2002 PLP 4002 (YLR)

(e) The accounts are not filed in terms of the order, copies thereof were received by the plaintiff after filing of C.M.A. No.5024 of 2001 and order passed thereon. (f) The defendant has only rendered accounts for the period of 1‑11‑2000 to 26‑4‑2000 and has not rendered the accounts from 1st July, 2000 to 31st July, 2000. Proper accounts have not been submitted. The accounts submitted are simple statement of profit and loss account. General Ledger Machine Book, purchase register, sale register, production register, sale tax register respectively.

3. Facts connected with the application are that the plaintiff claims to be partner with 60% share in the business of confectionary as well as in the factory in the terms of agreement of arrangement (Annexure P to the plaint), whereby both the parties desired to commence some business in partnership and as a preliminary agreement of arrangement was executed. The agreement of sale was executed between defendant No.2 with one Razia Ashraf for purchase of factory situated at Block 21, K.D.A. Scheme 16, F.B. Area, Karachi with equipment, machinery, fixture, furniture and amenities, including telephones for consideration of Rs.3,40,00,

000. It may be mentioned that seller Razia Ashraf is wife of the plaintiff's brother. The parties mutually agreed to carry on business in partnership in a name to be mutually agreed and the ratio of investment and profit to be 60% by plaintiff and 40% by defendant. While completing sale of the property, balance payment shall be made in the same ratio. Both parties mutually agreed to purchase the property in the name of Nargis Rafiq jointly with defendant No. 1 in the same ratio, who will let it out to partnership business on rent to be mutually agreed between the parties. It was further agreed that sale to be completed in favour of Mrs. Shahida Mumtaz exclusively holding 60% Benami share, which may be transferred in her name in recent future through sale‑deed or otherwise as required under law. The property shall be lawfully held in proportion of 60% and 40% ratio of ownership between Nargis Rafiq and Shahida Mumtaz. It is case of the plaintiff that Conveyance Deed was executed in pursuance of clause 6 of the agreement of arrangement after purchase the plaintiff and defendant No.2 started business by purchasing raw material engaging labours and also employed cousin of the plaintiff as Manager to manage the business. Defendants Nos. 1 and 2 in order to usurp the property 6f the plaintiff filed civil suit for declaration and injunction against the plaintiff and the said Manager and obtained status quo order. Criminal proceedings against Amin was also taken, in breach of contract. Thus, the plaintiff filed the suit for rendition of accounts, cancellation of Conveyance Deed and Declaration. C.M.A. No. 5013 of 2000, for appointment of Receiver was also filed that has been disposed of by order, dated 1‑11‑2000, as stated in para. 1 above.

4. Case of the defendants is that the plaintiff failed to perform his part of the contract by failing to make payment except to the extent of 20 lacs and failed to commence the partnership business. Defendant No.1 claimed to have purchased the property in her own name from her own resources and is running the confectionary business through her husband. Defendant No.1 has also filed Suit No.1016 of 2000 for cancellation of agreement of arrangement.

5. Application for appointment of Receiver has been resisted by defendant through counter‑affidavit by raising pleas, inter alia, that identical application was disposed of by consent of the parties on 1‑11‑2000, review application is still pending, thus the second application is barred by res judicata. Statement of accounts and security has been furnished as directed by the Court. The suit is not for dissolution of partnership. There had never been a partnership between the plaintiff and the defendant. The plaintiff paid about Rs.2,000,000 only and the defendant is ready to refund the same amount. By consent, order passed for security and accounts that cannot be circumvented under the law. They have admitted that small piece of premises lying vacant has been rented to one Tabsum Bano. They have denied that they have sold or transferred any machinery installed in the factory. The factory has been purchased as it is where it is basis. Removal/shifting of machinery was also denied.

6. I have heard Mr. Naeemur Rehman, learned counsel for the plaintiff and Mr. Rizwan Ahmed Siddique, learned counsel for the defendant.

7. Mr. Naeemur Rehman contended that partnership has been dissolved and in order to protect the property it is just, and convenient to appoint a Receiver as defendants are creating third party interest in the property and are also transferring machinery and are not rendering the accounts. He further submitted that once the partnership stand dissolved the consequences of such dissolution would be appointment of Receiver as the matter of course. To support his contention, he referred cases (i) Ali Muhammad v. Sadruddin (PLD 1959 (W.P.) Kar. 452), (ii) Muhammad Jameel v. Muhammad Iqbal (PLD 1977 Kar. 351) and (iii) Abdul Razaq v. Zehra Begum (1983 CLC 1658). The dictum laid down in the above case was that the appointment of Receiver must follow automatically on dissolution of partnership at will. It was further observed that the appointment of Receiver is interlocutory measures only for the purpose of winding‑up and not to run the business.

8. There is no cavil to the proposition enunciated in the above cases that once the partnership is dissolved the appointment of Receiver should follow in cases when the partnership is not disputed. In the present case the partnership is denied by the defendant. The suit for cancellation of agreement of arrangement, the basis of the plaintiff claim as partner, has been impugned by defendant in her suit.

9. Learned counsel for the defendant has vehemently opposed the application, by stressing that the Court can appoint receiver of the property if it was of the opinion that it is "just" and "convenient" to elaborating, his submission, contended that to arrive such conclusion a party must make a prima facie case that he own the property in question or has substantial interest therein which require "protection" and preservation pending final determination of right of the parties in the suit and because of the expected wastage of property and the right of interest of the plaintiff could not be protected or preserved without appointment of receiver. In this regard he referred the rule laid down in Muniruddin v. Sirajuddin Paracha (1999 CLC 247). He contended that security in the sum of Rs.50 lacs has been furnished by the defendant and the accounts are being regularly tiled. The plaintiff's objections to the account are yet to be decided and the Commissioner's report, is also under objection, unless and until the objections are disposed of the same cannot be considered at this stage. Mr. Rizwan Ahmed Siddiqui, contended that the defendant is the owner of the business and the property same cannot be disturbed on the request of plaintiff. To support his arguments, he referred case of Inshallah v. Izzat Khan (1987 MLD 2566) decided by a Division Bench of this Court, wherein the order of appointment of Receiver in favour of the respondent, whose title was perfect was challenged in appeal, which was dismissed by observing that the same cannot be challenged by a party whose title is under cloud.

10. It has been canvassed by him that the defendant is owner of the property whereas the plaintiff is claiming the transaction as Benami. The defendant's possession is protected as against the plaintiff whose right is yet to be established, under the provisions of sub‑rule (2) of rule 1 of Order 40 and the Court will not remove the defendant from the possession or custody of the property on the behest of the party who has no right in the property. Mr. Rizwan Ahmed Siddiqui also referred two judgments (i) Azhar Wali v. Bell Helli Copier Textraninc (1987 MLD 1336) (D.B) and (ii) Abdul Hai Arzi v. Mst. Haseen Khan (1986 CLC 1765) (S.B.) In former case the view taken was that where title of the property is disputed Receiver cannot be appointed and the person in possession should not be deprived of the property. In the latter case in spite of allegation of waste and mismanagement, the Court only appointed the Receiver in respect of the accounts only. His submission was that the Court has already taken care of the interest of the plaintiff by order, dated 1‑11‑2000, if any further, details are required regarding account the defendants are ready and willing to comply with direction.

11. Mr. Rizwan Ahmed Siddiqui has pointed out that portion lying vacant has been rented out and the rent has been reflected as income in the account submitted. The defendant has converted her own concern into company by getting in corporation in the name of Messrs Pak Afro Food (Pvt.) Ltd.

12. From the recital of the agreement‑of arrangement the partnership was to be formed on some later date which has been denied by the defendant. The defendant admits the receipt of amount of Rs.20 lacs whereas the learned counsel for the plaintiff has tried to show that the plaintiff has contributed not only in purchase by making payment but also contributed in business. Three documents have been referred, which were filed with earlier Application (C.M.A. 5013 of 2000, 2 bank letters dated 9‑8‑2000 (i) confirming issuance of Pay Order No. POH 22563, dated 10‑11‑1999 for Rs.10 lacs in favour of Mr. Ashraf to the debit of Messrs Ram Hussain and NR Hussain's account with Bank Al Habib Ltd. (ii) confirming issuance of Pay Order No. POH 225604, dated 10‑11‑1999 for Rs.13 lacs in favour of Razia Begum to the debit of Rafiq Ali account. Third containing details of sale consideration, expenses stamp duty, registration fee, miscellaneous expenses etc., this document is yet to be proved. Even if the amounts of pay orders are treated as payment by the plaintiff, even then at this stage, his contribution to the extent of the said amount. Thus the interest of the plaintiff is protected by order, dated 1‑11‑2000 by directing the defendant to furnish the security which has been furnished in the sum of Rs.50 lacs.

13. So far as the question of Benami is concerned, a person claiming Benami transaction has to prove that he has pain consideration. The title documents are in his possession and possession of the property and reasons for Benami transaction. Reference can be made to Muhammad Sajjad Hussain v. Muhammad Anwar Hussain (1991 SCMR 703), wherein the Supreme Court has laid down the criteria for determination or question whether a transaction as Benami or not, inter alia, following facts are to be taken into consideration:‑‑ (i) source of consideration. (ii) from whose custody the original title deed and other documents came in evidence. (iii) who is in possession of the suit property; and (iv) motive for, the Benami transaction. The plaintiff has claimed share to the extent of 60%, whereas the property is in the name of defendant No. 1, who also claims possession of the property in her own right.

14. The object and purpose of the appointment of receiver is preservation of the subject‑matter of the litigation pending a judicial determination of .the rights of the parties thereto. Since the receiver disturbs the person in possession, the appointment of receiver is well‑recognized as one of the harshest remedies that the law provides, so the jurisdiction must be exercised in extreme cases, if found just and convenient. In the present case, admittedly an order is in the field whereby interest of the plaintiff has been protected by direction to the defendant to furnishes security, which has been furnished with further direction to the defendant for submission of the annual account. The very basis of the partnership viz. agreement of arrangement has been disputed through the suit. The partnership is disputed. It is yet to prove that defendant No.2 is holding the property as Benami and on behalf of the plaintiff to the extent of 60% Therefore, I am of the view that the interest of the plaintiff is fully secured by compliance of the order, dated 1st November, 2000. The application having no merit is dismissed, with no order as to costs. H.B.T./R‑79/K Application dismissed.