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Venkideswara Prabhu Ravindranatha Prabhu Vs. Surendranatha Prabhu Sudhakara Prabhu and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial;Civil
CourtKerala High Court
Decided On
Case NumberA.S. No. 269 of 1978
Judge
Reported inAIR1985Ker265
ActsHindu Law; Partnership Act, 1932 - Sections 29, 29(1) and 29(2); Transfer of Property Act, 1882 - Sections 5; Code of Civil Procedure (CPC) , 1908 - Order 1, Rule 9
AppellantVenkideswara Prabhu Ravindranatha Prabhu
RespondentSurendranatha Prabhu Sudhakara Prabhu and ors.
Appellant Advocate P. Krishnamoorthy and; P.C. Chacko, Advs.
Respondent Advocate M.K. Narayana Menon,; T.V. Ananthan,; A.S. Warrier,;
DispositionAppeal allowed
Cases ReferredAmirchand Nagindas & Co. v. Raoji Bhai
Excerpt:
civil - nature of property - section 29 of partnership act, 1932, section 5 of transfer of property act, 1882 and order 1 rule 9 of code of civil procedure, 1908 - suit for dissolution of provision store - dissolution sought on ground of shop being family concern - evidence prove that provision shop does not belong to joint family concern but is partnership firm - non partners of such business cannot file suit for dissolution of concern. - - the suit is also barred by limitation and bad for non joinder of parties. a1 and b2, the provision store continued as a joint family business (ii) who are all partners of the business and whether the plaintiff is entitled to sue for dissolution and settlement of accounts and (iii) if the suit is bad for non joinder of parties and hence not.....padmanabhan, j.1. second defendant is the appellant. o. s. no. 2 of 1973 before the sub court, alleppey was filed by the plaintiff for dissolution of partnership and settlement of accounts. the sub judge allowed the suit granting dissolution of partnership and ordering settlement of accounts. hence this appeal.2. a brief history of the litigation may help us in understanding the facts and controversies. the parties are followers of the hindu law. first defendant is the father and defendants 2 to 6 are his sons. among them, some died after the suit. 9th defendant is the wife of the 5th defendant and defendants 7 and 8 and the plaintiff are their sons. defendants 10 to 14 are the daughters of defendants 5 and 9.3. in the year 1124, the first defendant executed ext. b1 settlement deed by.....
Judgment:

Padmanabhan, J.

1. Second defendant is the appellant. O. S. No. 2 of 1973 before the Sub Court, Alleppey was filed by the plaintiff for dissolution of partnership and settlement of accounts. The Sub Judge allowed the suit granting dissolution of partnership and ordering settlement of accounts. Hence this appeal.

2. A brief history of the litigation may help us in understanding the facts and controversies. The parties are followers of the Hindu Law. First defendant is the father and defendants 2 to 6 are his sons. Among them, some died after the suit. 9th defendant is the wife of the 5th defendant and defendants 7 and 8 and the plaintiff are their sons. Defendants 10 to 14 are the daughters of defendants 5 and 9.

3. In the year 1124, the first defendant executed Ext. B1 settlement deed by which some of the properties were given to defendants 2 to 6. The joint family properties were divided between defendants 1 to 6 under Ext. A1 in 1955. An oil mill alone was kept in common. There was a provision store by name 'M. Rule Venkateswara Prabhu and M. V. Surendranatha Prabhu', which was conducted as a joint family concern. That business was also divided under Ext. A1 though there was some controversy as to whether it was a joint family business or only an individual concern of the first defendant, now that controversy is over and it is admitted that it was actually a joint family business. At present the main dispute is whether the business has been partitioned under Ext. A1 or not.

4. Ext. A1 was on 16-8-1955. On 17-8-1955 defendants 1 to 3 and 5 executed Ext. B2 deed of partnership in order to continue the provision store as a partnership concern, admitted the 4th defendant, who was then a minor, to the benefits of partnership until he attains majority. It was also decided to admit him as a regular partner after he attains majority. It is conceded that in fact he was made a regular partner after he became major.

