' SH. AZMAT SAEED, J.---This appeal is directed against the order dated 28-7-2008 whereby the trial court seized of the matter dismissed the application filed by the appellant seeking temporary injunction under Order XXXIX, Rules 1 and 2, C.P.C.
2. Brief facts necessary for the adjudication of the lis at hand are that the appellant filed a suit against the respondent inter alia contending that the appellant and the respondent entered into a partnership vide partnership deed dated 28-1-2002 at Lahore, wherein the name of the partnership firm was "M&M Enterprises" and the business of the firm was to run the beauty saloons both for men and women. It was further contended in the plaint that the original terms and conditions of the partnership as incorporated in the partnership deed dated 28-1-2002 were supplemented and amplified vide letter dated 20-2-2002 addressed by the respondent to the appellant, as a consequence whereof, the partnership ceased to be a partnership at will and furthermore the scope of the business was no longer limited to the two original sites i,e, 57-C, Gulberg-II, Lahore and Begumpura Lahore so as to bring the entire business being carried out under the name of Depilex under its umbrella.
3. It was the case of the appellant as disclosed in the plaint that the respondent failed to fulfil her obligations emanating from the partnership deed and the subsequent letter, referred to above, and indulged in falsification of accounts, siphoning off the profits of the business to the prejudice to the appellant in spite of the fact that bulk of the investment was provided by the appellant. It was alleged that the investment made by the appellant was to the tune of Rs,200-million. It was also contended in the plaint that the respondent has now issued a notice dated 4-7-2008 purporting to dissolve the partnership treating the same to be a partnership at will. It was the case of the appellant that said notice dated 4-7-2008 was of no legal consequence and effect. It was prayed that letter dated 4-7-2008 be declared illegal. It was further prayed that a preliminary decree for the determination of the rights of the parties be granted, a decree for rendition of accounts also be passed to be followed by a final decree. In addition to the above, a money decree for Rs,5 cror along with compensation @ 20% per annum was also prayed for. The plaint was accompanied by an application under Order XXXIX, rules 1 and 2, C.P.C. Praying that a temporary injunction be granted inter alia to the effect that status quo be directed to be maintained by the parties, and the respondent be restrained from opening any further businesses in the name and style of Depilex. It was also prayed that the respondent be restrained from removing the fittings, fixtures and signboards etc. Fixed at the premises 57-C, Gulberg II, Lahore and Begumpura and further that the respondent be restrained from removing the signboards and other advertisement material affixed in the city.
4. Respondent entered appearance, resisted and contested the suit by filing written statement as well as reply to the application under Order XXXIX, Rules 1 and 2, C.P.C. In the written statement, the partnership deed dated 28-1-2002 was admitted and on the basis thereof, it was contended that the business of firm was limited only to two site mentioned above as reflected from clause 4 of the partnership deed. It was also the case of the respondent that partnership was at will as is evident from clause 5 of the partnership deed and had been dissolved in accordance with law vide notice dated 4-7-2008. However, the letter dated 20-2-2002 was denied.
5. It was the case of the respondent that Depilex is a trademark and a copy right which is the property of the private limited company M/S Depilex (Pvt.) Ltd. And the partnership firm of the parties with the business name of "M&M Enterprises" was allowed to use the name of Depilex consequent upon a Franchise Agreement as is borne out form clause (3) of the partnership deed. It was contended on behalf of the respondent that the partnership had been dissolved on the issuance of notice dated 4-7-2008 as the partnership was at will. However, the respondent solicited rendition and settlement of accounts with reference to the allegedly dissolved partnership firm in respect of the business being carried out at 57-C, Gulberg-II, Lahore and Begumpura Lahore. Application under Order XXXIX, Rules 1 and 2 C.P.C. Was replied to and its dismissal was prayed for.
6. The appellant whereafter filed a replication which is on record, wherein, the contentions raised in the plaint were reiterated. However, in addition thereto, it was contended that Deplilex (Pvt.) Ltd. For all intents and purposes is a sole proprietorship of the respondent and the veil of incorporation needs to be lifted, in the facts and circumstances of the case for the adjudication of lis at hand. It was reiterated that the scope of the business stood amplified by letter dated 20-2-2002 which it was reiterated was issued by the respondent.
7. In addition to the partnership deed dated 28-1-2002, there are two additional partnership deeds on record filed by the appellant with respect whereof it was contended that the same are "dummy" and were only executed for tax purposes. Respondent in the written statement disowned the said partnership deeds claiming having no recollection of their execution. Thus, the rights inter se the parties are to be determined by the partnership deed dated 28-1-2002 and as per the case of the appellant also by letter dated 20-2-2002 which is disputed by the respondent.
