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High Court Of Madhya Pradesh
ARUN MISHRA, J.
RAMESH KUMAR - Appellant
Versus
LATA DEVI - Respondents
MA 3757 Of 2005
Decided On : 02/20/2007
Partnership Dissolution - Partnership Act - Section 7, Section 40, Section 53 - The court discussed the provisions of the Partnership Act, particularly Section 7, Section 40, and Section 53, and their interpretation in the context of partnership dissolution. The court emphasized the importance of mutual agreement for dissolution and the conditions under which a partnership can be considered 'at Will'. The court also highlighted the significance of Section 53 in restraining partners from using firm name or property after dissolution.
Fact of the Case:
The plaintiff filed a suit for rendition of accounts and permanent injunction against the defendants, claiming that the partnership firm had been dissolved by serving a notice, and the defendants were using the firm's name and assets for their own benefit.
Finding of the Court:
The court found that the partnership had not been dissolved as there was no mutual agreement between the partners, and therefore, the plaintiff was not entitled to an injunction. The court also rejected the prayer for the appointment of a receiver.
Issues: The key issue was whether the partnership had been dissolved by the plaintiff's notice, and whether the plaintiff was entitled to an injunction. The court also considered the application for the appointment of a receiver.
Ratio Decidendi: The court held that the partnership could only be dissolved by mutual agreement as per the provisions of the Partnership Act. It emphasized the importance of establishing prima facie evidence of dissolution before granting an injunction. The court also considered the conditions under which a partnership can be considered 'at Will' and the implications of Section 53 in restraining partners after dissolution.
Final Decision: The appeals were dismissed, and the parties were left to bear their own costs.
( 2 ) PLAINTIFF/appellant has filed a suit before the Court below for rendition of accounts and permanent injunction restraining the defendants from carrying on the business in the name and style of M/s. Antique Stores, Bombay Bazar, Khandwa. Plaintiff has come with the case that on 1-9-1971 a partnership firm was constituted, it was duly registered under the provisions of the the Partnership Act, 1932 (hereinafter referred to as the Act ). Initially the partnership was entered between Shivalal, father of the plaintiff and Rishi Kumar, Rishi kumar was elder brother of the plaintiff ramesh Kumar. Shivalal died on 14-5-1979. Firm was continued a deed of partnership was executed on 15-5-1979, got registered on 20-6-1979 with the Registrar, Firm and societies. Atul Kumar, son of Rishi Kumar subsequently desired to become a partner, consequently he was inducted and a fresh partnership deed was executed on 1 -4-1989. Rishi Kumar died on 22-12-2001. On his death his widow Smt. Leela Devi was inducted as partner. Firms financial year commenced on 1st April and ended on 31st march of subsequent year. Plaintiff served a notice dated 20-9-2005 by registered post. The profit for the year 2004-05 was not distributed, share of the plaintiff was not given. As the partnership was at will, he dissolved it by serving the said notice. Newspaper publication was also made in Dainik bhaskar dated 20-10-2005, however, account of partnership was not rendered, consequently plaintiff has filed the suit.
( 3 ) THE stand of the defendants /respondents is that partnership can be dissolved by mutual agreement of the partners. One of the partners has no right to dissolve the partnership. Defendants made newspaper publication dated 23-9-2005. As per deed plaintiff had an option of retiring from the partnership business as he was not willing to continue but not to dissolve partnership business, thereafter business is carried out by the subsisting partners. By showing unwillingness to continue, he has retired from business. Plaintiff is not entitled for an injunction in view of the terms and condition of the partnership deed. Subsisting partners have the right to continue the business of partnership.
( 4 ) AN application IA No. III under Order 39, Rules 1 and 2 and. A. No. IV under order 40, were filed by the plaintiff. Applications have been rejected as per impugned order dated 8-11-2005. The Trial Court has found that balance of convenience was not in favour of plaintiff and irreparable injury was not going to be caused in case injunction was not granted to the plaintiff. While deciding the. A. No. IV the Court has directed maintenance of the accounts and quarterly audited report to be filed. There has to be monthly maintenance of the accounts of the firm.
( 5 ) IT was submitted by Shri A. D. Deoras, learned Sr. Counsel appearing with Shri R. Jaiswal for appellant that in view of Clause 8 of the agreement partnership was at will and notice has been served by the plaintiff, thus partnership came to an end, it stood dissolved on the date the notice was served. Section 53 of the Act comes into play it confers an unfettered discretion on every partner or his representative in the absence of contract to the contrary to restrain any other partner or his representative from carrying on his similar business in the firm's name or from using any of the property of the firm for his own benefit, thus the defendants ought to have been restrained from using firm's name and using the assets of the firm for their own benefit during pendency of the suit. As partnership stood dissolved, mandatory consequence of Section 53
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