SHABBIR AHMED, J.--- CMA No. 4508/2001 is the second application for appointment of Receiver, First Application (CMA 5013/2000) was disposed of by order dated 1st Nov., 2000, whereby the defendants were directed to furnish the security in the sum of Rs.50 lacs to the satisfaction of the Nazir of this Court with further direction. To the defendant to furnish accounts biannually in Court with right to plaintiff for a copy of such account and objections, if any, may be filed to such accounts before the Nazir of this Court. Simultaneously the plaintiff was directed not to interfere with possession and business activities of defendants pending decision of the suit.
2. It may mentioned here that a review application for review of the aforesaid order is pending disposal. The present application for appointment, of receiver has been filed by plaintiff by pleading changed circumstances as follows:-
(a) the defendants have let out 3/4th of the factory premises of M/s. Apex Marketing (Pvt.) Ltd.
(b) the business of the factory has been closed as reflected in Nazir's report dt. 9.8.2000, with lame excuse.
(c) Machinery of the factory was found at another place i.e. Anarkali, Bhingoria Town Karachi.
(d) The defendant has formed a Company namely Apex (Pvt.) Ltd. With registered office at the address of the suit property. One Haseebur Rehman's has been inducted as Director and ipso facto share-holder.
(e) The accounts are not filed in terms of the order, copies thereof were received by the plaintiff after filing of CMA No. 5024/2001 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, sales tax register respectively.
3. Facts connected with the application are that the plaintiff claims to be partner with 60% share in the business of confectionery 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, KDA 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 were 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 of 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. CMA 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 defendant 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 on name from her on resources and is running the confectionery business through her husband. Defendant No. 1 has also filed Suit No. 1016/2000 for cancellation of agreement of arrangement.
5. Application for appointment of Receiver has been resisted by defendant through counter- affidavit by raising pleas, inter a/ia, 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's, learned counsel for the plaintiff and Mr. Rizwan Ahmed Siddiqu, learned counsel for the defendant.
7. Mr. Naeemur Rehman's 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 (i.e) 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 a partnership at will. It was further observed that the appointment of. Receiver is interlocutory measure 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 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 on 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 filed. 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 Inshaullah v. Izzat Khan (1987 M LD 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 Siddiqi also referred two judgments (i) Azhar Wall v. Bell Helli Copter Textraninc (1987 M LD 1336) (D.B.) and (ii) Abdul //a/ ,4/z/ v. Mst. Haseen Khan (1987 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 accounts the defendants are ready and willing to comply with direction. / 1. Mr. Rizwan Ahmed Siddiqi has pointed out that portion lying vacant has been rented out and the rent has been reflected as income in the accounts submitted. The defendant has converted her on concern into company by getting in corporation in the name of M/s. Pak Afro Foods (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 (CMA 5013/2000), 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 M/s. Ram Hussain and NR Hussain's account with Bank Al-Habib Ltd. (ii) confirming issuance of pay order No. P0H 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, misc, 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 paid 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 SCM R 703), wherein the Supreme Court has laid down the criteria for determination of 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.
(i.e) 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 on 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.