5. On 12-11-1957 Ext. A2 partition deed was executed between the 5th defendant and his 3 sons, namely, plaintiff and defendants 7 and 8, who were minors at that time. That partition deed was regarding the assets obtained by 5th defendant under Ext. A1 including his share in the partnership business. The document proceeded on the assumption that the partnership business is also a joint family concern in which plaintiff and defendants 7 and 8 are entitled to right by birth. 3/4th share of the business was given to plaintiff and defendants 7 and 8. The 5th defendant surrendered guardianship of his minor sons and first defendant was appointed as their guardian. The 1/4 the share of the 5th defendant in the provision store was given to defendants 9 to 11 and the daughters to be born in future. Defendants 12 to 14 are the daughters born subsequently.

6. The suit was filed on the assumption that the provision store was not partitioned under Ext. A1 and it continued as a joint family business even after Ext. A1 in spite of Ext. B2 partnership deed. On the basis of Ext. A2, plaintiff claimed that himself and defendants 7 and 8 are also partners, each entitled to 1/4th of l/5th share, that is one upon 20th share, over the business as of right. The further claim is that defendants 9 to 14 are jointly entitled to 1/20 share. Plaintiff wanted dissolution of partnership, settlement of accounts and realisation of the 1/20 share due to him. The contentions of defendants 1 to 3 could be briefly put as under. Ext. A1 was an outright partition of the entire joint family assets including 'M. Rule Venkiteswara Prabhu and M. V. Surendranatha Prabhu' (herein-after called the provision store), thereafter, there was no joint family business. It was only a partnership business conducted by defendants 1 to 5 under Ext. B2. Ext. A2 was only an internal arrangement between 5th defendant and his children. The other partners are not bound by it. Plaintiff and defendants 7 to 14 are not partners of the firm and the plaintiff has no right to file a suit for dissolution of partnership or settlement of accounts. The suit is also barred by limitation and bad for non joinder of parties.

7. The trial Court found that the provision store is being run as joint family business even after Ext. A1 and hence plaintiff and defendants 7 and 8 are also partners having birthright in the business. Defendants 9 to 14 were also found entitled to share in the partnership. It was further found that Ext. B2 partnership deed is not binding on plaintiff and defendants 7 and 8, who were admitted to the partnership. The contention of non joinder of parties was found not material on the ground that the plaintiff was not aware of the fact that the wife of the 6th defendant is made a partner. From the arguments advanced before us by either side, the points arising for consideration in the appeal are: (i) whether in spite of Exts. A1 and B2, the provision store continued as a joint family business (ii) who are all partners of the business and whether the plaintiff is entitled to sue for dissolution and settlement of accounts and (iii) if the suit is bad for non joinder of parties and hence not maintainable.

8. We shall deal with the first two points now. The finding of the trial Court is that even after Exts. Al and B2, the provision store continued as a joint family concern and Ext. B2 was intended only as a formal document for registration and income-tax purposes. Being a joint family business, plaintiff and defendants 7 and 8 were found to have birthright in it. We think that the trial Court made a wrong approach to the issue.

9. Admittedly, there was a joint family consisting of the first defendant and his sons. By Ext. B1 some of the properties were divided in 1124. The remaining assets of the joint family were divided on 16-8-1955 under Ext. A1 partition deed to which all the coparceners were parties. The only item of joint family asset kept in common was an oil mill. Ext. A1 shows that even the provision store was divided. Though there was originally some contention that the provision store was only a proprietary concern of the first defendant, now that controversy is over. Before us it was admitted by either side that at least till the date of Ext. A1, the provision store was a joint family business. The status of the business after Ext. A1 alone is now the subject of controversy. All the parties admit that all other assets of the joint family except the oil mill were finally partitioned. Thus it could be taken for granted that there was admittedly a complete disruption of the joint family except only regarding the provisions store and the oil mill. Regarding the provision store, the main contention is that in spite of Ext. A1 evidencing partition, there was actually no physical partition of the business. Therefore, it was contended that under the guise of partnership concern, it was run as a joint family business.

