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Srinivasalu Naidu Vs. Ramakrishna Naidu - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1933Mad353a
AppellantSrinivasalu Naidu
RespondentRamakrishna Naidu
Cases ReferredJoopoody Sarayya v. Lakshmanaswamy
Excerpt:
..... - 7. the learned district judge finds it clearly established that 'the arni partnership came to an end' by which he evidently means that it was dissolved, as he has expressly discussed the question of whether the first court was correct in holding that there had been a dissolution of the partnership. 10. this evidence shows that he was perfectly aware that there was a question as to whether the partnership at arni had been dissolved. it may very well have been because no re-examination could explain away what he had admitted. that decision however dealt with a partnership which bad not been dissolved at the time when the suit was filed, and the court had to fix the time from which the partnership should cease to exist in the present instance, though the suit was brought as one for the..........be looked into and settled. it nowhere says in so many words that there was a dissolution of the arni partnership or sets up that the claim of the plaintiffs in respect of that partnership was barred by limitation. the suit was contested, and decided by the district munsif, with reference to the first part of issue 2 which runs thus: 'was the partnership at arni continued at vallam?'4. the learned district munsif has found, on dealing with that issue, that the vallam trade was not a continuation of the arni partnership, but that it was an entirely new business, with no relation to the old one except that the men among whom disputes have arisen are the same in respect of both the trades. he has also found that, in this view, the arni partnership must be deemed to have been dissolved, at.....
Judgment:

Bardswell, J.

1. This is an appeal from the decree and judgment of Reilly, J., in S.A. No. 1223 of 1927. The suit was originally filed in the Court of the District Munsif of Arni by two plaintiffs who are now the respondents before us. Their case was that on 20th December 1916 they and the defendant, who is now the appellant, entered into an oral agreement that they should invest capital in equal shares and carry on at Arni a business in groundnuts, paddy and rice on certain terms, under the name and style of Sri R.A. Subbarayulu Naidu Co. They carried on business accordingly at Arni from 20th December 1916 till August-September 1918. Then they stopped the mandi business at Arni as they found it unprofitable; but, after an interval, they 'decided to continue the said company' and carry on business instead at their own village, Vallam, by buying groundnuts and stocking them. This business at Vallam, in which they were assisted by sub-partners, was carried on from 17th November 1919 till January-February 1930, after which misunderstandings arose.

2. The suit was brought for dissolution of the 'company' and the taking of accounts. In a written statement, which is by no means as clear as could be wished, the defendant has admitted that there was the partnership at Arni, though he denies the truth of some of the details of the partnership as set out in the plaint. The written statement goes on to say that 'the partnership came to an end in 1918 as alleged in the plaint,' though the plaint has alleged no such thing, and that:

it is wrong to state that it was continued into fresh partnership as alleged by the plaintiffs. Both of them were independent and unconnected transactions.

3. In para. 5 it speaks of a new business, but in para. 6 it talks of a new partnership. In para 9 it says that the 'partnership property' was stored in the plaintiff's house; in para. 11 it refers to the 'partnership accounts;' in para. 18 it speaks of the partnership concern' and in para. 19 the 'partnership assets' are mentioned, but in none of these paragraphs is it stated whether the partnership referred to was at Arni or at Vallam or at both places. In conclusion it is prayed in the written statement that the accounts may be looked into and settled. It nowhere says in so many words that there was a dissolution of the Arni partnership or sets up that the claim of the plaintiffs in respect of that partnership was barred by limitation. The suit was contested, and decided by the District Munsif, with reference to the first part of issue 2 which runs thus: 'Was the partnership at Arni continued at Vallam?'

4. The learned District Munsif has found, on dealing with that issue, that the Vallam trade was not a continuation of the Arni partnership, but that it was an entirely new business, with no relation to the old one except that the men among whom disputes have arisen are the same in respect of both the trades. He has also found that, in this view, the Arni partnership must be deemed to have been dissolved, at the latest, on 2nd November 1919, and that, as the suit was filed more than three years after that date, the claim for accounts in respect of the Arni partnership was barred under Article 106, Lim. Act. He has therefore granted a decree for the taking of accounts of the Vallam partnership only. This decree was confirmed in a brief judgment on first appeal by the District Judge of North Arcot; but, on second appeal, Reilly, J., ordered that accounts should be taken of the Arni business also. In his judgment he has said that, even if the business conducted by the parties at Arni was that of a different partnership from that which subsequently conducted business at Vallam, the plaintiffs are entitled to have accounts taken of the Arni business unless the partnership concerned in that business was dissolved more than three years before the date of the suit.

