1988 Supreme(MP) 609

IN THE HIGH COURT OF MADHYA PRADESH
V. D. Gyani, J.
Ibrahim - Appellant
Vs.
Abid Ali - Respondent
M. A. No. 71 of 1987 (I)
Decided On : 21-01-1988

Headnote:Civil Procedure Code, 1908 – O.40, R. 1 and 2 – running manufacturing partnership concern – receiver should not be appointed to take the business out of the hands of partners.

        Short Note

       The plaintiff/respondent filed a suit against defendant/appellants for dissolution of partnership, rendition of accounts and settlement of assets. He also filed an interim application under Order 40, Rule 1 – 2, CPC for appointment of a receiver and prayed for an exparte interim order, which was granted by the trial Court on 10 – 4 – 1987, appointing an advocate as a receiver and directing him to take possession of the entire establishment, and to run the same. His remuneration was also fixed at Rs. 1,000/ – per month. The appellants made their appearance on 12 – 4 – 1987. They opposed the application on various grounds. Trial Court, however, confirmed the order passed earlier on 10 – 4 – 1987. It is, against this order dated 20 – 4 – 1987, that the present appeal bas been preferred.

       2. Held: The crucial question which in view of the rival contention advanced by the learned counsel for the parties, which arises for determination in this appeal is, whether it was just and convenient to have appointed a receiver in respect of running manufacturing concern under contractual obligations. Kerr on 'the law and practice as to receivers' (thirteenth edition) observes that –

       "If, however, the partnership is continuing one, and may continue, the Court is always placed in a position of very great difficulty, if it grants the motion, the effect of it is to put an end to the partnership, which one of the parties claims a right to have continued, while if it refuses the motion, it leaves the defendant at liberty to go on with the partnership business at the risk, and probably to the great loss and prejudice, of the dissenting party. Between these difficulties it is not very easy to select the course which is the best to be taken, but the Court is under the necessity of adopting some mode of proceeding to protect, according to the best view it can take of the matter, the interests of both parties.

       The Court does not, therefore, appoint a receiver unless it is reasonably clear that a dissolution will be ordered at the trial. If it is not, the Court will sometimes grant an injunction to restrain a partner from doing the acts which are complained of although it will not grant a receiver, for the latter course has the effect of taking the business out of the hands of the partners altogether. Where complaints are made of breaches of partnership articles, it must be seen whether the complaints are urged with a view to making them the foundation of a dissolution, or of a judgment enforcing and carrying on the partnership according to the original terms, and preventing, by proper means, the recurrence of those breaches which have happened before by reason of the conduct of one of the parties."

       3. As the object and purpose of appointment of a receiver, is preserving of the assets pending realisation and affecting that realisation, the question to be asked in the context of running concern. which contractual obligations to other parties for supply of goods should be, whether it is necessary to put an end to the concern itself and whether it would be just and convenient to do so. It is this crucial point, which appears to have been missed by the learned judge of the trial Court. Learned Author further observed that:

       "If, however, it is doubtful, whether there is or is not an unexpired term, a Receiver will note the assets, so where a partnership is alleged on the one side and denied on the other, unless person in possession of the assets consents."

       4. Without commenting on the merits of the case of licensee, as pleaded by the 'plaintiff – respondent and denied by the appellants, who pleaded a retirement, of the plaintiff himself, at this stage, it is doubtful as to who is right or wrong, nor it is the stage to decide the same, but it would certainly not be just to, bring the running concern to stand still by appointing an Advocate as a Receiver, who undoubtedly, does not possess the expertise, required for manufacturing of goods and the business – skill for marketing such goods. At best, he may maintain the status – quo, but that would also not be in a larger interest of the running concern and the parties concerned. Conditions imposed. Appeal allowed.