10. In our opinion, there is absolutely no basis for such a contention. Clause 8 and 9 of Ext. A1 clearly prove an outright division of the provision store and its assets also. The document provides that the assets and liabilities of the business including the stock and outstandings were ascertained and divided among the partners. There were some suits filed by the 5th defendant on behalf of the provision store for realisation of amounts. He was authorised to continue those cases and hand over the realisations to the first defendant. Fifth defendant himself was authorised to sue for realisation of further outstanding of the business and hand over those amounts also to the first defendant. In case of default, the other coparceners were authorised to realise their shares proportionately from him. Provision for proportionate discharge of the liabilities were also made. We are satisfied that Ext. A1 conclusively establishes that it is an outright partition regarding the provision store also.

11. Among defendants 1 to 5, the 4th defendant was a minor at the time of Exts. Al and B2. On 17-8-1955 (the date next to the execution of Ext. A1) defendants 1 to 3 and 5 entered into Ext. B2 partnership deed for carrying on the provision store as a partnership concern. In Ext. B2 it is stated : 'Whereas by the registration deed dt. 16-8-1985, the said joint family was disrupted and all the property and assets including the business have been partitioned in definite portions amongst the members and whereas as a consequence the said family business ceased to be carried on as a family concern with effect from the above date of partition'. It is further stated that the executants of Ext. B2 wanted to continue the business in the existing name itself as a partnership and it was for that purpose Ext. B2 was executed. The 4th defendant was agreed to be admitted to the benefits of the partnership till he becomes a major and thereafter as a regular partner. There is no dispute that he was actually admitted as a regular partner on attaining majority. In our opinion, even without reference to any other documentary or oral evidence, Exts. A1 and B2 by themselves could be taken as capable of establishing an outright partition and disruption of the joint family even regarding the provision store. If so, the burden will be on the plaintiff to establish any special agreement to keep the provision store as a joint family concern. There is absolutely no such evidence.

12. Absence of physical division of the assets and liabilities of the provision store was the main basis of the contention that the provision store continued as a joint family concern in spite of the partition and subsequent registration of the partnership deed. It is said that the investment of the partnership business was the share of each individual coparcener in the business received under Ext. A1. In short the contention was that there was no change in the nature of the business in spite of the partnership deed. At any rate it must be conceded that one coparcener namely, the 6th defendant, who separated under Ext. A1, is not a partner in Ext. B2. He had absolutely no claim over the partnership. Under Ext. A1 he got another joint family business namely Tobacco business for his separate share.

13. Actual physical division or partition by metes and bounds is not an essential ingredient for the purpose of effecting severance in status. That is only a procedural formality to be undergone in the process of partition. Even without undergoing that formality severance in status could be had. Expression of an unequivocal intention to separate resulting in division of status is sufficient to bring about the severance of status. That is a question of fact to be decided on the merits of each case. Simply because properties are not physically divided and allotted to members, a partition will not cease to be such, provided there are facts and circumstances evidencing severance in status. When severance is attained, the joint family status is definitely disrupted. A business as a going concern could attain a status of division even by dividing book balance. Mere specification of shares in the accounts will be sufficient to attain a divided status regarding a family business. For that purpose it is not necessary that there should be a physical division of the business.

14. In Bhimraj Bansidhar v. Commr., Income-tax, : [1954]26ITR185(Patna) , the Patna High Court held :

'A partition of the business can therefore be brought about by mere specification of the shares in the accounts and making entries therein to show that the business is held in severally or in specified shares; it is not necessary that there should be physical division of the business.'

It was also held therein :

'The entries in the books of account dt. 29th June, 1946, and the two partnership deeds constituted sufficient materials in law for a finding as to the disruption of the joint family status with respect to the business and for bringing into existence the partnership firm which was entitled to registration under Section 26A'

15. The provisions in Exts. Al and B2 will have to be considered in this background. Here severance in status is admitted regarding every item other than the oil mill and the provision store. Oil mill was admittedly kept in common. Exts. Al and B2 by their provisions amply indicate that severance of status was attained in the case of the provision store also. We do not feel it necessary to extract the provisions of Ext. A1 or B2, or to discuss the oral or documentary evidence to support our finding that the provision store also attained a status of division.

