G. Ramchandrayya vs Nethi Iswarayya

Srinivasachari, J.—This is a revision which has been filed by the defendant against the order of the Divisional and Sessions Judge, Secunderabad in a Civil Miscellaneous appeal before him against the order of the District Judge, Secunderabad. The plaintiff, who is the respondent here, filed a suit in the Court of the District Judge, Secunderabad alleging that he and the Revision Petitioner jointly obtained a licence to run a Ration Shop at Nallagutta, Secunderabad, from the Director of Rationing, Secunderabad, on or about the 11th of December 1944; and that they conducted the shop jointly till December 1948 as partners, excepting for a short period, when owing to the disturbed conditions prevailing then both of them left Secunderabad, leaving charge of the shop to another person for management. The plaintiff stated that after they returned and assumed the joint management, the Defendant-Revision Petitioner suggested that they might run the shop by turns, each for a period of 4 months, which would enable either of them to attend to other business as well. The plaintiff stated that he believed in the bona fides of the defendant and allowed the shop to be run solely by the defendant, but on or about the 7th of March 1949, he found to his great astonishment the ''Sign Board'' of the shop having been changed and bearing the name of the defendant alone. The plaintiff made other allegations in the plaint against the defendant that he deliberately tried to exclude him from management. He averred that it had become impossible to conduct the shop jointly and the defendant had deliberately excluded him from participation in the management. On the above allegations the plaintiff filed the present suit for a declaration that he was entitled to run the shop as a partner jointly with the defendant and for an injunction restraining the defendant from interfering with the exercise of his right as a partner in the above shop. He prayed for other reliefs as well, namely, for an account being taken of the dealings and transactions of the shop during his absence and for payment of the amount that may be found due to him.

An application for the appointment of a Receiver was also filed. The grounds on which the plaintiff bases his case for the appointment of a Receiver are that the defendant denied that the plaintiff was a partner and that he also alternatively contended that even if he was a partner that he had settled accounts and received his share in the partnership and left the partnership. The trial Court declined to appoint a Receiver holding that no sufficient cause was shown to warrant the appointment of a Receiver. The Court further held that inasmuch as the business was a Ration shop and under the Rationing Rules the defendant was obliged to maintain a regular account, there was no apprehension of any danger or loss to the plaintiff and where there was no irreparable mischief to be done, the case would not warrant the appointment of a Receiver. Against this order of the District Judge, the plaintiff filed an appeal before the Divisional and Sessions Judge, who allowed the appeal, set aside the order of the trial Court, and appointed a Receiver with certain specific directions as regards the powers that were to be exercised by the Receiver. It is against this order that the defendant has come up in revision before me.

No hard and fast rule can be laid down in so far as the question of the appointment of a Receiver is concerned. The well accepted general principle is that a Receiver should be appointed where it is ''just and convenient.'' As to whether in a particular case it is just and convenient the question would have to be determined on the particular facts of the case. The underlying principle u/s 40, Rule 1, Civil Procedure Code, relating to the appointment of a Receiver, is that the subject-matter of the suit should be allowed to remain intact in order that at the end of the final adjudication, the parties might be entitled to the benefit thereof.

It was argued by the learned Advocate for the petitioner that having regard to the particular nature of the business in this suit, there was no justification for the appointment of a Receiver. He further submitted that this was a ration shop where regular accounts were expected to be maintained and the licensee was accountable to the Government for the sales that he effected and further there is always the supervision of the Government over the conduct of the business. Therefore under the above circumstances there was no apprehension of any mischief being done or any injury caused so as to require the appointment of a Receiver to supervise the conduct of the sales. He further contended that the plaintiff and the defendant were only entitled to the commission on the sales and whatever commission the plaintiff would be entitled to in the event of his being declared a partner in the suit could always be ascertained by reference to the accounts in the office of the Directorate of Rationing. The learned Advocate further urged that no allegations had been made against the defendant about the financial condition of the defendant, nor that there was any fear of the amount not being able to be realised from the defendant by reason of his impecunious condition. On all these grounds it was argued that this was not a fit case for the appointment of a Receiver and the imposition of a Receiver would seriously interfere with the smooth running of the business.

On behalf of the respondent it was urged that this was a revision and in revisions the powers of the High Court were circumscribed by Section 115 of the CPC and it was not open to the petitioner to urge such grounds as he would be entitled to urge in an appeal. No doubt while exercising jurisdiction u/s 115 of the CPC the High Court would only direct its attention to the question as to whether the lower Court had failed to exercise jurisdiction which was vested in it or had exercised a jurisdiction which was not vested in it by law. If, however, the Court acted with some material irregularity, the High Court would surely exercise its powers under the revisional jurisdiction. No absolute rule could be enunciated. This view is supported by the observations of their Lordships of the Privy Council in the case of AIR 1949 156 (Privy Council) , wherein they observe, "It would be difficult to formulate any standard by which the degree of error of subordinate Courts could be measured."

