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Saturday, April 19, 2014

Retail out let - partnership firm - two partners relinquished their rights in the firm by agreement - one of the partner died - Lrs were brought - acceptance of reconstitution of partnership firm by company appellant due to pending of civil cases - mere pending of set aside exparte order is not pending of a case - the decree is to be considered as in force- insisting for No Objection certificate from the out gone partners - Apex court held that consider the reconstitution of partnership firm by treating the agreement of relinquishment rights of out gone partners as No Objection certificate with out insisting for it separately = Bharat Petroleum Corp. Ltd. .. Appellant(s) -vs- B.M. Motors & Ors. .. Respondent(s) = 2014 (April.Part ) http://judis.nic.in/supremecourt/filename=41422

 Retail out let - partnership firm - two partners relinquished their rights in the firm by agreement - one of the partner died - Lrs were brought - acceptance of reconstitution of partnership firm by company appellant  due to pending of civil cases - mere pending of set aside exparte order is not pending of a case - the decree is to be considered as in force- insisting for No Objection certificate from the out gone partners - Apex court held that consider the reconstitution of partnership firm by treating the agreement of relinquishment rights of out gone partners as No Objection certificate with out insisting for it separately =
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.


    11.    Since the Bank draft received by respondents 2  and  3  has  not
    been encashed we direct that the first respondent firm shall deposit  a
    sum of Rs.8,64,650/- with the Registrar of the High Court of Allahabad,
    to be released in favour of  respondent  Nos.  2  and  3  herein,  upon
    surrender of the bank draft/pay order dated 10.6.2013 received by  them
    from respondent No.1.  The needful shall be done within a period of one
    month from the date of judgment.  Upon the deposit  of  the  amount  as
    aforesaid, the proposal for reconstitution of the  1st  respondent-firm
    submitted  to  the  appellant-corporation,  shall  be  considered   for
    acceptance, treating agreement dated 3.5.1984 entered into between  the
    original partners as a “No Objection Certificate” by respondent Nos.  2
    and  3  to  such  reconstitution.       The  appeal  is   disposed   of
    accordingly. No costs.

 2014 (April.Part ) http://judis.nic.in/supremecourt/filename=41422
T.S. THAKUR, C. NAGAPPAN
                                                           NON-REPORTABLE

                        IN THE SUPREME COURT OF INDIA


                        CIVIL APPELLATE JURISDICTION


                      CIVIL APPEAL NO.  4595    OF 2014
       [Arising out of Special Leave Petition (Civil) No.482 of  2014]





    Bharat Petroleum Corp. Ltd.        ..           Appellant(s)

                                    -vs-

    B.M. Motors  & Ors.                ..             Respondent(s)




                               J U D G M E N T

C. NAGAPPAN, J.



        1. Leave granted.




    2.     This appeal is preferred against the judgment dated 30.5.2013 of
    the Division Bench of the High Court of Judicature at Allahabad in Writ
    Petition (Civil) No.59450 of 2012.  Respondent No.1  therein  viz.  M/s
    Bharat Petroleum Corporation  Limited is the appellant herein.



    3.     Briefly the facts leading to the filing of the writ petition are
    as follows:   Respondent No.1 herein, partnership firm was  constituted
    on 26.6.1973 consisting of  four partners  with  the  following  profit
    sharing ratio:

           (1)   Subhash Chandra        1%

                 (2)    Brijrani                  33%

                 (3)    Ramesh Kumar Tandon    33% and

                 (4)    Roop Rani Tandon          33%

    A licence agreement was executed on  12.8.1975 between  the  said  firm
    and the then M/s Burmah Shell Oil Storage  &  Distribution  Company  of
    India Ltd. to run a retail outlet and  the  business  was  carried  on.
    Subsequently  another  agreement  was  entered  between  all  the  four
    partners on 3.5.1984 under which the partner nos.1 and  2  referred  to
    above demanded 100 litres of petrol per month,  to  which  the  partner
    nos. 3 and 4 agreed and partner nos. 1 and 2 further agreed  that  with
    effect from the said date the business of the petrol pump in  the  name
    of firm will be run by partner nos. 3 and 4 and partner nos.  1  and  2
    shall have no right, share or interest in the running of  the  business
    and also in the assets or the liabilities of  the  firm.   As  per  the
    Agreement the outlet was run in the firm’s name by partner nos.3 and 4.