16. The contention was that instead of physically dividing the assets of the provision store, defendants 1 to 5 invested their shares in the business obtained under Ext. A1 for the purpose of continuing it as a partnership under Ext. B2. Even accepting that position, the case of the plaintiff cannot improve to any extent. If this contention is accepted, the position will be that defendants 1 to 5, who attained a status of division under Ext. A1, utilised their share of the joint family business in order to start a partnership concern. Even in that contingency, the old family business must be treated as having come to an end. Thereafter, it was only a new partnership business started by five divided coparceners with the nucleus obtained by each of them on family partition. The maximum that could be found is that each of them, in their capacity as partners may be representative of the joint family consisting of himself and his sons. In that event also, plaintiff cannot improve his case to any extent.

17. Let us take the case of the 5th defendant. After Ext. A1, he is only a divided member. In the assets obtained by him under Ext. A1 his sons also may have birthright. In that way he may be representative of the joint family in the partnership firm. So far as the partnership firm is concerned, the 5th defendant alone is the partner even though he became a partner in his capacity as Manager or Kartha of his joint family. The other members of his joint family or the joint family as a unit do not become partners of the firm.

18. In Pichappa v. Chokalingam, , it was held :

'Where a managing member of a joint family enters into a partnership with a stranger the other members of the family do not ipso facto become partners in the business as to clothe them with all the rights and obligations of a partner as defined by Contract Act. In such a case the family as a unit does not become a partner, but only such of its members as in fact enter into a contractual relation with the stranger; the partnership will be governed by the Act.'

19. The fifth defendant may be accountable to the other members of his joint family for the profits of the partnership business but his rights and liabilities in the partnership will be governed by deed of partnership alone. That has nothing to do with his obligation towards strangers. The position will not change even if the strangers to the partnership towards whom he is having obligation are the members of his own joint family.

20. In Income-tax Commr. v. Bagyalakshmi and Co., : [1965]55ITR660(SC) , it was observed :

'A contract of partnership has no concern with the obligation of the partners to others in respect of their shares of profit in the partnership. It only regulates the rights and liabilities of the partners. A partner may be the Karta of a joint Hindu family; he may be trustee; he may enter into a sub-partnership with others; he may, under an agreement, express or implied, be the representative of a group of persons; he may be a benamidar for another. In all such cases he occupies a dual position. Qua the partnership he functions in his personal capacity; qua the third parties, in his representative capacity. The third parties, whom one of the partners represents, cannot enforce their rights against the other partners nor the other partners can do so against the said third parties. Their right is only to a share in the profits of their partner-representative in accordance with law or in accordance with the terms of the agreement, as the case may be.'

21. Third parties whom the partner represents, even if they are members of his joint family cannot enforce their claims against the other partners or against the partnership. They can only claim their share of profits from the partner representative,

22. A Hindu joint family is not a juristic person for all purposes. As a joint family it cannot enter into a partnership. For the purpose of entering into a partnership, the joint family cannot be treated as a juristic person. All the individual members of a joint family could enter into a partnership with the members of another joint family or even with other individuals. In that case also, they will be treated in the eye of law only as individual partners and not as a joint family. That is also the case with representatives of the joint family even if they are karta or manager. For this purpose, it may be advantageous to extract the principles laid down in Kshetra Mohan Sannyasi Charan v. Commr. of Excess Profits Tax, : [1953]24ITR488(SC) :

'When two kartas of two Hindu undivided families enter into a partnership agreement the partnership is popularly described as one between the two Hindu undivided families but in the eye of the law it is a partnership between the two kartas and the other members of the families do not ipso facto become partners. There is, however, nothing to prevent the individual members of one Hindu undivided family from entering into a partnership with the individual members of another Hindu undivided family and in such a case it is a partnership between the individual members and it is wholly inappropriate to describe such a partnership as one between two Hindu undivided families.'

