ORDER
1. This is an appeal against an order passed by the court below whereby the court below has refused to issue a temporary injunction in favour of the appellant.
2. It appears that the plaintiff has filed a suit for perpetual injunction against the defendant-respondents to the effect that the defendants, their servants, employees, agents and family members of anybody through them be restrained by means of permanent injunction not to use, utilise, usurp or misappropriate the share of property in whole or any part of the firm M / s. B.T. Paul and Sons situate at 84/13, Factory Area, Fazalganj, Kanpur and at 83-23-B, Building Material Market, Juhi, Govind Nagar, Kanpur till the said firm is finally wound up.
3. The plaintiffs case before the trial court is that by virtue of a partnership deed dated 24-12-1966 he along with defendant No. 1 and Smt. Jaidevi, plaintiffs mother, had constituted a partnership firm under the name and style of M/s. B. T. Paul and Sons situate at 84/13, Factory Area, Fazalganj, Kanpur, which was registered under the Indian Partnership Act. The said firm had properties and assets, which are detailed by the plaintiff in various annexures. Apart from that the firm had immovable properties-bearing No. 84/13, Factory area, Fazalganj, Kanpur and 83/23-B, Building Material Market, Juhi, Govind Nagar, Kanpur, which are described in Annexure 1 to the plaint. On 2-12-1978 all the three partners agreed to stop the operation of the firm and dissolved the partnership business. However, the assets of-the partnership business could not be distributed till date. Smt. Jaidevi Sharma, who was the mother of the plaintiff and defendant No. 1 is said to have expired on 25-11-1988. The defendant No. 2 is the wife of defendant No. 1, The defendant No. 1 is a partner of M/s. B. T. Paul and Sons. His wife defendant No. 2 is carrying on business in the name and style of M/s. Sukhdeo Steel Cutters and Welders from premises No. 83/23-B, Building Material Market, Juhi, Govind Nagar, Kanpur. The defendant No. 2 is alleged to be using and usurping the materials, machineries and other assets, as given in Annexures to the plaint, of the firm M/ s. B. T. Paul and Sons in her business, which is a proprietorship concern and she is doing so without the consent of the plaintiff. The defendant No. 2 has no right or authority to use or utilise any asset or shares of the erstwhile firm which, though dissolved, has not been wound up. The plaintiff is said to have requested the defendants to desist from using the properties and assets of the erstwhile firm but no heed-was paid to his request; hence the suit. Along with the suit the plaintiff had filed an application for grant of ad interim injunction and the defendants seem to have filed objections to the said application.
4. The case of the defendant No. 2 is that plot No. 83/23-B, which belonged to M/s. B. T. Paul and Sons, was earlier leased out to some department by the partners of the B. T. Paul and Sons and thereafter the said tenant had vacated the premises and it was let out to the defendant No. 2, who has started her own business with her own assets and funds. She has denied that she is using any assets or properties of the erstwhile firm without the consent and permission of the partners of the said firm. The defendant No. 1, who is the husband of defendant No. 2, obviously seems to have been supporting the defendant No. 2. His case is that the partnership deed of 1966 contained an arbitration clause. On the dissolution of partnership in 1978 the question of distribution of assets was to be referred to the arbitrator because the assets could not be amicably distributed between the partners of that firm. Since no arbitration had taken place despite the efforts of the defendant No. 1, therefore, the assets of that firm have not been distributed but it is stated by him also that plot No. 83/23-B, which was a vacant plot, has been leased out to defendant No. 2 by the partners of the firm. The tenancy is based on some rent receipts, which are said to have been executed by the defendant No. 1 and their mother, who had expired. The plaintiff has not executed any receipt in favour of the defendant No. 2.
5. Arguments in this case were advanced by the learned counsel for the parties in detail. The only question which falls for consideration of this Court is whether the relief of temporary injunction could be withheld or granted to the appellant during the pendency of the suit. It is contended that the suit is likely to take some time to reach its final conclusion. At the interim stage the properties of the erstwhile firm M/s, B. T. Paul and Sons may be saved, from being dissipated and the defendants may not be allowed to use or usurp the assets of the said firm unless they are distributed. Till the time M/s. B. T. Paul and Sons is wound up its assets may be safeguarded and preserved.
6. The trial court has been influenced by the fact that the defendant No. 2 was conducting the business from 1977 and the vacant piece of land No. 83/23-B was in her possession as tenant, therefore, it will riot be proper to issue a temporary injunction against her. However, it has not adverted to the other aspect of the case as to whether the plaintiff had a prima facie case for the purposes of grant of injunction and whether he was likely to suffer irreparable injury if the relief of temporary Injunction was withheld, It has also not considered the balance of convenience in cue the temporary injunction is granted or withheld.
