C.R.No.6261 of 2009 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.R.No.6261 of 2009. Decided on: November 11, 2009. Satish Kumar Bhalla and others .. Petitioners VERSUS Indira Puri and others. .. Respondents * * * CORAM: HON'BLE MR.JUSTICE M.M.S.BEDI 1. Whether reporters of local papers may be allowed to see the judgment? 2. Whether to be referred to the Reporter? 3. Whether the judgment should be reported in the Digest? * * * PRESENT Mr.Sandeep Bansal, Advocate, for the petitioners. Mr.Rajinder Mahajan, Advocate, for the respondents. M.M.S. BEDI, J. Petitioners-plaintiffs have preferred this revision petition under Article 227 of the Constitution of India, aggrieved by the orders dated 05.12.2007 and 07.08.2008, passed by the Courts below dismissing the application for interim injunction filed by the petitioners-plaintiffs in their suit for permanent injunction seeking to . . . 1 C.R.No.6261 of 2009 restrain them from taking forcible possession of the premises consisting of two shops and stock affixture, articles of the partnership concern M/s Janta Cycle Company. The claim of the petitioners- plaintiffs in their plaint is that they along with defendant-respondent No.1 had entered into partnership agreement dated 16.06.1999. The defendant-respondent No.2 is husband and defendant-respondent No.3 is the son of defendant No.1. Defendant No.1 is owner of godown which is part of property No.52 and defendant-respondent No.2 is owner of the shops. Defendant No.2 had agreed not to take any rent of the shops owned by him and a letter was written by him to the Assessing Authority, Excise and Taxation Officer, Jalandhar in this concern. The partnership agreement was reduced into writing between the petitioners-plaintiffs and defendant No.1 and it was signed by the parties on 16.06.1999. As per the agreement, the petitioners-plaintiffs are partners in the business to the extent of 50 per cent and defendant No.1 is partner to the extent of remaining 50 per cent as per the clause of the partnership deed. Defendant- respondent No.1, is a sleeping partner whereas the petitioners- plaintiffs are working partners of the firm. The petitioners-plaintiffs claim that plaintiffs are in actual physical possession of the shops and godown. On 27.06.1999, the petitioners-plaintiffs and defendant No.1 jointly wrote a letter to the Manager, Oriental Bank of Commerce, Adarsh Nagar, Jalandhar, authorizing and empowering petitioner-plaintiff No.3, to solely operate the account. The firm belonging to the petitioners and defendant-respondent No.1, was . . . 2 C.R.No.6261 of 2009 being run peacefully under the name and style of M/s Janta Cycle Company, through the Managing partner petitioner No.3. Defendant- respondent Nos.2 & 3, on 23.10.2007, in furtherance of their common intention took steps to dispossess the plaintiff-petitioner No.3, from the shops of the firm, compelling the petitioners-plaintiffs to file a suit for injunction. The defendants-respondents filed written statement taking up the plea that defendant-respondent No.2 was carrying on the business of trading in cycle parts along with his brothers under the name and style of Janta Cycle Store. The petitioner-plaintiff No.3, used to function as part time accountant with M/s Janta Cycle Store. His main function was to write books of accounts and prepare statutory returns of Janta Cycle Store. Since respondent No.2, started manufacturing activities under the name and style as Neel Kamal Rubber Private Limited and his brother Kamal Puri and Harpal Puri got separated as such, defendant No.2 closed down the business of Janta Cycle Storel. The petitioner- appellant No.3, started working as part time accountant in Neel Kamal Rubber Private Limited. In the meanwhile, he approached defendant No.2, with a request that since son of petitioner Nos.1 & 2, are grown up and were unemployed, a proposal was given to run business of cycle parts in partnership with his family. In view of his long association, plaintiff No.2 & defendant No.3, agreed to the said proposal with the condition that business would be run under the name and style Janta Cycle Company, in which defendant No.2, and his family and Satish Kumar and his family would have 50 per cent . . . 