8. It would not be out of place to mention that Depilex (Pvt.) Ltd. Has also filed a suit for declaration and permanent injunction against the appellant through the respondent claiming to be lawful owner of the trade mark and copy right of Depilex and seeking injunction restraining the appellant from using the said name. Along with the said plaint, an application for interim injunction was also filed, whereupon, an order was passed which is the subject-matter of F.A.O. 204 of 2008 filed by M/s. Depilex (Pvt.) Ltd. Against the appellant, which is also pending adjudication before this Court and shall be dealt with and decided through a separate order.
9. The learned trial Judge seized of the matter after hearing the learned counsel for the parties dismissed the application for the grant of temporary injunction vide the order impugned primarily on the basis that while the partnership deed dated 28-1-2002 was an admitted document, the subsequent letter dated 20-2-2002 was a disputed document the execution whereof having been denied by respondent, hence, the rights cf the parties were to be determined in terms of said partnership deed, wherein, relationship inter se the parties was identified as a partnership at will, hence, the impugned notice dated 4-7-2008 was valid. It is the said Order, which has been assailed through the instant appeal.
10. The learned counsel for the appellant reiterates the case as set out in the plaint, referred to above, and adds that by way of impugned order, the learned Judge of the trial court has brushed aside the letter dated 20-2-2002 without any legal and factual basis. It is contended that signatures appearing on the aforesaid letter correspond with the admitted signatures of the respondent. Further adds that from the contents of the letter, it is clear and obvious that it is natural in its tenor and must necessarily at the stage of the grant of temporary injunction be taken into consideration especially in presence of only a bald denial and absence of an expert opinion. It is further contended that by virtue of the aforesaid letter, primarily the scope of the partnership business was extended to 'include all present and future businesses being carried on by the respondent i,e,, the running of beauty saloon in the name and style of Depilex. Adds that rights and obligations of the parties must be determined with reference to the partnership deed dated 28-1- 2002 as amplified by the subsequent letter dated 20-2-2002.
11. In the above context, it is prayed that status quo be ordered to be maintained especially with reference to the business being run by the appellant in the name and style of Depilex at Gulberg and Begumpura at Lahore. It was also contended that respondent be restrained from starting any new business by using the name of Depilex.
12. Aforesaid contentions were controverted by the learned counsel for the respondent by vehemently contending that the letter dated 20-2-2002 is fabricated and the alleged signatures of the respondent thereon have been forged. In the alternative the learned counsel for the respondent argued that at best the letter is executory in nature which was never acted upon, hence, did not create any obligations upon the respondent and at worst the appellant can seek damages if so permitted by law. Adds that in the facts and circumstances of the case, the rights of the parties are to be determined only under the partnership deed dated 28-1-2002 whereby it is clearly incorporated firstly that the partnership was at will and secondly its business was limited only to two premises at Gulberg and Begumpura, Lahore, and that it did not affect or touch the business activities of M/s. Depilex (Pvt.) Ltd. Carried on by the said company in its own name or through various franchise agreements. Further adds that name Depilex is a copyright and trademark duly registered in favour of M/s. Depilex (Pvt.) Ltd., and the appellant has no right in law to use the said name. Name of the partnership in question was "M&M Enterprises" while the trade name Depilex was being used by the firm through a franchise granted by the said company i,e,, M/s. Depilex (Pvt.) Ltd. In this behalf, learned counsel has referred to clause III of the partnership deed dated 28-1-2002 and the letter dated 4-2-2002 purportedly issued by M/S Depilex (Pvt.) Ltd.
In the above context, learned counsel prays that the appeal be dismissed.
14(sic). In rebuttal, learned counsel for the appellant reiterated that M/s. Depilex (Pvt.) Ltd. Is a pseudonym for the respondent and the . Business being carried on by Depilex is in fact by a sole proprietorship i,e,, the respondent which fact would be evident by lifting of the veil of incorporation.
15. Learned counsel for the appellant has denied the letter dated 4-2-2002 claiming the same to be bogus and fabricated. In support of his contentions learned counsel for the appellant has drawn this Court's attention to the fact that said letter purportedly granting franchise rights on the face of it is without consideration and deficient in material particulars as to the terms and conditions of the franchise and its duration, therefore, even otherwise void.
