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Gur Dayal Prasad Vs. L. Raghunath Prasad and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad High Court
Decided On
Case NumberFirst Appeal No. 2 of 1959
Judge
Reported inAIR1976All141
ActsPartnership Act, 1932 - Sections 11, 13 and 44; Evidence Act, 1872 - Sections 92
AppellantGur Dayal Prasad
RespondentL. Raghunath Prasad and ors.
Appellant AdvocateDeoki Nandan Agarwal, Adv.
Respondent AdvocateA.G.A.
Excerpt:
(i) contract - rights and duties - sections 11 and 13 of partnership act, 1932 - rights and duties of partner are determined by contract between partners subject to provisions of act - contract may be varied by consent of all members - liability of partner is to firm and not to individual partner. (ii) dissolution - section 44 of partnership act, 1932 - plaintiff willing to sell his shares - firm refused to purchase the share - as per the partnership deed plaintiff allowed to withdraw from partnership if rights prejudiced - also allowed to sell their shares privately - partnership deed does not allow dissolution on these grounds - held, right to dissolution negated under section 44 in light of partnership deed. - - as the defendants failed to purchase the share of the plaintiffs,.....r.b. misra, j.1. the present appeals are directed against the judgment and decree dated 30th october, 1958, passed by the 1st additional civil judge, agra in a suit for dissolution of partnership, rendition of accounts and for recovery of damages.2. there was a spinning mill at hathras in the district of aligarh, known as ram chand hardeo dass. this mill was later on, purchased by shroti lal bankey lal and others in execution of a decree no. 217 of 1916 for a sum of rupees 24,00,000. according to the plaintiffs, the purchasers were short of funds. they, therefore, approached makhan lal, grand-fa her of plaintiff no. 1 and father of ram swarup, plaintiff no. 2 and persuaded him to become a partner in the said mill on the assurance of prospective profits.makhan lal agreed to become a.....
Judgment:

R.B. Misra, J.

1. The present appeals are directed against the judgment and decree dated 30th October, 1958, passed by the 1st Additional Civil Judge, Agra in a suit for dissolution of partnership, rendition of accounts and for recovery of damages.

2. There was a spinning mill at Hathras in the district of Aligarh, known as Ram Chand Hardeo Dass. This mill was later on, purchased by Shroti Lal Bankey Lal and others in execution of a decree No. 217 of 1916 for a sum of Rupees 24,00,000. According to the plaintiffs, the purchasers were short of funds. They, therefore, approached Makhan Lal, grand-fa her of plaintiff No. 1 and father of Ram Swarup, plaintiff No. 2 and persuaded him to become a partner in the said mill on the assurance of prospective profits.

