1. This second appeal has been filed by the plaintiffs against the judgment and decree of the Additional District Judge, Gurdaspur, dated Dec. 11, 1967.
2. Briefly the facts are that Mathra Singh, plaintiff No. 1 and defendant nos. 1 to 13 were partners in an ice factory, known as Modern Ice Factory, at Gurdaspur. Arjan Singh, defendant No. 1 and Hakam Singh, defendant No. 8, were running the factory on behalf of the partners till 1955. Thereafter it was taken by Gurbachan Singh, defendant No. 10 and Kesar Singh, defendant No. 5, who ran it for about one year. It is alleged that they were of the opinion that the business could not be run profitably. They, in 1956, gave it on lease in favour of Hardev Sahai and Amolak Raj, defendants Nos. 14 and 15, employees of Bakhshish Singh, plaintiff No. 2, for a period of one year on a rent of Rs. 3,900. It is further alleged that the said defendants were in possession of the factory and were running the same. The case of Bakhshish Singh is that the said defendants were holding leasehold rights as Benamidars for him as he had provided the entire investment for running the business.
3. From 1956 to 1960, defendants Nos. 14 and 15 purchased the share of Mohinder Singh, Ram Singh, Gurbachan Singh, Harbans Lal, Kesar Singh and Nanak Singh and got them transferred either in their respective wives, Smt. Mansa Devi, defendant No. 16 and Smt. Satwati, defendant No. 17. Plaintiff No. 2 claims that purchase money for the abovesaid shares was paid either out of the business of the factory or from his funds in the hands of defendants Nos. 14 and 15 an, therefore, he was the real owner of the same and defendants Nos. 14 to 17 were Benamidars. Plaintiff No. 2 also purchased 5/64th share in the ice factory from plaintiff No. 1 vide sale deed dated Oct. 19, 1963 and thus became partner with regard to 30/64th share in it.
4. Mathra Singh, plaintiff No. 1, had appointed Ganda Singh, defendant No. 19, as General Attorney to manage his share in the ice factory. It is stated that Ganda Singh leased out 5/64th share belonging to plaintiff No. 1 in the ice factory in favour of Joginder Singh, defendant No. 18, for ten years, vide lease deed dated March 20, 1957. The plaintiffs have challenged the said lease deed, inter alia, on the ground that plaintiff No. 1 did not appoint defendant No. 19 as General Attorney.
5. Defendants Nos. 14 and 15, after 1961, also purchased the shares of the remaining partners in the ice factory. It was alleged by the plaintiffs that the business of the ice factory could not be carried on in profit, Consequently they filed a suit for dissolution of the partnership and rendition of accounts. The suit was resisted by defendants Nos. 14 to 17, who inter alia, pleaded that they were the real lessees of the ice factory and were not Benamidars for plaintiff No. 2; that they were owners of 59/64th share of the ice factory and were not Benamidars for 25/64th share as alleged by the plaintiffs and that no amount was invested by plaintiff No. 2 in the business. Regarding lease by plaintiff No. 1 in favour of defendant No. 18, they averred that it was valid. They also denied that plaintiff No. 2 purchased share of plaintiff No. 1.
5-A. The trial Court held that plaintiff No. 1 validly transferred his 5/64th share in favour of plaintiff No. 2 and that defendants Nos. 14 to 17 were not Benamidars for plaintiff No. 2 regarding 25/64th share. It also held that defendants Nos. 14 and 15 were not Benamidars regarding lease in the factory of Bakhshish Singh, plaintiff No. 2, but they were real lessees. In view of the aforesaid finding, the Court dismissed the suit of the plaintiffs. They went up in appeal before the Additional District Judge, Gurdaspur, who affirmed the judgment and decree of the trial Court and dismissed it. They have come up in second appeal to this Court.
6. During the pendency of the appeal Harnam Singh, respondent No. 13 died on November 9, 1968. Mr. K. S. Thapar, counsel for the appellants, moved an application dated March 6, 1969, stating that Harnam Singh had died on Dec. 9, 1968. He consequently prayed that his legal representatives be ordered to be brought on record. The application came up before H. R. Sodhi, J., on April 1, 1969, and the learned Judge allowed the same subject to just exceptions. Mathra Singh, appellant No. 1 also died on Sept. 22, 1969, leaving behind one son and one daughter as his legal representatives, but no application was filed by the appellants to bring them on record. Civil Miscellaneous Application No. 3117-C of 1972 was moved on behalf of the respondents that in view of the death of Mathra Singh, the appeal had abated and it might be dismissed as such.
