Skip to content


Raghunath Sahu and anr. Vs. Trinath Das and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtOrissa High Court
Decided On
Case NumberFirst Appeal No. 67 of 1973
Judge
Reported inAIR1985Ori8; 58(1984)CLT416
ActsPartnership Act, 1932 - Sections 4, 6 and 69
AppellantRaghunath Sahu and anr.
RespondentTrinath Das and ors.
Appellant AdvocateP.K. Misra, Adv.
Respondent AdvocateS. Misra-I, Adv.
DispositionAppeal dismissed
Cases ReferredMahadeba Padhi v. Balla Syamamurty Patro
Excerpt:
.....1997(2) glt 406, approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - 4 unequivocally establish that all the elements of partnership have been satisfied in this case and plaintiff and defendant constituted a partnership firm. a, the petition filed by the plaintiff before the sub-divisional officer, complaining against the defendant, it has been stated that the plaintiff and the defendant were doing business as partners, but the document read as a whole does not indicate that all the three elements of partnership were satisfied and as such ext......in any way be considered to be an act of one of the partners, namely, raghunath on behalf of the firm raghunath sahu and company. that apart, under section 31 of the partnership act. no person can be introduced as a partner into a firm without the consent of all the existing partners. the evidence on record unequivocally discloses that there was a partnership firm of raghunath and his son harihar. harihar has never consented to bringing in the plaintiff as one of the partners, nor ext. 2 in any manner refers to such consent. in that view of the matter, we are firmly of the opinion that ext. 2 does not constitute a partnership agreement in the eye of-law between the plaintiff and the defendant.8. no doubt in ext. a, the petition filed by the plaintiff before the sub-divisional officer,.....
Judgment:

G.B. Patnaik, J.

1. This is an appeal by the defendants against the judgment and decree of the Subordinate Judge. Nayagarh. in O. S. No. 8 of 1971. wherein the defendant was directed to pay a sum of Rs. 7,040/- to the plaintiff with future interest at six per cent per annum on the principal sum of Rs. 6,971/-. During the pendency of the appeal, the defendant having died, his legal heirs have been substitued who are pursuing this appeal.

2. According to the plaint case, the defendant posing himself to be a forest contractor having taken some forest coupe on lease, persuaded the plaintiff to be a partner in business and took Rs. 6,971/- in cash from him on 30-9-1968. On that date, an agreement (Ext. 2) was executed wherein it was agreed that the plaintiff would get one-third share in the profit out of the timbers that would be sold, bul notwithstanding the same agreement, the defendant did not pay anything for which the plaintiff filed a petition on 7-8-1970 (Ext. A) before the Sub-Divisional Officer, Nayagarh, seeking his interference for the redress. The Sub-Divisional Officer referred the matter to the Sarpanches of, five Grama Panchayats who met on 21-11-1970 and an agreement was entered into between the plaintiff and the defendant. The said Panchnama is Ext. 1. Even thereafter, the defendant did not pay anything and, therefore, the present suit, was filed for realisation of Rs. 6,971/- which was paid to the defendant on 30-9-1968 together with interest of Rs. 69/-, total amounting to Rs. 7,040/-.

3. The defendant in his written statement challenged the maintainability of the suit on the ground that it was hit by Section 69(2) of the Partnership Act and further that a suit by a partner against the firm forrealisation without prayer for dissolution of partnership and rendition of accounts was not maintainable. So far as the merit of the case is concerned, it was pleaded that the firm sustained heavy loss and, therefore, the question of paying one-third to the plaintiff out of the profit did not arise. According to the defendant, his son Harihar Sahu was carrying on business as a forest contractor to whom the sum of Rs. 6,971/- was advanced by the plaintiff. According to the written statement, the plaintiff was bound to share the loss but he had not paid anything towards the loss and, therefore, the question of paying back Rs. 6,971/- did not arise.

4. On these pleadings the learned Subordinate Judge framed six issues and recorded the following findings : --

(a) the plaintiff and the defendant did not constitute any firm and the plaintiff was not a partner of the defendant.

(b) the defendant received Rs. 6,971/-from the plaintiff, but the terms and conditions of Ext. 2 did not spell out that the defendant and the plaintiff were partners.

(c) Section 69(2) of the Partnership Act had no application and the suit was maintainable.

(d) the defendant having received the sum of Rs. 6,971/- was bound to repay the same to the plaintiff.

(e) the plaintiff was entitled to receive compensation at the rate of twelve per cent per annum from 1-2-1971.

On these findings, the learned Subordinate Judge decreed the suit to the tune of Rs. 7,040/-

5. In view of abundance of evidence to the factum of payment of Rs. 6,971/- by the plaintiff to the defendant. Mr. P. K. Misra, the learned counsel for the defendant-appellant does not dispute the same. He raises only two contentions, namely (i) the suit is hit by Section 69(2) of the Partnership Act ; and (ii) a suit by one of the partners against the firm or others is not maintainable for recovery without a prayer for dissolution of partnership and rendition of accounts.

Mr. S. Misra J., the learned counsel for the plaintiff-respondent, does not disputethe propositions of law, but submits that since there was no partnership between the plaintiff and the defendant, these contentions are of no avail. Thus, the moot question to be decided in this appeal is whether there was a partnership between the plaintiff and the defendant.