3 C.R.No.6261 of 2009 share in each in the partnership of the firm. Defendant-respondent No.2, also allowed the said firm to use the premises without any right. Both the parties agreed that in case any partner desires to retire, the partnership firm would be dissolved with one month's notice and defendant No.2, would be entitled to get vacant possession of the premises. Since respondent No.2, is highly reputed person and plaintiff No.3 was also having regard for him, as such, both the parties had agreed that defendant No.2, shall be sole arbitrator in case of any dispute. It was mutually agreed that defendant No.3, having numerous business activities, both manufacturing and trading, as such, they cannot afford time for day to day proceedings. It was pleaded in the written statement that plaintiff Nos.1 & 2, were totally unemployed and as such, plaintiff No.2, requested the defendants-respondents that plaintiff Nos.1 & 2 would devote whole time to the business affairs of the firm and in view of that it was agreed that they would be paid salary. It was pleaded that since plaintiffs were not rendering accounts of the firm and the plaintiffs refused to allow the defendants to have access to the accounts of the firm, defendant No.1, gave notice of one month for dissolution of the firm on 27.10.2007. Defendant-respondent Nos.1 & 2 came to know that plaintiffs are thus running the affairs of the firm and as such, they requested the petitioners-plaintiffs not to indulge in illegal activities but the petitiones used filthy language and caught hold of defendant No.2 and pushed defendant No.2 out of the shop. Preliminary objections were taken that the firm has not been . . . 4 C.R.No.6261 of 2009 impleaded as a party and that the firm having not been dissolved and defendant having found lot of differences as per stock statement, the plaintiffs have got no right in the premises in dispute as same is owned by defendants. After dissolution of the firm, the plaintiffs are running the business. The Courts below have dismissed the application of the petitioners-plaintiffs observing that the firm stands dissolved and the petitioners-plaintiffs are not within their right to run the business. The business is now being run in the premises which is owned by defendant No.2 under mutual understanding but after the defendants withdrawn, the partnership firm stands dissolved, the petitioners-plaintiffs having no right either in the business or in the shop in dispute. It was also observed by the Courts below that mere non-payment of rent does not mean that defendant No.2 cease to be landlord of the property. All the assets of the partnership concern are the property of defendant No.1, on dissolution as per the agreement of partnership. It was held that the petitioners-plaintiffs have got no right in the property i.e., the stocks and liabilities of the partnership firm, as such, they are not entitled for any interim relief believing the allegations in the written statement that in the books, the stocks of Rs.45 lacs had been shown whereas actually there was a stock of Rs.3 lacs only. The petitioners have not defrauded the defendants. The sleeping partners are not entitled to injunction, they having not come to the Court with clean hands. Counsel for the petitioners has vehemently urged that since the business of partnership concern is being run by the . . . 5 C.R.No.6261 of 2009 petitioners-plaintiffs in the shops belonging to defendant No.2, the petitioners-plaintiffs have got a right for settlement of accounts even if the business is wound up or the firm is dissolved. Reliance has been placed on provisions of Sections 46 & 48 of the Partnership Act. Contention of counsel for the respondents is that the partnership between the parties being at will, a notice has admittedly been sent to the petitioners-plaintiffs for dissolution under Section 43, in writing. Petitioners-plaintiffs having misconducted themselves are not entitled to the equity relief of interim injunction. After hearing the counsel for the parties in order to ascertain whether the shop in dispute owned by defendant No.2 is in actual physical possession of the plaintiffs, the counsel for the respondents submitted that, as a matter of fact, the shop in dispute is in possession of the partnership concern which stands dissolved and that in individual capacity, the plaintiffs does not have any right to remain in possession or to run the business of partnership concern. Counsel for the respondents-defendants admitted that a separate suit for rendition of account and decree for amount found due from the defendants and also handing over of the assets including vacant possession of the premises occupied by the firm stands filed by the defendants on 29.09.2009. On asking of the Court, a photocopy of the suit filed by the defendants for rendition of account has been produced wherein it has been admitted that the present petitioners are still . . . 