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Bhawarlal Vs. Mathura Prasad - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 16 of 1960
Judge
Reported inAIR1962MP141
ActsEvidence Act, 1872 - Sections 31; Partnership Act, 1932 - Sections 37; Code of Civil Procedure (CPC) , 1908 - Order 41, Rule 33
AppellantBhawarlal
RespondentMathura Prasad
Appellant AdvocateB.L. Seth and ;S.L. Golchha, Advs.
Respondent AdvocateM.C. Nihalani and ;G.S. Nihalani, Advs. for Respondent No. 1 and ;S.C. Dubey, Adv. for Respondent No. 2
DispositionAppeal dismissed
Cases ReferredIn Kedar Nath v. Prahlad Rai
Excerpt:
.....the first respondent's shares to be -/6/- each and that of the second respondent to be -/4/-.an account of the partnership assets and liabilities was directed to be taken from the inception of the partnership to the date of passing of the decree, namely, 31-12-1959. 8. the learned counsel for the appellant, inviting attention to the pleas raised by the parties urged that although the appellant might have failed to prove that the firm was dissolved by act of the parties, the plaintiff would not be entitled to any account, as he had retired from the partnership with effect from diwali 1954. we may therefore, have to examine the said question apart from the question of dissolution of the firm due to an act of the parties. we are of opinion that the appellant had failed to establish any..........on the other hand, the partnership was running in loss and there were liabilities against the partnership firm. it was on account of this that the plaintiff decided to sever his connections with the firm and in pursuance of that he retired from the partnership and did nothing, so as to continue the partnership. as such, the appellant alone was entitled to appropriate the profits earned after diwali of the year 1954. it was also contended that the partnership having ceased to exist with effect from 26-10-1954 (diwali), the suit filed on 10-5-1958 was barred by time under article 106 of the indian limitation act. the defence of the second respondent in addition was that he was never a partner of the firm, inasmuch as, the deed was not signed by him, but by his brother. sobhagmal, who.....
Judgment:

Tare, J.

1. This appeal is by the first defendant against the preliminary decree, dated 31-12-1959, for dissolution of an unregistered partnership and accounts passed by Shri B.R.L. Shivastava, First Additional District Judge, Bhopal in Regular Civil Suit No. S-B of 1959.

2. The Central India Bidi Works Begumganj, a bidi manufacturing business, was being run by the appellant and the second respondent, Laxmichand, who is related to him as a family business, till the year 1946. On 14-8-1946, the plaintiff-respondent 1, Mathuraprasad was introduced as a partner and a deed of partnership of the same date (Ex- P-1) was executed between the three partners. However, the partnership was not registered under the Indian Partnership Act. The business was carried on in partnership till Diwali of the year 1954 according to the appellant.

3. The first respondent's allegation in the plaint was that the partnership was never dissolved; and, as such, he filed a suit on 10-5-1928 for dissolution of the unregistered partnership and for taking accounts thereof.

4. The defence of the appellant was that the partnership was dissolved on account of the retirement of the second respondent, Laxmichand from the Diwali of the year 1953, as also the retirement of the plaintiff with effect from the Diwali of the year 1954. Thereafter, the appellant carried on the business exclusively for himself. The appellant in his written statement alleged that after the retirement of Laxmichand in Diwali of the year 1953, there was an agreement between the appellant and the first respondent agreeing to dissolve the firm with effect from Diwali of the year 1954. It was further stated that the notice given by the first respondent on 4-1-1955 (Ex. P-5) did not dissolve the partnership, nor was the partnership dissolved as per Clause 11 of the agreement of partnership, dated 14-8-1946 (Ex. P-l).

5. Further, it was the defence of the appellant that there were no profits till Diwali 1954. On the other hand, the partnership was running in loss and there were liabilities against the partnership firm. It was on account of this that the plaintiff decided to sever his connections with the firm and in pursuance of that he retired from the partnership and did nothing, so as to continue the partnership. As such, the appellant alone was entitled to appropriate the profits earned after Diwali of the year 1954. It was also contended that the partnership having ceased to exist with effect from 26-10-1954 (Diwali), the suit filed on 10-5-1958 was barred by time under Article 106 of the Indian Limitation Act. The defence of the second respondent in addition was that he was never a partner of the firm, inasmuch as, the deed was not signed by him, but by his brother. Sobhagmal, who had no authority to sign the deed on his behalf. As such, it was alleged that it was Sobhagmal, who was in fact, a partner and who should have been impleaded in the suit.

6. An application was made by the plaintiff for impleading Sobhagmal as a party to the suit.

But, it was rejected by the trial Judge, holding that Sobhagmal was not a partner; and, as such, not a necessary party to the suit.

