Kamal Chand Jain vs Mahendra Electricals

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

Advocates Appeared:
For the Appellant : Abhay Sapre
For the Respondent: V.P. Shrivastava

Headnote:(1) Civil Procedure Code, 1908 – – O. 39 R. 2 – – suit by one of the partners against partnership firm and other partners – – loss likely to be compensated – – injunction cannot be claimed even if prima facie case and balance of convenience are proved.
       (2) Civil Procedure Code, 1908 – – O. 40 R. 1 – – appointment of receiver – – partners carrying on business – – quarterly returns of income and expenditure ordered to be produced in Court – – no receiver can be appointed to create hinderances in busineS.
        Short Note
       1. This common judgment also disposes of Misc. Appeal No. 884 of 1994 (Komal Chand Jain v. M/s. Mahendra Electricals and others) as both the appeals arise out of the same suit but from the different orders.
       2. Misc. Appeal No. 883 of 1994 is directed against the order of refusal dated 24.10.1994 for appointment of a receiver, passed by the XIIth Additional District Judge, Jabalpur in Civil Suit No. 511 – A of 1994, whereas Misc. Appeal No. 884 of 1994 is directed against the order of refusal passed on the same day for restraining the respondents from interfering with the appellant in managing the business of the partnership firm.
       3. The controversy which has given rise to this appeal lies in narrow compass that on 1.7.1968 the appellant and respondents Nos. 2 and 3, who are real brothers constituted and formed a partnership firm for dealing in electrical goods. For some reasons the firm was re – constituted by them by another partner – ship deed on 1.4.1993 for the same busineS. The partners had been carrying on business of the firm smoothly. The appellant was shocked to read a notice published on 11.4.1994 in local newspaper under the name of respondent Nos. 2 and 3 that the appellant had voluntarily retired from the aforesaid firm w.e.f. 31.3.1994. The appellant on reading the false and misleading news immediately published a contradiction on 21.4.1994 in the daily newspaper stating that he had never retired voluntarily from the partnership business with his brothers. The appellant also sent letters to all concerned authorities intimating that he had not retired and continued to be partner.
       4. The appellant then filed the instant suit for declaration that he continues to be the partner of the firm and he had never retired from the partnership business as published in the newspaper. He also made two applications; one under Order 39, Rule 2 of the Code of Civil Procedure for grant of injunction and another under Order 41, Rule 1 of the Code of Civil Procedure for appointment of receiver.
       4. The learned trial Court, after hearing counsel of both sides, was satisfied that the appellant had not voluntarily retired from the partnership business and he continued to be the partner of the firm. But he declined to grant the injunction and to appoint a receiver, directing the respondents to maintain the status – quo of the business of the firm and submit a quarterly statement of income and expenditure of the firm, in the Court.
       5. Shri Abhay Sapre, learned counsel for the appellant, has contended that the appellant is being deprived from enjoying the usufruct of the business of which he is a valid partner. He further contended that a partner may retire from the partnership with the consent of all other partners. But the appellant who never retired voluntarily, arbitrarily expelled by the respondents – partners, who happens to be his brothers by publishing a notice in the newspaper.
       6. In the impugned order the trial Court was, satisfied that a prima facie case was made out by the appellant for grant of injunction but still he declined to grant the injunction which is bad in law.
       7. Shri V.P. Shrivastava, learned counsel for the respondents, on the other hand, has contended that the appellant in breach of the partner – ship agreement had separately set up a parallel business in the name of his wife and son which was causing irreperable loss to the business of the firm.
       8. It is well settled that when the loss and damages can be compensated in terms of the money the injunction cannot be granted; despite of a prima facie case and the balance of convenience in favour of the plaintiff.
       9. In the instant case, the dispute is with regard to the business of a partnership firm, admittedly respondent 2 and 3 are managing the business of the firm. Therefore, the loss, if any, caused to the appellant could be compensated in terms of the money. The injunction as prayed for will create hinderance in the working of the firm on account of apparent difference and distrust between the parties.
       10. As regards the order of refusal to appoint the receiver is concerned, it is obvious that the respondents have already been directed to maintain status – quo of the business of the firm and to submit a quarterly statement of the income and expenditure in the Court, which is as good as the appointment of a receiver.
       11. Admittedly, respondents 2 and 3 are managing the business of the firm, therefore, there is no reason to deprive them from carrying out the business of the firm by appointment of a receiver.
       12. For the reasons mentioned aforesaid, I do not find any merit in the appeal. In the result both the appeals are dismissed but without costs.

Kamal Chand Jain vs Mahendra Electricals - 1995 Supreme(MP) 1125