On Oct. 26, 1972, another Civil Miscellaneous Application No. 3258-C of 1972 was filed on behalf of the respondents that Harnam Singh, respondent No. 13, had actually died on Nov. 9, 1968 and that an application had been filed by the appellants to bring his legal representatives on the record, stating therein that he had died on Dec. 9, 1968. It is further asserted that the date of death of Harnam Singh had intentionally been given wrongly because otherwise the application would have been beyond limitation. In the circumstances it was prayed that the appeal be dismissed as having abated as the legal representatives of Harnam Singh had also not been brought on record within the period of limitation.
7. A preliminary objection has been raised by Mr. D. N. Awasthy that on account of death of Mathra Singh, plaintiff-appellant and Harnam Singh, respondent No. 13, the appeal stood abated and is liable to be dismissed as such. On the other hand, Mr. Thapar, learned counsel for the appellants states that the aforesaid persons were not necessary parties to the appeal and consequently it will not abate on account of their death.
8. I have heard the learned counsel for the parties at a considerable length. The facts required to decide this matter are not disputed. Mathra Singh and Harnam Singh were partners along with others in Modern Ice Factory. Mathra Singh sold his 5/64th share in favour of Bakhshish Singh vide sale deed dated Oct. 19, 1963 and Harnam Singh sold his share in favour of defendants 14 & 15. The suit was filed by the plaintiffs for dissolution of partnership and rendition of accounts in March, 1964. In para. 11 of the plaint the plaintiffs stated that the original partners had transferred their respective shares, but under law transferees alone could not bring a suit for dissolution of partnership and for accounts etc. and therefore the suit had been filed by Mathra Singh, plaintiff No. 1, the original partner and Bakhshish Singh, plaintiff No. 2, his transferee against defendants Nos. 1 to 13, original partners and defendants Nos. 14 and 15, the alleged transferees of the other shares.
It is further stated that defendants Nos. 16 and 17 had been impleaded because they also claimed to be purchasers of some of the share and defendant No. 18 had been impleaded as he claimed to be a long time lessee of the share of plaintiff No. 1, through his Attorney, defendant No. 19. From a perusal of the above said paragraph it is evident that the plaintiffs admitted that the original partners in the firm were necessary parties for the purpose of institution of a suit for dissolution of partnership and rendition of accounts. This proposition of law is also admitted correct by Mr. Thapar, learned counsel for the appellants and in may view he has done so rightly, as there cannot be any dispute about this proposition. In this regard reference may be made to S. 29 of the Indian Partnership Act (hereinafter referred to as the Act), which is as follows:--
'29(1). A transfer by a partner of his interest in the firm, either absolute or by mortgage, or by the creation by him of a charge on such interest, does not entitle the transferee, during the continuance of the firm, to interfere in the conduct of the business, or to require accounts, or to inspect the books of the firm, but entitles the transferee only to receive the share of profits of the transferring partner, and the transferee shall accept the account of profits agreed to by the partners.
(2) If the firm is dissolved or if the transferring partner ceases to be a partner, the transferee is entitled as against the remaining partners to receive the share of the assets of the firm to which the transferring partner is entitled, and, for the purpose of ascertaining that share, to an account as from the date of the dissolution.
9. A bare perusal of the section shows that a transferee of a share in a partnership business cannot ask for accounts of the firm. He is entitled to the share of profits of the transferring partner and has to accept the account of profits agreed to by the partners. It further provides that after the dissolution of the firm, the transferee is entitled to receive the share of the assets of the firm to which the transferring partner is entitled. From the above discussion it emerges that a transferee of share of a partner has limited rights in the partnership business. Therefore, in a suit for dissolution of partnership and rendition of accounts of a firm, the original partners are necessary parties and a suit cannot be instituted without them.
In the aforesaid view I get support from the observations of a Division Bench of the Sind High Court in Mulchand Tagiomal v. Shamdas Jethanand, AIR 1941 Sind 73. It was observed by the Bench that in a suit, by a transferee or an assignee from an ex-partner in a firm after the dissolution of the partnership, for accounts of the dissolved partnership as a whole the assignors are necessary parties. I am in respectful agreement with the above observations. In that case the assignors were not made parties till more than three years after the dissolution of the partnership. The suit was consequently dismissed on this ground.