7. The trial Judge held that the partnership was not dissolved in Diwali 1954; and as such, the plaintiff was entitled to an account till the date of passing the decree for dissolution. The suit was held to be within time; and, accordingly, a preliminary decree was passed, declaring the appellant and the first respondent's shares to be -/6/- each and that of the second respondent to be -/4/-. An account of the partnership assets and liabilities was directed to be taken from the inception of the partnership to the date of passing of the decree, namely, 31-12-1959.

8. The learned counsel for the appellant, inviting attention to the pleas raised by the parties urged that although the appellant might have failed to prove that the firm was dissolved by act of the parties, the plaintiff would not be entitled to any account, as he had retired from the partnership with effect from Diwali 1954. We may therefore, have to examine the said question apart from the question of dissolution of the firm due to an act of the parties.

9-19. It is, therefore, necessary to refer to the pleadings of the parties on the question of dissolution and retirement (After referring to the pleadings and considering the evidence, his Lordship concluded :)

20. From the oral evidence on record, as also the correspondence that went on between the parties it is clear that there was never any specific agreement about dissolution of the partnership. What happened was that as the firm was suffering loss in business, the first respondent expressed his intention to retire from the partnership. The relations between the parties became sufficiently strained, as the appellant was not rendering any accounts of profits or losses and the possibility of the first respondent advancing further money appears to be very slender under the circumstances. What, however, actually occurred was that the appellant expressed his intention to withdraw from the partnership. As it was the impression of the partners that the firm had suffered losses the appellant desired the first respondent to continue as a partner. But, however, the first respondent did not do anything active thereafter, although he neither did anything so as to dissolve the firm or so as to retire from the firm. It is definite that he did not do anything positive thereafter either in the interest of the firm or against the firm. The appellant might have thought that on taking accounts and, on fastening the liability of the losses on each partner, the partnership may not be in a position to return whatever money might be due to the first respondent. Therefore, he was anxious to see that the first respondent continued as a partner.

21. The learned counsel for the appellant sought to use the first respondents admission made in the notice dated 4-1-1955 (Ex. P. 5) as also in the statement, dated 5-11-1955 (Ex. 1 D. 2) in proof of the fact that the first respondent had retired from the partnership with effect from Diwali 1954. On the other hand, the first respondent relied on the admission made by the appellant in his notice, dated 4-1-1955 (Ex. P. 6). The conduct of the parties, as is disclosed from their depositions as also the correspondence on record, shows that the first respondent was keen on retiring from the partnership; but, the appellant, on the other hand, insisted on treating the first respondent as a partner. But, the net result of all this appears to be that the first respondent never retired from the firm.

22. The learned counsel for the appellant based his arguments on the fact of retirement of the first respondent from the partnership and urged that in view of this abandonment by the first respondent, he would not be entitled to demand either accounts or profits with effect from Diwali 1954. Our attention was invited to the observations of their Lordships of the Privy Council in Moung Tha Huyin v. Mah Thein ILR 28 Cal 53 (PC) and Chandra Kunwar v. Narpatsingh ILR 29 All 184 (PC) in support of the proposition that a partner deserting the partnership in the mid-stream would not be entitled to the benefits thereof after such abandonment. We are of Opinion that the appellant had failed to establish any abandonment on the part of the first respondent so as to disentitle the latter either to claim account or profits on the principles laid down by their Lordships of the Privy Council.

On the other hand, we have the indisputable fact that the defendants took an advance of Rs. 12000/- and odd as loan from the first respondent in the partnership. They utilised the same for the benefit of the partnership- It is not known as to what the state of accounts was in Diwali 1954, although the impression of the partners was that there might be losses. When the first respondent expressed his intention to retire, the appellant insisted on the first respondent continuing as a partner. The appellant would not settle the accounts and return whatever was due to the first respondent. On the other hand, he continued to utilise the funds advanced by the first respondent to the extent of Rs. 12000/- and odd and it appears thereafter the business made lot of profits. Therefore, we are of opinion that the case of an abandonment by the first respondent is not established.

23. An admission can only he used against a party, if it amounts to an estoppel, as provided by Section 31 of the Indian Evidence Act. It is always open to a party to explain, the admission made by him. As laid down by their Lordships of the Supreme Court in a series of cases, namely, Dhiyansingh v. Jugal Kishore AIR 1952 SC 145. Nagubai Animal v- B. Shama Rao, (S) AIR 1956 SC 593 and Kishorilal v. Mt. Chaltibai, AIR 1959 SC 504 a party can show that either the admission was made under a mistake or under different circumstances and unless there has been a prejudice to the opposite party on account of the admission having been acted upon or on account of any representation made by the admitting party, it would not bind the party unless it amounted to an estoppel. In Kedar Nath v. Prahlad Rai, AIR 1960 SC 213, their Lordships of the Supreme Court have further laid down that where each party made admissions detrimental to itself, the mutual admissions would cancel each other with the result that the question for consideration may have to be decided on the material on record irrespective of such alleged admissions.