In all such cases, even where the partner is the karta or manager of a joint family, the partnership agreement is only between him and the other partners. No member of the family except the partner acquires right or interest in the partnership. The members who are not partners could only enforce their claims against their representative partner for share of profits treating the partnership profit as joint family asset.

23. In Ram Laxman Sugar Mills v. Commr. of Income-tax : [1967]66ITR613(SC) , it was decided :

'A Hindu undivided family is undoubtedly a 'person' within the meaning of the Income-tax Act; it is however not a juristic person for all purposes, and cannot enter into an agreement of partnership with either another undivided family or individual. It is open to the manager of a joint Hindu family as representing the family to agree to become a partner with another person. The partnership agreement in that case is between the manager and the other person, and by the partnership agreement no members of the family except the manager acquires a right or interest in the partnership. The junior members of the family may make a claim against the manager for treating the income or profits received from the partnership as a joint family asset, but they cannot claim to exercise the rights of partners nor be liable as partners.

From the very nature of its fluctuating composition consisting of members, some of whom may not have attained the age of majority and some may at a given time be unborn, the family as a unit is incapable of entering into a partnership agreement contemplating the creation of mutual rights of agency among its members.'

24. The fact that, as in this case, partners are exclusively divided members of a joint family, without any stranger, will not improve the position any further. Persons having rights and liabilities are only the partners and nobody else. Admittedly, plaintiff and defendants 7 to 14 are not partners of the firm and consequently they cannot enforce any rights against the firm including the right to sue for dissolution or settlement of accounts.

25. On 12-11-1957, the 5th defendant executed Ext. A2 partition deed along with his minor sons as well as wife and daughters. In Ext. A2, the assets received by the 5th defendant under Ext. A1 including the share in the provision store were described as joint family assets to which plaintiff and defendants 7 and 8 were entitled by birthright. Plaintiff and defendants 7 and 8 were given 3/4th share stating that they are entitled to it as of right. 1/4th share of the 5th defendant over the provision store was given to his wife, 9th defendant, and the then existing daughters, defendants 10 and 11, providing that future born daughters also will be entitled to share in that 1/4th. Defendants 12 to 14 are daughters of defendants 5 and 9 born after the date of Ext. A2. In Ext. A2 the 5th defendant relinquished guardianship of plaintiff and defendants 7 and 8 and the first defendant was appointed as their guardian. In fact this document is the main basis of the plaint claim.

26. Whatever is stated in Ext. A2 is not binding on defendants 2, 3 and 4, who were not parties to it. Ext. A2 is only an internal arrangement between the 5th defendant and his children. The participation of the first defendant in Ext. A2 will not improve the position. Even though he is the father of defendants 2 to 6, he was only a divided coparcener after Ext. A1. So far as Ext. B2 partnership is concerned, the capacity of the first defendant is only as an individual partner-Therefore, his admissions in Ext. A2 also cannot bind the other partners. At any rate. Ext. A2 cannot invest the plaintiff and defendants 7 and 8 with the status of partners in the firm. The finding of the trial Court to the contrary cannot be accepted as correct.

27. Then the contention was that plaintiff and defendants 7 and 8 were admitted to the benefits of partnership. In this connection, the accounts of the partnership were also relied on. It is true that the accounts show that the plaintiff and others were being paid amounts from the profits of the firm occasionally. But there is nothing to indicate that they were admitted to the benefits of partnership or admitted as partners. Payment of amounts from the profits of the partnership by itself cannot prove the case of the plaintiff. Section 29 of the Partnership Act reads :

'29. Rights of transferee of a partner's interest : (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 entitled 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 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.' '

28. The contesting defendants say that the payments were on the basis of Ext. A2 under Section 29(1) of the Partnership Act and there is nothing to indicate otherwise. Even though the correctness of the recitals are disputed and even though these recitals regarding rights are not binding on the other partners, Ext. A2 was contended to be capable of proving transfer of the interest of the 5th defendant in the partnership. It was argued for the defendants that at any rate under Section 29(1) of the Partnership Act, the plaintiff and his brothers would have been entitled to get the share of the 5th defendant. But even conceding that there is such a right, during the continuance of the partnership, the transferees are not entitled to interfere with the conduct of the business of the firm or require accounts or inspect the books.

