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Arunachalarn and Co. and ors. Vs. M. Sadasivarn - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberS.A. 1864 of 1979
Judge
Reported inAIR1985Mad354
ActsPartnership Act, 1932 - Sections 7, 43 and 69; Code of Civil Procedure (CPC), 1908 - Sections 100 - Order 42, Rule 2
AppellantArunachalarn and Co. and ors.
RespondentM. Sadasivarn
Appellant AdvocateM. Velusami, Adv.
Respondent AdvocateG. Masilamani, Adv.
Cases Referred and Kalyan Sahai v. Firm Lachminarain
Excerpt:
.....of suit filed for rendition of accounts or in alternative for dissolution of partnership - whether suit for dissolution of partnership at will and rendition of accounts in absence of notice of dissolution maintainable in law - partnership deemed to be dissolved when summons accompanied by copy of plaint is served on defendant where there is only one defendant and on all defendants when there are several defendants - date of dissolution would have to be regarded to be one on which last summons served - requirement of notice under section 43 complied - second appeal admitted only on one substantial question of law already adverted to - appellant cannot plead for first time in second appeal that section 69 is bar to maintainability of suit - court correct in granting decree as prayed for -..........of notice linder s, 43 of the indian partnership act will not be a bar for maintainability of a suit for dissolution of partnership and in the end dispraised the appeal.5. the defendants have filed the second appeal and a learned judge of this court has formulated the following substantial question of law, at the time of admission of the second appeal-'whether the suit for dissolution of partnership at will and rendition of accounts, in the absence of a notice of dissolution is maintainable in law.'the admitted facts are that the plaintiff was one of the partners along with defendants 2 to 4 and defendants 3 and 4 joined the first defendant firm on 1-4-1970. ex. a 6 is the copy of the agreement dt. 9-7-1970. the terms of the partnership deed are not disputed and the defendants claim.....
Judgment:

1. Defendants are the appellants. The suit out of which the second appeal arose, was filed by the plaintiff respondent for rendition of accounts or in the alternative for dissolution of partnership. Defendants 2 to 4 and the plaintiff entered into a partnership agreement on 9-7-1970 for carrying on 'commission business' in chillies, groundnuts and onion. The plaintiff contributed Rs. 19,500. Defendants 2 and 3 contributed Rs. 16.250 each. 4th defendant contributed Rs. 13,000. The second defendant was managing the affairs of the partnership. Defendants 3 and 4 joined the first defendant firm on 1-4-1970. The partnership was to continue for three years from 1-4-1970. During the year 1970-71, a net profit of Rs. 50,258 was earned. It was shared in accordance with the terms of the partnership deed and the plaintiff was paid a sum of Rs. 15,077 towards his share. But for the years 1971-72, the plaintiff was paid a sum of Rs. 4,302-30. The case of the plaintiff is that the other partners namely defendants 2 to 4 conspired to remove the plaintiff from the partnership business and had manipulated the accounts. The plaintiff's request to provide a true copy of the account fell on deaf ears of the other partners and the plaintiff was forced to give a notice through his advocate on 22-1-1973, demanding rendition of accounts for the year 1971-72, for which a reply was sent, which is to the effect that the plaintiff and third defendant had agreed to withdraw from the partnership and that the plaintiff had to pay Rs. 6735-11 to the firm and that the plaintiff has agreed to pay the amount within three months. Plaintiff denied these allegations and has filed the suit for reliefs stated.

2. The suit was resisted by the defendants, who in their answer contended that the plaintiff and third defendant had retired from the partnership voluntarily since the plaintiff was disappointed at the low profit made during the year 1971-72 and that the plaintiff has settled his accounts and retired on 31st Mar. 1972, and that it is only thereafter the fifth and the sixth defendants were taken in as partners, and that, therefore, the plaintiff is not entitled to the reliefs prayed for.

3. The learned trial Judge found that the plaintiff has not settled his account with the first defendant firm and has not retired from the partnership with effect from 31-3-1972, and that the plaintiff has not been furnished with the copies of the accounts and granted preliminary decree in favour of the plaintiff for dissolution of partnership and accounting.

4. In appeal the learned Appellate Judge, concurred with the findings of the trial court that the plaintiff has not retired from the partnership and also held that want of notice Linder S, 43 of the Indian Partnership Act will not be a bar for maintainability of a suit for dissolution of partnership and in the end dispraised the appeal.

5. The defendants have filed the second appeal and a learned Judge of this court has formulated the following substantial question of law, at the time of admission of the second appeal-

'Whether the suit for dissolution of partnership at will and rendition of accounts, in the absence of a notice of dissolution is maintainable in law.'

The admitted facts are that the plaintiff was one of the partners along with defendants 2 to 4 and defendants 3 and 4 joined the first defendant firm on 1-4-1970. Ex. A 6 is the copy of the agreement dt. 9-7-1970. The terms of the partnership deed are not disputed and the defendants claim was that plaintiff voluntarily retired from the partnership on 31-3-1972, and that the accounts were looked into and a document has also been written under Ex B 17, which was signed by the other retiring partner, who is the third defendant.

