NAGARCHAND GOENKA Vs. SURENDRA NATH SARKAR

JUDGEMENT

(1.) This is the defendant's appeal against an order appointing a Receiver of a partnership business constituted under circumstances hereafter described. This order was passed on the application of the plaintiff in a proceeding under Section 20, Arbitration Act (10 [X] of 1940). The facts giving rise to the cause of action for the plaintiff-respondent's suit are shortly these: The plaintiff, Surendra Nath Sarkar, is the sole and absolute proprietor of several business concerns known as the Galgalia Rice Mills at Islampur, P.S. Islampur and the Jute Presses at Galgalia, Thakurganj and Islampur, District Purnea. The defendant Nagarchand Goenka is a big business man being the proprietor of several other concerns. For better management of the plaintiff's business, the parties entered into a partnership on and from 9 February 1943, for a. period of three years. The terms of the partnership were later incorporated into a deed which was fully executed and registered by both parties on 4 June 1943, and the firm name and style of the partnership was adopted as Galgalia Rice and Oil Mills and N.G. Rice Mills. According to the terms of the partnership, the present appellant was left in the sole and absolute charge of the business being entirely responsible for the efficient and smooth management thereof, and thus became the managing partner. By the terms of the said partnership the respondent was not ordinarily to interfere in the management of the partnership firm.

(2.) Some very important terms of the partnership relevant for the purposes of this case are set out herein below: (a) That each of the partners was to contribute Rs. 1,51,000 towards the working capital of the business within a prescribed time; (b) That the managing partner Goenka would get a budget estimate duly prepared and have the same approved by the plaintiff; (c) That Goenka would furnish Sarkar every month with abstracts of accounts; (d) That Goenka should every year prepare a profit and loss statement of the business and submit the same to Sarkar for scrutiny; (e) That the accounts of the firm should be duly adjusted and audited within the time mentioned in the deed; (f) That none of the partners should utilise any asset or goodwill of the firm in connexion with any other business of similar nature either on their own account or on behalf of any other person, firm or company; and that according to para. 20 of the partnership deed, it is provided that if any of the partners committed any breach, non-observance or nonperformance of any of the terms of the partnership, the other partner should give him notice requiring him to make amends within a month of the receipt thereof, and in case the breaches, etc., are not remedied, the partner aggrieved might, notwithstanding anything contained in the deed, forthwith determine the partnership by notice in writing and on such determination the firm should be deemed to stand dissolved.

(3.) In pursuance to the arrangement between the parties, the plaintiff paid Rs. 1,51,000 as agreed upon towards, the fund for capital outlay of the business. The defendant appellant entered into management without any interference by the plaintiff-respondent. Sometime after the plaintiff came to discover that the defendant did not comply with the partnership covenants. This led to acute differences between the parties in consequence whereof the plaintiff by a notice dated 13 November 1944, called upon the defendant to make amends for his defaults in observance of the terms of the partnership within the prescribed time.