1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2709 OF 2008 IN SUIT NO.3505 OF 1998 Ishaq Yusuf .. Plaintiff Versus Abbas Peer Mohamed & Ors. .. Defendants and Court Receiver .. Respondent Mr.Anil Singh for plaintiffs Mr.Bobde i/b. Pradeep J. Ramchandani for defendant No.1 CORAM : S.C.DHARMADHIKARI, J. DATE : 28th November 2008 P.C. . Heard Mr.Bobde for first defendant in support of the motion and Mr.Anil Singh for plaintiffs in opposition. 2. Perused the reply and the annexures thereto so also the rejoinder affidavit. 2 3. It is stated by the First defendant in the affidavit in support that the Court Receiver, High Court, Bombay has been appointed in this matter. The plaintiffs are appointed as Agent of the Court Receiver. However, they are paying a sum of Rs.45,000/- per month as Royalty amount to the Receiver. Therefore, it is prayed that when the First defendant is ready and willing to pay higher amount and upto Rs.70,000/- per month, he be appointed as Agent of Court Receiver in place of plaintiffs. Alternatively, the Court Receiver should invite public bids for running the suit hotel. 4. It is not necessary to make a detailed reference to the plaint averments inasmuch as the dispute is between the partners over the partnership business which is a hotel. Admittedly, the first defendant holds 20% of the shares and balance 80% of the shares are held by plaintiffs. 3 5. It is not further necessary to set out the statements and averments in the affidavits in support and rejoinder inasmuch as, it is undisputed that the second defendants had claimed certain rights in the property. But, after a prolonged litigation, it has been held that the second defendant has no independent right in the property but was merely an employee of the first defendant. He is, therefore, not entitled to continue in that capacity. He was not entitled to run the business even as an agent of the Receiver, was the complaint of plaintiffs and it is also not in dispute that plaintiffs, therefore, moved a Notice of Motion No.601 of 2007, requesting that this Court should appoint them as agent of Receiver without payment of royalty and compensation. 6. This Court after hearing all parties passed an order dated 19th September 2007 4 appointing plaintiffs as agent of Court Receiver. It goes without saying that the agency of the second defendant stood terminated and he was to surrender possession. Defendant No.2 was appointed as agent of the receiver on 25th August 1998 and the plaintiffs, therefore, have been appointed as Agent by this Court on 19th September 2007 on the very same terms and conditions as were imposed on the second defendant. 7. Being aggrieved and dissatisfied with the order passed by this Court, second defendant preferred an Appeal being Appeal No.800 of 2007, but the Division Bench was pleased to dismiss the said Appeal on 11th June 2008. Thus, the order passed by learned Single Judge on 19th September 2007 was confirmed. 8. Mr.Bobde, appearing before me contended that the first defendant can also pray for 5 appointing him as an Agent of the Receiver on the admitted position. Even if he holds 20% shares, nonetheless, his rights are not in dispute. If the suit hotel is in a prime locality and if the same can be managed by earning a substantial sum, then, the Court Receiver can consider enhancing the royalty. Since the Receiver is not doing so, the request is that this Court should enhance the royalty amount and if the plaintiffs are not willing to pay the same, then, appoint the first defendant as agent of the Court Receiver. He places reliance upon the statement made by the plaintiffs during the earlier proceedings and a valuation report, based upon which the plaintiffs contended that valuation should be Rs.80,000/- per month. Thus, on the own showing of the plaintiffs, if the value is to this extent, then, they cannot continue as agent of the Court Receiver on payment of a meagre sum of Rs.45,000/-. For all these reasons, Mr.Bobde urged that the plaintiffs must be removed as 6 agent of Receiver and instead first defendant be so appointed. 9. On the other hand, Mr.Singh learned Counsel for the plaintiffs places heavy reliance upon the order passed on 25th August 1998 in Notice of Motion which was moved by the plaintiffs. This Court after hearing parties had appointed the Court Receiver and further directed him to appoint the second defendant as his agent on such terms and conditions as to royalty and security. 10. Mr.Singh submits that the said notice of motion was placed for hearing and final disposal before a learned Single Judge of this Court on 28th August 2000 and after hearing all parties, the said notice of motion was made absolute in terms of the ad-interim order dated 25th August 1998. Mr.Singh submits that this Court granted liberty to the plaintiffs to apply in the event 7 the Small Causes Court reverses the order passed in favour of defendant No.2. Mr.Singh strongly emphasised that this is a matter where first defendant’s conduct is such that he is not entitled to any equitable and discretionary reliefs. He put his employee, defendant No.2, in possession only to defeat the rights of the plaintiffs. Defendant Nos. 1 and 2 colluded with each other before the Small Causes Court and ultimately the plaintiffs had to intervene and challenge the orders passed by the Small Causes Court. Mr.Singh submits that the Appellate Bench of Small Causes Court, passed an order in favour of the plaintiffs and which order was confirmed by this Court, as the challenge to the said order at the instance of defendant No.2 failed. All the while, the first defendant supported second defendant. In such circumstances, it is not open to the first defendant now to contend that this Court must remove the plaintiffs as an agent of the Court Receiver, more so, after that order was 8 passed on hearing all parties. Mr.Singh relies upon an order passed by this Court (A.S.Oka, J) dated 19th September 2007 and submits that this order is confirmed by the Division Bench of this Court. In these circumstances, he submits that there is no substance in the motion and it should be dismissed. 