5. He remarks that the defendant did not allege dissolution of that partnership at any particular date, nor can his written statement be reasonably construed as pleading dissolution at all. He also expresses the opinion that the evidence on which the two lower Courts have held that there was a dissolution of the Arni partnership was not, in the circumstances, sufficient to establish the fact of such dissolution, and says that the two lower Courts appear to have been confused by the question whether the business at Arni was the business of the same partnership as that which conducted the business at Vallam, and to have overlooked the importance of the question whether and when there was a dissolution of the first partnership, if there was more than one partnership. This confusion he attributes mainly to the way in which the defendant's written statement was drafted.

6. On this appeal the main contentions are that Reilly, J., erred in setting aside the concurrent judgment of the two first Courts, failing to note that they were based on a finding of fact, and that in any case the evidence conclusively shows that the Ami business was dissolved over three years before the suit was filed. Now in this case there has certainly been a concurrent finding, both in the first Court and the appellate Court, that there was a dissolution of the Arni partnership. The learned District Munsif has found that

there was a radical change contemplated in the partners inter se and the firm became dissolved.

7. The learned District Judge finds it clearly established that 'the Arni partnership came to an end' by which he evidently means that it was dissolved, as he has expressly discussed the question of whether the first Court was correct in holding that there had been a dissolution of the partnership. Under Section 100, Civil P C, a second appeal does not lie to the High Court on a pure question of fact. Our attention has however been called to Shivabasava v. Sangappa (1904) 29 Bom. 1 in which it was held that Section 584, to which the present Section 100 corresponds, applied to a case in which the lower appellate Court had disposed of a suit upon a case not raised by the parties and to which the evidence had not been directed. We shall have occasion to show that evidence has been directed to the point of whether the Arni partnership had been dissolved. What has to be considered more carefully is the point as to the suit having been decided upon a case not raised by the parties. These and various connected points have to be dealt with and decided by us, before we can come to a conclusion as to whether or no the learned Judge who heard the second appeal disposed of it on a pure question of fact.

8. That there was a dissolution of the Arni partnership was not at all the case as set up in the plaint. The plaintiff's case was that the partnership was continuing, and so the learned District Munsif should not have attached importance as he has done, to there being no allegation in the plaint 'that the Arni trade dissolved within three years of the suit.' Naturally there could be no such allegation. Even the written statement does not say in so many words that the Arni partnership was dissolved. The word 'dissolution' does not occur in the written statement at all. The most that it says is that the partnership, meaning the Arni partnership, came to an end in 1918. It has been held by the Allahabad High Court, in Chunilal v. Sheo Charan Lal : AIR1925All787 that a partnership will not be dissolved merely because it is closed, but it must be dissolved in one way or other known to and recognized by the law. Section 253, Contract Act, provides that a partnership is dissolved by the death of any partner, or if any member of a partnership ceases, from any cause whatever, to be so. Dinmahommed v. Khansi Ram A.I.R. 1930 Lah. 378 shows that a partnership is not necessarily dissolved because the work of the partnership ceases, though at the same time it indicates that dissolution of a partnership can be inferred from the facts of the case. We may however note that this decision uses the expression 'came to an end' as an equivalent for dissolution and that very expression 'came to an end' is what is used in the written statement with reference to the Arni partnership though it is, unfortunately, qualified by the words 'as alleged by the plaintiffs,' whereas the plaint has no such allegation. In Haramohandas Poddar v. Sundarsan Poddar AIR 1921 Cal 538 the Calcutta High Court held that the stoppage of a business cannot be treated as the dissolution of a firm. The defendant in this case has, indeed, set up in his written statement something more than a mere stoppage but, at the same time, he has not explicitly and definitely set up the fact of dissolution. Nor is there any issue framed as to dissolution. These points, no doubt, tell in favour of the plaintiffs.

