Skip to content


Harivallabh Chhotalal Nagori Vs. Ahmedali Rajabhai Kadiani - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtGujarat High Court
Decided On
Case NumberA.F.A.D. No. 1541 of 1960
Judge
Reported inAIR1969Guj145; (1969)GLR481
ActsPartnership Act, 1932 - Sections 48
AppellantHarivallabh Chhotalal Nagori
RespondentAhmedali Rajabhai Kadiani
Appellant Advocate P.V. Hathi, Adv. for; V.G. Hathi, Adv.
Respondent Advocate S.K. Boorjiwala, Adv.
DispositionAppeal allowed
Cases ReferredKarri Venkata Reddi v. Narasayya
Excerpt:
- - it will be open, according to him, to the defendant to file a suit for dissolution of partnership and rendition of general accounts, and the decree passed in this suit can well be accounted for therein. it will be for the court to determine under what circumstances it will be equitable to order a partial account having regard to the rights of the parties under the contract there is no rule of law now in force that a partial account cannot be ordered under exceptional circumstances. the present case stands far on a better foot-tog......for in the partnership. one other partner is neither a party to the deed nor in the suit even though it has connection with the partnership business and may have to be taken into account if partnership is dissolved and general accounts taken. it is not that it cannot he separated therefrom and no prejudice is likely to be caused to the defendant if a decree for such an advance made to the defendant is passedin this suit general accounts need not necessarily be taken at this stage for such a purpose. it would be open to the defendant to file' such a suit for general accounts if he so desired. but it can hardly lie in the mouth of the defendant to say that the plaintiff must sue for the dissolution of partnership and claim general accounts before he can claim any amount of this transaction.....
Judgment:

N.G. Shelat, J.

1-4. * * * *

5. The contention made out by Mr. Hathi, the learned advocate for the appellant is that the mortgage transaction was 'quite an independent one and whatever the amount was advanced thereunder was advanced to' the defendant personally and not In the capacity of his being a partner of a partnership firm, and that any such advance made under the mortgage deed had nothing to do with the partnership business He further urged that even if it was advanced for partnership purposes a suit such as the one for the amount advanced to the defendant under a mortgage deed can still lie as neither it is barred by any provision of law nor under any terms of contract either under the mortgage deed or the partnership deed between the parties. It will be open, according to him, to the defendant to file a suit for dissolution of partnership and rendition of general accounts, and the decree passed in this suit can well be accounted for therein. Now both the Courts have found that the amount though advanced to the defendant personally under a mortgage deed, it was advanced for partnership business and for that the defendant had made himself liable for the same. That finding of fact cannot be challenged before this Court in second appeal It has. therefore, to be seen as to whether, with that finding, it is open to him to file a suit for recovering the amount under the mortgage deed.

6. Now one fact is clear that havingregard to the terms of the mortgage deedEx. 8 as also the terms of the partnership deed Ex. 5 entered into between theparties, no bar is created against theplaintiff filing such a suit for recoveringany amount advanced to the defendanteither in his personal capacity or evenas a partner of the firm. Besides, themortgage deed does not in any wayrecite any condition to have the claimthereunder only adjusted in the settlement of accounts of the partnership. Another fact to be kept in mind is that,besides the defendant and the plaintiff,there was one another person Daudbhal as a partner in the firm. He is not aparty either to the mortgage deed or aparty to the suit The transaction ofmortgage was an independent one inasmuch as it created liability for theamount taken by him in his differentcapacity and not as a partner of the firmand again for the benefit of the firm. Inthat the other partner Daudbhai hadnothing to do and he would not be liable for the same. At the same time, apartfrom authority. It is clear that there 19no provision in the Partnership Actwhich totally forbids any such suit againstone - of the partners under a differenttransaction, even though it has some relation to the partnership business inwhich event that amount may have to betaken into account while taking generalaccounts. In such circumstances, it is difficult to say that 'this suit was not maintainable. In this connection, I may wellrefer to material observations fromLindley on 'Law of Partnership', 11thEdition, at page 668. Those observationsrun thus :--

'Again if one partner gave to his copartner a bill or note which was in such a form as to bind not the firm, but the partner who gave it, he might be sued by his co-partner thereon, whatever the state of the account between the two might be, and although the bill or note in question had reference to some partnership transaction; for by giving the bill or note, the demand in respect of which it was given' was isolated from the general partnership accounts.'

Mr. Hathi has referred to some decisions in support of such a proposition and I would refer to them. In the case of Govula Ramakistiah. v. Yerram Yellappa : AIR1959AP653 , it was held that :

'In cases involving special circumstances one partner can sue another during the subsistence of the partnership without asking for its accounts or dissolution. Thus, if a suit is brought by one partner against another for the recovery of a certain amount, the relief sought should be given io him though it may arise out of partnership business or connected withit and does not Involve taking of general accounts.'

The next case referred to was of Hari Shankar Misra v. Firm Bansilal Abirchand, AIR 1948 Nag 266. It was a suit tor recovery of a loan advanced by the plaintiff to the partnership and the plea raised in defence was that without asking for general accounts the suit for an isolated item was. not maintainable. It was held that though ordinarily disputes between partners inter se are decided in a suit for dissolution of partnership and for accounts, there is nothing in law in special circumstances to prevent a partner acting in different capacity to sue some of his partners for such relief as he is entitled to as flowing from that different capacity unconnected with his capacity as a partner. Another case of Karri Venkata Reddi v. Narasayya, (1909) ILR 32 Mad 76, was referred to. It was a suit for recovery of an amount on a cheque and the defence contended that the suit was not maintainable as a suit for general accounts has to be filed, whereby such amount has something to do with the partnership business. That contention was negatived and it was held that 'in regard to suits by one partner against another for a partial account the general rule as applied in India, is that if the account is sought in respect of a matter, which, arising out of partnership business or connected with it does not Involve the taking of general accounts, the Court will as a rule give the relief applied for. It will be for the Court to determine under what circumstances it will be equitable to order a partial account having regard to the rights of the parties under the contract There is no rule of law now in force that a partial account cannot be ordered under exceptional circumstances.

7. It appears, therefore, clear that there la no rule of law which precludes any such action being brought by any party to the partnership for recovering any amount from any partner even though. It may have some connection with the partnership concern itself. The present case stands far on a better foot-tog. The claim is based on a mortgage deed passed by the defendant alone and whereby he has made himself liable for the amount borrowed thereunder. In that deed no reference has been made that it has to be accounted for in the partnership. One other partner is neither a party to the deed nor in the suit Even though it has connection with the partnership business and may have to be taken into account if partnership is dissolved and general accounts taken. It is not that it cannot he separated therefrom and no prejudice is likely to be caused to the defendant if a decree for such an advance made to the defendant is passedin this suit General accounts need not necessarily be taken at this stage for such a purpose. It would be open to the defendant to file' such a suit for general accounts if he so desired. But it can hardly lie in the mouth of the defendant to say that the plaintiff must sue for the dissolution of partnership and claim general accounts before he can claim any amount of this transaction with the plaintiff. I, therefore, disagree with the Courts below In that respect and held that the suit is maintainable in law and can be decided on its merits.


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