Makhan Lal agreed to become a partner and invested a sum of Rs. 2,25,000 out of Rs. 24,00,000, the total sale consideration of the mill. The terms of the partnership were agreed upon in or about November, 1920, and later on, a partnership deed dated 4th April, 1923, incorporating the terms of the partnership was written out at Agra and registered at Hathras. Under the terms of the partnership, Bankey Lal, father of defendants Nos. 3 and 4 and husband of defendant No. 5, and Ganpat Lal, defendant No. 2 were appointed Manager and Assistant Manager respectively of the mill, which was styled as Lalla Mal Hardeo Dass Cotton and Spinning Mill, Hathras and to which a ginning factory and other immovable properties were attached. These two managers were responsible to keep and render correct accounts. Ban-key Lal died in January, 1942, and, after his death, Gur Dayal Prasad, defendant No. 1, was appointed as Manager and Ganpat Lal continued to be the Assistant Manager and they were liable for rendering accounts of the partnership for the period during which they acted as Managers. The management of the mill was very unsatisfactory. The Managers did not hold regular meetings, as required by the deed of partnership. The accounts were not subjected for examination and audit nor true balance sheets were prepared nor the stocks of raw and finished materials were included therein. The yarn was sold at a favourable rate fictitiously to their own creatures and resold after making secret profits. The partners personally utilised the mill property without the price being debited in their accounts in utter disregard of Clause 11 of the partnership deed. The Managers were not purchasing cotton for the mill at Agra nor selling the yarn of the mill through the plaintiffs firm and the plaintiffs have thereby been put to heavy loss on account of the wrongful acts for which defendants Nos. 1 to 5 were liable. The Managers and other persons secured the majority of partners to their side by showing them illegal favour. They were not carrying on their duties imposed by law and under the terms of the partnership deed and were acting dishonestly with the sole object of misappropriating to themselves the profits of the mill and making illegal Rains. The plaintiffs, fed up with the state of affairs of the mill, had no other alternative but to sever their connection with the mill and a notice dated 14th March, 1944, was served, under Clause 18 of the Partnership Deed, offering to sell their own share to the firm. No resolution was, however, passed on the notice despite its being included in the agenda of the meetings of 31st March, 1944, 16th April. 1944 and 28th May, 1944. On the other hand, to create complications, a supplementary agenda at the instance of certain members was issued on 7th April, 1944, that the mill be sold by public auction. This resolution was passed in the meeting of 28th May, 1944, with a view to causing loss and prejudice to the plaintiffs. The defendants were bound to inform the plaintiffs of their decision as to whether the firm was prepared to purchase the plaintiffs' share or not within thirty days but the plaintiffs got no response. The result was that the price of the share of the mill fell down and the strangers were not prepared to purchase the shares even at the price fixed by the mill under clause 28 of the partnership deed, viz at Rupees 416/10/8 per share of Rs. 500 the actual price being much more. As the defendants failed to purchase the share of the plaintiffs, they were entitled to have the partnership dissolved by Court as per clause 17 of the partnership deed. The defendants were anxious to sell the mill privately with the object of whitewashing their misdeeds of management and to avoid their liability to render true and correct accounts. The defendants Nos. 1 to 5 and other defendants were forming a clique and were acting negligently and carelessly and had committed acts and omissions, viz. they did not get the partnership registered with the income-tax authorities in time causing loss to the partnership, that in spite of the resolution to get the burnt portion of the mill and the machinery restored so as to make the mill to yield as much profit as possible, it was not done. The raw cotton for the mill was not purchased through the plaintiffs nor the finished yarn was sold through them at Agra. The defendants were thus liable to compensate the plaintiffs for the loss caused on account of the breach of duties of the defendants and for their acts and omissions. Makhan Lal having died', Raghunath Prasad plaintiff No. 1, is entered as partner in the firm as per Clause 23 of the partnership deed and Ram Swarup, plaintiff No. 2, was a sub-partner. The plaintiffs, therefore, filed the suit for recovery of a sum of Rs. 50,000 for the loss suffered by them on account of the acts and omissions of the defendants in not considering the notice of the plaintiff dated 14th March, 1944, and passing of the resolution dated 28th May, 1944, for the sale of the mill thereby reducing the value of the share pro rata and for a sum of Rs. 25.000 as damages for the acts and.' omissions, as mentioned in paragraph 32 of the plaint. They also claimed a relief for dissolution of the partnership and for rendition of accounts,

3. The suit was contested by defendants Nos. 1, 2 and 6. Gur Dayal Prasad, defendant No. 1 contested the suit on the ground that the plaint was vague for want of particulars of fraud, misconduct, misrepresentation, dishonesty and secret gains, that during the time of managership of the answering defendant, the mill yielded substantial profits and he discharged his duties most honestly and faithfully, that various meetings referred to in the plaint were duly called, that in view of arbitration clause 49 of the partnership deed, the suit was not legally maintainable, that the judgment dated 16th February, 1939, passed by this Court in the suit instituted by Smt. Dropadi, defendant No. 15, operated as res judicata, that during the period of managership of the contesting defendant, accounts were properly and regularly maintained, which had been inspected by the plaintiffs, through servants and Amar Nath, that the accounts were presented every year in the meeting of the partners after auditing, that purchase of raw cotton was made according to the best interest of the partnership to the knowledge and consent of all the partners and the plaintiffs were not entitled to any commission or compensation etc., that the partnership could not be got registered due to the default of the other partners, that Makhan Lal was admitted as a partner at his own request at Hathras and that the court had no jurisdiction to try the suit, as no part of the cause of action arose within the jurisdiction of that Court.

4. Ganpat Lal, defendant No. 2, filed a separate written statement and denied the plaint allegations that Seroti Lal and others persuaded Makhan Lal and made certain exaggerations and misrepresentation. The true facts were that Makhan Lal became a partner of his own free will, that the terms of the partnership, the writing of the partnership deed, its execution and attestation all took place at Hathras and no part of the cause of action arose within the jurisdiction of the trial court, that the profit and loss accounts, balance sheets etc. used to be considered in the meetings of the partners and dividends distributed, that the defendant being the Assistant Manager had no share in the management and was not liable to render accounts, that Suit No. 96 of 1943 was instituted by defendant No. 3 for a declaration that the proceedings of the meeting of 17th February, 1943, were ineffective and ultra vires, that the said suit was dismissed on 27th February, 1944, that during the pendency of the said suit and after its decision, the business of the partnership was managed by Gur Dayal Prasad, defendant No. 1 and the defendant had no hand in the management, that the purchase of cotton and sale of yarn at Agra had to foe discontinued as the plaintiff firm did not do the business honestly. He further denied that the defendants intentionally did not hold the meetings with, the intention that the plaintiffs' notice remained undisposed of and that the resolution of 28th May, 1944, for the sale of the mill was passed in the interest of all the partners.

