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Kashi Ram Vs. Kundan Lal and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad High Court
Decided On
Case NumberFirst Appeal No. 172 of 1954 connected with First Appeal Nos. 364 and 379 of 1954
Judge
Reported inAIR1956All660
ActsCode of Civil Procedure (CPC) , 1908 - Order 20, Rule 15 - Order 40, Rule 1 - Order 41, Rule 33; Partnership Act, 1932 - Sections 9; Limitation Act, 1908 - Sections 3 - Schedule - Article 106
AppellantKashi Ram
RespondentKundan Lal and ors.
Appellant AdvocateV.D. Bhargava and ;Brij Lal Gupta, Advs.
Respondent AdvocateAmbika Prasad, ;Raja Ram Agarwala, ;Gyanendra Kumar and ;Shanti Bhushan, Advs.
Excerpt:
.....in the assets not possible without taking accounts - suit for taking accounts time barred - held, suit for share failed on ground of limitation. - - ' 11. benarsi das filed a written statement and contended that the lease executed in his favour was perfectly valid and legal. during the trial of the case the plaintiff-respondent conceded that the lease executed in favour of banarsi das was perfectly valid and legal. this contention is perfectly sound. in our opinion, his contention is perfectly sound and the suit for accounts is bound to fail against him on that ground alone. that the dissolution of partnership had taken place on 13-5-1944, is perfectly correct. this contention is not well-founded. where the circumstances are such that shares in the assets of the partnership..........declaration that the partnership stood dissolved with effect from 13-5-1944. he declared that the share of banarsi das, who had purchased the right, title and interest of shiva prasad, had become one-third and all other brothers owned a one-sixth share each. he passed a preliminary decree for accounts against kanshi ram but dismissed the suit for accounts against banarsi das. he appointed a commissioner for the purpose of widing up the affairs of the mill and directed him to prepare accounts of the credits, properties, effects and stocks belonging to the said mill and to submit a report. he further directed that after the report had been submitted and objections heard anddecided he would fix a date for the sale of the assets of the mill. he dismissed banarsi das's claim for accounts.....
Judgment:

Brij Mohan Lall, J.

1. This and the connected First Appeals Nos. 364 and 379 of 1954 are defendants' appeals aaginst a decree of the learned Additional Civil Judge of Bijnor.

2. There are six brothers, viz. Kundan Lal, Banarsi Das, Kanshi Ram, Muuna Lal, Devi Chand and Shiva Prasad. They were members of a joint Hindu family till 31-8-1936 and owned, inter alia, a sugar mill known as S. B. Sugar Mills situate at Bijnor. On the aforesaid date a separation took place in the family and the six brothers agreed to hold the said mill thenceforward as a partnership concern, each owning a one-sixth share therein. From 1941 to 1944 Kundan Lal was the resident manager of the mill.

3. On 13-5-1944 Shiva Prusad instituted a suit (No. 105 of 1944) in the court of the Subordinate Judge of Lahore against Kundan Lal and other brothers for dissolution of partnership and for accounts. On the same day he put in an application for appointment of a receiver.

4. On 3-8-1944 the leraned Subordinate Judge appointed one Mr. P. G. Mahajan as a receiver of the said mill. An appeal preferred against that order was dismissed by the learned District Judge of Lahore on 14-11-1944. The matter was taken up in revision to the Lahore High Court. In that Court the parties came to terms. It was agreed between them that the order appointing the receiver should be maintained but that Kanshi Ram, one of the brothers, should be appointed the receiver. The High Court passed an order to that effect on 5-4-1945.

5. On 28-8-1946 a joint petition was presented by all the six brothers to the learned Subordinate Judge praying that the receiver be directed to execute a lease of the mill to Banarsi Das. On the same dato the court passed an order as prayed. The lease was actually executed on 12-9-1946.

6. Meanwhile, the District Magistrate of Bijnor, acting under the Defence of India Rules, had taken possession of the mill and had appointed Kundan Lal and his son, Puran Chand, as agents on behalf of Government to work the mill during the 1944-45 season. In the next year the Government executed a lease in favour of Kundan Lal and his son, Puran Chand, and they remained in possession of the mill in 1945-46 season as lessees from Government.

