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C. Krishnaswami Naidu Vs. K. Jayalakshmi Ammal - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1931Mad300; (1931)60MLJ315
AppellantC. Krishnaswami Naidu
RespondentK. Jayalakshmi Ammal
Cases ReferredKarri Venkata Reddi v. Kollu Narasayya I.L.R.
Excerpt:
.....follows that these grounds must be alleged by the plaintiff, while the defendant must have an opportunity of showing cause against. this condition necessarily remains unfulfilled in the present case, and we are unable to hold that the plaintiff is entitled to a decree for an account in the face of the circumstances that not only has she failed to justify special treatment but, on the finding of the learned judge, has falsified her case to the extent of not alleging a partnership at all......framing of issue no. 4, there is undoubtedly much authority for the appellant's contention that a decree on a partnership basis should not have been given in the circumstances and certainly not without a prior amendment of the plaint. the matter, however, does not rest there.6. it has been said that the plaintiff has been given a decree for an account and it arises for consideration in what circumstances such a decree, unassociated with a decree for dissolution and during the currency of the partnership, can be given. no doubt in england the old rule, that the courts of' equity will not interfere between partners except for the purpose of dissolving the partnership or, if it was dissolved already, of finally winding up its affairs, has been relaxed in modern times. but still the.....
Judgment:

1. The suit which gives rise to this appeal was filed by the widow of one Chengayya Naidu, who died in April, 1918, against her maternal uncle for an account of certain businesses which she alleged he had conducted as her agent. We are only concerned here with a rice mandi business which the defendant carried on from the time of Chengayya Naidu's death up to date of suit. The plaintiff's case was that since her husband did not dispose of this business by will, as he did of some other assets, it was hers by right of inheritance and that the defendant, who held her power of attorney, was only her agent. The defendant contended, on the other hand, that the mandi which Chengayya Naidu had been conducting was closed a few days before his death and that the subsequent business was the defendant's own, to a share in which the plaintiff had no title Nevertheless, in consideration of the facts that she had lost her husband, was his relative and was living with him, he had voluntarily given her a half share, which continued up to October, 1918, when the successive arrangements described in paragraph 12 of the written statement were made. He further alleged that accounts had been settled and the plaintiff had received the allowances under this arrangement up to the 1st February, 1926. The case was tried by Kumaraswami Sastri, J., who found that neither the plaintiff nor the defendant was speaking the truth and decided that each was jointly interested in the business and entitled to a half share. He accordingly gave a declaration to this effect and referred the suit to a Commissioner to take an account. This decision has been attacked before us on the ground that it is consistent neither with the plaintiff's nor the defendant's pleas, and that of course is true. It appears that there was no application to amend the plaint, nor indeed could there well have been one, because this was no example of an inadvertent misstatement of facts or legal position but, according to the learned Judge's finding, a deliberate falsification of the truth. A number of issues were framed, Nos. 1 and 4 relating particularly to the rice mandi business. No. 1 was framed in the terms of the pleadings to enquire whether the business belonged to the plaintiff and whether she entrusted it to the defendant for management, or whether it had been given to the defendant. No. 4 ran thus:

Was there an agreement to give the plaintiff a share of the profits in the said business as stated in paragraph 12 of the written statement and, if so, what are the terms thereof.

2. There has been some discussion as to what the learned Judge's finding amounts to, whether it means that the parties were in partnership. Mr. K.S. Krishnaswami Aiyangar for the respondent has done his best to resist that conclusion for reasons which are not very difficult to surmise. It is true that the judgment contains no express reference to a partnership but it is further true that if the incidents of such a legal relationship appear to have been found by the Court a partnership must be inferred. The learned Judge expresses the view in the first place that the business was not transferred to the defendant and that he was not merely looking after it on plaintiff's account. He then gives grounds for adopting an intermediate view, involving some arrangement for carrying on the business; and says that all probabilities point to the conclusion that each was to get a half share, adding his finding that they were 'jointly interested'. For the respondent it is sought to add to these findings an averment of the defendant that the plaintiff, who was to get ex gratia a half share, was not to be liable for any losses, but the judgment makes no reference to this and we have no reason to suppose that this condition was held proved. Under Section 239 of the Contract Act, partnership is defined as 'the relation which subsists between persons who have agreed to combine their property, labour or skill in 'some business, and to share the profits thereof between them'. We cannot find sufficient reason to doubt that this was the nature of the relationship between the parties which the learned Judge found, and not some other form of contract not specifically recognised or provided for by law, as Mr. K.S. Krishnaswami Aiyangar would suggest.