5. Sheo Prasad, defendant No,. 6, also filed a separate written statement and contested the suit on the grounds, inter alia, that the suit was toad for misjoinder of plaintiff No. 2 and some of the partners as plaintiffs and defendants, that Dauji Dayal was a necessary and proper party to the suit, that under the terms of the partnership deed, the plaintiffs had no right of dissolution through Court, that despite the notice for selling the shares, the plaintiffs were at liberty to sell them to any person and were not required to wait for the outcome of any meeting of the partnership firm. The allegations about the clique and collusion etc. by the defendants, as alleged in the plaint, were denied. It was further asserted that no secret gain was made by him and that the application for registration of the partnership for the purpose of income-tax was duly signed by him. There was default on the part of the Managers and they were liable. He further denied the allegations in the plaint that he utilised the mill property for his personal use. He was not liable to render any accounts

6. The remaining defendants did not contest the suit in spite of sufficient service. So the case proceeded ex parte against them. Defendant No. 7 was represented by a counsel and defendant No. 8 was present personally.

7. The pleadings of the parties gave rise to as many as 16 issues, as will be evident from the judgment of the trial Court. Issues Nos. 1, 2. 11 (b), 12, 14 and 16 were decided in the affirmative while issues Nos,. 3 to 9, 10 (except that the Court found that the Managers were guilty of making secret gains), 11 (a) and 11 (c) were decided in the negative. On issue No. 13, the trial Court found that the status of Ganpat Lal was that of an Assistant Manager. On these findings, the suit for accounting was decreed and defendants Nos. 1 to 5 were held liable to render accounts for different periods. Defendants Nos. 2 and 3 to 5 were held liable to render accounts for the period from 1st January, 1930, to 1st July, 1940. Gur Dayal Prasad, defendant No. 1 and Ganpat Lal, defendant No. 2, were held liable to render accounts for the period 2nd July, 1940, to 21st August, 1944. Those defendants had been directed to furnish profit and loss account for each year. While accounting, the Commissioner was also directed to find out if any secret gain had been made by the Managers during their tenure, either in the purchase of cotton, in its resale or in the sale of yarn through their friends, relatives or firms. The court further passed a decree for a sum of Rs. 5,000 against defendants Nos. 1 and 2. The plaintiffs' claim for relief (1) claiming Rs. 50,000 and for relief (4) claiming Rs. 20,000 and the prayer for dissolution of the partnership were, however, dismissed,

8. The judgment and decree of the trial court have given rise to two appeals; one by Gur Dayal Prasad, the defendant, which is First Appeal No. 2 of 1959, and the other toy Raghunath Prasad and others, the plaintiffs, which is First Appeal No. 92 of 1959. Both the appellants have taken a fairly large number of grounds in their appeals, but at the time of arguments, they confined their arguments to a limited point.

9. We first take up First Aopeal No. 2 of 1959.

10. Sri Deoki Nandan Agrawal, at the very outset, stated that his argument was confined only to the finding on issue No. 11 (b). Issue No. 11 (b) reads:

'11 (2) Whether the resolution dated 6th August, 1952, for restoring the machinery of the burnt portion of the mills was not carried out into effect? If so its effect?'

11. As stated earlier, this issue was decided in the affirmative and the Court assessed the damages on that account at Rs. 5,000. The first contention raised by Sri Deoki Nandan Agrawal was that in the absence of any allegation, much less evidence, about the actual loss, the court below acted illegally in assessing the damages at Rs. 5,000. To start with, in paragraph 32 of the plaint, the plaintiffs alleged that defendants Nos 1 to 5 and other defendants formed a clique with others and acted negligently and carelessly and did not pay due attention to their duties.

12. As would be evident from the fact that though a resolution to get the burnt portion of the mill and the machinery restored was passed long ago, it was never carried out and the mill continued suffering loss on that account. The plaintiffs did not allege any specified amount of loss on that account. Later on, when the Court asked the plaintiffs to supply better particulars, in paragraph 19 of the better particulars, at page 37 of the typed paper book, the plaintiffs alleged that without going through the accounts, it was not possible for them to divide the sum of Rs. 25,000 claimed as damages under relief 4 in respect of the items given in paragraph 32 of the plaint into different heads inasmuch as they were interconnected. However, the plaintiffs roughly divided the figure of Es. 25,000, claimed under relief 4, as follows:--

Rs, 10,000 on account of loss of commission

RD. 10,000 for non-registration of the firm for the purpose of income-tax.

Rs. 5,000 for the loss on account of not carrying out the resolution for the restoration of the burnt portion of the mills.