7. On the execution of the lease by Kanshi Ram to Banarsi Das delivery of possession was made by Kundan Lal and Puran Chancl to the Tahsildar as representative of the Government on 12-9-1946. On the same day the Tahsildar handed over possession to Kanshi Ram, the receiver, and, again, on the same day, Kanshi Ram handed over possession to Banarsi Das, the lessee.

8. Partition of India took place on 15-8-1947. As is wellknown, it was followed by great disturbances. The result was that the parties could not reach the Lahore court to prosecute the civil suit pending in the court of the Subordinate Judge atLahore. The suit was dismissed for default on 11-10-1947, Neither party made any attempt to get it restored.

9. On 8-11-1947 a suit. (No. 22 of 1947) was instituted by Shiva Prasad at Bijnor for a permanent injunction to restrain Banarsi Das from acting as a lessee and asking for the appointment of a receiver. This suit was also dismissed for default on 13-3-1948.

10. On 7-10-1948 the suit which has given rise to these three appeals was instituted by Kundan Lal. He impleaded his five brothers as defendants. In the plaint he alleged that the partnership had dissolved on 13-5-1944. Further, he maintained that the lease executed by the receiver in favour of Banarsi Das was illegal and void. According to him, the appointment of Kanshi Ram as a receiver came to an end with the dismissal of the suit on 11-10-1947. He was impleaded in the present suit as a partner and not as a receiver. The reliefs sought by Kundan Lal were as follows :

'(a) That it may be declared that the partnership of the Shiv Prasad Banarsi Das Sugar Mills, Bijnor, between the parties was dissolved on 13-5-1944 and if in opinion of the court the partnership is still in existence, the court may be pleased to dissolve it. Valued at 5000/-.

(b) That an account be taken from defendants 1 and 2 (i.e. Kanshi Ram and Banarsi Das) or any of them and decree be passed in favour of the plaintiff for the amount that may be found to be due to the plaintiff on account of his share in the assets and profits and sums of money in their possession. Valued at Rs. 500/-.

(c) That a pendente lite interim Receiver may be appointed for the Seth Shiva Prasad Banarsi Das Sugar Mills, Bijnor.

(d) Any other relief which the plaintiff may be entitled against any or either of the defendants as the Court may deem fit to grant.

(e) Costs may be awarded to the plaintiff.'

11. Benarsi Das filed a written statement and contended that the lease executed in his favour was perfectly valid and legal. He denied his liability to render accounts, Bat he admitted that the partnership had been dissolved on 13-5-1944. He prayed that Kundan Lal might be ordered to render accounts for the period 1941-44 when he worked as a resident manager of the mill. No other defendant filed a written statement. Although Kanshi Ram engaged a lawyer, the latter seemed to have simply watched the proceedings. During the trial of the case the plaintiff-respondent conceded that the lease executed in favour of Banarsi Das was perfectly valid and legal.

The learned Civil Judge decreed the suit for a declaration that the partnership stood dissolved with effect from 13-5-1944. He declared that the share of Banarsi Das, who had purchased the right, title and interest of Shiva Prasad, had become one-third and all other brothers owned a one-sixth share each. He passed a preliminary decree for accounts against Kanshi Ram but dismissed the suit for accounts against Banarsi Das. He appointed a commissioner for the purpose of widing up the affairs of the mill and directed him to prepare accounts of the credits, properties, effects and stocks belonging to the said mill and to submit a report. He further directed that after the report had been submitted and objections heard anddecided he would fix a date for the sale of the assets of the mill. He dismissed Banarsi Das's claim for accounts against Kundan Lal as time-barred.

12. Against this decision three first appeals have been preferred. The present appeal (No. ,172 of 1954) has been filed by Kanshi Ram, F. A. No. 364 of 1954 by Banarsi Das and F, A. No. 379 of 1954 by Munna Lal. It may be pointed out that Munna Lal had not put in appearance in the court below and had not made any prayer to that court for any relief. But in the appeal he contends that Kundan La! be ordered to render accounts for the period 1941-44 when he remained in possession of the mill.