9. But the matter does not rest there. It is represented that the plaintiffs were prejudiced in that they were taken unawares by the first Court's taking for the first time at the trial a point that was not covered by the issues. But we have to point out that if a new point was thus taken it was due to what was stated by plaintiff 1 himself even in his examination-in-chief. In the course of it he has produced Ex. 4, a rough calculation which he says was written by the defendant in his presence though the defendant is noted in the first Court's judgment as having denied that he wrote it. This document is dated 2nd November 1919, 15 days before the new business at Vallam was started, and the plaintiff has said as to it:

The defendant directed mo to receive the debts due from the debtors of the firm at Arni. He also calculated the interest due on my capital and his capital. It was ascertained that the defendant owed Rs. 446-15-8. It was prepared to find out how much the defendant owed me.... The Arni accounts were not settled and they were not carried forward to the Vallam accounts.

10. This evidence shows that he was perfectly aware that there was a question as to whether the partnership at Arni had been dissolved. He may have thought that the question was involved in the first part of issue 2, or he may have had some other reason of his own for letting in evidence on the subject. At any rate there we have his evidence in chief, on which he was, of course, cross-examined. In his cross-examination he admits that Ex. H was prepared before the Vallam business began though he says it was ten days before, which is not quite accurate. He says, further, that

all that remained to do in connexion with the Arni business was to collect the outstandings, pay up the debts and ascertain the profit and loss,

and he explains the figure of Rupees 446-15-8 in the following way: A certain amount was found due to the defendant and a certain amount to the plaintiffs. These amounts were totalled, and divided by three. The defendant than deducted what was to his credit and said that he owed Rs. 446-15-8. If he had paid that amount there was nothing more to adjust 'as between ourselves.' Plaintiff 1 himself accepted the correctness of Ex. H. Aud, again, plaintiff 1 says:

When the Vallam trade commenced no money or assets of the Arni trade were taken for

the Vallam trade. We invested a separate capital for the Vallam trade.

11. No doubt what was elicited in his cross-examination gave far clearer evidence on which a finding of a dissolution of partnership could be based than what he stated in his examination-in-chief, but when he had given evidence in chief that bore on the subject of dissolution, he cannot be said to have been taken by surprise by that subject being raised, and it was only in the natural course of events, following on what he had said in chief, that his further statements in cross-examination were elicited from him. It is true that there was no re-examination but we cannot hold in the circumstances that this was because he was unaware that the question of dissolution had been raised. It may very well have been because no re-examination could explain away what he had admitted. It has been argued that no heed should be paid to the evidence of P.W. 1 as the onus had been wrongly laid on the plaintiffs who should therefore not have been called upon to lead evidence. Peddi Reddi Jogi Reddi v. Chinvabbi Reddi A.I.R. 1929 P.C. 13 has been cited to us in this connexion and also, among other cases the Privy Council decision in Official Assignee of the estate Cheah Sova Taun v. Khoo San Chcow AIR 1930 PC 265 and The Official Receiver v. W.K.M.R.M. Chettiar Firm . We do not however find it necessary to go into the various decisions that have been cited to us in this connexion as even taking it that the burden of proof was wrongly thrown on the plaintiffs, that appears to have been done with their acquiescence, and certainly no point as to the onus of proof having been wrongly thrown was taken on either first appeal or second appeal. It is too late for the point to be taken now, even if it be taken correctly. It was decided by the Privy Council in Secy, of State v. Girijabai that when the plaintiff had accepted the onus on the issues as they were framed and evidence was gone into on that basis and the parties proceeded to trial accordingly it was too late for the plaintiff to raise before their Lordships, on appeal from an appellate decision of the High Court of Bombay, the question of whether the onus of proof had been wrongly thrown on him. We may also add that this is not a case where the evidence is nicely balanced, so as to make it material, when all the evidence is before the appellate Court, where the onus lies. The concrete evidence, in fact, is practically all one way, and it is the evidence of one of the plaintiffs.

