Nisha M., W/o Sajin & Lajin D.L., S/o Dixon v. State Bank of India, Mongam Branch and Binu V.M.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** ## **THURSDAY,THE 25TH DAY OF MARCH 2021/4TH CHAITHRA,1943** ## **WP(C).No.3110 OF 2021(K)** ## **PETITIONERS:** - **1 NISHA M., W/O.SAJIN, AGED 40 YEARS, MANAGING PARTNER, M/S.MONGAM INDANE SERVICES, INDANE DISTRIBUTOR, RESIDING AT KILIKKOTTUTHODUVIL HOUSE, MONGAM P.O., MALAPPURAM DISTRICT, PIN - 673 642.** - **2 LAJIN D.L., S/O.LATE DIXON, AGED 40 YEARS, PARTNER OF M/S.MONGAM INDANE SERVICES, INDANE DISTRIBUTOR, RESIDING AT BAGALETH QUARTERS, FEDERAL BANK BUILDING, KOZHIKODE ROAD, MONGAM P.O., MALAPPURAM DISTRICT, PIN - 673 642.** **BY ADVS. SRI.R.SURENDRAN KUM.S.MAYUKHA** ## **RESPONDENTS:** **1 THE STATE BANK OF INDIA, MONGAM BRANCH, REPRESENTED BY THE MANAGER, STATE BANK OF INDIA, MONGAM BRANCH, MONGAM P.O., MALAPPURAM DISTRICT, PIN - 673 642. 2 BINU V.M., S/O.MATHEW, AGED 34 YEARS, NOW RESIDING AT BIG B STORE BUILDING, NEAR MONGAM INDANE LPG GODOWN THADAPPARAMBU ROAD, MONGAM P.O., MALAPPURAM DISTRICT, PIN - 673 642. R1 BY ADV. SHRI.TOM K.THOMAS R2 BY ADV. SRI.T.C.KRISHNA R2 PREETHI RAMAKRISHNAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 25-03-2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.3110/2021 : 2 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.3110 of 2021 ````````````````````````````````````````````````````````````` _Dated this the 25[th] day of March, 2021_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioners, who are Partners of a Firm engaged in the distribution and sale of LPG in retail to consumers, are before this Court seeking to quash Ext.P10 e-mail intimating the stoppage of internet banking facility of Current Account of the Firm and to direct the 1[st] respondent to restore the internet banking facility of the Current Account. 2. The petitioners state that they are Partners of M/s. Mongam Indane Services. The Partnership Firm is registered. The 1[st] petitioner was selected by Indian Oil Corporation for appointment as Distributor of LPG. On issuance of Ext.P2, the 1[st] petitioner spent the entire amount for establishment of the infrastructure facilities of the LPG W.P.(C) No.3110/2021 : 3 : distributorship. On 05.04.2019, the 1[st] petitioner entered into partnership with the 2[nd] petitioner and the 2[nd] respondent. The 2[nd] respondent promised to contribute ₹20 lakhs to the Firm as his share capital. But, the amount was not paid. 3. The 2[nd] respondent later started joining hands with nearby Gas Agency and started to cause trouble to the petitioners' business. The 2[nd] respondent has criminal background, contends the petitioners. The Partnership Firm had an account with the 1[st] respondent-Bank and was operating a Current Account. All the three Partners were jointly operating the Account. The 2[nd] respondent was convicted by a criminal court. The petitioners reported the conviction of the 2[nd] respondent to the Oil Company. Infuriated by the action of the petitioners in communicating the conviction, the 2[nd] respondent approached the 1[st] respondent-Bank and instructed to stop all net banking transactions. The 1[st] respondent thereupon stopped internet transaction in respect of the Account of the Firm. W.P.(C) No.3110/2021 : 4 : 4. The petitioners filed W.P.(C) No.11337/2020. Pursuant to an interim order passed in the said writ petition, the 2[nd] respondent withdrew his instructions given to the 1[st] respondent-Bank and thereafter internet banking facility was restored. 