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Mohadeo Prosad Sahu Vs. Gajadhar Prosad Sahu and ors. - Court Judgment

LegalCrystal Citation
Decided On
Reported in16Ind.Cas.459
AppellantMohadeo Prosad Sahu
RespondentGajadhar Prosad Sahu and ors.
Cases ReferredKari Venkata Reddi v. Kollu Narasayya
partnership - accounts--deposit by one partner--suit for dissolution--application that deposits may be paid to him--dismissal of application--separate suit for deposits, whether maintainable--civil procedure code (act v of 1908), section 10--suit between partners without taking general account, when maintainable. - now was dismissed by the court below, first, because it was not maintainable at all, as being a suit by a partner for a partial account; and, secondly, because it was barred by reason of the provisions of section 10 of the code of civil procedure, 1908.7. the second, at least, of these demurrers must, in our opinion, succeed, section 10 of the present code lays it down that no court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties litigating under the same title, where such suit is pending in the same or any other court having jurisdiction to grant the relief claimed. it was for a moment suggested that the plaintiff is suing as a partner of the banking business in.....

1. This is an appeal from the judgment and decree of the Subordinate Judge of Mozufferpur, dismissing a suit brought by a partner in a banking business for the recovery from the other partners of a considerable sum of money said to have been deposited in the bank in circumstances which may be thus described.

2. The plaintiff's father, Ganesh, and his uncles, Gajadhar (the father of the first defendant) and Baldeo (the father of second, third and fourth defendants) were members of a joint Hindu family, which owned, inter alia, an ancestral bank. Ganesh died in 1886, and it was thereafter, in 1893 apparently, agreed that each of the three branches of the joint family should be entitled to draw a monthly allowance from the bank of Sections 750 for personal expenses. The plaintiff's allowances were, however, not required, and it was arranged through his mother, he using a minor at the time, that they should be permitted to accumulate with interest in the bank. In the meantime, disputes in the management arose, and on the 5th April 1900 a suit was instituted on behalf of the plaintiff against Baldeo and Gajadhar for partition of the family property and for an account. This suit was compromised on the 17th April 1901, the consent-decree dividing the moveable and immoveable properties of the family, discharging Baldeo and Gajadhar from further liability to account, and directing the appointment of a manager for the realization of the assets and outstandings, and the winding up of the banking business.

3. On the 17th July 1904, the plaintiff brought another suit for the purpose of having the consent-decree of the 17th April 1901 set aside as inequitable and in fraud of his rights, for a fresh partition of the family property, and for a further account from Gajadhar and the sons of Baldeo, who had died in the interval. Most of the points in controversy were once more amicably settled when the case came before the High Court on appeal in 1908, and a decree was made as to the division of the property in accordance with the terms of the compromise then arrived at. But the parties had been unable to agree as to the liability of Gajadhar and the sons of Baldeo to account, and on this portion of the case, the High Court decided in favour of the plaintiff. It was accordingly further ordered by the decree that, as the accounts of the joint family business had not been duly investigated by the plaintiff's next friend and guardian ad litem in the suit of 1900, they should then be taken; and the case was remanded to the lower Court for that purpose and with the further direction that a Receiver should realise the outstandings of the banking business and divide the same, after satisfying the debts, if any, of the bank, between the 'parties according to their respective shares.' The consent-decree of 1901 was thus entirely set aside and superseded.