29. Section 29(2) of the Partnership Act imposes two conditions for the purpose of entitling the transferees to receive the assets of the firm which the transferring partner is entitled to as well as entitling them to ascertain the share. The firm must have been either dissolved or the transferring partner must cease to be a partner. Above all these things, the first condition is that there is a transfer of the interest of the partner. Here on the date of the suit, the firm was not admittedly dissolved. So also there is nothing to show that the 5th defendant ceased to be a partner. The prayer in the plaint itself is for dissolution of the partnership. But, before us, it was argued that after the suit, defendants 3 and 4 died and hence there must be an automatic dissolution of the partnership. But that was not pleaded. The pleading is only to the effect that the provision store continues to be joint. The plaint was not amended consequent on the death of defendants 3 and 4. No relief was claimed on the basis of the death of the two partners. A case which is not pleaded, need not be considered.

30. Further, as we have earlier stated, what is required under Section 29(1) of the Partnership Act is the transfer of the interest of the partner in the firm. What is claimed under Ext. A2 is not a transfer. Plaintiff and defendants 7 and 8 claimed birthright. Ext. A2 is only a partition deed by which plaintiff and defendants 7 and 8 claimed to have obtained what they were entitled to as a matter of right by birth. Partition is not a transfer. It is only renouncement of existing rights in common properties in consideration of getting exclusive right and possession over the specific plots. Partition is only a process of mutual renunciation by which common unspecified rights in larger extents are located into exclusive right over specific plots.

31. In Panchali v. Manni, 1963 Ker LT 168 : : AIR1963Ker66 , it was found :

'The true nature of partition is that each co-owner gets a specific property in lieu of his rights in all the joint properties: that is to say, each co-sharer renounces his rights in the other common properties in consideration of his getting exclusive right to and possession of specific properties in which the other co-owners renounced their rights. It is thus a renunciation of mutual rights and does not involve any transfer by one co-sharer of his interest in the properties to the others. So a partition spells not a transfer but a transformation by a process of renunciation.''

32. In other words, partition is transformation of antecedent subsisting title over the totality of the family properties held jointly into separate titles of individual members over specific plots. Whether it be co-ownership, joint family or joint tenancy as in the case of towards, each member is having right over every inch of the common property before partition. No transfer of rights is involved in partitions as such. In this connection, it may be advantageous to advert to the principles laid down in Sarin v. Ajit Kumar, : [1966]1SCR349 :

'Having regard to the basic character of joint Hindu family property, each coparcener has an antecedent title to the said property, though its extent is not a determined until partition takes place. That being so, partition really means that whereas initially all the coparceners had subsisting title to the totality of the property of the family jointly, that joint title is transformed by partition into separate titles of the individual coparceners in respect of several items of properties allotted to them respectively. As this is the true nature of a partition, the contention that partition of an undivided Hindu family property necessarily means transfer of the property to the individual coparceners cannot be accepted.'

33. If so, Ext. A2 cannot be claimed as a transfer of the interest of a partner coming under Section 29(1). In order to bring the claim of the plaintiff and others within Section 29(1) of the Partnership Act, they must have acquired some rights, which they did not have from a partner. They have no such case. What they claimed was birthright and the separation of the same by partition. If so, application of Section 29(1) or (2) does not arise. Receipt of profits, under such circumstances, cannot in any way help the plaintiff.

34. Ext. B20 shows that the 4th defendant was admitted as a partner when he attained majority. So also there is evidence to show that the wife of the 6th defendant was admitted as a partner. But none of the records evidence the fact that plaintiff or defendants 7 and 8 were either admitted as partners or admitted to the benefits of the partnership even though it is seen from Ext. B25 that plaintiff was born on 29-10-1949 and he must have attained majority in 1967.

