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Bharat Petroleum Corporation v. B.M. Motors

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 4595 of 2014)Decided 17 Apr 2014
Civil Appeal No. 4595 of 2014
Justice T.S. Thakur · Justice C. Nagappan

Background

Two petrol-pump partners had surrendered management and profit-sharing rights in 1984 in return for a monthly petrol allowance. After the operating partners died, Bharat Petroleum stopped supplies and resisted reconstitution because fresh no-objection certificates had not been given. Disputes also remained over the former partners' unpaid allowance.

Decision Breakdown

The Supreme Court treated the 1984 agreement as a retirement deed and as the former partners' no-objection certificate for reconstitution. It directed the firm to deposit Rs.8,64,650 with the Allahabad High Court Registrar within one month, for release to the former partners on surrender of the earlier uncashed bank draft. After that deposit, Bharat Petroleum had to consider the reconstitution proposal treating the agreement as consent. The corporation could impose conditions protecting its business interests, but should not permit procedural objections to give a retiring partner an unfair bargaining advantage.

Lesson Learnt

A partnership agreement's real effect matters when deciding whether a former partner can block continuation of a business. Even where an old agreement supplies consent, a dealership operator must satisfy payment directions and the corporation's lawful reconstitution conditions.

Official source (sci.gov.in)View Judgment (PDF)

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