IMPORTANT POINT
In suits for winding up partnership firm, it would only be just and convenient to appoint a receiver for assets, stock in trade, books of accounts etc. of firm and to consolidate accruals and recoverables.

Thottathil B. Radhakrishnan, J.—The plaintiff in a suit for directing the winding up of a partnership firm; for settlement of accounts and for direction to the defendant to render accounts, is the appellant. He sued alleging that he and the defendant are partners of a firm run with a firm name, engaged in quarrying and stone crushing business activities.

2. According to the plaintiff, that is a partnership at Will and he and the defendant have equal shares, with right to share the profit and loss of the partnership equally. The plaintiff pleaded that the unit was initially commenced by the defendant as a proprietary concern and thereafter, he was brought in on negotiations. He pleaded that the partnership business stood dissolved as on 25.2.2011, when a notice of termination was issued. Alongwith the plaint, among other things, Ex. A1, the agreement (in original) dated 16.4.2000, Ex. A2, a copy of notice dated 22.2.2011 and Ex.A3, defendant’s reply (in original) dated 15.3.2011 were produced. With these materials, the plaintiff applied for appointment of a receiver to take possession of all assets of the firm, particularly those described in plaint ‘C’ schedule, along with stock in trade, books of accounts etc.

3. The defendant objected to that application contending that the Ex.A1 agreement does not, by its terms, create a partnership or regulate mutual fights and liabilities arising out of a duly constituted firm. He took the stand that in terms of clause 3 thereof, the parties have to execute a deed of partnership and such a deed having not been executed, no partnership has come into being. According to him, it is only after executing such a deed, would all assets referred to in Ex.A1 agreement have to be conveyed to the partnership firm; otherwise, there would be no partnership since the intention was that the partnership will come into existence only on the execution of a deed following Ex.A1 agreement. Though he admitted having issued reply notice, he tried to explain off some of its contents.

4. The court below dismissed the application for appointment of receiver holding that the allegations in the plaintiff’s affidavit contain complaint only that the defendant is not allowing the plaintiff to participate in the business, but not of mismanagement or of any damage to the property, so as to preserve the same. Hence, it took the view that no injury is shown to have been caused to the plaintiff, because it was admitted that ‘B’ schedule property purchased for the partnership firm is now in the possession and enjoyment of the plaintiff. The court below viewed that the plaintiff wants to have a receiver appointed only to take possession of the property that belongs to the defendant alone and that the case is not a fit one for appointment of receiver. The court below noted that Ex.A1 agreement is challenged by the defendant on the ground that it is not a deed of partnership and that the conditions mentioned therein have not been fulfilled. The court below did not decide, either way, as to whether, at least prima facie, there is material to hold the existence of a partnership and if so, what would be the legal incidences flowing therefrom.

5. Learned senior counsel appearing for the appellant/plaintiff argued that the court below has wholly misconceived the effect of Ex. A1 agreement. According to him that document evidences the existence of a partnership and the clause therein, to have a partnership deed drafted, does not in any manner, takes away the quality of Ex. A1 as itself being the evidence of partnership. He argued that in cases of partnerships terminable at Will, termination by one of the parties ipso facto gives rise to a situation where the other party is bound to account and no transaction could be had thereafter, except for the purpose of preserving the partnership or to carry out and discharge obligations incurred before the termination. He further argued that going by the facts of the case in hand, the no