7. The learned counsel for the appellant has vehemently argued that M/s. B. T. Paul and Sons admittedly is not wound up. Its assets are likely to be divided and that division has not taken place. The defendant No. 1 or his wife, defendant No. 2, who is running business and usurping and using the assets of the firm M/s. B. T. Paul and Sons, cannot do so unless the said share is given to her husband on distribution. The plaintiff being the owner of the assets of the property to the extent of one-half after the death of his mother is entitled to seek a relief from the Court for the preservation of his share of assets which is in the hands of defendant No. 2 with the connivance of the defendant No. 1.
8. In this appeal I need not be guided by the observations made by the trial court because those observations do not seem to be based on law or equity. The learned counsel for the parties submitted that they have filed counter-affidavit and rejoinder-affidavit in the case, therefore, the whole matter can be decided so as to allow the court below to consider the main suit on merits. The trial of the main suit is hampered because of the pendency of this appeal. I feel that for deciding ad interim injunction disposal of the suit should not be delayed. Therefore, it will be in the interest of both the parties that this appeal against the interim order is decided on merit by this Court so as to allow the trial court to proceed with the trial of the suit. This Court as a Court of appeal has the same powers in the matter of grant of interim injunction or refusal to grant injunction, as are vested in the trial court. Therefore, I proceed to decide this appeal against the ad interim order on merits.
9. There is no dispute that the appellant was a partner in the firm M/s. B. T. Paul and Sons. There is also no dispute with regard to the fact that the assets of the said firm have not been distributed in accordance with law. After the firm is dissolved in 1978 the assets of the firm were available for being distributed amongst the partners of the firm. The assets of the firm would include the property of the firm -- whether movable or immovable. In distribution, according to the defendants, has not taken place because the partnership deed of 1966 contains an arbitration clause, which has not been invoked by the plaintiff for settlement of the dispute, The relations between the parties are governed by the provisions of the Partnership Act.
10. The defendants' case is that defendant No. 2 is conducting her business on vacant piece of land No. 83/23-B, which was leased out to her by the partners of the Firm but the business of welding and steel cutting is done by the defendant No. 2 with her own assets and machineries. No portion of the assets and properties of the erstwhile firm is being used or usurped as is alleged. The two plots, which are said to be the assets of the firm, could be treated to be the property of the firm because there is no dispute that these plots were acquired by the erstwhile firm in the course of business of that firm. Its property would include good will also or any other property which was acquired with the funds belonging to that firm. The property of the erstwhile firm was to be held and used by the partners of that firm exclusively for the purposes of the business. If the business is stopped and the firm is dissolved then it is to be divided according to the terms of the contract of partnership. Each partner has a right to get his share out of the assets of the dissolved firm and untill the assets of the dissolved firm are divided no partner has a right to waste, destroy or dissipate the property of the firm. Right of alienation also cannot be exercised by any partner with regard to the assets of the said firm if the same is not wound up. On winding up the assets of the firm are divided. Since no winding up has taken place, therefore, the property and assets of M/s. B. T. Paul & Sons are considered to be joint between the plaintiff and the defendant No. 1. Defendant No. 2 was not a partner of that firm nor she claimed any interest from that firm.
11. With regard to the authority of the partners either the deed must specify the authority or subject to the provisions of Section 20 of the Act implied authority of the partners is to be recognised. The implied authority of the partner does not empower a partner to transfer immovable property belonging to the firm or enter into partnership on behalf of the firm. Therefore, the status of defendant No. 2 as lessee of plot No. 83/ 23-B, as set up by her, cannot be recognised unless she proves that she was given this vacant piece of land with the consent of all the three partners. She may have obtained it from her husband, defendant No. 1 or from the deceased partner but that would not give her a right to claim lease of the property unless she proves at the trial that she has become the lessee of the property with the approval and consent of all the three partners. This would not mean that she is to be prevented to conduct her own business on the said vacant piece of land. She has a right to conduct her business with her own assets and she cannot be deprived of the use of plot No. 83/23-B till her claim of tenancy fails or till she is ousted from the said plot in accordance with law, till then her business activities cannot be interfered with.
12. At the same time the plaintiff can seek ad interim injunction asking the other side not to use or usurp the property of the firm. The trial court should have, therefore, ascertained-by appointment of a Commissioner as to whether the defendant No. 2 was using the assets of the firm M/s. B. T. Paul & Sons and passed an order preserving that property so as to make it available for being distributed between the plaintiff and defendant No. 1. Admittedly the defendant No. 2 cannot use or utilise or usurp the property of the erstwhile firm without the consent of the plaintiff. The plaintiff has interest in each part of that property. He is entitled to get share from that property and his share may enhance after the death of his mother. Therefore, the property which he is entitled to get is to preserve for him so that he is not deprived of the fruits of winding up of the firm.