4. In accordance, as it is said, with these directions, the plaintiff moved the District Judge by petition on the 10th December 1908 to order the Receiver to pay to him the sum of Rs. 87,247, which, it was alleged, were shown by the books of the bank in the Receiver's possession to be due to him on account of the moneys deposited on his behalf by his mother, with, interest up to date. This petition was forwarded in original to the Receiver for disposal, and the Receiver decided that the request contained in it could not be complied with. He was of opinion apparently that the item of Rs. 87,247 referred to was inseparable from the whole account, and that the plaintiff's right to it could be determined only by the Commissioner appointed to adjust the accounts of the partnership. The soundness of this decision was challenged by the plaintiff in a petition which he presented to the District Judge on the 8th February 1909, and in which he urged that the sum claimed by him was a separate item in respect of which the bank and he stood in the relation of debtor and creditor, that the transaction oat of which the claim arose was apart from and independent of his position as a co-sharer in the bank, and that he was entitled as an ordinary creditor to recover it from the hands of the Receiver, as contemplated by the decree of the High Court, without having to wait for a final settlement of accounts between him and his partners. The District Judge, however, decided to await the Commissioner's report, and that was submitted by one Mr. Smith on the 23rd September 1909. In it, the only passage that has any bearing on the claim now under consideration is that in which it is stated that it appeared from the books of the bank that each partner had, in accordance with the arrangement already alluded to, received and been duly paid an allowance of Rs 750 per mensem from the year 1893 down to the year 1910. The Commissioner was silent as to any moneys banked by the plaintiff, not qua partner, but as an ordinary depositor or creditor, or, in other words, as to what may be called the plaintiff's private account with the bank as opposed to the account between him and the other partners. The present claim was, therefore, not inquired into by the Commissioner; and yet the District Judge seems to have deemed it unnecessary to interfere, although it would appear from the concluding part of his order of the 24th December 1909, that he affirmed the view of the Receiver that the claim could be settled by the Commissioner alone. Exception on this, ground was evidently taken by the plaintiff to the Commissioner's report; but the District Judge's order of the 29th June 1910, on a representation submitted by Gajadhar, indicates that it had been held to be out of time and rejected in consequence. The result, it is urged by the learned Vakil for the appellant, was that the plaintiff was forced to bring the present action, which he instituted on the 15th November 1909, for the recovery of his deposits, with interest, less one-third, the proportion recoverable from himself as a partner. The suit was dismissed by the Subordinate Judge on the 31st August 1910 and its failure seems to have driven the plaintiff back to the proceedings in the suit for partition and accounts still pending before the District Judge who was on the 28th November 1910 moved, as Mr. Smith had left the country, to remit the matter to a second Commissioner, Rai Shib Chandra Chatterjee Bahadur, who had been appointed to deal with certain matters other than those referred to Mr. Smith, in order that the question of the plaintiff's deposits in the batik might be inquired into and fully reported upon. To this prayer, Gajadhar objected on several grounds. In the first place, the plaintiff had intimated that it was his intention to appeal--as he at once did by preferring the present appeal on the 15th December 1910--against the dismissal of his suit for the recovery of his deposits directly from his co-partners; and it was argued that, in those circumstances, it was not open to him to ask, in other proceedings, for an order for accounts in connection with the same deposits. Next, it was asserted that the Commissioner, Mr. Smith, had in fact investigated the whole account and definitely found that the allowance of Rs. 750 a month had been regularly paid to the plaintiff; and it was submitted that any claim on that score should have been made when Mr. Smith's report was presented in 1909, and could not be entertained simply because the plaintiff's separate suit had failed. These objections prevailed with the learned District Judge who refused the application. Against this refusal the plaintiff did not appeal; but he eventually moved this Court in revision and was successful in obtaining from it, on the 1st May 1911, an order setting it aside and remitting the case for re-consideration. We gather that Mookerjee and Tennon, JJ., were of opinion that a proper account of the transactions of the plaintiff, qua depositor, with the bank, had not been taken in the suit for partition and accounts, and ought in justice to be taken either in the proceedings ancillary to the High Court's decree of 1908 or in connection with the present suit. It was, therefore, ordered by those learned Judges that the proceedings in the earlier suit should be stayed pending the disposal of the present appeal, and that the plaintiff's deposit account, so to speak, should be taken in the former unless, as the result of this appeal, such an account had to be taken in connection with the latter.

