P L D 1986 Karachi 306 (PLP)

The plaintiff has moved this application under Order XL, rule 1, C. P. C. praying, that a Receiver may be appointed to take complete charge of all business of partnership firm Messrs Pak Best Recruiting Agency/Pak Best Overseas Employment Promotors, .presently having its office at 91 Commercial Street, No. VII, Phase IV, Defence Housing Society, Karachi, which at present is being conducted by defendant:

2. The admitted facts of the case are, that in 1972 the defendant obtained a recruiting licence in the name of Messrs Pak Best Recruiting Agency, showing the business premises of plaintiff as office of the said Agency. He carried on business till 1975 when he associated the plaintiff in the partnership business executing a general power‑of‑attorney in favour of the son of the plaintiff. In 1979, the plaintiff deposited Rs. 1,25,000 to the Government of Pakistan as licence fee for the said Agency, and on 22‑4‑1979, the parties reduced in writing the terms and conditions of the partnership. After sometimes there arose dispute between the parties, therefore, the plaintiff filed this suit on 9‑1‑1984 for dissolution of partnership and rendition of account. This Court vide its order dated 11‑4‑1984 granted a temporary injunction to the plaintiff. The relevant portion of the order reads as follows :‑ "For the present it is sufficient to state here, that there is a positive covenant in the document, dated 24th April, 1979, which provides that until such time a sum of Rs. 1,25,000 invested by the plaintiff is not returned back to him the defendant shall not carry on business, and engage himself directly or indirectly in the recruitment/ promoters business. I, therefore, grant a temporary injunction restraining the defendant from carrying on business of recruiting in the name and style of Messrs Pak Best Recruiting Agency/Pak Best Overseas Employment Promotors, till the decision of suit. This order is, however, conditional and in case the defendant deposits in Court a sum of Rs. 1,25,000 mentioned in the partnership agreement dated 24‑4‑1979, injunction shall stand vacated."

3. The defendant moved an application under Order XXXIX, rule 4, C. P. C. stating therein, that he has deposited R . 1,25,000 as directed by the Court and requested for vacation of temporary injunction which was accordingly vacated by this Court by its order, dated 22‑5‑1984.

4. According to this partnership deed the initial duration of the partnership was for one year from the date of deed but the same was extendable subject to the terms and conditions mentioned therein. The most relevant portion of the terms and conditions in the deed was, that the defendant shall have no right or authority to dissolve the partnership including another person as partner without first paying to the plaintiff a sum of Rs. 1,25,000 the deposits and expenses incurred by the plaintiff in the business and till such time, this sum of Rs. 1,25,000 is paid, the partnership business shall continue and the plaintiff shall have right to adjust this sum from the share of profit of the defendant.

5. It is argued by Mr. Azhar Ali Siddique, learned Advocate for the defendant, that the defendant bas deposited a sum of Rs. 1,25,000 in accordance with the terms of the partnership and also as directed by the Court, therefore, the partnership stood dissolved, and the plaintiff had no more right to have the Receiver appointed to take over the business which now the defendant had the right to carry on independently of the plaintiff.

6. The‑learned Advocate for the plaintiff, Mr. Ibrahim Memon, has relied upon P L D 1966 S C 330, wherein it is held as follows :‑ "Section 15 of the Partnership Act declares, that subject to contract between the partners the property of the firm shall be held and used by partners exclusively for the purpose of the business. This precludes the possibility of any of the partnership property being or being deemed to be separate property of any partner for so long as the partnership subsists. Again, a mere dissolution without division of assets as provided by the Act does not have the effect of ascertainment of the separate property of any partner. Dissolution may, as provided by section 43 of the Act, take effect by delivery of notice of an intention to dissolve but while this may furnish starting point for the ascertainment of the interest of the partners which had become legally separated as from the date of the notice, yet the condition does not come into existence by the mere effectuation of such a legal and notional dissolution in which any partner can point to any piece of the partnership property as belonging to himself alone. That can only happen after action has been taken as provided by sections 46, 48 and 49 of the Act. These sections require debts and liabilities of the partnership should be first met out of the property of the firm and thereafter the assets should be applied in rateable payment to each partner of what is due to him, firstly, on account of advances as distinguished from capital. and secondly, on account of capital and thirdly, the residue if any, should be divided rateable among all the partners. Therefore, the conception of the share of a partner in the assets of the partnership does not take a real and concrete shape until these processes have been gone through." It is further held, that the partnership for fixed period may continue as partnership‑at‑will after expiry of such period.

7. Mr. Ibrahim Memon has also relied upon a decision of this Court reported in P L D 1977 Kar.

51. It is held therein, that the Receiver must automatically follow the dissolution of partnership‑at‑will particu larly when there are two equal partners, It is contended by the Advocate for the plaintiff, that the appointment of a Receiver is more necessary in this case where the share of the plaintiff, according to the partnership deed is 75 % as against 25 % of the defendant. Even provisions of Partnership Act are subject to the terms of the contract between the parties. Under the terms and conditions of agreement between the parties the recruiting licence has not been made divisibile asset of the partnership business. The plaintiff has been given right to appropriate from the profits of the defendant Rs. 1,25,00(

1. The restriction imposed upon the defendant is, that till be pays Rs. 1,25,000 to the plaintiff, he cannot carry on the business of recruiting agency independently an the business shall continue as partnership business. This condition impliedly permits the defendant to carry on the business of recruiting agency independently of the plaintiff from the date he pays amount o Rs. 1,25,000 to the plaintiff. In the instant case, the defendant ha deposited in the Court Rs, 1,25,000 and the injunction restraining him from carrying on the business independently has been vacated by an order, of this Court dated 22‑5‑1984. The business of partnership, therefore, would prima facie stand dissolved from 22‑5‑1984. Hence the business, that the defendant is now carrying on, prima facie; cannot considered as a business of partnership for which Receiver can be appointed.

8. However, the business, that the plaintiff or defendant were carrying on in the name of business firm till 22‑5‑1984 would be partner ship business. Its assets and liabilities are to be divided amongst partners in accordance with their shares under the agreement. The request of plaintiff, that appointment of Receiver is allowed, to 'the extent the Receiver shall take possession of the books of accounts and other assets of the partnership business till 22‑5‑1984, but shall not touch the business of recruiting agency that defendant is carrying on after 22‑5‑1984. Nazir of this Court is appointed as Receiver. The plaintiff to deposit Rs. 500 in the first instance towards Receiver's fee. For further proceedings adjourned to a date in Office. M. Y. H. Receiver appointed.