13. It is true that defendant No. 2 has been conducting business on plot No. 83/23-B but that would not entitle her to claim the property as her own or claim it as lessee unless she proves it before the trial court. The plaintiff did not accept her as a lessee of the property and this question is yet to be determined. Therefore, the trial court's finding that she was a lessee of the property does not seem to be correct. Similarly the trial court's finding that she was conducting business on the property from 1977 would disentitle the plaintiff to seek relief for the preservation of the suit property is not correct. The defendant No. 2 has no interest in the suit property. She obviously cannot resist the claim of the plaintiff for preservation of the property. For preservation of the property the trial court should have passed an equitable order which could secure the ends of justice by issuing discretionary relief which could satisfy the judicial test.
14. The learned counsel for the respondent No. 2 has referred to the case of Smt. Kusuma Gupta v. Smt. Sarla Devi reported in 1988 (1) AWC 459 : (AIR 1988 All 154). Division Bench of this Court has discussed the principles governing the grant of temporary injunction. It has also held that where the rights of a person from dissolution of partnership can be fully protected without grant of injunction the Court need not grant temporary injunction. The question of balance of convenience and irreparable injury is to be seen by the Court. The principles laid down in the said authority cannot be disputed. However, there was a dispute between the partners in the said authority. In the instant case the partners' property is alleged to be used or usurped by a stranger to the firm. Therefore, the principles laid down in 1988 (1) AWC 459 : (AIR 1988 All 154) (supra) cannot be made applicable to this case.
15. The plaintiff cannot be deprived of this share from the property which is to be distributed between him and the defendant No. 1. For the distribution of that property, the same must remain intact. Nobody has a right to use or usurp the property without the consent of the plaintiff and the defendant No. 1. The defendant No. 1 being the husband of the defendant No. 2 would be too willing to give the property to the defendant No. 2 but that would not constitute an approval for using the partnership property on the part of the plaintiff.
16. After the firm is dissolved every partner or his representative has a right in the absence of contract between the partners to the contrary, to restrain any other partner or his representatives from carrying on similar business in the firm name or to use any of the properties of the firm for his one benefit unless the affairs of the firm have been completely wound up. However, the firm's name can be purchased and thereafter used. This is the import of Section 53 of the Partnership Act. Even the defendant No. 1 cannot use the property of the firm for his own benefit. The stranger has no right to do so, therefore, the plaintiff could restrain the defendants from using the partnership property.
17. In my opinion, the plaintiff has made out a case for grant of ad interim injunction. He has a prima facie case in respect of the properties of the erstwhile firm. He is likely to suffer an injury if the said properties are usurped or used by the defendant No. 2 without his consent and the balance of convenience also is in his favour because the law does not permit the defendants Nos. 1 and 2 to use the partnership assets and the properties of the firm which has been dissolved and winding up proceedings are yet to start.
18. At the same time no partner should cause interference with the defendant No. 2 to run her business which she alleges to be her proprietorship business. Any ad interim injunction which this Court will grant should not affect the business of the defendant No. 2. She can conduct the business on plot No. 83/23-B till she is ousted therefrom in due course of law or till it is established by the plaintiff that she is doing the business on the said plot without any express or implied authority of the partners of the firm. For conduct of her alleged own business she cannot use the property and the assets of the firm.
19. Accordingly I allow this appeal and set wide the order of the Court below refusing to grant ad interim injunction to the plaintiff and pass the following order in the case:
"The defendants are restrained from using the property of the firm M/s. B. T. Paul & sons I.E. 84/13, Factory Area, Fazalganj, Kanpur and other movable properties given in Annexure B to the plaint, furniture, fittings, telepnones, Machines etc. given in Annexure C to the plaint, raw material stocks and steel stores given in Annexure D to the plaint and any finished goods situate at 84/13, Factory Area, Fazalganj, Kanpur or at 83/23-B, Juhi, Govindnagar, Kanpur as mentioned in Annexure E to the plaint. However, her own business which she might have set up with her own funds and machinery on plot No. 83/23-B is not to be interfered."
20. For making this order of ad interim effective the trial court is directed to appoint a Commissioner to ascertain whether the property mentioned in the annexures to the plaint in respect of which ad interim injunction is granted is in existence or not. The Commissioner can examine this fact by conducting local inspection or by scrutinising the books of M/s. B. T. Paul & Sons. Apart from the vacant land i.e. 83/23-B, the defendant No. 2 shall not use any other assets or property of B, T. Paul & Sons, the firm which has been dissolved. Her using or ousting from the property i.e. vacant land No. 83/23-B will depend on the result of the suit. The trial court shall take care that the business set up by her is not interfered with under the cover of this order by the appellant or defendant No. 1.
21. The learned counsel for the parties are directed to cause the presence of their clients before the trial court on 21-5-1993 for seeking further directions from the trial court.
22. Appeal allowed.