We are of opinion that the present one is a case of this type, where the conduct of the parties, as also the correspondence on record, show the admissions made by the parties against their own interest. Therefore, the alleged admission said to have been made by the first respondent in his notice, dated 4-1-1955 (Ex. P. 5) would have no particular significance in view of the counter admission made by the appellant in his notice, dated 4-1-1955 (Ex. P.6). The present case, therefore, cannot be decided on the alleged admissions alone. But, as already discussed earlier we have taken into consideration the subsequent conduct of the parties, as also the correspondence that ensued between them.

24. Even if we were to assume that the first respondent retired from the partnership with effect from Diwali of the year 1954, there is no doubt that under Section 37 of the Partnership Act he would be entitled to claim a share in the profits or to claim 6 per cent interest on the capital advanced by him unless the other partners settled the accounts and cleared off all the dues that might he due to him. Even from that point of view, there is no substance in the contention of the learned counsel for the appellant that the first respondent is not entitled to anything after Diwali, 1954. Under Section 37 of the Act, it is the choice of the first respondent to claim either accounts or interest at 6 per cent per annum on the advances, whichever be greater. The choice is his. This is an unfettered right of an outgoing partner. There is no doubt that the appellant utilised the money advanced by the first respondent for the benefit of the partnership and that there was never any dissolution of the firm nor any abandonment on the part of the first respondent. Even as a retiring partner, the first respondent would be entitled to the benefit conferred by Section 37 of the Indian Partnership Act.

25. The learned counsel for the appellant further urged that the suit would be Barred by time under Article 106 of the Indian Limitation Act, inasmuch as the partnership stood dissolved in Diwali, 1954, while the present suit for dissolution was filed on 10-5-1958. As we have held earlier that there was no dissolution of the firm at any time the question of limitation under Article 106 of the Indian Limitation Act would not a arise. We agree with the learned trial Judge that the suit was within time.

26. The learned counsel for the second respondent Laxmichand, filed an application purporting to be one under Order 41, Rule 33 of the Civil Procedure Code, praying, firstly, that he be transposed as an appellant and contending secondly that he never became a partner of the firm, as the deed had been signed not by him, but by his brother, Sobhagmal, who had no authority to sign on his behalf.

27. As regards the question of transposition of the second respondent as an appellant, we may observe that it is too late now for the second respondent to seek to be transposed as an appellant. In the trial Court he was one of the defendants along with the appellant. He had raised certain pleas, which were found against him and a decree was accordingly passed against both the defendants. He was apparently satisfied with the decree passed and therefore, he elected not to file an appeal against the decree. Now to permit him to be transposed as an appellant after the unsuccessful attempt of the appellant to challenge the decree would be prejudicial to the interest of the first respondent. The second respondent, having elected to be impleaded as a respondent, might urge whatever grounds he could in such capacity, without seeking to be transposed as an appellant. Therefore, we reject his prayer for being transposed as an appellant.

28-31. As regards the question whether the powers conferred by Order 41, Rule 33 of the Civil procedure Code could be invoked by the second respondent in the manner suggested by his learned counsel, the said provision is as follows:-

'The Appellate Court shall have power 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 may be exercised by the Court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents or parties although such respondents or parties may not have filed any appeal or objection.'

Provided that the Appellate Court shall not make any order under Section 35-A, in pursuance of any objection on which the Court from whose decree the appeal is preferred has omitted or refused to make such order.'

The wording of Order 41, Rule 33 indicates thatthe Court has the power to vary the decree infavour of any of the non-appealing respondent, ifit thinks it necessary to do so and if it furtherthinks that such an interference with the decreeis required On account of the decree in favour ofan appellant being varied or reversed. But, thesaid provision does not confer any right on anyof the non-appealing respondent to claim to duplicate the rights and privileges exercisable by anappellant. Therefore, we are of opinion that although the Court would have the power to reverseor vary a decree in favour of a non-appealingrespondent, the respondent concerned cannot demand it as a matter of right, he having elected tobe satisfied with the decree passed by the trialCourt. (His Lordship then held that Laxmichand,and not Sobhagmal, was a partner.)

32. As on merits we have taken a view against the appellant, there is no occasion to interfere with the decree passed by the trial Court and consequently no question for consideration under Order 41, Rule 33 of the Civil Procedure Code arises in the present case.

33. For the reasons aforesaid, the appeal failsand is dismissed with costs. The second respondent shall bear his own costs of this Court. Thecosts of the trial Court shall be borne as directedby that Court. Counsel's fee in this Court according to schedule or certificate, whichever be less.


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