13. Even in the better particulars supplied, the plaintiffs have not given any basis how the loss of Rs. 5,000 was occasioned on account of not carrying out 'the resolution for the restoration of the burnt portion of the mills. So far as the evidence on this point is concerned, Sri Deoki Nandan Agrawal made a reference to the statement of Raghunath Prasad, the .plaintiff. In the statement-in-chief, Raghunath Prasad did not say a word about the loss on that account. In cross-examination, however, he deposed to the effect that in 1942, a portion of the mill was burnt. A sum of Rs. 2,00,000 was received from the insurance company. No new machinery was purchased from that amount. On that account, there was a decrease in the production. Previously, 40 bales of cloth were prepared in two shifts, but, later on, only 20 bales of cloth were prepared and so there was loss. At page 61 of the typed paper 'book, he admitted that he could not say whether there was a profit of Rs. 1,58,000 in 1941 and Rupees 4,97,000 in the year 1942 and Rs. 7,45,000 in 1943 because if there had been any profit, he would have got a share. In the next sentence, he, however, admitted that he had already received the profits for the years 1942 and 1943, but he could not say how much profits he got for those years. That profit was less, but he could not say how much it was. The deposition of Raghunath Prasad does not categorically show whether there was any loss and, if so, what was the amount of loss. Rather, on the other hand, according to his deposition, he had already received the profits for the years 1942 and 1943.

14. Gur Dayal Prasad (D.W. 1) inhis deposition stated that on 21st May, 1942, and on 3rd January, 1943. there was a fire in the mill. On account of the fire in the mill in these two years, a sum of Rs. 2,30,000 was received from the insurance company. The fire was in the Gari Khata Mule Department, that is, in the machinery which used to prepare yarn of less twist. Twelve sets of machines were burnt in those fires. A resolution dated 16th August, 1942, was passed in the meeting for replacing those machines and that work was entrusted to Rai Bahadur Sheo Prasad, but he did not purchase the machines in spite of reminders. No special damage was occasioned on account of non-replacement of the machines because, at that time, the demand was for high count yarn which was prepared by ring press. Out of the twelve machines, which were burnt, three had been repaired. From the deposition of D.W. 1, it is evident that no loss was occasioned to the firm on account of non-replacement of the burnt machines. The reason given by him was that the quality of the fabrics in demand was not the one prepared by those machines, which were burnt. It is further clear from his deposition that, in any case, he was not liable for any damages on that account, as by a resolution dated 16th August, 1942, the work of purchasing the new machines had been entrusted to Rai Bahadur Sheo Prasad. This is clear from resolution No. 7, at page 214 of the typed paper book. Resolution No. 7 is in the following terms:--

--7 fey ds ckcr xkM+h [kkrsdh e'khu [kjhnus ij fopkj&& 7 ;k 'kkUrh Lo:i us ;g jk; nh fd og feydks tks jde chek dEiuh ls olwy gqbZ gS mlesa e'khu [kjhnus dk v[R;kj ugha gSckdh esEcjku desVh dh ;g jk; gqbZ fd e'khu [kjhnus ds ckLrs jk- ck- f'k- izlkndks rtcht fd;s tkras gSa mudksa tqeys v[R;kjkr e'khu [kjhnus ds okLrs fn;s tkrsgSa og ftl rjg ls le>s e'khu xkMha dh [kjhn dj ysa A

This resolution was passed by majority and if this duty of purchasing the machines was cast on Rai Bahadur Sheo Prasad and he failed to purchase the same in time despite reminders how could the Manager be held liable for the omission of Rai Bahadur Sheo Prasad.

15. Shri Swatni Dayal, appearing for the plaintiffs, however, contended that the power of the General Management was with the Managers, as contemplated in the deed of Partnership and that power could not be varied even by a resolution of majority. He referred to Proviso (4) to Section 92 of the Evidence Act Section 92 in so far as it is material for the purpose of the present case reads:

'92. Exclusion of evidence of oral agreement:--

When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest for the purpose of contradicting, varying, adding to, or subtracting from, its terms.

(1) .....

(2) .....

(3) .....

(4) The existence of any distinct sub-sequent oral agreement to rescind or modify any such contract, grant or disposition of property, may be proved, except in cases in which such contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to the registration of documents.'

16. We feel difficulty in acceding to this argument of Sri Swami Dayal. Section 11 of the Indian Partnership Act provides:

'11 (1). Subject to the provisions of this Act, the mutual rights and duties of the partners of a firm may be determined by contract between the parties, and such contract may be expressed or may be implied by a course of dealing.

Such contract may be varied by consent of all the partners, and such consent may be expressed or may be implied by a course of dealing.

(2) Notwithstanding anything contained in Section 27 of the Indian Contract Act, 1872, such contracts may provide that a partner shall not carry on any business other than that of the firm while he is a partner.'