6. Under the Partnership Act, three elements are necessary to be present to constitute a 'partnership': (1) there must be an agreement entered into by all the persons concerned; (ii) the agreement must be to share the profits of a business; and (iii) the business must be carried on by all or any of the persons concerned acting for all. These three elements though appear to overlap, but they are nevertheless distinct. The first element relates to the voluntary contractual nature of the partnership; the second gives the motive which leads to the formation of the firm; i.e. acquisition of gain; and the third shows that the persons of the group who conduct the business do so as agents for all the persons in the group and are, therefore, liable to account to all. Under Section 6 of the Partnership Act, in determining whether a group of persons constitute a firm or not, it is necessary to look into the real relationship between the parties as shown by all relevant facts taken together. Undoubtedly, it is not an easy task to decide whether a group of persons are partners in a business carried on by some one or more of them. The word 'partner' very often is used in a specific deed in a very loose sense without caring for and keeping in view the essential element of a legal partnership. A statement in a document that 'nothing therein contained would constitute the parties as partners' will not necessarily prevent them from being partners in the eye of law. Similarly, a mere statement that parties are to be partners will not necessarily constitute them partners in law. Therefore, it has to be decided taking into account all the relevant facts taken together keeping in view the three elements of partnership, as stated earlier. Recently we have dealt with a similar matter in another first appeal (First Appeal No. 78 of 1971 Mahadeba Padhi v. Balla Syamamurty Patro disposed of on 26th June, 1984) where the matter has been exhaustively dealt with. We shall now examine the evidence in this case tofind out whether a partnership was constituted between the plaintiff and the defendant.

7. According to Mr. P. K. Misra, the learned counsel for the appellants, Ext. 2. Ext. A, paras 3 and 4 of the plaint and evidence of P. W. 4 unequivocally establish that all the elements of partnership have been satisfied in this case and plaintiff and defendant constituted a partnership firm. Ext. 2 is the so-called agreement dt. 30-9-1968 wherein Raghunath Sahu, the defendant, agreed to share the profit and loss out of the sale proceeds of timber to the extent of one-third to the plaintiff on receiving a sum of Rs. 6,971/-from him. In this document there is no agreement between the parties that either of the so-called partners will carry on the business or any one of them will carry on the business on behalf of all, thereby the third element required for constituting a partnership is totally absent. That apart, it refers to some coupe taken on auction by Raghunath. Harihar, examined as D. W. 4, who is the son of Raghunath, in his evidence states that Raghunath and Harihar have a partnership business under the name and style of Raghunath Sahu and Company. He further states that the coupe in question was taken on lease by Harihar in his name. The name of Harihar is totally absent in Ext. 2. If Raghunath acted on behalf of the firm in executing Ext. 2, then the same is hit by Section 22 of the Partnership Act, inasmuch as under the said provision in order to bind a firm, the act or instrument done or executed by a partner on behalf of the firm shall be done or executed in the name of the firm. That being absent, Ext. 2 will not in any way be considered to be an act of one of the partners, namely, Raghunath on behalf of the firm Raghunath Sahu and Company. That apart, under Section 31 of the Partnership Act. no person can be introduced as a partner into a firm without the consent of all the existing partners. The evidence on record unequivocally discloses that there was a partnership firm of Raghunath and his son Harihar. Harihar has never consented to bringing in the plaintiff as one of the partners, nor Ext. 2 in any manner refers to such consent. In that view of the matter, we are firmly of the opinion that Ext. 2 does not constitute a partnership agreement in the eye of-law between the plaintiff and the defendant.

8. No doubt in Ext. A, the petition filed by the plaintiff before the Sub-Divisional Officer, complaining against the defendant, it has been stated that the plaintiff and the defendant were doing business as partners, but the document read as a whole does not indicate that all the three elements of partnership were satisfied and as such Ext. A also does not establish that there was a partnership firm of the plaintiff and the defendant. In the plaint, the only averment that has been made is to the effect that the defendant persuaded the plaintiff to be a partner with him in the said coupe for one-third share and took Rs. 6,961/- in cash from the plaintiff. This averment, in our view, does not constitute a partnership in the eye of law. On the other hand, the plaint read as a whole would indicate that the word 'partner' has been loosely used. At any rate, there cannot be a partnership agreement between the plaintiff and the defendant with respect to the coupe in question when the said coupe had been taken in auction by Harihar and not by the defendant. D. W. 4 in his evidence states that previously Raghunath, Harihar and one Bhikari were partners of Raghunath, Sahu and Company and after four years Bhikari did not continue as a partner and the firm continued consisting of Raghunath and Harihar. Neither the case in the written statement, nor all the documents relied upon by the defendant establish constitution of any partnership firm between the plaintiff and the said firm Raghunath Sahu and Company. In this view of the matter, we are firmly of the opinion that there was no partnership firm between the plaintiff and the defendant and consequently, the contention of the appellants that the suit is hit by Section 69(2) of the Partnership Act as also the contention that the suit by a partner against the firm without praying for dissolution and rendition of accounts have no force.

9. In the result, we do not find any merit in this appeal, which is accordingly dismissed, but there will be no order for costs of this Court.

P.C. Misra, J.

10. I agree.


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