RAJ CHOPRA Vs. NARENDER ANAND

JUDGEMENT

(1.) By this order I am to decide two applications one filed by the plaintiffs under Order 39 Rules 1 and 2 of the Code of Civil Procedure and other by defendant No. 2B under Order 39 Rule 4 of the Code.

(2.) The suit is for dissolution of partnership, rendition of accounts, winding up and for perpetual injunction. There are two plaintiffs and in effect tour defendants. Partnership ls in t e name of 'Competent Builders' of which first plaintiff and the first defendant are the partners. This was constituted by a deed of partnership dated February 20, 1978. These two partners extended the business of partnership and started a unit under the name 'Competent Motors'. For this purpose they entered into an agreement dated July 19, 1983 called the 'Supplementary Agreement of Partnership.' Though this unit was part of the partnership 'Competent Builders' whose main business was that of builders and promoters of multi-storeyed buildings, this unit was to deal in automobiles. Then on September 1, 1983 an agreement was signed between the Competent Motors and defendant No. 3, manufacturers of cars, under the name "Marnti', as dealers of these cars. Competent Motors for all intent and purposes was Competent Builders in whose name assessments under the tax laws were being done. The partners, however, could not pull on together and on KSeptember 30, 1986 an agreement was executed between the partics styied as 'Modification Deed'. Under this deed the parties though continued to be the partners in Competent Builders agreed to segregate the activities of dealership in automobiles and motor-cycles (a dealership of Ind-Suzuki Motorcycies in the name of "Competent Motorcycies' was acquired on May 11, 1985 by the two partners). They bad by this te two showrooms one at Connaught Place and the other at Bhikaji Cama Place, New Delhi, and certain workshops. They, however, nevertheless wanted to keep the agency of defendant No. 3 as a joint activity for limited purpose in partnership as mentioned in various terms in the deed. At the same time, they expressed the desire that the principal deed of partneiship shall remain in force as long as the partnership subsisted (Clause 2). The agency obtained from defendant No. 3 under the name of Competent Motors was to remain undivided and jointly exploited for the limited purpose inasmuch as of receiving the allocation of vehicles under the name and style of Competent Motors and making the payment against the vehicles received from defendant No. 3 from the joint bank account to be operated jointly by the partners or their nominees. These vehicles received in partnership account were to be divided equally between the partners. Otherwise from this deed it appears that parties separated for the purpose of sale of automobiles, first plaintiff getting the showroom of Connaught Place and the first defendant that of Bhikaji Cama Place. These partners also divided various other properties including workshops, etc. It was also provided that in the event of the remaining any unsold Maruti vehicles from defendant No. 3 for a period of three days with any of the parties, then such unsold vehicles were to be diverted to the other party at the cost of the party returning the unsold vehicles. The deed also provided that agency commission received from defendant No. 3 would be equally shared upto March 31, 1988 lrrespective of allocation between the parties, but after this .date the commission together with warranty claims would be shared on the ba is of and its proportionate to booking and allocation of vehicles respectively made by the two partners. Various clauses of this deed would show that the parties did separate thelr business of automobiles, the principal business being saie of Maniti vehicles of defendant No. 3. Then, Clauses 22 and 23, which have raised the present controversy are as under :- 55

(3.) Thus, it would appear the unit Competent Motors of the principal partnership was disbanded, but the parties remained together only to keep the agency of Maruti vehicles of defendant No. 3 alive. At a subsequent stage defendant No. 3 gave separate dealerships to the two partners. It so happened that at the All India Dealers Conference of defendant No. 3 held at Bangalore on 6-8th November, 1987, the Managing Director of defendant No. 3 announced the Board's decision that the MUL Dealers who were appointed dealers in 1983-84 could open their showrooms and workshop for sale and service of the vehicles in the same states provided they had the requisite infrastructure and other facilities of showrooms and workshops conforming to the MUL (Defendant No. 3) requirement. This announcement led the two partners to write a letter of December 14, 1987, to defendant No. 3 to sub-divide the dealership in the name of Competent Motors into two dealerships in the name of (1) Competent Motors & Co. and (2) Competent Motors and Parts. It was mentioned in this letter about the 8 kms. restriction as agreed to by the partners In reply to this letter, defendant No. 3 stipulated certain requirements and then meetings were held between the partners on the one side and the representatives of defendant No. 3 on the other. Ultimately, defendant No. 3 agreed to give two separate dealerships to the two partners. This was by a letter dated January 9, 1988 of defendant No. 3 stated that it had agreed to allow the two partners two separate and establish independent dealerships subject to certain conditions mentioned in the letter. These were that the existing dealership would cease to exist and separate agreements for dealerships will be entered into by plaintiff No. I and defendant No. I with defendant No. 3; showrooms for sale and workshop for servicing facilities for both the dealerships would be approved by defendant No. 3; separate security deposits as applicable would be paid: and appropriate names for dealerships would be approved by defendant No. 3. This was accepted by both the partners. They proposed two names of the dealerships: Competent Motors Company of plaintiff No. 1, and Competent Motors and Parts of defendant No. 1. Then there were discussions between these two partners and the General Manager (Sales) of defendant No. 3 As the old dealership was to come to an end new dealerships started, two dealerships agreements were separately entered on January 15, 1988 To the first plaintiff the dealership was given in the name of 'Competent Automobiles Pvt Ltd.' and to defendant No. 1 in the name of 'Classic Motors', respectively having showrooms at Connaught Place and Bhikaji Cama Piace. The defendant No 1 as proprietor of Classic Motors (Defendant No. 2A) wrote a letter dated February 15, 1988 to defendant No.3 for change of dealership in the name of defendant No.2B, i.e., Classic Motors Pvt. Ltd. It was stated in (his letter that at the time of division, defendant No. 1 bad an incorporated company in the name of Competent Motors & Parts (P) Ltd. and plaintiff No. 1 had an incorporated company in the name of M/s. Competent Automobiles Company Private Limited, and further as the defendant No. 3 had suggested that both the partners could not get the name "Competent", defendant No. I had agreed to keep the name of his concern 56 as Classic Motors at that stage and now bad got the company incorporated in the name M/s. Classic Motors Private Limited. In the letter defendant No. I also gave the details of the authorised paid up capital of the company, the promotors thereof, the directors and the shareholders, In the letter dated February 23. 1988 from defendant No. 3 to defendant No. 1, while agreeing to the change in the dealership, it was mentioned that this was subject to the condition that no change in the existing shareholdings and directorship as indicated in the letter dated February 15, 1988 of the first defendant would be made without the prior approval in writing of defendant No. 3. Both the parties had, thus. entered into separate dealership agreements with defendant No. 3. At the All India Dealers Conference of defendant No. 3 held at Madras on 9th and 10th December, 1989, some dealers complained that co-dealers had established sales and service outlets in close proximity to their dealership and defendant No. 3 should put a restriction on the minimum distance to be maintained. The Managing Director of third defendant clarified this position. This would as appear from Minute 3.4.2. in the minutes of that meeting :- "MD clarified that MUL would not impose any reatriction in so far as distance between any two outlets are concerned. He reiterated that dealer could open Sales & Service Outlets within their allocated sales territories even without specific permission of the Regional Offices but, these outlets would have to be in accordance with MUL standards. He felt that no codes should be allotted to sales & service outlets and that despatch of spare parts would be made only to parent dealerships to enable dealers to exercise greater control on their inventory."