35. The claim that plaintiff and defendants 7 and 8 were admitted to the benefits of partnership also cannot be accepted as proved in the absence of necessary evidence. Section 30 of the Partnership Act reads :

'30. Minors admitted to the benefits of partnership -- (1) A person who is a minor according to the law to which he is subject may not be a partner in a firm, but, with the consent of all the partners for the time being, he may be admitted to the benefits of partnership.

(2) Such minor has a right to such share of the property and of the profits of the firm as may be agreed upon, and he may have access to and inspect and copy any of the accounts of the firm.

(3) Such minor's share is liable for the acts of the firm, but the minor is not personally liable for any such act.

(4) Such minor may not sue the partners for an account or payment of his share of the property or profits of the firm, save when severing his connection with the firm, and in such case the amount of his share shall be determined by a valuation made as far as possible in accordance with the rules contained in Section 48 :

Provided that all the partners acting together or any partner entitled to dissolve the firm upon notice to other partners may elect in such suit to dissolve the firm, and thereupon the Court shall proceed with the suit as one for dissolution and for settling accounts between the partners, and the amount of the share of the minor shall be determined along with the shares of the partners. (5) At any time within six months of his attaining majority, or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later, such person may give public notice that he has elected to become or that he has elected not to become a partner in the firm, and such notice shall determine his position as regards the firm:

Provided that if he fails to give such notice, he shall become a partner in the firm on the expiry of the said six months. (6) Where any person has been admitted as a minor to the benefits of partnership in a firm, the burden of proving the fact that such person had no knowledge of such admission until a particular date after the expiry of six months of his attaining majority shall lie on the persons asserting that fact.

(7) When such person becomes a partner, --

(a) his rights and liabilities as a minor continue up to the date on which he becomes a partner, but he also becomes personally liable to third parties for all acts of the firm done since he was admitted to the benefits of partnership, and

(b) his share in the property and profits of the firm shall be the share to which he was entitled as a minor.

(8) Where such person elects not to become a partner --

(a) his rights and liabilities shall continue to be those of a minor under this section up to the date on which he gives public notice,

(b) his share shall not be liable for any acts of the firm done after the date of the notice,

and

(c) he shall be entitled to sue the partners for his share of the property and profits in accordance with Sub-section (4).

(9) Nothing in Sub-sections (7) and (8) shall affect the provisions of Section 28.'

I n order to prove that a minor was admitted to the benefits of the partnership, in the first place there must be proof of consent of all the partners; secondly, there must be an agreement as contemplated under Section 30(2).

36. In Venkatarama Iyer v. Balayya AIR 1936 Mad 595, it was held :

'Where members of a family carry on a business and these are minor members in the family, there must be some positive conduct from which a Court can infer that the regular members intended to admit to the benefit of the partnership certain minor members. The mere fact that everybody concerned assumed by some error of law that all the children of the family whether majors or minors, were in some manner interested in the business does not suffice to bring Section 247 into operation.'

37. So also in Addl. Commr. of Income-tax v. Uttam Kumar Promod Kumar : [1974]97ITR730(All) it was observed :

'Section 30(2) of the Partnership Act leads to the inference that even for admission of a minor to the benefits of a partnership, an agreement is required between him and the existing partners. The minor's property and funds can be utilised by the firm and for that purpose also it is essential that there should be an agreement on behalf of the minor with other partners. In our opinion any agreement to which the minors are not parties cannot be validly made to admit the minors to the benefits of partnership. In this case, the minors had not signed the partnership deed nor had anybody acting on their behalf. The minors were thus not parties to the partnership document.'

No such consent and no such agreement have been proved in this case. There is no point in saying that there was consent and agreement as evidenced by circumstances or the consent and agreement will have to be presumed from the participation of the first defendant in Ext. A2.

38. From the foregoing discussions, it is clear that by the execution of Ext. A1 the joint family, including the provision store got divided. Thereafter, the provision store was being continued only as a partnership business by defendants 1 to 5 under Ext. B2. Neither the plaintiff nor defendants 7 and 8 were either admitted to the benefits of the partnership or made regular partners. Plaintiff was not competent to sue for dissolution of the partnership or for settlement of accounts and realisation of amounts. The suit was definitely incompetent. The findings of the trial Court to the contrary are wrong and will have to be reversed.