6 C.R.No.6261 of 2009 running the affairs of the firm but they are indulging in illegal activities. The said suit seems to have been filed after the present suit for injunction filed by the petitioners. I have heard counsel for the parties and considered the facts and circumstances of the case. It is an admitted fact that the petitioners and respondent No.1, have been running a business under an agreement of partnership. There are allegations against the petitioners of having misconducted themselves for which a notice has been issued by respondent No.1. It is surprising that there is an arbitration clause in the partnership agreement but neither the parties have opted to approach the named arbitrator nor any objection regarding maintainability of civil suits in view of existence of arbitration clause has been taken by any party. The defendants-respondents have admitted that till 23.10.2007, the applicants have been running the business of the partnership concern but it has been alleged that he had refused to render the accounts and assets of the firm including the vacant possession of the premises after the dissolution. Even it is is presumed that the partnership concern has been dissolved, still the partners are liable for any acts done by them during the existence of partnership and for the acts done after dissolution. The partners of a dissolved firm continue to be liable even to third parties over any act done by them after dissolution. The defendants have admitted the plaintiffs to be in possession of the asserts of the partnership concern. They are liable to render the accounts to the defendants- . . . 7 C.R.No.6261 of 2009 respondents in case they have been running the business of the partnership concern. As per the terms of agreement between the partners, even the sole arbitrator named in the partnership Deed is entitled to pass any award which would be binding on all the parties. The petitioners-plaintiffs claim to be in possession of the shop of respondent No.2, who admittedly is not a partner. He has got every right to get possession of his premises from the partnership concern or any of the partners of the firm having entered into possession of his property in the capacity as partners of partnership concern. Even if it is presumed that all the rights of the petitioners in the partnership concern cease to exist and that the petitioners are in unauthorized occupation of any premises of respondent No.2, he can take back the possession from the partnership concern or any of its partners even if the partnership concern has been dissolved. The rights of the partners are yet to be settled in the suit filed by respondent Nos.1 & 3, for rendition of account. The petitiones-plaintiffs and the other partners defendant Nos.1 & 3, will be deemed to be in joint possession of the assets of the partnership concern. The petitioners cannot seek injunction against his partners who are also deemed to be in possession of the property as partners. The revision of the petitioners against respondent Nos.1 & 3, partners is liable to be dismissed on that ground. The rights of the partners have to be determined in the suit filed by defendant-respondent Nos.1 & 3. The Courts below have rightly dismissed the application of the petitioners as the suit for injunction against the co-partners is not maintainable . . . 8 C.R.No.6261 of 2009 without impleading the partnership concern. So far as respondent No.2, Rajinder Kumar Puri, the owner of the premises where the business is being run is concerned, he has certainly got a right to dispossess the petitioners or the other partners including defendant Nos.1 & 3, in accordance with law. He being not a partner, the petitioners along with other co-partners being in joint possession of the property, the application for interim injunction of the petitioners deserves to be allowed against respondent No.2, Rajinder Kumar Puri. The appeal is partly allowed and the impugned orders passed by the Courts below are modified to the effect that respondent No.2, will be restrained from dispossessing the petitioners from his property except by due process of law. It will be open to respondent No.2, to evict the petitioners by adopting the procedure of law. It will also be open to respondent No.2, to claim the market value for the use and occupation of his shop/shops which is claimed to be in possession of petitioners. The possession of petitioners will be deemed to be joint possession along with his co- partners. The rights of respondent Nos.1 & 3, in the capacity as partners of petitioners will not be prejudiced, in any manner, by the suit for injunction filed by the petitioners. The interim injunction application of petitioners is allowed against respondent No.2 and dismissed against respondent Nos.1 & 3. (M.M.S.BEDI) JUDGE November 11, 2009. rka . . . 9