    4.     As agreed upon, partner nos.3 and 4 referred above supplied  100
    litres of petrol per month to partner nos. 1 and 2 and dispute arose in
    the year 1993  and partner nos. 3 and 4 filed a  civil  suit  in  Civil
    Suit No.368 of 1995 on the file of Civil Judge Senior Division  Kannauj
    for permanent  injunction  to  restrain  partner  nos.  1  and  2  from
    interfering in the management and working of the  retail  outlet.   The
    said suit was decreed ex-parte on 14.1.2004.  Partner nos. 1 and 2  who
    are respondent nos. 2 and 3 herein, have filed an application   to  set
    aside the ex-parte decree and  the  said  application  is  said  to  be
    pending.  The appellant –Corporation stopped supply of  petrol  to  the
    outlet and respondent No.1 herein namely the firm filed  another  civil
    suit in Suit No.582 of 1998 against the Corporation to restore  supply.
    In the said suit respondent Nos. 2 and 3 herein  namely  partner  nos.1
    and 2 referred to supra filed an application  to implead themselves  as
    defendants and the said application was dismissed by  the  trial  court
    and challenging that  order  a  writ  petition  came  to  be  filed  by
    respondent nos. 2 and 3 herein and that also was dismissed.

    5.     Partner no.4 Roop Rani  Tandon   expired  on  11.6.2011   and  a
    letter was sent by the firm on 22.3.2012 to the Corporation  intimating
    the death of the partner.  The Corporation stopped supply on  30.3.2012
    and directed to apply for a temporary dealership.  The firm filed  Writ
    Petition No.19606 of 2012 to restore the  supply  and  the  High  Court
    after hearing both sides by  its  order  dated  3.9.2012  directed  the
    Corporation to dispose of the representation.  The Corporation by order
    dated 31.10.2012 rejected the representation of the firm.  Aggrieved by
    the same the firm  filed Writ Petition © No.59450 of 2012 to quash  the
    impugned  order dated 31.10.2012 and for direction to  restore  supply.
    Partner no.3 Ramesh Kumar Tandon also died during pendency of the  writ
    petition leaving his widow and son as legal  heirs.   The  legal  heirs
    impleaded themselves as partners of the firm in the writ petition.  The
    High  Court  after  hearing  both  sides  by  impugned  judgment  dated
    30.5.2013 directed the firm namely the writ petitioner, to make payment
    of amount equivalent to 100 litres of petrol per month from  July  1993
    to the date of the judgment and on such payment directed partner  nos.1
    and  2  referred  to  supra  to  give  No  Objection  Certificate   for
    reconstitution  of the firm and further  directed  the  Corporation  to
    take a decision regarding the  reconstitution  of  the  firm.   It  was
    further observed in the order  that 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.


    11.    Since the Bank draft received by respondents 2  and  3  has  not
    been encashed we direct that the first respondent firm shall deposit  a
    sum of Rs.8,64,650/- with the Registrar of the High Court of Allahabad,
    to be released in favour of  respondent  Nos.  2  and  3  herein,  upon
    surrender of the bank draft/pay order dated 10.6.2013 received by  them
    from respondent No.1.  The needful shall be done within a period of one
    month from the date of judgment.  Upon the deposit  of  the  amount  as
    aforesaid, the proposal for reconstitution of the  1st  respondent-firm
    submitted  to  the  appellant-corporation,  shall  be  considered   for
    acceptance, treating agreement dated 3.5.1984 entered into between  the
    original partners as a “No Objection Certificate” by respondent Nos.  2
    and  3  to  such  reconstitution.       The  appeal  is   disposed   of
    accordingly. No costs.


                                                               ………………………….J.
                                                               (T.S. Thakur)




                                                               ……………………………J.
                                                               (C. Nagappan)
    New Delhi;
    April  17, 2014


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