39. On point No. 3 also the findings of the trial Court will have to be reversed. From the records, it cannot be disputed that the wife of the 6th defendant was admitted as a regular partner. The trial Court has also found this point against the plaintiff. She was not impleaded as a defendant in the suit. The reason given by the trial Court in this connection is not at all appealing. It is stated that the plaintiff was not aware of the admission of the wife of the 6th defendant as a partner and hence he is competent to file a suit even without impleading her. That finding cannot be accepted. At least after the plaintiff was informed of the fact that the wife of the 6th defendant is a partner, he could have taken steps to implead her. That was also not done.

40. What was argued before us was that under Order I Rule 9 of the Civil P.C., a suit cannot be defeated by reason of nonjoinder of parties and the Court will have to decide the controversy as regards the rights and interests of the parties actually before it. Order I Rule 9 of the C.P.C. reads :

'Misjoinder and nonjoinder : No suit shall be defeated by reason of the misjoinder or nonjoinder of parties, and the Court may in every suit deal with the matter in controversy so far as regards the rights and interests of the parties actually before it : Provided that nothing in this rule shall apply to nonjoinder of a necessary party.'

From the proviso it is clear that nothing in the rule is applicable so far as nonjoinder of a necessary party is concerned. There cannot be any dispute that in a suit for dissolution of partnership and settlement of accounts a partner is a necessary party. Section 46 of the Partnership Act reads :

'46. Right of partners to have business wound up after dissolution. -- On the dissolution of a firm every partner or his representative is entitled, as against all the other partners or their representatives, to have the property of the firm applied in payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners or their representatives according to their rights.'

On dissolution of the partnership, every partner or his representative is entitled to payments of debts and liabilities as against all the other partners or their representatives.

41. In Yakub Ibrahim v. A. Gulamabbas : AIR1958Bom51 , it was found :

'Each of the partners, in a partnership suit, is really in turn plaintiff and defendant and in both capacities comes before the Court for the adjudication of his rights or liability relatively to the other partners which the Court endeavours to determine by its decree. In such a suit it is well established that a decree can go either in favour of the plaintiff against the defendant or in favour of any defendant or defendants against any other party or parties to the suit. In a partnership suit all the partners or their legal representatives must be made parties because all the parties necessary for the disposal of the subject matter of the suit including taking of accounts must be before the Court or the suit will fail. Proper and complete accounts cannot be taken as between some only of the partners. The necessary corollary is that if a necessary party has been omitted and added at a time when the suit against him is barred, the whole suit will be dismissed.'

42. That suit even considered the case in which a necessary party has been impleaded at a time when the claim against the other parties or some of them had become barred by limitation. In that contingency also, the finding goes against the plaintiff.

43. In S. Mohinder Singh v. S. Des Singh AIR 1971 P&H; 186, it was observed (para 5) :

'It is a settled proposition of law that a suit for accounts cannot be maintained against some of the partners only and that every partner is a necessary party. The reason for this rule is not far to seek. The shares of all the partners in the matter of their profits and losses have to be determined and it is neither possible nor correct to decide the extent of rights and liabilities of a partner in his absence. The cardinal rule of law is that no decree can be passed against a person in his absence.'

44. If any further authority is necessary, it could be had from the decision in Amirchand Nagindas & Co. v. Raoji Bhai AIR 1930 Mad 714. where it was held that 'a suit for accounts cannot be maintained between some only of the partners of a firm but every partner must be made a party'. It goes without saying that non-impleading of the wife of the 6th defendant who is a partner is fatal even if the plaintiff was otherwise entitled to get a decree.

Thus the provision store sought to be dissolved is not joint family concern, but only a partnership business. Plaintiff is not a partner and he was not admitted to the benefits of the partnership also. As such he is not competent to sue for the reliefs claimed. The suit is also bad for nonjoinder of a necessary party. The appeal is therefore allowed, the decree and judgment of the trial Court are set aside and the suit is dismissed with costs to the contesting defendants in both the Courts.


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