5. The position, therefore, is reduced to this, that the parties are now disputing before us regarding nothing more than the venial question whether the plaintiff or the respondents should bear the costs of the present appeal and of the suit out of which it has sprung. For the plaintiff has, admittedly, secured by the revisional order of this Court passed on the 1st May 1911, all that he can want; and it is contended on behalf of the defendants-respondents by their learned Counsel, Mr. Sinha, that, whatever the result, his clients ought not to be required to pay for this unnecessary litigation. We have come to the conclusion that Mr. Sinha is right.

6. The suit before us now was dismissed by the Court below, first, because it was not maintainable at all, as being a suit by a partner for a partial account; and, secondly, because it was barred by reason of the provisions of Section 10 of the Code of Civil Procedure, 1908.

7. The second, at least, of these demurrers must, in our opinion, succeed, Section 10 of the present Code lays it down that no Court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties litigating under the same title, where such suit is pending in the same or any other Court having jurisdiction to grant the relief claimed. It was for a moment suggested that the plaintiff is suing as a partner of the banking business in the partition suit and as an ordinary creditor in this, and cannot, therefore, be said to be litigating under the same title; but there is nothing in the suggestion, and it was not pressed. The provision is clearly applicable, and the only other answer attempted is that it contemplates merely a stay of the trial of the second suit, and not its dismissal as not maintainable. It is true that the words 'proceed with the trial of' re-place the word 'try' in the corresponding Section 12 of the Code of 1882, and the altered language of the new section thus removes all doubt as to its being possible to institute such a suit, as for example, that of Raja Ransgit Singha v. Bhagabutty Charan Roy 7 C.W.N.720. But in the present instance, there is no substance in the plea, since the only result of a stay would have been to keep this suit pending until the sole question at issue in it had been decided in the other suit and so become res judicata. The appeal must, therefore, fail on this ground.