11. With the assistance of the learned Counsel for both sides, I have perused the entire material, including the orders relied upon. The learned Counsel appearing for the plaintiffs is right in relying upon the order passed by the learned Single Judge (A.S.Oka, J) on 19th September 2007. The learned Single Judge in para 8 has referred to the earlier order dated 25th August 1998. The second defendant claimed Tenancy in the suit premises which right has been negatived. The learned Single Judge, then, referred to the Small Causes Court proceeding in para 11 and has reproduced the observations of 9 the Appellate Bench. Ultimately, he has referred to the findings of the learned Single Judge in a Writ Petition which was filed by the second defendant to challenge the small causes appellate bench order. In para 13 of the order passed by the learned single Judge, it is recorded that prima facie the second defendant was an employee of the suit firm. He had no independent right and, therefore, the plaintiffs have rightly urged that he should be removed as Agent of Court Receiver. Finally the learned Single Judge in para 17 of the order observes thus:- "17. As stated earlier, the appointment of the second defendant was continued only on the basis of the order of temporary injunction granted by the Court of Small Causes. The said order has been set aside and the order of setting aside an injunction has not been disturbed by this Court in Writ Petition 10 filed by the second defendant. Admittedly, the plaintiffs are having 80% share in the partnership firm and the first defendant is having 20% share. The first defendant has not contested the present notice of motion. In view of the prima facie finding of the Appeal bench of the small causes court regarding rights of the second defendant, now the second defendant cannot be continued as an agent of the Court Receiver and the present plaintiffs will have to be appointed as the agents of the Court Receiver. However, the appointment of the plaintiffs will be subject to compliance with the conditions imposed by this Court while appointing the second defendant as an agent by order dated 25th August 1998. The second prayer in the notice of motion cannot be obviously granted as the main suit is still 11 pending. Hence, the notice of motion is disposed of by passing the following order:- "(i) The appointment of the second defendant as an agent of the Court Receiver made under the order passed in Notice of Motion No.2729 of 1997 is cancelled; (ii) The plaintiffs are hereby appointed as agents of the Court Receiver on the same terms and conditions on which the second defendant was appointed as an agent of the Court Receiver by order dated 25th August 1998." 12. It is this order of the learned Single Judge, which was challenged before the Division Bench in Appeal No.800 of 2007. Learned Judge (Mujmudar, J) speaking for the bench observed in 12 paras 11 and 12 that there is no substance in the contention of the second defendant - appellant before division bench and proceeded to dismiss the appeal. 13. In my view, the first defendant cannot urge that the plaintiffs should be removed as Agent of Court Receiver. In the circumstances noted by this Court, it would be a travesty of justice, if the first defendant is now permitted to displace the plaintiffs. More so, in the light of the serious allegations which have been made by the plaintiffs all through out. Even in the present motion, in the reply affidavit, the plaintiffs have averred that in the small causes court suit, the second defendant purported to sue the firm but no papers and proceedings were served on him. The collusion has been set out and it has been contended very vehemently before me that there is no consideration for inducting second defendant and handing him over valuable 13 property of the firm. It is in these circumstances and on account of serious allegations of collusive acts between the defendants that it will not be possible to accede to the submissions of Mr.Bobde that the first defendant be appointed as Agent of the Court Receiver. More so, when earlier orders have gained finality. 14. As far as alternate submission with regard to the enhancement of royalty is concerned, even there the grievance of the first defendant is without any substance. The conditions are contained in the order dated 25th August 1998 and Court Receiver having entered into an Agency Agreement determined the sum of Rs.45,000/- it was open for the first and second defendant to point before the Single Judge (A.S.Oka, J) that the royalty amount should be enhanced. Nothing of this sort is pointed out 14 to the learned Single Judge. In fact, no grievance is made when the learned Single Judge appointed plaintiff as agent of Court Receiver on the same terms and conditions. Plaintiffs by their affidavit in reply specifically contended that a 20% share holding partner cannot seek to displace plaintiffs who admittedly are holding 80% shares in the suit Hotel business. The second defendant has not made any grievance with regard to the royalty amount and, therefore, the first defendant who has, all through out remained silent, should not be permitted to take advantage at this stage. The report of the Valuer was taken into consideration and that is how the royalty amount was determined as Rs.45,000/- per month. This is the specific case set up in para 13 of the affidavit in reply by the plaintiffs in the present motion. 15 15. In such circumstances, it will not be possible to uphold the contentions of Mr.Bobde, even with regard to enhancement of the royalty amount. Considering the conduct of the first and second defendant and the earlier orders of this Court, in my view, there is no substance in the motion and the same deserves to be and is accordingly dismissed. No costs. (S.C.Dharmadhikari, J)