Skip to content


Navinchandra Jethabhai and anr. Vs. Moolchand Sadaram Gindodiya - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai High Court
Decided On
Case NumberA.F.O.D. No. 527 of 1958
Judge
Reported inAIR1966Bom111; (1965)67BOMLR357; ILR1965Bom641
ActsIndian Contract Act, 1872 - Sections 216; Partnership Act, 1932 - Sections 10, 16 and 18; Limitation Act, 1908 - Schedule - Articles 106 and 115
AppellantNavinchandra Jethabhai and anr.
RespondentMoolchand Sadaram Gindodiya
Appellant AdvocateR.B. Kotwal and ;M.R. Kotwal, Advs.
Respondent AdvocateK.J. Abhyankar, Adv.
Excerpt:
.....of such firm whether can be filed against partner under section 69(3)(a)--maintainability of suit by partner against another for damages for misconduct.;under section 69(3) (a) of the indian partnership act, 1932, a suit for accounts of a dissolved firm or for realisation of the property of a dissolved firm can be filed against a person whether he be a partner or not.; appaya v subrao (1937) 39 bom. l.r. 1214, explained.;sheo dutt v. pushi ram [1947] a.i.r. all. 229 and daitari mohapatra v. brundaban matia [1959] a.i.r. orissa 110, referred to.;a suit by one partner against another for damages for misconduct will fall within the exceptions contained in section 69(3) of the act.;bihari lal v. union of india [1960] a.i.r. pat. 397 and daitari mohapatra v. brundaban matia [1959]..........by the firm unless it is registered and it shown that the persons suing on the behalf of the firm are partners that the in the firm. sub - section (3) provided that sub - section (1) and (2) would also apply to a claim of set - off fro the proceedings to enforce a rights arising fro ma contract, but is proceeds to case out - (a) the enforcement's of any rights to sue for the dissolution of the firm or for accounts of a dissolved relished the property of a dissolved firm, and (b) the powers or courts under the two insolvency of the act for relations of the property of an insolvent of partner. the exceptions, to the section created by sub -section (4) have no application to the present case, and we need not consider them. clauses (a) and (b) of the sub - section (3) which provide.....
Judgment:

Patel, J.

[1 - 15] XX XX XX XX XX

(16) The next question is whether the suit is barred by time. The court below has applied Article 115 o the Limitation Act which is for compensation for the Brach of any contract, express or implied, not in writing registered and not there specially provided for. It the suit were not only for damages for the breach of the contract of partnership, this Article would indeed apply, though the important question would be that of the starting point of the period. The third column which regulation would be that of the starring point provides that the time shall run from the date the contract is broken and in the case of the successive breached when the breach finally ceases. A suit for account and share of profits of a dissolved partnership is governed by Article 106 which provides a period of three years fro the date of dissolution of the partnership.

The learned Judge in Paragraph 43 of the his judgment has observed that the time commenced to the run from the 28th of April 1953, because the plaintiff admitted in this cross - examination - 'matter went wrong between in us since 28th April 1953. Since the said date disputes arose between the parties. Since the end of April 1953 Glabhchand was not allowed to take part in the doing of the firm'. He also relies on the admission of Shah in he his cross - examination in paragraph 4 that the defendant told him at the end of April 1953 that he didn't want to talk that to him, and by about 25th April he earnest that attempts were being made to have the tender in the defendants name only. If in this case there was a contract of partnership between the plaintiff and the defendant, the mere refusal of the defendant to associate the plaintiff agent with the partnership work would not necessarily determine the starting point of limitation. The plaintiff need not, merely of because of this dispute, terminate the contract and sue for damages for breach of the contract. Section 3 of the India Contract Act enables the plaintiff to terminate the contract or to continue it by this acquiescence. In the present case , is spite of the defendant's refusal to associate the plaintiff agent with the work of the contract, the plaintiff insisted onto continuance of the officers and this did by the protesting to the officers regarding the transfer of the contract to the name of the defendants, and ultimately he go it transferred in favor and firm as late as July in the sense to the that he got it decided that the contact belonged to the firm. In this case, having regard to the fact that the partnership was for particular venture, as long as the venture did not end, the plaintiff was in a position to continue the contract ands of it breach if he was otherwise entitled to sue on that basis. We may also point out that the defendants had in fact never denied the existence of the partnership except on the 4th of October 1953 in reply to the plaintiff suit having been filed onto 1st of October 1956 was with three years from the date f the denied of the plaintiff rights. We asked Mr. Abyankar to the show as any denial on the part of the defendants of the plaintiff right prior to that the date but he was not able to show any. He referred us to the evidence of the defendants at pages 57 and 58 of the paper book, but t shows that the only refused to execute the deed. There is nothing to show that the he ever, denied the existence of the partnership. Similarly the plaintiff admission at page 21 of the paper Book does not the show that the denial of the partnership was made to him prior of the that date. Reliance was also placed by Mr. Abhyankar to the support his contention on Ex. 139 dated 28th September 1953 which his client wrote to the Executive Engineer where in the he alleged that servile terms were not settled, and therefore the partnership deed could not be executed. Even here there ins clear-cut denial oft existence of the partnership. Secondly, a copy of the letter was not to the plaintiff ad thirdly eve this letter reached the Executive Engineer's officer on the 1st October 1953 as shown n by the Inward No. Written in red ink as on that letter. The suit having been filed on the 1st of the October 1956 - even under the assumption of that the this letter, finished causes of the action of the plaintiff, of which he knew nothing - it would be within time. We hold that even it the suit were for compensation for breach of the contract for the partnership, it would not be barred by the firstly because there was no denial of the partnership of till the 4th of October 1953 even if new denial furnished the only causes of action, though in our view, the period commenced on the date on which the Government terminated the contract.

(17) The question is whether the suit can be regarded as barred under Article 106 of the Limitation, Act. Having regard to the what we have stated above, it is clear that the partner ship would stand dissolved when the contract was rescinded by the Government, since admittedly the partnership was for this particular venture. The defendants himself admits that the partnership, was in respect him of this venture only if therefore it is a suit for the accounts of the dissolved firm , then since of the dissolution of the could be only on the 9th of April 1954 of by reason of the Ex 180 the period of the suit would limitation will start from that the and the suit would evidently be in time. Further discussion will show that this is a suit of such nature. We must, therefore, hold that the suit is within time.

(18) The next question is whether the suit is barred by reason of S. 69 of the India partnership Act. It is an admitted position that the partnership between the plaintiff and the defendants was not registered under the Partnership Act and therefore, S. 69 of the Act must govern the cases. The section is divided into four sub - sections. Sub - section (10 prevents a persons from suing as partner is a firm either the firm or a person who is alleged in the to be a partners in the firm, in respect to any rights arising out of the contract of the partnership or any other rights conferred by the Act, unless the firm if registered. Sub - section (2) prevents of the similar suit against a third party in respect of any contract by the firm unless it is registered and it shown that the persons suing on the behalf of the firm are partners that the in the firm. Sub - section (3) provided that sub - section (1) and (2) would also apply to a claim of set - off fro the proceedings to enforce a rights arising fro ma contract, but is proceeds to case out - (a) the enforcement's of any rights to sue for the dissolution of the firm or for accounts of a dissolved relished the property of a dissolved firm, and (b) the powers or courts under the two Insolvency of the act for relations of the property of an insolvent of partner. The exceptions, to the section created by sub -section (4) have no application to the present case, and we need not consider them. Clauses (a) and (b) of the sub - section (3) which provide exceptions clearly enable to asset of the accounts of the dissolution of the firm of the for accounts oft dissolved firm or for realization of the property of the dissolved firm. An arguments was made of the last portion of clauses (a) applied only to a suit against a third person. But then it is extremely defeat to hold that the provisions which is made as an exception to both the sub = section (1) and(2) should be split up in such a way that one portion of it should up in such a to sub = section (1) and the other potion of sub = section (2), with out even addition the words 'respectively' by the legislature. To do so would appears to the be adding the word are not to be found in found in the clauses or re - drafting the statute. If the legislature really intended to create an exception in this limited from, then to each of the sub =section a proviso could have been added - making an exception only to that sub - section. Giving a natural meaning to the provisions of clauses case in the our view, a suit for the accounts of the dissolved firm or for relations of the property of dissolved firm for m any proviso, whether he be a partner or not can be filed. This view was taken in the case of Sheo Dutt v. Pushi Ram AIR 1947 All 229, and it was subsequently followed in the case of Daitari Mohapatra v. Brundaban Matia : AIR1959Ori110 . Mr. Abhyankar relied on the observations of Sir John Beaumont of the case of Appayya Nijlingappa v. Subrao Babaji reported in 39 Bom LR 1214: AIR 1938 Bom 108 where the learned chief Justice appeared to be of the view that the first sentence of sub - clauses (a) should be read as creating exception from sub - section (1), the exceptions being enforcement of the right of the sue for dissolution of accounts of the dissolved firm, and the last sentence of that sub = clauses should be read as creating an exception to sub =section (2) in respect of suit to enforce any right to the realize of suit of the enforce any right to realize property of a dissolved firm. The question arose in a suit be the plaintiff who were partners of the defendants for the recovery of an amounts due to the partnership by the defendants after the partnership by the defendants after the partnership was dissolved. Now , if was really the learned chide justice has laid down the rules purposed to the have been formulated b him, the suit old have been dismissed. In that case, the trial court had dismissal in the suit of the decreed the plaintiffs claim. The learned Chief Justice held that the suit in question fell within the exception and therefore setting aside the decree it is obvious from the reasoning of the learned chief justice that the did not limited the exception to suits against third parties only , and if this is so with respect, it would seem it does not matter whether the exception is to there fore is really not against the conclusion at which we have arrived.

(19) Even a suit by one partner against another for damages for misconduct in the ultimate analysis must fall within the exceptions. When a partner claims damages on the grounds of the misconduct of his partner, what he really means is the partner by must make good the loss sustained by the partnership by the his misconduct and the amounts so brought into the partnership. The amount brought into the partnership is to course the retaliation of the properties of the partnerships. One must notice in this connection that the partnership act imposes no disability that the partners of the unregistered firm entering into contracts and wither with third parties or amongst themselves. The prohibition is only in respect to the either the partners or the firm being able to the file suits during the continuance of the partnership. Suits, however of the nature referred to the in the exceptions could be filed. In Bihari lal Shymsundar v. Union of India : AIR1960Pat397 , a suit for the damages against a third party was held maintainable. In : AIR1959Ori110 , referred to earlier a suit for money due from a partner of a dissolved firm to the another was held to be maintainable. It is not necessary to was state what kind to suit may not be maintainable as between partners. Suffice it to say that the present suit, even as a suit for damages is maintainable.

(20) Order accordingly.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //