Case: Bharat Petroleum Corp. Ltd Vs. B.M. Motors

even after payment is made, if partner nos. 1 and 2 do not give no objection, the Corporation shall reconstitute the firm waiving the No Objection. Challenging the judgment, Bharat Petroleum Corporation Limited has preferred the present appeal.6. The learned counsel appearing for the appellant –corporation contended that the agreement dated 3.5.1984 reconstituting the firm was not intimated to the Corporation and only after the death of partner Roop Rani Tandon the request for reconstitution of the firm was received in the year 2012 and the said proposal was not in accordance with their policy for reconstitution of partnership dealership and the High Court erred in directing the Corporation to proceed with the reconstitution of the firm waiving No Objection Certificate from respondent nos. 2 and 3 herein and hence the impugned judgment is liable to be set aside.7. Per contra the learned counsel appearing for the firm namely respondent No.1 herein contended that after the agreement dated 3.5.1984 respondent Nos. 2 and 3 herein are no longer partners of the firm and said fact was intimated to the Corporation and after the death of partner Roop Rani Tandon a request for reconstitution was submitted in writing and the Corporation is obliged to reconstitute the firm and the impugned judgment is sustainable. The learned counsel appearing for respondent nos. 2 and 3 submitted that even after the agreement dated 3.5.1984 respondent nos. 2 and 3 continued to be partners of the firm though their entitlement was restricted to the supply of 100 litres of petrol per month or its value thereof. 8. We carefully considered the rival contentions of the parties. The firm M/s B.M. Motors was constituted on 26.6.1973 with four partners and the said firm was running the retail outlet from 12.8.1975 onwards. It is also admitted that all the four partners entered into subsequent agreement dated 3.5.1984 and as per the terms and conditions of the said agreement partner nos. 1 and 2 namely respondent nos.2 and 3 herein would receive 100 litres of petrol per month or its value thereof. They further agreed that they will have neither right in the retail outlet nor claim right in the assets or liabilities of the firm and partner nos. 3 and 4 would run the retail outlet in the name of the firm. A reading of the agreement dated 3.5.1984 clearly reveals that respondent nos. 2 and 3 herein have virtually retired from the partnership and their entitlement was only to supply of 100 litres of petrol per month from the said date. In other words it cannot be said that the original partnership deed continued thereafter. It is also relevant to point out that partner nos. 3 and 4 were recognized as partners of the reconstituted firm from that date. The agreement dated 3.5.1984 was also acted upon and it is not in dispute that 100 litres of petrol per month was supplied to respondent nos. 2 and 3 herein till June 1993.9. Thereafter the firm instituted a suit being Civil Suit No.368 of 1995 against Respondent nos. 2 and 3 herein seeking for decree of permanent injunction to restrain them from interfering in the management and working of the plaintiffs retail outlet and the suit was decree ex-parte on 14.1.2004. Though respondent nos. 2 and 3 herein have claimed that they have filed an application to set aside the ex- parte decree and the same is still pending and the decree is in force. In other words the retail outlet in the name of the firm continue to be run by partner nos. 3 and 4 only for nearly three decades. In such circumstances the agreement dated 3.5.1984 is in effect the retirement deed executed by respondent nos. 2 and 3 herein from the firm B.M. Motors and it has to be treated as No Objection Certificate in so far as they are concerned. 10. Respondent No.1 herein in its counter affidavit dated 31.01.14 have stated that in compliance of the direction of the High Court in the impugned judgment, it had sent the bank draft/pay order dated 10.6.2013 for a sum of Rs.8,64,650/- issued by Canara Bank Kannauj Branch to respondent nos. 2 and 3 herein towards the value of 100 litres of petrol per month for the period from June 1993 to June 2013. Respondent Nos. 2 and 3 in their letter dated 28.6.2013 shown as Annexure CA-2 to the counter affidavit of respondent no.1 have acknowledged the receipt of the said pay order and have stated that they have kept the said pay order as security and will not encash it till the final decision is taken by the Corporation in respect of reconstitution of the firm. It appears that the said pay order has not been encashed and had expired. Be that as it may the order passed