8. The other point taken by the learned Subordinate Judge is one of considerable difficulty, and we are not sure that there are sufficient materials before us for a definite decision. For present purposes, we must take the facts as alleged by the plaintiff-appellant: that is to say, we must take it that the moneys claimed were deposited by him in the bank, of which he was himself a proprietor to the extent of one-third. On his behalf, it is contended that, quoad these deposits, he is in the position of an outside creditor; that his transactions in this particular connection have nothing whatever to do with the partnership accounts; that he is entitled to his money like any ordinary customer of the bank, and that, by limiting his claim to two-thirds of it, he avoids the difficulty involved prima facie in suing himself and being at once plaintiff and defendant in the same action. The law on the subject has, as Dr. Ghosh has shown by reference, in particular, to Lindley on Partnership, Edition 7th, at pages 133, 299, 303, 497, 591, 592 and 595, and the judgment of Ameer Ali and Pratt, JJ. in Durga Prosonno Bose v. Raghunath Doss 26 C. 254 : 3 C.W.N. 299 considerably-developed; and, whatever doubts may at one time have been entertained in England as to the maintainability of an action by one partner against another under the old technical rules of English procedure, even the Courts there have latterly taken a more reasonable attitude towards disputes between partners. And here in India we ought to feel still less hampered, and should not hesitate to look to the substance rather than to the form. Regarding the matter from this standpoint, we find that certain principles emerge which, at the outset, seem undoubtedly to stand in the appellant's way. If the items in dispute are items in the partnership account, it would appear at first sight to be impossible to deal with them by themselves without taking a general account of the partnership business. Here, as the learned Doctor has frankly admitted in the course of argument, if the appellant's allowances had never been drawn, but had been simply left to accumulate undrawn in the bank, it might be difficult to urge that the moneys so accumulated were not items in the partnership account. Does it, as has been argued, make any substantial difference that they were drawn and re-placed as deposits, possibly by means of mere book transfers? We are not prepared to say that it does. It is suggested that the deposits cannot be treated as 'advances' to the firm by a partner in it; but the appellant must not be allowed to evade the fact that he was, after all, primarily a partner; and does not that circumstance make a real difference in his position as a depositor and creditor? We are inclined to think that it does, and that there is, at least, the difference recognised in England by Section 44 of the Partnership Act, 1890 (53 and 54 Vict., C. 39), which provides, in connection with the settling of accounts between partners after dissolution, for the satisfaction first, of the debts and liabilities of a firm to persons other than the partners in it, and, then, for the payment to each partner rateably of what is due to him from the firm for advances, as distinguished from capital. No doubt, the statute referred to does not extend to British India; and there is in the Indian Contract Act, 1872, which purports to codify the law relating to partnerships, no provision corresponding with that just described. Still, it would seem clear that, on general principles, the claims of partners must in the course of winding up be postponed to those of outsiders. This, however, does not, as it seems to us, conclude the matter. The law in this connection seems to be summed up by Lord Lindley when, at page 592, he answers the question--when can an action be maintained between partners without taking a general account of all the partnership dealings and transactions--by saying that each case must depend upon its own circumstances and upon whether justice can really be done without taking such an account.' In other words, which we quote from the judgment of White, C.J., and Abdur Rahim, J. in Kari Venkata Reddi v. Kollu Narasayya 32 M. 76 at p. 80 : 4 M.L.T. 456 : 19 M.L.J. 10 : 1 Ind. Cas. 384 'it may be taken generally that, if the account sought is in respect of a matter which, though arising out of the partnership business or connected with it, does not involve the taking of general accounts, the Court will, as a rule, give the relief asked for, and will now-a-days refuse to interfere only in those cases in which a partial account would work injustice to the other partner.' It seems to us that there may well be cases in which the complete solvency of a bank is admitted and a partner might sue, like any other customer, for the taking separately of his private account as a customer and for recovery of the balance found standing to his credit. This may be a case of that kind; and, indeed, judged by the pleadings, it would seem to be such a case. In the written statement, it is nowhere suggested that the suit was not maintainable because the plaintiff was. a partner and his rights as against the defendants could not be ascertained without an investigation of the whole of the accounts of the banking business. It was not pleaded that injustice might be done to the defendant partners if the plaintiff were given a decree for a substantial sum appearing from a partial account to be due to him as a depositor when it might transpire, on the taking of a general account of all the dealings of the partnership, that the assets were insufficient to go round. Every other imaginable defence was taken; but not this: nor was any issue raised on the point. It was maintained that the suit was bad by reason of the non-joinder of the Receiver; that it was barred by limitation; that it was barred by Section 10 of the Civil Procedure Code; that the plaintiif was estopped by his conduct from pressing it; and even that the hath chitta on which it was based was not a genuine document. But, as we have said, it was never asserted that the circumstances were such that justice could not be done between the parties without the taking of general accounts. We are, therefore, inclined to hold that, on the pleadings, the suit was maintainable, and that it ought not to have been thrown out in limine on the first of the grounds on which the Court below dismissed it. But whether or not a decree for the plaintiff-appellant ought to have followed, is quite another matter, the decision of which would have depended on all the circumstances and the justice of the case. So far, then, as this point is concerned, we are not prepared to support the judgment under appeal; and, had it not been for our decision on the other aspect of the case, we should have been constrained to direct a remand.

9. The question of costs remains; and, as we have already indicated, we are of opinion that they must be borne by the appellant. He ought, when he was refused satisfaction in the general suit for partition and accounts, to have appealed; but he mistook his remedy, altogether by omitting to do that and having recourse to a separate suit which, in our view, he was not justified in instituting. And having failed in this second suit in the Court below, he at once harked back to the other suit, where he has at length succeeded with no other result than this, that the whole of the litigation, original and appellate, with which we are now concerned, is shown to have been supererogatory. For this, he is surely bound to pay.

10. The appeal is, therefore, dismissed with costs.

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