3. Thus the question is whether a suit by a principal against an agent can be converted into a suit by one partner against another. There can be no doubt that the two suits are essentially different in character and this circumstance, together with the consideration that the defendant may have been taken by surprise, are the two main grounds upon which decisions on this question have been based. The principles are thus stated in Ananda Chandra Chuckerbutty v. Braja Lal Singh I.L.R. (1922) C. 292:

The rule that the pleading and proof must correspond is intended to serve a double purpose; first, to apprise the defendant distinctly and specifically of the case he is called upon to answer ; and, secondly, to preserve an accurate record of the cause of action as a protection against a second proceeding upon the same allegations. The test is, whether the defendant will be taken by surprise if relief is granted on the facts established by the. evidence; or, as has sometimes been said, a variance between a pleading and what is proved is immaterial unless it hampers a defence or unless it relates to an integral part of the cause of action.

4. In Ma Shwe Mya v. Maung Mo Hnaung (1921) L.R. 48 IndAp 214 : I.L.R. 48 C 832 (P.C.) the Privy Council, decided, that a claim must be dismissed, because the cause of action upon which it was allowed was different from that recited in the plaint, and in Sayedani Mahmuda Khatun Chowdhurani v. Muhamad Elahadad Khan. Pani (1912) 17 C.W.N. 427 (P.C) the same principle was applied by the Board, where the plaintiff's claim was found to be 'upon a basis wholly different from that upon which the, suit, was founded'. There are a number of cases relating to the amendment of a plaint which applied the same principles. An example of such a case is Kali Das Chaudhuri v. Sm. Drapaudi Sundari Dassi (1917) 22 C.W.N. 104 which gives effect to the principle that, . . . .

Where a plaintiff bases his claim upon a specific legal relation alleged to exist between him and the defendant, he should not be allowed to amend the plaint so as to base it on a different legal relation.

5. Although, therefore, there is some substance in the plea that the defendant may not have been taken by surprise in view of the framing of issue No. 4, there is undoubtedly much authority for the appellant's contention that a decree on a partnership basis should not have been given in the circumstances and certainly not without a prior amendment of the plaint. The matter, however, does not rest there.

6. It has been said that the plaintiff has been given a decree for an account and it arises for consideration in what circumstances such a decree, unassociated with a decree for dissolution and during the currency of the partnership, can be given. No doubt in England the old rule, that the Courts of' Equity will not interfere between partners except for the purpose of dissolving the partnership or, if it was dissolved already, of finally winding up its affairs, has been relaxed in modern times. But still the question arises when one partner sues another otherwise than for dissolution, can relief be had without dissolving the partnership (Lindley, 9th Ed., pages 568-9.) A similar statement of the law is to be found in 22 Halsbury 71, Section 138. The same principle has been applied to such suits in this country, as where in Kassa Mal v. Gopi I.L.R. (1886) A. 120, Edge, C.J., observes:

It is only' under exceptional circumstances that partners can bring such actions against their co-partners, except when the action is for a dissolution of partnership, in which case they may claim an account and payment over of moneys that may be found to be due to them on the account being taken. So far as I am aware, actions between partners, which involve the taking of partnership accounts prior to dissolution, are almost Unheard of.

and he proceeds to discuss the English law on the subject. The same principle was applied in Damodara Shanabhaga v. Subraym Pai : AIR1918Mad387 and was recognised in Karri Venkata Reddi v. Kollu Narasayya I.L.R. (1908) M. 76 : 19 M.L.J. 10, although the special circumstances of that case justified the Court in interfering. The respondent's learned advocate scarcely contests the correctness of this position, his contention being, as has been said, that the arrangement between the parties did not amount to partnership. He further undertakes on behalf of his client not to press any subsequent claims, but we are unable to regard this as entitled to affect our view of the legal position. There seems no question but that if a partner asks for an account without asking for a dissolution, the Court must be satisfied that there are special grounds for granting the prayer, and it follows that these grounds must be alleged by the plaintiff, while the defendant must have an opportunity of showing cause against. This condition necessarily remains unfulfilled in the present case, and we are unable to hold that the plaintiff is entitled to a decree for an account in the face of the circumstances that not only has she failed to justify special treatment but, on the finding of the learned Judge, has falsified her case to the extent of not alleging a partnership at all. In these circumstances we think there are very special reasons why a decree of the nature under reference should not have been granted upon the pleadings and with much respect we are unable to support the learned Judge's decision to this extent. We must accordingly allow the appeal and direct that the reference to the rice mandi business be expunged from the decree. This will involve the deletion of paragraphs 1 and 2, of the words 'either in respect of the said mandi business or' in paragraph 4 and of paragraph 5(a), the remaining paragraphs being re-numbered. Costs in the Lower Court have been reserved for the final decree. The appellant will get his costs in this Court.


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