13. Kanshi Ram's appeal may be taken up first. He has been ordered to render accounts. He was a receiver and, as such, he is certainly liable to render accounts to the court. But he has not been sued as a receiver. The learned counsel for the plaintiff-respondent has categorically stated before us that he did not sue Kanshi Ram as a receiver. He adds that a suit has been brought against him as a partner.

In the circumstances, the plea of absence of notice under Section 80, C. P. C., or of absence of permission by the court which appointed the receiver does not arise. It is also unnecessary for us to determine whether under para 4, Indian Independence (Legal Proceedings) Order, 1947, the court of Subordinate Judge of Lahore retains jurisdiction even now to call upon Kanshi Ram to render accounts. All these questions would have arisen if he had been sued as a receiver.

14. Two contentions have been put forward by Kanshi Ram. The first argument is that since he was put into possession of the mill by eourt as a receiver and not by any one of his brothers as a partner, his possession was not that of a partner and therefore he cannot be sued for accounts as a partner. This contention is perfectly sound. At no stage was he put into possession as a partner by his co-partners. His possession throughout was that of a receiver acting under the order of the learned Subordinate Judge of Lahore. He will certainly lie liable to render accounts to the said court.

But neither the respondent nor any other partner can sue him for accounts for the simple reason that he was not put into possession of the mill as a partner. In our opinion, his contention is perfectly sound and the suit for accounts is bound to fail against him on that ground alone.

15. Kanshi Ram's second contention is that the claim ior accounts and share of profits and assets is time-barred. In order to appreciate this contention it is necessary to determine whether dissolution had taken place before the institution of the suit. The respondent caine definitely with the allegation that dissolution had taken place as long ago as on 13-5-1944. This allegation was not controverted by any defendant.

Banarsi Das, the only defendant who contested the suit, admitted this allegation. Moreover, he entered the witness box and stated on oath that dissolution had taken place on 13-5-1944. In the circumstances, the finding recorded by the learned Civil Judge, viz. that the dissolution of partnership had taken place on 13-5-1944, is perfectly correct.

16. The position, therefore, is that both according to the plaintiff-respondent's allegation & the finding of the court the suit was for accounts and shareof profits and assets of a dissolved firm. Article 106 of the first schedule of the Limitation Act prescribes a period of three years for a suit 'for an account and a share of the profits of a dissolved partnership'.

This period begins to run from the date of dissolution. The prsent suit, as already stated, was instituted on 7-10-1948, i.e. more than three years after the date of dissolution of the partnership. Therefore the claim for accounts and for share of profits was obviously time-barred.

17. It was contended by the learned counsel for the plaintiff-respondent that, although a suit for accounts and share of profits may be time-barred, the suit, so far as it relates to a share in the assets of the dissolved firm, is not covered by Art 106 of the Limitation Act and is not time-barred. This contention is not well-founded. The circumstances in the present case are such that the plaintiff-respondent's share in the assets cannot be ascertained unless accounts are taken.

Banarsi Das and Munna Lal contend that the plaintiff-respondent has already appropriated during the period oi his resident managership much more than his share of the assets in the partnership property. Where the circumstances are such that shares in the assets of the partnership cannot be determined without taking accounts and where the suit for accounts is time-barred, the suit for share in the assets must also fail on the ground of limitation.

This was laid down in the cases of Niaz Ahmad v. Abdul Hamid 30 All 279 (A) and Gobardhan v. Gane-shi Lal 11 Ind Gas 288 (All) (B). The same question came up for consideration before their Lordships oi the Privy Council also and they adopted the same view. In the case of Gopal Chetty v. Vijuyaraghavachariar AIR 19,22 PC 115 (C) their Lordships observed as follows on page 119.

'If on the other hand no accounts have been taken and there is no contest that the partners have squared up, then the proper remedy where such an item falls in is to have the accounts of the partnership taken; and if it is too late to have recourse to that remedy, then it is also too late to claim a share in an item as part of the partnership assets, and the plaintiff does not prove, and cannot prove that upon the due taking of the accounts he would be entitled to that share. It might well be the case that one of the reasons why no final balancing of accounts took place was that A owned the partnership so much money and that it was anticipated that B would hereafter receive a particular item which would operate substantially to balance the claim.'