In so far as the case before me is concerned, the question as to whether in a particular case a Receiver could be appointed is a matter relating to the exercise of jurisdiction and the High Court can always interfere where it finds that in exercising the jurisdiction the lower Court had committed a material irregularity. It may be that the lower Court has exercised a discretion vested in it by law, but whether there has been a proper and judicious exercise of discretion is a matter which the High Court can always look into in revisional jurisdiction. The objection, therefore, of the learned Advocate of the respondent in the form of a preliminary objection has not much force.

As regards the merits of the petition it was argued by the learned Advocate for the respondent that there was a partnership between the plaintiff and the defendant could not be disputed. He contended that this was substantiated by a number of circumstances, namely, (a) that the licence for the Ration Shop was granted in the joint names of both the plaintiff and defendant, (b) the indent for goods for the shop was drawn in the joint names from the Ration Office (c) further the correspondence between the defendant and the Ration Office also goes to show that the Ration Office treated both the plaintiff and the defendant as the joint owners of the Ration Shop. These facts were not denied by the defendant. It, therefore, follows that the plaintiff has been able to make out a ''prima facie'' case of a joint business. No doubt it would be open to the defendant to prove what he contends for, namely, that the plaintiff even if he was joint with the defendant in the business, he ceased to be so after the alleged date when he is said to have taken a sum of Rs. 850/-. The question is whether under these circumstances and in view of the allegations made by the plaintiff the appointment of a Receiver would be justified. The defendant in support of his contention that the plaintiff ceased to be a partner by taking away his share in the profits of the partnership relied upon an entry in the account book, wherein it is stated the plaintiff wrote saying that he has received a sum of Rs. 850/- and that he has nothing to do with the partnership. Both the entry and the signature are denied by the plaintiff. It would be a matter to be decided in the suit itself as to whether that entry was made and signed by the plaintiff. The position of the case as it is today is that admittedly the plaintiff has made out a prima facie case of the shop having been started under a partnership between the plaintiff and the defendant. The question now resolves itself to this, viz, whether in a case where a prima facie case of partnership has been made out and a suit is filed for a declaration and injunction by one of them that he has been excluded from the participation in the management, whether the appointment of. a Receiver would be justifiable.

No doubt ordinarily it is only where the Court is satisfied that there is danger apprehended of the subject-matter of the suit becoming unavailable, if the defendant were allowed to remain in possession of the same, or that the plaintiff would not be in a position to realise the fruits of his decree if he succeeds unless the property were protected, that the Court would be inclined to appoint a Receiver. The circumstances of this case, in my opinion, would justify the appointment of a Receiver for the safeguarding of the rights of the excluded party. The important factors are: It is now three years since the plaintiff is said to have been excluded from participation and according to both parties the monthly profit of the shop is Rs. 300/- and calculated on this basis, if the plaintiff succeeds in his suit, he would be entitled to a sum of Rs. 5,400/-. The defendant has not produced the accounts. The proceedings also show that the defendant has been resorting to obstructive tactics. These are such circumstances which necessitate the exercise of control over the business of the shop for the safeguarding of the rights of the plaintiff. In suits relating to partnership concerns, even though no circumstances tending to jeopardise the partnership assets be shown, the Court would be justified in appointing a receiver if the defendant seeks to exclude a co-partner from management. Where the documentary evidence ''prima facie'' shows the existence of a partnership between the plaintiff and the defendant and the defendant contends that the plaintiff is not a partner it would be a strong case for the appointment of a Receiver. From the point of view of the defendant also, I am of opinion, he is not likely to suffer any hardship, having regard to the guarded way in which the Divisional and Sessions Judge has made the order appointing the Receiver. While appointing the Receiver the Divisional and Sessions Judge has hedged in his powers by a number of conditions. That being so, I am of opinion, that the smooth running of the shop as before would not be affected by the general supervision of the Receiver. Furthermore the Sessions Judge has ordered that directions be taken from the Court as and when necessary and it would always be open to the defendant to apply to the Court when he finds that the Receiver has exceeded the powers delegated to him which interfere with the running of the shop.

On the above grounds I am of opinion that the order of the Divisional and Sessions Judge, Secunderabad is not wrong and I therefore decline to interfere in revision. This Revision Petition is therefore dismissed with costs. The file that was sent for from the trial Court be returned.

Revision dismissed.