RAPPAI Vs. PUSHPAM

JUDGEMENT

(1.) Petitioners are defendants 1 to 3 in O.S. No. 280 of 1998 on the file of the Sub Court, Thrissur. Suit is one for dissolution of a firm and settlement of accounts. Respondents are the additional plaintiffs in the suit. A preliminary decree was passed in the suit for dissolution of the firm directing settlement of accounts by passing of final decree. In the final decree proceedings, the petitioners/defendants 1 to 3 moved an application for permitting them to carry on business of their own in a building over which the firm has tenancy right, which formed part of its assets. The petitioners canvassed such a right contending that they form the majority among the partners of the dissolved firm. Ext.Pl is the copy of that application. That application was objected to by the respondents, the additional plaintiffs impleaded as the legal heirs of the deceased plaintiff, viz., one among the partners of the firm. At the time of arguments, as seen from Ext.P3 order, challenged in the Writ Petition, the petitioners canvassed for auctioning the tenancy right as an asset of the dissolved firm so that the successful bidder in that auction be permitted to conduct the business in that building. Plea so can vassed was resisted by the respondents contending that the petitioners had been appointed as party receivers earlier in the suit for carrying the business, but, on account of their default in depositing the income before the court the business had to be closed down. The present petition had been filed, according to them, only to delay the disposal of the final decree proceedings.

(2.) The learned Sub Judge, after appreciating the rival contentions presented by the parties, concluded that it is impracticable and more so not feasible, to auction the tenancy right over the building as canvassed by the petitioners. It was also observed that an auction for renting out building on an yearly or monthly basis may not be possible, and it cannot be determined at this stage how long the final decree proceedings will continue for its completion. Noticing the impracticability in the auctioning of the building on a monthly/yearly basis, which is likely to cause change of person periodically depending upon who is the successful bidder among the parties Ext.P1 petition was dismissed with an observation that final decree proceedings will be expedited. Propriety and correctness of Ext.P3 order passed by the learned Sub Judge is challenged in the Writ Petition invoking the supervisory jurisdiction vested with this Court, under Article 227 of the Constitution of India.

(3.) After hearing the counsel on both sides at length as I found that more enlightenment on the issue projected - auctioning of the tenancy right of a firm as part of its assets and the legal principles applicable thereof is called for, Senior Advocate Sri. T. Krishnanunni was requested to assist the court to resolve the question presented for consideration. The learned Senior Counsel Sri. Krishnanunni presented various facets of the issue under consideration, making reference to Ganpat Rai and Anr. v. Abnash Chancier, 1973 AIR(J&K) 74, Dwijendra Nath v. Rabindra Nath, 1987 AIR(Cal) 289 and Jayalakshmi v. Shanmug ham, 1987 2 KerLT 47. In all the above decisions considering whether tenancy right formed part of the assets of a firm it is concluded that it formed part of the goodwill of the firm. In Ganpat Rai and Anr. v. Abnash Chander, 1973 AIR(J&K) 74 expressing the view that tenancy right of the firm has to be treated as part of its goodwill, it has been held that in determining the assets of the firm on its dissolution such tenancy right will have to be valued along with the goodwill and taken into account at the final settlement of the accounts while passing a final decree. In Dwijendra Nath v. Rabindra Nath, 1987 AIR(Cal) 289; the High Court of Calcutta has held that the provisions under the Rent Control Act-would not be a bar in treating the tenancy right in favour of the firm as part of its goodwill and as an asset of the firm. In Jayalakshmi v. Shanmugham, 1987 2 KerLT 47 (C. No. 67) dilating on the question whether the benefit of a tenancy right formed part of its goodwill this Court has held thus: