Haris Vs. Chathu, (2013) 303 KLR 329 : 2013 (2) KLT 594
Dated this the 9th day of April, 2013.
Head Note:-
Partnership Act, 1932 - Section 43 & 53 - A partnership
at will does not require intervention of the court for its dissolution
and that even a notice of dissolution or a suit for rendition of
accounts will amount to dissolution of the partnership at will.
J U D G M E N T
Ext.P4, order dated 07.03.2013 on I.A. No. 478 of 2013 in O.S. No. 80 of 2011 of the Sub Court, Vatakara is under challenge.
2.
Petitioner and the respondent were running a saw mill in partnership
under the name and style, "Unique Wood Industries" at Valliappilly. It
is not very much in dispute that the partnership was at will. Difference
of opinion arose between the parties as to the running of the
partnership business, accounting, etc. Petitioner issued notice to the
respondent who was acting as Managing Partner, on 23.12.2010 demanding
dissolution of partnership and rendition of accounts. Respondent, by
letter dated 12.01.2011 refusing to dissolve the partnership. Petitioner
filed O.S. No. 80 of 2011 for a direction to the respondent to execute
deed of dissolution of partnership and for other reliefs.
3.
Respondent approached this Court with W.P.(C) No. 4054 of 2013, his
grievance being that period of licence of the saw mill is expiring and
hence he may be permitted to renew the licence. This Court passed
Ext.P3, judgment allowing the respondent to move appropriate application
in O.S. No. 80 of 2011. Accordingly, respondent filed I.A. No. 478 of
2013 requesting that he may be allowed to renew licence in the name of
the partnership. That application, though resisted by petitioner was
allowed as per Ext.P4, order.
4.
Learned counsel for petitioner contends that learned Sub Judge failed
to note from Ext.P1 that the partnership is at will and hence by notice
dated 23.12.2010 and at any rate by, institution of the suit, that
partnership stood dissolved and what remains is only rendition of
accounts. Learned counsel has invited my attention to Sections 43 and 53
of the Indian Partnership Act, 1932 (for short "the Act"). It is argued
that in the above circumstances, learned Sub Judge was clearly in error
in allowing the respondent to renew the licence in the name of
partnership firm making petitioner also liable for the debt incurred by
the respondent pursuant to the renewal of the licence or for any other
act of his.
5.
Learned counsel for respondent contends that respondent is the major
shareholder (75%) and in the circumstances, he is most suitable to get
the licence renewed. It is argued that once the period of licence
expired, and if it is not renewed in accordance with the law, a fresh
grant of licence may even be impossible. In the circumstances, learned
Sub Judge was correct in allowing the licence to be renewed.
6.
Having heard learned counsel on both sides, I am inclined to think that
it is not necessary to allow the period of licence to expire without
its renewal if otherwise any of the parties is entitled for as such
renewal as per the law in force. Having regard to the fact that
respondent is the major shareholder (76%), I accept contention of
learned counsel for the respondent that respondent is the most suitable
person to have the licence renewed (if otherwise he is entitled to that
course as per the law in force). Therefore, there is no reason to
interfere with the order of learned Sub Judge allowing renewal of
licence in favour of respondent.
7.
But, having heard learned counsel on both sides and having regard to
the nature of the partnership as evident from Ext.P1 and also the
relevant provisions pointed out by the learned counsel for petitioner as
aforesaid, I am inclined to think that learned Sub Judge was in error
in allowing the licence to be renewed in the name of the partnership
firm. In this connection, I must notice that a partnership at will does
not require intervention of the court for its dissolution and that even a
notice of dissolution or a suit for rendition of accounts will amount
to dissolution of the partnership at will. Hence, respondent cannot have
the licence renewed in the name of the partnership firm.
8.
Learned counsel for respondent submitted that respondent is prepared to
take renewal of licence in his own name. That suggestion is accepted.
Hence, renewal of licence has to be in the name of respondent and has to
be subject to appropriate conditions to protect interest of petitioner
as well. Resultantly, this Original Petition is allowed in part as
under:
1.
While no interference is required with that part of Ext.P4, order dated
07.03.2013 on I.A. No. 478 of 2013 in O.S. No. 80 of 2011 of Sub Court,
Vadakara allowing the respondent to renew licence (of course subject to
the laws and regulations in force), permission granted to the
respondent to renew licence in the name of the partnership firm is set
aside.
2. It is open to the respondent to apply for and obtain renewal licence in his own name subject to the following conditions:
a)
That until there is a final rendition of accounts (in case the suit is
decreed), respondent shall maintain separate account for running of the
saw mill as per licence renewed in his name and submit copy of such
accounts in the Sub Court, Vadakara once in three months beginning from
the date on which licence is renewed in the name of respondent.
b)
It is made clear that petitioner shall not in any way be held
responsible or liable for the business conducted by the respondent based
on the renewal of licence.
c)
If petitioner has a contention that the land and building where the saw
mill is functioning belong to him and the court ultimately finds so and
that petitioner has to be compensated for the respondents using the
said land or building, it is within the power of the court to award such
compensation to be released from the respondent and his estates.
d)Petitioner shall not, while respondent is running the saw mill as per
licence renewed in his name, cause any obstruction to the respondent
running the saw mill.
sd/-
THOMAS P. JOSEPH, JUDGE.
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