5. When the petitioners verified the accounts of the Firm, they found that the 2[nd] respondent has committed gross irregularities and misappropriated funds. Thereupon, the petitioners issued a show-cause notice to the 2[nd] respondent. Though the 2[nd] respondent issued a reply to the show-cause notice, the reply did not contain any explanation to the allegations made against him. Therefore, the petitioners were convinced that continuance of the 2[nd] respondent in the Firm will be against the interest of the Firm. The petitioners therefore expelled the 2[nd] respondent from the Firm and the decision was communicated to the 2[nd] respondent as per Ext.P9. 6. The petitioners state that the 2[nd] respondent is no more a Partner of the Firm. However, the 2[nd] respondent W.P.(C) No.3110/2021 : 5 : prevailed upon the 1[st] respondent-Bank and the Bank has stopped internet banking facilities of the Current Account of the Partnership Firm. It is challenging the action of the Bank in stopping internet banking facilities that the petitioners are before this Court. 7. The counsel for the petitioner would contend that though the 2[nd] respondent had offered to contribute ₹20 lakhs to the Firm, the 2[nd] respondent did not pay the amount. He was cooperating with the business rivals. As per Clause 12 of the Partnership Deed, a Partner can be expelled after giving an opportunity to show-cause. After issuing a showcause notice, the 2[nd] respondent was expelled from the Partnership and the said fact was communicated to the 1[st] respondent-Bank also. Therefore, the Bank ought not have acted upon the instructions of the 2[nd] respondent. 8. The petitioners' Firm has not committed any default. Therefore, the 1[st] respondent-Bank had no reason to stop internet banking transactions in respect of the Account. The 1[st] respondent-Bank ought to have noted that in view of W.P.(C) No.3110/2021 : 6 : Clause 11 of the Partnership Deed, no Partner could individually, without the concurrence of other Partners, seek stoppage of the Bank Account. 9. The learned counsel for the petitioners relied on a judgment of the Hon'ble High Court of Calcutta in _**Ganesh Chandra Mukherji v. Gopal Chandra Hazra** [AIR 1976 Cal 459]_ to contend that as per Section 33 of the Partnership Act, 1932, a Partner can be expelled from a Firm in the exercise of powers conferred by contract between the Partners. Expulsion of the 2[nd] respondent from the Partnership was communicated to the 1[st] respondent-Bank and therefore the Bank cannot be permitted to suspend the internet banking transactions of the petitioners' Firm, on the basis of instructions of the 2[nd] respondent, contended the learned counsel for the petitioners. 10. The learned counsel for the 2[nd] respondent pointed out that the petitioners were not justified in approaching this Court since under Clause 14 of Ext.P3 Partnership Deed, if any dispute or difference arises between W.P.(C) No.3110/2021 : 7 : the Partners, the dispute should be referred to arbitration. The learned counsel for the 2[nd] respondent relied on Clause 17 of Ext.P3 Partnership Deed and contended that the petitioners cannot be permitted to change the constitution of the Firm in any manner without the written consent and concurrence of the Indian Oil Corporation Limited. The 2[nd] respondent seriously disputes the legality of his ouster from the Partnership Firm. 11. I have heard the learned counsel for the petitioners and the learned counsel for the 2[nd] respondent. I have also heard the learned Standing Counsel for the 1[st] respondent-Bank. 12. The case of the petitioners is that the 2[nd] respondent has been expelled from the Partnership for good and sufficient reasons. Such expulsion is permitted by the provisions of the Partnership Act. The 1[st] respondent-Bank, therefore, ought to have relied on the information given by the petitioners as regards expulsion of the 2[nd] respondent from the Partnership and ought not have acted upon the W.P.(C) No.3110/2021 : 8 : instructions of the 2[nd] respondent. However, the 2[nd] respondent has disputed the fact of his expulsion from the Partnership. According to the 2[nd] respondent, he cannot be expelled from the Partnership in view of the specific provisions contained in the Partnership Deed, except with the leave of the Indian Oil Corporation Limited. Furthermore, in view of the provisions contained in the Partnership Deed, the petitioners ought to have resorted to arbitral proceedings. 13. The dispute involved in this writ petition falls under the realm of contract. When the legality of expulsion of a party from the Partnership is disputed by the Partner who is allegedly expelled, the appropriate remedy available to the petitioners is either arbitral proceedings as provided for under the Partnership Deed or civil remedies. The jurisdiction of the High Court under Article 226 of the Constitution of India cannot be invoked to resolve disputes between Partners of a Firm. Though the relief sought for by the petitioners is against the 1[st] respondent-Bank which is a Public Sector Undertaking, the issue involved is of purely civil W.P.(C) No.3110/2021 : 9 : nature and would fall under the realm of contract. No element of public duty on the part of the 1[st] respondent-Bank is involved in this case. In the circumstances, this Court finds that the writ petition filed by the petitioners is misconceived and no relief can be granted to the petitioners in exercise of the jurisdiction of this Court under Article 226 of the Constitution of India. The writ petition is therefore dismissed. Sd/- **N. NAGARESH, JUDGE** aks/24.03.2021 W.P.(C) No.3110/2021 : 10 : ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE ACKNOWLEDGMENT DATED 10/4/2019, ISSUED BY THE REGISTRAR OF FIRMS, THIRUVANANTHAPURAM TO THE FIRM M/S.MONGAM INDANE SERVICES.** - **EXHIBIT P2 TRUE COPY OF THE LETTER OF INTENT DATED 25/6/2015 ISSUED BY THE SECOND RESPONDENT TO THE PETITIONER.** - **EXHIBIT P3 TRUE COPY OF PARTNERSHIP DEED DATED 5/4/2019 EXECUTED BETWEEN THE PETITIONERS AND THE SECOND RESPONDENT.** **EXHIBIT P4 TRUE COPY OF THE COUNTER AFFIDAVIT DATED 18/6/2020 FILED BY THE SECOND RESPONDENT HEREIN IN WP(C) NO.11337 OF 2020 OF HIGH COURT OF KERALA.** - **EXHIBIT P5 TRUE COPY OF THE LETTER DATED 30/5/2020 ISSUED BY THE FIRST RESPONDENT TO THE PETITIONERS.** - **EXHIBIT P6 TRUE COPY OF THE JUDGMENT DATED 11/8/2020 IN WP(C) NO.11337 OF 2020.** - **EXHIBIT P7 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 9/1/2021 ISSUED BY THE PETITIONERS TO THE SECOND RESPONDENT.** - **EXHIBIT P8 TRUE COPY OF THE REPLY DATED 21/1/2021 RECEIVED FROM THE SECOND RESPONDENT.** - **EXHIBIT P9 TRUE COPY OF THE LETTER DATED 25/1/2021 ISSUED BY THE PETITIONERS TO THE SECOND RESPONDENT.** - **EXHIBIT P10 TRUE COPY OF THE E-MAIL COMMUNICATION DATED 2/2/2021, RECEIVED FROM THE FIRST RESPONDENT.** W.P.(C) No.3110/2021 : 11 : ## **RESPONDENTS' EXHIBITS:** **EXHIBIT R1(a)** **TRUE COPY OF LETTER DATED 1.2.2021 ISSUED BY THE 2ND RESPONDENT TO THE 1ST RESPONDENT** **EXHIBIT R1(b)** **TRUE COPY OF LETTER DATED 1.2.2021 ISSUED BY THE 2ND RESPONDENT TO THE 1ST RESPONDENT** **EXHIBIT R2(a)** **TRUE COPY OF COMPLAINT DATED 21/5/2020 SUBMITTED BY THE PETITIONERS BEFORE THE INDIAN OIL CORPORATION** **EXHIBIT R2(b)** **TRUE COPY OF LETTER DATED 24/12/2020 OF THE CHIEF AREA MANAGER, INDIAN OIL CORPORATION** ncd