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HIGH COURT OF ALLAHABAD
S.R. SINGH, J.
Subhash Chandra Agrawal - Appellant
Versus
D J Mathura - Respondent
Decided on : Nov 16, 1995
PARTNERSHIP - DISSOLUTION - APPOINTMENT OF RECEIVER - CONDITIONS - U. P. URBAN BUILDINGS (REGULATION OF RENT, LETTING AND EVICTION) ACT, 1972 - APPLICABILITY.
Fact of the Case:
Plaintiff, claiming to be a partner in a firm, filed a suit for accounting and winding up of the firm. She also filed an application for appointment of a Receiver to take possession of the business and prepare an inventory of the goods, books of accounts, etc. The trial court appointed a Receiver, and the appellate court modified the order by appointing Joint Receivers. The defendants challenged the appointment of the Receiver.
Finding of the Court:
The court held that the appointment of the Receiver was not justified as the plaintiff had no concern with the assets or liabilities of the firm after its dissolution. The court also held that the U. P. Urban Buildings (Regulation of Rent, Letting and Eviction) Act, 1972 was not applicable to the case as the plaintiff was not a tenant of the shop in which the business was carried on.
Issues: 1. Whether the plaintiff was a partner in the firm and entitled to seek dissolution and winding up of the firm? 2. Whether the appointment of a Receiver was justified in the facts and circumstances of the case? 3. Whether the U. P. Urban Buildings (Regulation of Rent, Letting and Eviction) Act, 1972 was applicable to the case?
Ratio Decidendi: 1. The court held that the plaintiff was a partner in the firm as per the partnership deed dated 1.2.1973, which was not amended as alleged by the defendants. 2. The court held that the appointment of a Receiver was not justified as the plaintiff had no concern with the assets or liabilities of the firm after its dissolution. The court also held that the Receiver could not be appointed to preserve the property of the firm as the defendants had the right to continue the business in the shop as per the supplementary deed of partnership dated 23.11.1978. 3. The court held that the U. P. Urban Buildings (Regulation of Rent, Letting and Eviction) Act, 1972 was not applicable to the case as the plaintiff was not a tenant of the shop in which the business was carried on.
Final Decision: The court quashed the impugned orders appointing the Receiver and directed the trial court to dispose of the application for appointment of Receiver afresh in accordance with law and in the light of the observations made in the judgment.
1. S. R. Singh, J. Defendants to Suit No. 385 of 1991 have challenged the appointment of Receiver made on an application moved on behalf of the plaintiff-Respondent Anguri Devi under Order XL, Rule 1, C. P. C. The suit was instituted essentially for the relief of accounting and winding up of "m/s. Goyal Brothers" which according to the plaintiff was a partnership firm. The partnership, according to her, was at Will. The relief was founded on the plaint allegations that the plaintiff was the owner of a shop situate at Holi Gate, Mohalla Tilakdwar in the town of Mathura; that she agreed to launching business in the said shop in partnership with the defendants on terms" and conditions encapsulated in the partnership deed dated 1.2.1973 executed with the consent of all the partners and that no rent would be payable to the plaintiff for the shop but she would get 10% of the net profit accruing from the business without sharing the losses incurred therein. It was further alleged in the plaint that the defendants who according to the agreement were actually managing and carrying on the business failed to furnish proper accounts thereof whereupon the partnership was terminated vide notice dated 25.2.1988 and the firm dissolved vide notice dated 10.8.1991 and since the defendants failed to render Accounts despite termination of the partnership and dissolution of the Firm hence the suit.
2. The plaintiff-respondent moved an application for interim injunction restraining the defendants from selling any goods from the shop in question and from removing the goods either from the shop or from the godown and an application for appointment of Receiver to take possession of the entire business including the shop and the godown thereof and to prepare an inventory of the entire goods, books of accounts, bills, vounchers, returns, Raseed Bahi, pass books, sales files relating to Sales-tax etc.
The trail court granted ex parte injunction vide order dated 3,9. 1991 which was set aside in appeal and a modified version of injunction order was issued to the effect that the petitioners would furnish security to the tune of Rs. 1 lac half of which would be cash security in order to ensure speedy disposal of injunction application and the application for appointment of Receiver. The appellate order dated 3.10.91 was impugned in a writ petition which was dismissed by order dated 22.10.91 subject to certain observations/directions as embodied therein. It is not within the domain of dispute that the petitioners have since furnished adequate/requisite security to the extent of Rs. 1 lac before the trial court and the same was accepted on 16.11.91.
3. The application for appointment of Receiver was resisted by the petitioners on grounds inter alia that the plaintiff was not a partner of the Firm namely, M/s. Goyal Brothers and in fact she had let out her shop' on consideration of 10% profits in lieu of rent accruing from the business. The deed dated 1.2.73 was albeit, ostensibly a partnership but in practical terms, it was an agreement for letting out the shop which was within the purview of the U. P. Urban Buildings (Regulation of Rent, Letting and Eviction) Act No. 13 of 1972. According to the petitioners, they scrupled making investment in the business because of the reasons that under the agreement dated 1.2.73, the plaintiff had a right to terminate the agreement and take possession of the shop and hence, an amended deed dated 23. 11. 1978 was executed with the consent of the parties, according to which, if the plaintiff wanted to dissociate herself from the partnership she would be entitled to get l/12th of 10% of the last three years' profit by way of rent and the shop and other goods etc. would remain in possession of the petitioners.
4. The trial court appointed, vide order dated 5. 8. 1995, Sri R. K. Agarwal Advocate as a Receiver investing him with the authority to take possession of the goods, bills, vouchers, Raseed Bahi and other papers
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