16. Counsel for the parties have been heard and the record appended with this appeal perused.
17. At the very outset, it has been noticed that in the plaint filed by the appellant legality and effectiveness of the notice dated 4-7-2008 issued by respondent purporting to dissolve the firm had been challenged, and a declaration in this behalf prayed for. However, in the application under Order XXXIX, Rules 1 and 2, C.P.C. For the grant of temporary injunction appended with the plaint, no interim relief with regard to said notice was asked for and prayer for the suspension of the effectiveness of the said notice is conspicuous by its absence in the prayer clause.
18. That in the instant appeal filed before this Court by the appellant, no relief with respect to the said letter has been claimed either in the grounds of appeal or in the accompanying application for the grant of interim relief i.e, C.M. 1-C of 2008.
19 Ground III of the instant appeal reads as follows: "It is a common position between the appellant and the respondent that the partnership should be dissolved"....
' And that the contention of the learned counsel for the appellant as incorporated in the order dated 4-8-2008 is reproduced as under:-- "Learned counsel for the appellant has submitted that both the parties desire dissolution of the partnership as bad blood has come therein and for protection of partnership assets and for determination of rights and obligations"
20. At this juncture it appears appropriate to refer to the law laid down by the apex Court in the case reported as PLD 1960 SC 330 Mr.B.A. Shiekh v. The Custodian Evacuee Property West Pakistan and others relied upon by the learned counsel for the respondent, and for facility of reference the relevant part is reproduced in the following manner:-- '... ... It is true that in the plaint allegations of breach of agreement etc. Were made, but that does not alter the legal position which is entirely clear, namely, that a partnership at will is dissolved by intimation to the other partners of the will of any one of the partners that the partnership should be brought to an end.".
21. Thus prima facie the partnership firm "M&M Enterprises" stands dissolved.
22. After the dissolution of the partnership firm, every partner has a right to have the business of the partnership wound up and the property thereof applied for the repayment of the debts and liabilities of the firm, and thereafter to have the surplus distributed among the partners as has been stipulated in section 46 of the Partnership Act, 1932. During the aforesaid process of winding up of the dissolved firm is to be carried out in accordance with sections 48 and 49 of the Act ibid. However, in practical terms there is always a time lag between the dissolution of the firm and the eventual gathering of its properties and assets by the Court to be dealt with in accordance with the provisions, referred to herein above. But nevertheless the rights of the parties would have to be identified and regulated during this interregnum twilight zone. In the present case, prima facie, the parties are in this twilight zone.
23. Upon the dissolution of the partnership firm status of the partners qua the assets of the firm are perhaps best described by Lindly MR in the case reported as Pruchell v. Wilde 1900-3 All ER Ext.1744 in the words "They had become tenants in common of that asset, and each partner is entitled to enjoy that asset".
24. The honourable Supreme Court of Pakistan in the case reported as BA Sheikh (supra), the following observations made at page 337 would be relevant to quote as hereunder:-- "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 a starting point for the ascertainment of the interests of the partners which had become legally separated as from the date of the notice, yet the condition 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 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 that the 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 rateably 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 Therefore, it is perfectly clear that in this case, it is impossible to speak of Mr. BA sheikh's separate share in the partnership property having come into existence either on the date on which he filed his suit, namely, the 21st July, 1947, or on the date of the preliminary decree, namely, the 13th January, 1948."
25. In view of the above, it is clear and obvious that during the interregnum of the dissolution of a firm and its eventual winding up, the assets and properties of the firm including the name of the firm and its goodwill are held jointly and in common.
26. That during the currency of the relationship of partnership subject to contract all the assets and properties of the firm are to be exclusively used for the purposes of the business of the firm as is enjoined by section 15 of the Partnership Act, 1932. After dissolution similar (but not identical) provision contained in section 53 of the said Act which comes into play and is attracted, and the same states that any partner of a dissolved firm may restrain the other partner from carrying on a similar business in the firm's name and from using any property of the firm for his own benefits until affairs of the firm have been completely wound up. The categoric prohibition of the use of the firm property for any purpose other than the business of firm is conspicuous by its absence in section 53 of the Act.