6. A perusal of Ex B-17 shows that the plaintiff has not signed on it. Both the courts did not believe that there was panchayat, that the accounts were looked into and that the plaintiff retired from the partnership. Both the Courts concurrently held that the plaintiff has not retired from the partnership and this finding of fact is binding in second appeal. But the question as formulated by a learned Judge of this Court was not raised during the trial of the suit. In appeal, learned appellate Judge has dealt with the question as to whether the suit for dissolution of the partnership is not maintainable in view of Sec. 43 of the Indian Partnership Act, which requires a notice of dissolution.

7. It should be noted that the prayer for dissolution of the partnership is only an alternative prayer in the plaint. Further the question whether the partnership is a partnership at will has not been adverted to. The appellate court has proceeded on the basis that the partnership is a partnership at will. The two essential conditions of a partnership at will are : The deed of partnership should not, contain any provisions whether express or implied (1) as to the duration of their partnership; and (2) for the determination of their partnership. If these two provisions are absent or cannot be implied, then the partnership will be at will. Now a reference to Ex A 6 shows that the duration of their partnership is fixed as three years from 1-4-1970 and thereafter the partnership should be 'a partnership at will'. As there is clear indication that the defendants wanted to continue the partnership after the expiry of the initial period, it would be reasonable to conclude that it is a 'partnership at will', as it continues to carry on business after the expiry of the initial period. In Lilabati Rana v. Lalit M. Mohan Dey : AIR1952Cal499 , it has been pointed out that the provisions contained in See. 43 of the Partnership Act do not control the other provisions of Chap V I and that it is possible to have partnership of a firm dissolved even when no notice in writing has been given as required under S. 43.

8. Certain observations in Banarsi Das v. Seth Kanshiram, : [1964]1SCR316 will help the plaintiff in this case. The observations are

'Even assuming, however, that the term 'notice' in the provision is wide enough to include within it a plaint filed in a suit for dissolution of partnership, the sub-section itself provides that the firm will be deemed to be dissolved as from the date of communication of the notice. It would follow, therefore, that a partnership would be deemed to be dissolved when the summons accompanied by a copy of the plaint is. served on the defendant, where there is only one defendant, and on all defendants, when there are several defendants. Since a partnership will be deemed to be dissolved only from one date, the date of dissolution would have to be regarded to be the one on which the last summons was served.'

Therefore, there is no difficulty in holding that notice under Sec. 43 had been substantially complied with.

9. The next argument of the learned counsel for the appellants was that the suit is not maintainable in view of the provisions of S. 69(1) of the Partnership Act. According to the learned counsel the plaintiff as a partner is prohibited from instituting a suit or enforcing a right arising from a contract unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.

10. It is not disputed that the firm is registered. It is also not disputed that the plaintiff was a partner. He has been shown as a partner in the Register of firms. According to the appellants he is now not shown as a partner in the Register of firms. This point was not taken up by the defendants in their written statement before the trial court, nor before the appellate Court in the Memorandum of grounds of appeal nor before this court in the memorandum of grounds of second appeal. The question whether a person is shown in the Register of Firms as a partner in the firm is a question of fact. The following observations of their Lordships of the Supreme Court in Banarsidas v. Kanshiram : [1964]1SCR316 already referred to, also show that such a question cannot be taken for the first time in second appeal. Their Lordships observed

'The High Court has overlooked the fact that even upon the argument addressed before it on behalf of Kanshi Ram, the question of limitation was not only purely of law but was a mixed question of fact and law and, therefore, it was not proper for it to allow it to be raised for the first time in argument. We are satisfied that what the High Court has done has caused prejudice to some of the parties to the suit and on that ground alone, we would be justified in setting aside its decision.'

In Chairman v. Ganga Saha : AIR1961Ori94 it was held that the plea that the plaintiff's suit is laid was not maintainable by reason of S. 69 of the Partnership Act was a mixed question of fact and law and that such a plea could not be allowed to be, raised in second appeal when it was not pleaded in the written statement.

11. In MohamadAli v. Kondho Rayaguru : AIR1945Pat286 the same view was taken. A similar view was taken also in Kalyan Sahai v. Firm Lachminarain .

12. The rulings in Chimanram v. Ganga Saha : AIR1961Ori94 , Mohamed Ali v. Kondho Rayaguru AIR 1945 Pat 286 and Kalyan Sahai v. Firm Lachminarain are cases which deal with the registration of firms. These cases equally apply' to other part of S. 69, namely' whether a person suing is or has been shown as partner of the firm'. I have already pointed out that the plaintiff has been shown as a partner in the Register of firms and that it is enough for the purpose of S. 69 that the person suing has been shown in the Register of firms as a partner of the firm.

13. It should however be noted that the second appeal was admitted only on one substantial question of law which had already been adverted to. In the circumstances, I am of the view that the appellants cannot plead for the first time in second appeal that S. 69 of the Partnership Act is a bar to the maintainability of the suit by the plaintiff. The Courts below were therefore correct in granting a decree as prayed for. There are no reasons to interfere with the findings of the courts below. The second appeal fails and is dismissed with costs.

14. Appeal dismissed.


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