17. Section 11 of the Indian Partnership Act makes it obvious that the mutual rights and duties of the partners of the firm are to be determined toy contract between the partners, of course, subject to the provisions of this Act. This section further contemplates that the contract may be varied by consent of all the partners. As the responsibility of the partners is joint and several, it was fully competent to the partners by an agreement to entrust Rai Bahadur Sheo Prasad with purchase of the new machinery. The resolution authorising Rai Bahadur Babu Sheo Prasad to purchase the machinery was passed by all the partners except Sri Shanti Swarup. Even Babu Shanti Swarup raised only ,a technical objection that the amount received from the insurance company could not be utilised for the purchase of machines. He had no objection to the conferment of power on Rai Bahadur Babu Sheo Prasad to purchase the machines. Even his subsequent conduct shows his tacit consent to empower Rai Bahadur Babu Sheo Prasad to purchase the machinery. Sri Shanti Swarup did not raise his little finger even at a later stage against the enforcement of the resolution empowering Rai Bahadur Babu Sheo Prasad to purchase the machines. Thus, it can be safely concluded that there was an implied consent even of Sri Shanti Swarup and there was express consent of the remaining partners. Even if the Manager had the power of the General Management under the terms of the agreement, such an agreement could be varied by the consent of the partners and, indeed, by the resolution dated 16th August, 1942, the partners authorised Rai Bahadur Babu Sheo Prasad to purchase the machinery. This was fully warranted by Section 11 of the Indian Partnership Act. Section 92 of the Evidence Act, in these circumstances, can have no application to the facts of the present case and the transaction of the business of the partnership will toe governed by the Indian Partnership Act or by the partnership deed.

18. There is yet another aspect from which the case can be considered. Section 13 of the Indian Partnership Act deals with the rights and liabilities of the partners. Amongst others, Section 13 provides:

'13. Subject to contract between the partners-

(a) .....

(b) .....

(c) .....

(d) .....

(e) the firm shall indemnify a partner in respect of payments made and liabilities incurred toy him-

(i) in the ordinary and proper conduct of the business, and

(ii) in doing such act, in an emergency, for the purpose of protecting the firm from loss, as would be done by a person of ordinary prudence, in his own case, under similar circumstances: and

(f) a partner shall indemnify the firm for any loss caused to it by his wilful neglect in the conduct of the business of the firm'

19. In view of Section 13 of the Indian Partnership Act, either the firm shall indemnify a partner in respect of the payments made and liabilities incurred by him or, alternatively, a partner shall indemnify the firm for any loss caused to it by his wilful neglect in the conduct of the business of the firm. The section does not contemplate of a suit by one partner for damages against another partner. The liability of a partner is to the firm and not to one particular partner. We are doubtful whether in face of Section 13 of the Indian Partnership Act, a suit by some of the partners against some other partners is at all maintainable. As at present advised, we do not express any firm opinion on this question, but the lurking doubt about the maintainability of such a suit for recovery of damages by some partners against some other partners is there. This is coupled with the fact that there is no definite evidence or basis alleged by the plaintiff for the recovery of Rs. 5,000 as damages from the defendants on account of the Managers' omission to purchase the machines.

20. From the statement of Gur Dayal Prasad D.W. 1), the Manager, at page 93 of the typed paper book, it is evident that there was no loss on account of the omission to replace the new machines in place of the burnt machines. He deposed that the machines, which were burnt, used to prepare fabrics of less twist, which were not in demand, and, therefore, there was no particular loss on that account. Further, the purchase of machines was entrusted to Rai Bahadur Babu Sheo Prasad by consent of all the partners and if Rai Bahadur Babu Sheo Prasad omitted to purchase the machines despite reminders by the Manager, the Manager could not fee held responsible for the fault of Rai Bahadur Babu Sheo Prasad. For the foregoing discussion, we are reluctant to endorse the finding of the trial Judge on issue No. 11 (b) and we hold that the plaintiff is not entitled to a sum of Rs. 5,000 as damages against defendants Nos. 1 and 2.

21. This leads us to the other ap- peal (First Appeal No. 92 of 1959). The contention of Sri Swami Dayal was that he was entitled to the entire damages claimed by him and the court below wrongly refused to grant him the relief in respect of the entire damages. His next contention was that the plaintiffs were entitled to a decree for dissolution, which has been wrongly refused to them by the trial court.

22. We first take up the question of damages. The plaintiffs have claimed damages on various counts. They claimed damages to the tune of Rs. 25,000 against defendants Nos. 1 to 5 on account of the negligence of the Managers. The total amount claimed under this head was Rs. 25,000 consisting of the following:--

(1) Rs. 5,000 for the loss on account of non-carrying out the resolution for the restoration of the burnt portion of the mill.

(2) Rs. 10,000 for non-registration of the firm for the purpose of income-tax, and,

(3) Rs. 10,000 for the loss of commission on account of not purchasing the raw materials through Sri Makhan Lal.