by the High Court is, in our opinion, just and equitable inasmuch as, while it had protected the interests of the retiring partners-respondents 2 and 3, it had ensured that they do not frustrate either the agreement by which they had surrendered their rights in the profit and losses of the partnership or interfere with the smooth running of the business by the continuing partners, in breach of the decree passed in their favour. The arrangement arrived at between the partners may not have been disclosed to the petitioner corporation but such non- disclosure should not be allowed to result in termination of the agency especially when one of the parties is acting unreasonably or armtwisting the other party, to extract an extra pound of flesh from it. The petitioner-corporation would in such a case be expected as a public sector entity, to act fairly and objectively to prevent one party taking undeserved advantage over the other on technical or procedural grounds. There is no gain saying that while considering reconstitution of the partnership the petitioner-corporation shall be free to stipulate conditions that would protect its business interest, goodwill and reputation among its consumers.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. Respondent No.1 herein in its counter affidavit dated 31.01.14 have stated that in compliance of the direction of the High Court in the impugned judgment, it had sent the bank draft/pay order dated 10.6.2013 for a sum of Rs.8,64,650/issued by Canara Bank Kannauj Branch to respondent nos. 2 and 3 herein towards the value of 100 litres of petrol per month for the period from June 1993 to June 2013. Respondent Nos. 2 and 3 in their letter dated 28.6.2013 shown as Annexureto the counter affidavit of respondent no.1 have acknowledged the receipt of the said pay order and have stated that they have kept the said pay order as security and will not encash it till the final decision is taken by the Corporation in respect of reconstitution of the firm. It appears that the said pay order has not been encashed and had expired. Be that as it may the order passed by the High Court is, in our opinion, just and equitable inasmuch as, while it had protected the interests of the retiring2 and 3, it had ensured that they do not frustrate either the agreement by which they had surrendered their rights in the profit and losses of the partnership or interfere with the smooth running of the business by the continuing partners, in breach of the decree passed in their favour. The arrangement arrived at between the partners may not have been disclosed to the petitioner corporation but such nondisclosure should not be allowed to result in termination of the agency especially when one of the parties is acting unreasonably or armtwisting the other party, to extract an extra pound of flesh from it. Thewould in such a case be expected as a public sector entity, to act fairly and objectively to prevent one party taking undeserved advantage over the other on technical or procedural grounds. There is no gain saying that while considering reconstitution of the partnership theshall be free to stipulate conditions that would protect its business interest, goodwill and reputation among itsreading of the agreement dated 3.5.1984 clearly reveals that respondent nos. 2 and 3 herein have virtually retired from the partnership and their entitlement was only to supply of 100 litres of petrol per month from the said date. In other words it cannot be said that the original partnership deed continued thereafter. It is also relevant to point out that partner nos. 3 and 4 were recognized as partners of the reconstituted firm from that date. The agreement dated 3.5.1984 was also acted upon and it is not in dispute that 100 litres of petrol per month was supplied to respondent nos. 2 and 3 herein till June 1993.9. Thereafter the firm instituted a suit being Civil Suit No.368 of 1995 against Respondent nos. 2 and 3 herein seeking for decree of permanent injunction to restrain them from interfering in the management and working of the plaintiffs retail outlet and the suit was decreeon 14.1.2004. Though respondent nos. 2 and 3 herein have claimed that they have filed an application to set aside the exparte decree and the same is still pending and the decree is in force. In other words the retail outlet in the name of the firm continue to be run by partner nos. 3 and 4 only for nearly three decades. In such circumstances the agreement dated 3.5.1984 is in effect the retirement deed executed by respondent nos. 2 and 3 herein from the firm B.M. Motors and it has to be treated as No Objection Certificate in so far as they are concerned