DAYABHAI Vs. NATWARLAL

JUDGEMENT

(1.) THIS is an appeal from an order of the Additional District Judge of Indore appointing a receiver in a suit for partnership accounts instituted by respondent no. 1 Natwarlal against the appellant Dayabhai and the respondents Nos. 2 and 3, Chhotabhai and Purushottambhai,

(2.) THE plaintiff's case briefly stated, is that there was a partnership between him and the defendants in motor transport business and in certain other subsidiary businesses, namely, cinema, ginning factory etc., that in the partnership, which commenced in January 1948, he had four annas' share and the remaining twelve annas' share was held by the three defendants, who are brothers; that he contributed his share to the capital investment and it was on account of his efforts, influence and business tact that the motor transport business developed and flourished giving a daily return of about Rs. 2,300; and that the other ventures were not so profitable as the motor transport business, The plaintiff proceeded to say that when he found that the partnership business was not being carried on very efficiently, he wrote to his partners several times to improve the management of the business or to dissolve the partnership and settle the accounts thereof; that the defendants paid no heed to his suggestion; that, therefore, he gave a notice to the defendants on 30th November, 1954 expressing his intention to put an end to the partnership with effect from 15th December 1954 and calling upon them to render and settle accounts and pay to the plaintiff his share of the profits and assets of the business; and that by his reply dated 7th January 1955, the defendant Dayabhai denied that the plaintiff was a partner in the motor transport business, and stated that the plaintiff had rendered only friendly service to the defendant for which the defendants had amply rewarded him by paying a sum of about Rs. 37,455 -8 -3. The plaintiff has further averred that until 7th January 1955, the defendant Dayabhai had never denied his status as a partner; that, on the other hand, he had introduced him as his partner to several prominent persons; and that the defendant's denial of the partnership was out of selfish motives and in breach of the faith and confidence that the plaintiff had reposed in him. On these allegations, the plaintiff claimed that the partnership stood dissolved as from 15th December 1954 or from such other date as the Court may determine and prayed for a decree for the payment of his share of profits and assets after the taking of the partnership accounts and for the appointment of a receiver in the suit.

(3.) MR . Sanghi, learned counsel appearing for the appellant, though at first inclined to argue that as the defendant Dayabhai had denied partnership, a receiver could not be appointed until the existence of partnership was established, later on did not dispute that even without a final determination of the question of the existence of the partnership a receiver could be appointed if it was prima facie established. But he contended that the prima facie existence of a partnership or the denial per se by the defendant of partnership was not sufficient for the appointment of a receiver without any proof of imminent danger to the assets of the partnership. It was urged that the jurisdiction to appoint a receiver must not be exercised lightly but must be most cautiously used; that the relief was not one ex debito justiuae but one which is purely within the discretion of the Court; that the power to appoint a receiver was not to be generally exercised as a matter of course; that it was not a reason for allowing an application for the appointment of a receiver on the ground that it could do no harm to appoint a receiver; and that before appointing a receiver the Court must take the whole circumstances of the case into consideration and then decide whether it would be just and convenient to appoint a receiver, In support of this argument and for the purpose of showing under what circumstances and on what grounds the Court should appoint a (sic), learned counsel for the appellant referred me to 'Lindley on Partnership' (eleventh edition) page 651, Woodroffe's "Law relating to Receivers" (fifth edition) pages 28, 90, 94 and 95, paragraph 923 in Halsbury's Laws of England, volume 24 (Hailsham edition) and to the decisions in Peacock vs. Peacock (10 Revised Reports page 138), Sitaram vs. Pannalal (, A.I R. 1957 Nag 1 ), T. Krishnaswami vs. C Thangavelu (, A.I R. 1955 Mad 430 ), and Benoy Krishna Mukerjee vs. Satish Chandra Giri (, A.I R. 1928 Pri Cou 49 ) It was said that in the absence of any allegation by the plaintiff about any misconduct on the part of the defendant or about loss or injury to the partnership property, the learned Additional District Judge should not have gone into the question whether prima facie there existed a partnership and thus pre -judged the question; that in any case the finding of the learned trial Judge that the documents produced by the plaintiff prima facie established the fact that he was a partner in the motor transport business, was not justified; and that the lower Court had not taken the whole circumstances of the case into consideration before coming to the conclusion that in this case it was just and convenient to appoint a receiver.