27. That section 53 of the Act examined in the context of the rights of the parties of a dissolved partnership, in respect to its assets referred to above, would suggest that the purpose thereof is primarily and firstly to ensure that the process of winding up of the business of the firm and the protection and preservation and eventual gathering of the assets of the properties thereof is not impeded. None of the partners should be allowed to jeopardize beyond repair or compensation the rights of the other partners and temporary injunction cannot be claimed as a matter of right restraining the other partners from holding and using the property of the firm as a matter of right in the absence of irreparable loss and injury and subject to the balance of convenience, the time honourd ingredients for the grant of temporary injunction. It may be appropriate to pass only a regulatory order protecting and preserving the assets and properties of the firm and balancing the rights of the all parties concerned. I am fortified in this view by the judgment reported as AIR 1988 All. 154 Kasuma Gupta v. Sarla Devi. However, I may hasten to add that in the appropriate cases where the assets of the dissolved firm have been usurped by one of the partners or a stranger to the exclusion of the other'partner, or there is a risk of waste or misappropriation of the said property or there is likelihood of irreparable loss and injury or if other equitable considerations so require a restraining order in respect of the use and possession of the assets of firm, can always be passed as was done in the case reported as AIR 1994 All. 62 Rajindra Kumar Sharma v. Brinjendra Kumar Sharma.
28. A careful perusal of the application under Order XXXIX, rules 1 and 2, C.P.C. Filed by the appellant reveals that in pith and substance generically two separate reliefs are claimed, firstly concerning the physical assets of the firm, i,e,, fittings and fixtures etc. In the custody of the appellant who solicited temporary injunction restraining the respondent from removing the same or entering the premises whereat the same are currently present. And secondly, the appellant has prayed for temporary injunction restraining the respondents from opening any new business using the name of Depilex either directly or indirectly and from removing any hoardings and signboards of the firm's business, which was being carried out in the same name. Latter relief in pith and substance perhaps in an oblique manner seeks to indirectly permit the appellant to continue to run the business of beauty saloon by using the name of Depilex and stake a claim to the exclusive use of such name.
29. I propose to deal with two generically different reliefs separately. As regards physical assets of the partnership firm presently in the custody of the appellant, suffice it to say that they are the joint property of both the appellant and the respondent. Same would obviously be true of any physical assets of the firm in the custody of the respondent. Evidently, the respondent has not come to the court seeking a restraining order against the appellant form using the said properties and deriving benefits therefrom. It is not the case of the respondent that the said assets are risk of being misappropriated or wasted or the rights of the respondent are being jeopardized and the continued possession of the said assets by the appellant would impede the process of winding up of the firm.
30. Therefore, in the facts and circumstances of the case, the appellant is entitled to an order restraining the respondent from invading the premises situated at Gulberg and Begumpura, Lahore or to remove the assets and properties of the firm present thereat subject to the appellant furnishing a list of such assets to the trial court.
31. Adverting to the question of the use of the name of the Depilex by either of the two parties, it is an admitted fact inter se the appellant and the respondent that name of the firm was "M&M Enterprises" which carried on business in the name of Depilex. It appears from record that the same business was perhaps being carried on with the same name i,e,, Depilex prior to the constitution of the firm inter se the parties. It is the case of the respondent that name Depilex is a trademark and copy right registered in the name of a company M/s. Depilex (Pvt.) Ltd. Which is not a party to the present proceedings, and has in fact filed a suit against the appellant seeking to retrain him from using or carrying on business in the name of Depilex. Said suit is still pending and the matter of the grant or otherwise of interlocutory injunctive relief is the subject matter of F.A.O. 204 of 2008 which too is pending adjudication before this Court.
32. The appellant on the other hand contends that in fact the said company is only an alter ego of the respondent and which fact would become obvious upon lifting of the veil of incorporation.
33. Be that as it may, it is evident from the record that all the claims and the claimants of the name of Depilex are not before this Court and in the absence thereof no effective order can be passed.
The matter pertaining to the use of the said name is sub judice in a civil suit filed by M/s. Depilex (Pvt.) Ltd. Through the respondent against the appellant. And that the matter of the grant or otherwise of temporary injunction is also before this Court in FAO 204 of 2008. The scope of the said litigation is much larger than the lis at hand, and all the claims and claimant to the use of the name Depilex are before the Court. All rights claimed by the appellant under the partnership deed and the subsequent alleged letter dated 4-7-2002 would obviously also be available to the appellant in the said litigation. Further more, any attempt by this Court in the present lis to deal with the said issue or pass any order in this behalf would also pre-empt and prejudge the decision in the parallel litigation initiated by M/s. Depilex (Pvt.) Ltd. And the appeal arising therefrom.
Consequently, in the fitness of things that this issue/matter be decided in FAO 204-2008.
34. For the foregoing facts and reasons, this appeal is partially accepted with the result that the respondent is restrained from invading the premises situated at Gulberg and Begumpura Lahore and from removing the physical assets and the properties of the firm present thereat in possession of the appellant subject to the appellant's furnishing the list of such assets to the trial court.