12. Next as to the point of limitation. When the learned District Munsif found that a question of limitation arose from the evidence for the plaintiffs he was entitled and indeed obliged to deal with it. He had evidence before him from which it was open to him to draw the inference that the Arni partnership was dissolved on 2nd November 1919, over three years before the suit. It is however contended before us that, even taking it that the partnership was dissolved on 2nd November 1919, the suit was within time in that Article 120, which allows a period of six years within which to bring a suit, applies and not Article 106 which allows only three years. Article 106 is as to a suit for an account and share of the profits of a dissolved partnership, while Article 120 is as to suits for which no period is provided in Sch. 1. In this connexion we are referred to Narayanaswami Mudali v. Gangadhara Mudali AIR 1919 Mad 838 in which it was held that Article 106 is inapplicable to a suit which is in terms one for dissolution of a partnership even though the parties treated it as one for an account of a dissolved partnership. That decision however dealt with a partnership which bad not been dissolved at the time when the suit was filed, and the Court had to fix the time from which the partnership should cease to exist In the present instance, though the suit was brought as one for the dissolution of an existing partnership, it has been found as a fact that the partnership had been dissolved over three years before the suit was filed. As pointed out by the Calcutta High Court in Haramohandas Poddar v. Sudarshan Poddar AIR 1921 Cal 538 Article 106 applies only to dissolved partnerships, but the finding in this case is that the Arni partnership has been dissolved. Dinmohamed v. Kanshi Ram A.I.R. 1930 Lah. 378 is to a similar effect to Haramohandas Poddar v. Sudarshan Poddar AIR 1921 Cal 538. Had the suit been brought for the dissolution and taking of accounts of a partnership that had not been dissolved, then we should have to follow these decisions and hold that not Article 106 but Article 120 was applicable; but, when the suit was brought in respect of a partnership that had already been dissolved, the matter is otherwise. We cannot hold that it is open to a party to bring a suit saying that a partnership still subsists when it has, in fact, been dissolved, and then claim the benefit of Article 120 on the basis of an untrue contention. We agree with the two lower Courts that, on their findings of fact, Article 106 applied to the case so as to make the relief prayed for in respect of the Arni partnership barred by limitation.

13. There remains one more point to be dealt with. Reilly, J., has remarked that Exs. K and Z (1) had not been considered. Were this the case there might be ground for interfering, even with the concurrent findings of the two lower Courts as to fact, in that they had not properly and fully considered all the evidence that was put before them. But, with all respect, we have to point out that the learned Judge is not accurate in this remark. The learned District Munsif has very specifically dealt with Ex Z (1) along with which Ex. K, which he has not mentioned, has to be read, and found that no weight attaches to it. By Ex. K the parties jointly sold some properties of the Arni business on 12th December 1919, that being after the Vallam business had started, and the sale proceeds of Rs. 1,000 were utilized for the Vallam business, and credited to it in Ex. Z-1 on the following day. It is admitted that the entry as to these sale proceeds is the only entry in the Vallam accounts relating to the Arni business, and the view of the District Munsif is that:

all that it amounts to is that the parties brought in their common property as their contribution for the Vallam trade,

a view which he was entitled to take. The learned District Judge has not referred in terms to Exs. K and Z (1) in his appeal judgment, but he has relied on the admissions of plaintiff 1 as P.W. 1, and one of these admissions he could legitimately take as covering the case of these exhibits. This is when P.W. 1 says that it was a separate capital that was invested for the Vallam trade. Reilly, J., has discussed the effect of Ex. H and the statements of P.W. 1 as to it, but the findings of the two lower Courts on that matter were findings of fact which could not be questioned on second appeal. Lindley on Partnership states that a dissolution of partnership at will can be inferred from circumstances, and this has also been held in the Privy Council decision in Joopoody Sarayya v. Lakshmanaswamy (1913) 36 Mad 185 from which the learned District Munsif has extracted a long quotation which is applicable to the facts in this case. In this case there were undoubtedly circumstances from which it was open to the two lower Courts to draw the inference which has been drawn by them as to the partnership having been dissolved. In conclusion we hold that the two lower Courts have arrived at a finding of fact, and that as there was no legal impediment or objection to their arriving thereat, it was not competent for the learned Judge who heard the second appeal to interfere with their decrees on the grounds stated by him, which amount to a difference from them on a question of fact, the point of limitation being merely a corollary to what they found as to the facts. We therefore allow the appeal and restore the decree of the learned District Munsif, with costs to the appellant-defendant in the Court of the District Munsif and the District Judge and in this Court in second appeal and on this appeal.


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