10. Faced with this difficulty, Mr. Thapar, learned counsel for the appellants, sought to argue that Mathra Singh sold his share in the partnership to Bakhshish Singh and Harnam Singh to some of the defendant. He submits that the transferees are parties to the litigation. According to him, the transferees would be legal representatives of the deceased and consequently the appeal would not abate. Prima facie the argument appeared to be very plausible but when examined minutely, it was found to be without substance. The partnership business started long before the shares were purchased by the transferees. By virtue of the sale deeds, only their shares in the partnership were transferred and not the profits made out prior to the transfer of the shares. The suit has been filed for dissolution of the partnership and rendition of the accounts. An enquiry was made from Mr. Thapar, learned counsel for the appellants as to from which date the rendition for the accounts had been sought.
He made a statement that the plaintiffs sought rendition of accounts from the defendants from March 31, 1961. He, however, was unable to explain from where he had taken the aforesaid date. Plaintiff No. 2 had purchased 5/64th share from Mathra Singh deceased vide sale deed dated Oct. 19, 1963 as stated above. It is not mentioned in the plaint that accounts had been settled between the parties at any time. If the accounts had been settled between them up to a certain date, it could be taken that the rendition of accounts was being claimed thereafter. Such being not the case, it cannot be held that the plaintiffs were claiming rendition of accounts from March 31, 1961. As accounts were being claimed from the very inception of the partnership, the legal representatives of the deceased partners were necessary parties to the litigation as they are interested in the accounts prior to the date when the shares were transferred. It, therefore, cannot be held that the transferees of the deceased partners are their legal representatives qua the accounts prior to the date of the transfer of share by the deceased. For the said reasons, I reject the contention of the learned counsel.
11. The learned counsel then argued that the partnership between the parties was a partnership at will and the institution of the suit for dissolution of partnership and rendition of accounts amounted to dissolution of partnership. He also urged that after the dissolution, the transferors ceased to be necessary parties. He made a reference to a judgment of a Privy Council in Sathappa Chetty v. S. N. Subrahmanyan Chetty, AIR 1927 PC 70, wherein it was observed that filing plaint in a suit for dissolution by one partner is enough of itself to put an end to a partnership at will. There is no quarrel with the proposition as enunciated by their Lordships.
The question to be determined in the present case however is, whether the transferors were necessary parties to the litigation after filing of the suit or not? If the partnership is dissolved on the date of filling of the suit, it cannot be held that the transferors ceased to be necessary parties thereafter. It has been held by the Supreme Court in Surinder Kumar v. Gian Chand, 1958 SCA 412: (AIR 1957 SC 875) that hearing of an appeal is under the processual law of the country in the nature of re-hearing. In my view an appeal is a continuation of suit and if a person is a necessary party in the suit, he will be deemed to be a necessary party in the appeal also. So I do not find any substance in this contention of learned counsel as well.
12. It is a settled law that if a necessary party dies and his legal representatives are not brought on the record, the suit/appeal abates. In the present case, as stated above, Mathra Singh appellant died on Sept. 22, 1969 leaving one son and one daughter. No application was filed to implead his legal representative. Harnam Singh died on Nov. 9, 1968. The appellants by wrongly representing that he died on Dec. 9, 1968, got his legal representatives brought on the record vide order of this Court dated April 1, 1969, This order was however passed subject to just exceptions. In Civil Miscellaneous No. 3258-C of 1972, the respondents have challenged the correctness of the date of death. They filed a copy of the death entry wherein Harnam Singh is shown to have died on Nov. 9, 1968. Mr. Thapar could not challenge the correctness of the said date.
The application for bringing on record the legal representative of Harnam Singh deceased, was filed on March 6, 1969. The application could be filed for that purpose within 90 days of the date of death. Thus that application was barred by limitation. It is the duty of the appellants to the file application for impleading the legal representatives within time. In case they fail to do so, they have to show that there are sufficient reasons for not making the application in time. Mr. Thapar has however not been able to show any reason for not filing the application for bringing on record the legal representatives in time, Therefore, in view of the death of Mathra Singh appellant and Harnam Singh respondent, the appeal abates and is liable to be dismissed as such.
13. For the reasons recorded above, the appeal is dismissed as having abated. In the circumstances of the case, I make no order as to costs.
14. Appeal dismissed.