23. This part of the claim was rejected by the trial Judge on the ground that the plaintiffs failed to prove the actual amount of loss which they had suffered for want of registration of the firm for the purpose of income-tax. Under the Income-tax Act, if a firm is registered then the share of the profits of the partners is added to their personal assessment and then it is computed according to the rate prevailing in the particular year. If the firm is unregistered, then a greater amount of tax is likely to be assessed on the total income of the firm.

24. In order to calculate the amount of loss sustained on that account, the present assessment of the plaintiff has to be seen. The plaintiffs have claimed arbitrarily a sum of Rs. 10,000 on this count, but they have not been able to show that actual loss suffered by them on that account, as they have not shown their personal assessment. The other count for which a damage of Rs. 5,000 was claimed was on account of the non-restoration of the burnt portion of the mill despite the resolution of 16th August, 1942. This part of the claim has already been dealt with while dealing with First Appeal No. 2 of 1959 filed by the defendant and it is not necessary to deal with the same twice over. For various reasons, the claim for recovery of Rs. 5,000 for damages on that account was wrongly accepted by the trial court and that finding has been set aside while dealing with First Appeal No. 2 of 1959.

25. Another sum of Rs. 10,000 was claimed by the plaintiffs as damages for the loss by way of commission. According to the plaintiffs, raw cotton for the mills was not purchased through the plaintiffs nor the finished yarn was sold through them at Agra, as per clause 11 of the partnership deed. So, whatever purchases and sales be found from the mill's books, the plaintiffs were entitled to the commission on such amounts with interest from the date as damages. This relief was also refused to the plaintiffs on the construction of Clauses 9. 10 and 11 of the partnership deed. The relevant Clauses 9, 10 and 11 of the partnership deed are quoted below:

'9. The work of selling yarn at Hath-ras shall be entrusted to Lala Makhan Lal or his sons, who shall have to come there and work but the said Lala Sahib or his son shall have to work in consultation with Lala Bankey Lal, Manager and shall not be entitled to any commission.

10. If Lala Makhan Lal or his son does not come to Hathras, in that case or hi their absence, the managers shall be in charge of the sale of the yarn.

11. The purchase of cotton at Agra for the factory when necessary and the sale of yarn shall be conducted by the firm styled MAKHAN LAL RAM SARUP and commission at the rate of 12 annas per cent shall be paid to the said Lala Sahib,'

26. In view of Clause 10 of the partnership deed, it was obligatory that Makhan Lal or his sons had to go to Hathras and if they failed to do so then the Managers had the authority to sell the yarn. It has not been established that Makhan Lal or his eons went to Hathras and the specified amount was claimed by them on that account and the claim of Rs. 10,000 on this account is simply arbitrary. We are fully satisfied that the claim of the .plaintiffs for damages on this count was rightly rejected by the trial Judge.

27. An additional amount of Rupees 50,000 was claimed by the plaintiffs against such of the defendants as were found liable for not putting up the notice of the plaintiffs under clause 18 of the partnership deed regarding the transfer of their shares in the mills. According to the plaintiffs, finding the unhappy state of affairs in the management of the firm, they gave a notice dated 14th March, 1944 (Ext. 1) in the following terms:---

'Notice under clause 18 of the partnership deed- Please take notice that we want to transfer our share in the aforesaid mills at the price already fixed by you as per clause 28 of the partnership deed. Please, arrange accordingly and let us have your decision.'

28. This notice was served on the firm on 15th March, 1944. The receipt of the notice was also acknowledged by Gur Dayal Prasad, defendant No. 1 by his letter dated 16th March, 1944 (Ext. 4). He intimated thereby that the notice would be put up in the general meeting to be held on 3lst March, 1944. The agenda for the meeting of 31st March, 1944, was issued on 13th March, 1944. This agenda included an item to consider over the sale of the mills. The notice could not be put up before the meeting although several adjournments were made and in order to harm the plaintiffs, a resolution for the sale of the mills itself was put on the agenda to reduce the value of the shares of the plaintiffs.

29. Charges and counter-charges were levelled against each other. According to one party, the notice of 14th March 1944, or the agenda of the meeting of 31st March 1944, was antedated. In paragraph 20 of the plaint, it has been alleged that on receipt of the said notice dated 14th March, 1944. the defendant issued an agenda antedating it as having been issued on 13th March, 1944, including in the said agenda an item regarding the sale of the mills for consideration in the meeting. The defendants, on the other hand, made a counter-charge. According to them, after the receipt of the agenda, the plaintiffs wanted to create some confusion and put some obstacles in the way of carrying out of the wishes of the partners to sell away the mills.

30. The proceeding book of the minute book of the mills (Ext. A-5) shows that the meeting of 3lst March, 1944, was attended, amongst others, by Amar Nath (P.W. 3), the brother of the plaintiff, and was his nominee for that meeting. The meeting was adjourned to 14th May, 1944, for want of quorum and a notice to that effect (Ext. 33} was given. By the said notice, it was also intimated that the agenda of the adjourned meeting would remain the same as per notice dated 13th March, 1944. The main objection on the irregularity of the meeting of 3lst March, 1944, on behalf of the plaintiffs was that the plaintiffs' notice dated 14th March, 1944, was not included in the supplementary agenda. In view of the terms of the partnership deed, it was not at all necessary to issue a supplementary agenda. The Managers were, therefore, not to foe blamed for not issuing a supplementary agenda, Gur Dayal Prasad stated that the matter could be discussed and considered with the permission of the chair and he had intimated it to the plaintiffs that the notice of 14th March, 1944, would be considered in the meeting of 31st March, 1944. It was, therefore, not considered necessary by him to issue a supplementary agenda. This explanation offered by Gur Dayal Prasad is quite plausible.

31. In the agenda of 13th March, 1944 (Ext. A-12), there is an item to the effect 'to consider over any other matters put up by the Manager with the consent of the chair'. This would have certainly entitled the Manager to put up the notice for consideration with the permission of the chair. There was thus no irregularity or impropriety till 31st March 1944. The meeting of 3lst March, 1944, was, however, adjourned to 14th May, 1944, and it included only the agenda of the last meeting Naturally, therefore, the plaintiffs' notice for selling their shares could not be included therein. Gur Dayal Prasad was quite alive to the provisions of Clause 14 of the partnership deed and an emergent meeting was called for 16th April, 1944, by issuing an agenda on 31st March, 1944. In the agenda, the first item was 'F.P.T.' and the second item was the plaintiffs' application for selling their shares. After the issue of the agenda, a requisition dated 4th April, 1944, was received from five partners for calling a meeting to consider the advisability of selling the mills and if the share holders did not come to an unanimous decision to sell the mills, to refer that matter to the board of arbitrators to decide whether the Managers should be given such directions for its sale, as may be deemed fit and proper. Due intimation of the requisition was given to the partners, vide Ext. 34, dated 7th April, 1944. The plaintiffs sent a reply dated 11th April, 1944, and asserted that it was moved to affect the application for the purchase of shares already made.

32. The meeting fixed for 16th April, 1944, was adjourned due to the death of Laxmi Narain. one of the partners. The meeting fixed for 14th May,1944, was also adjourned to 30th June, 1944, with the agenda already issued on 13th March, 1944, due to the marriage celebrations of Ram Khilawan.

33. On 9th May, 1944, three notices for emergent meetings to be held at 12 noon and 1-00 P.M. were issued separately. In the first meeting only two items were included for consideration. They were (1) to offer condolence on the death of Laxmi Narain, one of the partners and (2) to confirm the registration of Shanti Swarup, partner in place of his father, in the second meeting, the appointment of the Manager and the requisition for the sale of the mills was included. The third meeting was fixed for consideration of the notice of the plaintiffs for sale of their shares. The first two meetings were held and the resolution were adopted. A resolution with regard to the sale of the mills was passed. When the third meeting was going on, some news about the fire in the New Ramchand Cotton and Spinning Mills, Hathras, was received and so the meeting was dispersed. Ultimately, the plaintiffs' notice was considered in the meeting of 30th June, 1944, and it was resolved that since the mill would be sold, the company would not purchase the share and the plaintiffs might sell the same to anybody.

34. The grievance of the plaintiffs was that grave irregularities had been committed in the holding of the meeting and there was absolutely no reason for the Manager to put off the consideration of his notice to the last meeting of 28th May, 1944, and, in any case, there was no reason to make a distinction between the various meetings. All these businesses could have been transacted in one meeting of 28-5-44, but some unusual practice was adopted by the Manager in holding the three meetings for three different purposes. The explanation offered by Gur Dayal Prasad was that the item of the sale of the mill was considered important and, therefore, he placed it in the second meeting and left the consideration of the plaintiffs' notice for the third meeting. He further said that the item for the sale of the mill had already been included in the earlier meeting and, therefore, he tried to put it before the time for the consideration of the plaintiffs' notice.

35. There might be some irregularity in the procedure adopted by Gur Dayal Prasad, but it may be on account of an error of judgment as he thought that the sale of the mill was ,a most important item, which might precede other items in the agenda. Gur Dayal Prasad further stated that he had sought the legal advice from Mr. Ayar and Mr. K. M. Munshi and Mr. Pen about the advisability of selling the mill, without being affected by the income-tax on the sale price. This fact is supported by the evidence on the record that some expenses had to be incurred in seeking the advice of the legal experts. Gur Dayal Prasad stated that he met the plaintiff and requested him to wait for a couple of months and not to file the suit so that the mill might be sold.

36. The attitude of the plaintiffs also seems to be unco-operative. If the plaintiffs were keen after the passing of the resolution in 1944, they could have raised some protest or vindicated their serious disapproval. If they had really been prejudiced or apprehended pecuniary loss by way of fall in the price of the share, it w.as but natural that they would have been very vigilant. When the resolution of 30th June, 1944, was passed and the Company did not desire to purchase the share of the plaintiffs then a notice by telegram dated 1st July, 1944, was given to the plaintiffs. The plaintiffs could have sold away the shares privately if the firm was not prepared to purchase the shares within a particular period. Assuming that there was some irregularity in the various meetings, it did not in our opinion, prejudice the plaintiffs' right.

37. Besides, the plaintiffs have not been able to show that somebody w.as prepared to purchase the shares at a lesser price. They sought to prove that Loonkaran Sethia was prepared to purchase and had made an offer of Rs. 2,00,000, but that version has not been accepted by the court below and for cogent reasons. It is not necessary to reiterate the reasons with which we agree, which weighed with the trial court in arriving at that finding. The trial court on a consideration of the materials and circumstances of the case was fully satisfied that the plaintiffs were not entitled to a decree for damages for Rs. 50,000.

38. Now, we come to the last point raised by Sri Swami Dayal. The contention of Sri .Swami Dayal was that the trial court should have decreed the suit for dissolution of the firm. Articles 16 to 20 of the Partnership Deed prescribed the procedure for withdrawal or retirement of any partner and for sale of his share. Articles 16 to 20 of the Partnership Deed provide:

'16. No partner or his heir or representative shall have power to sell his share or to withdraw from the partnership, in any other manner than that mentioned below.

17. It shall be the duty of the partner desiring to withdraw himself from the partnership of the factory to sell his share in the manner given below. In case the company is not in a position to purchase the said share or to have it sold in any way the partner desiring separation shall have power to have the partnership dissolved and thus withdraw himself from the partnership.

18. The partner desiring bo transfer his share shall have to give a registered notice to the company allowing three months' time, so that it may either purchase his share itself at the price fixed by it according to paragraph No. 28 or may get the same sold in any other way. On receipt of the notice an emergent meeting of the company will be held within 30 days in which it will be decided whether the Company is ready to purchase the share or not. If it is decided by opinion of the majority that the company should purchase the share, it shall purchase itself, otherwise it shall allow those partners to purchase it who might be willing to do so at the price mentioned above. If no partner is ready to purchase the said share, the company shall get it sold in any way it thinks proper. If the company tails to have it sold within three months the partner seeking separation or the partner making the sale shall have power to transfer his share to anyone.

19. If any partner contrary to the conditions of this agreement, shall transfer his share to any person who is a partner or stranger the company and its partner have the right to pre-emption and the price fixed according to paragraph No. 38 of this agreement shall be paid.

20. Any of the partners willing to purchase the share of another partner shall be duty bound to attend the general or emergent meeting of the partners to be held according to the conditions mentioned above and show his readiness for purchase in the meeting. If the intention of purchase is not expressed (by any partner) in the meeting he shall have no right of purchase as against the other partners. In case there are more than one partner willing to make the purchase, the said share shall be transferred to them in proportion to the shares held by them in the company.'

39. On a consideration of the various articles of the partnership deed, it is evident that it was open to the plaintiffs to have sold their shares privately if the firm did not purchase their shares. The partnership deed stipulated about all contingencies and provided for the withdrawal of the partner who considered his rights to have been prejudiced or desired to sell his share for some reason. It took away the right of any partner to dissolve the partnership and to bring the business of the mills to a standstill. Thus, the right of dissolution which was available to a partner on the ground of Section 44 of the Indian Partnership Act would not be available in the present case in view of the terms of the partnership deed. Besides, the claim for the dissolution of the partnership is not maintainable in view of the decision of Suit No. 35 of 1935, Smt. Dropadi Devi v. Bankey Lal. It was held, toy the court that the intention of the executants of the deed of partnership was that the firm should not be dissolved on the happening of the contingencies mentioned in the partnership deed.

40. For the foregoing reasons, the claim for dissolution of the partnership is not maintainable and the court below has rightly rejected this claim.

41. We, accordingly, allow First Appeal No. 2 of 1959 and set aside the judgment and decree of the court below against defendants Nos. 1 and 2 for a sum of Rs. 5,000 claimed as damages with the result that the suit of the plaintiff shall stand dismissed in respect of this amount. First Appeal No. 92 of 1959 has no force. It is, accordingly, dismissed, in the circumstances of the case, we direct the parties to bear their own costs.


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