It will therefore follow that not only a claim for accounts and share of profits but also a claim for share in the assets of the dissolved partnership is time-barred.

18. It has not been suggested that the appellant had at any stage made any acknowledgment or done anything else which may give a fresh start to the period of limitation. We have, therefore no hesitation in holding that the suit is time-barred.

19. It is true that the plea of limitation was not taken in the court below. But where the claim is time-barred on the allegations contained in the plaint itself, there is no reason why the plea of, limitation should not be upheld even if raised in the appellate court. Reference may also be made in this connection to Section 3 of the Limitation Act which lays downthat every suit instituted after the period of limitation prescribed therefor by the first schedule shall be dismissed although limitation has not been set up as a defence.

20. Another point-rcaised by the learned counsel for the plaintiff-respondent is that in neither of the three first appeals an attempt has been made to question that portion of the decree which grants him a share in the assets of the partnership. But there is ample power in this Court under O 41, R 33, C. P. C. to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power can be exercised by the court notwithstanding that the appeal is as to part only of the decree and can be exercised in favour of any party although such party may not have filed any appeal.

It is absolutely necessary in a suit like this to dismiss the claim for share in assets also because con-fusion will arise if the claim for accounts is declared to he time-barred and the claim for division of the assets of the partnership is allowed. As pointed out earlier, it will become difficult, if not impossible, to ascertain the share of assets.

We have, therefore, decided to exercise the po-wer conferred on us by Order 41, Rule 33, C. P. C., and to set aside the decree in so far as it relates to the division of the assets of the partnership even if this portion has not been specifically challenged by any of the appellants. This means that Kanshi Ram's appeal must succeed. It may be pointed out that he has not challenged that portion of the decree winch declares the partnership to have been dissolved on 13-5-1944.

21. Next conies F. A. No. 364 of 1954 preferred by Banarsi Das. The relief sought by him in this appeal is that Kundan Lal (Plaintiff-respondent) be ordered to render accounts for the period 1941-44. For the reasons already stated, this relief is time barred.

22. The learned counsel for Banarsi Das put forward another contention, viz., that the portion of the decree which declares the partnership to have been dissolved on 13-5-1944, should also be set aside. It may he pointed out that no such prayer has been made in the memorandum of appeal, nor has court-fee been paid on that relief. But a more serious hurdle in his way is that Banarsi Das himself has taken oath and stated in the court below that the dissolution of partnership had taken place on 13-5-1944. Moreover, in the written statement also he had admitted at throe places that the dissolution had taken -place on the aforesaid date. Relating to the relief claimed by the plaintiff, he stated in the written statement as follows ;

'Relief (a) for a declaration that the partnership oi the mills between the parties was dissolved on 13th May, 1944, is admitted. ....'

23. It will, therefore, follow that the decree which has been passed against him so far as this relief is concerned is a consent decree. Section 96(3), C. P. C. provides that no appeal shall lie from a decree passed by the Court with the consent of parties. In the circumstances, we did not permit the learned counsel for the appellant to argue this point. We are definitely of the opinion that it is not open to him to challenge this portion of the decree. The result, therefore, is that his appeal must fail.

24. The only relief sought by Munna Lal in F. A. No. 379 of 1954 is that Kundan Lal be asked to render accounts for the period 1941-44. As already held, this portion of the claim is time barred.

25. For the above reasons, we allow Kanshi Ram's First Appeal No. 172 of 1954 in part and modify the decree of the learned Additional Civil Judge. The plaintiff-respondent's suit shall stand decreed for a declaration that the partnership stood dissolved with effect from 3.3-5-1944 and that the shares of the six brothers are as found by the learned Judge. The rest of the suit is dismissed. Since the plea of limitation was not raised in the court below and since the portion of the decree granting the plaintiff-respondent a share in the assets was not challenged in the memorandum of appeal, we do not award costs to Kanshi Ram. He shall bear his own costs in both courts. Kundan Lal will bear his own costs in the trial court and of this appeal.

26. First Appeals Nos. 379 and 364 of 1954 are dismissed with costs. Parties shall bear their own costs of the trial court.


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