Madras High Court
M.O.H. Aslam vs M.O.H Uduman And Ors. on 17 December, 1988
Equivalent citations: (1989)2MLJ172
JUDGMENT Sathiadev, J.
1. Plaintiff in O.S. No. 206 of 1978 on the file of First Additional Subordinate Judge, Pondicherry is the appellant. The five defendants are five respondents herein.
2. Plaintiff filed the suit for dissolving the firm M.O.Hassan Kuthus Maricar with its registered office now at No. 19, Jawaharlal Nehru Street, Karaikal and all its branches at Pondicherry, Madras and Villupuram with effect from the date of filing of the suit; for directing taking of accounts from 20.7.1962 till date of suit and to direct the assets of the firm to be valued and realised, etc., for appointment of a receiver to take charge of the management of the Firm; for granting a permanent injunction to restrain defendants 1 to 3 on the one hand and defendants 4 and 5 on the other from recovering or receiving or disposing of or otherwise dealing with the assets of the Partnership Firm including those specified in Schedule 'A' to 'C' and for such other reliefs as deemed fit and just, in the circumstances of the case.
3. In the plaint, he has stated as follows:
Plaintiff and defendants 1 to 3 are brothers. Fourth defendant is their mother. Their father one M.O. Hassan Kuthus Maricar started a proprietary concern three decades ago, in the name and style of M.O. Hassan Kuthus Maricar at No. 70, Thirunallar Road, Karaikal for carrying on business in import and export and other allied businesses. On 20.7.1962, by a notarial document No. 587 of the even date, he converted the proprietory business into a partnership firm with the same name and style of "M.O.Hassan Kuthus Maricar, by taking plaintiff and defendants 1 to 3 as partners. All the partners joined the firm by jointly executing the deed. The father had transferred all the goodwill rights and the rights to quotas, additional quotas and licences in favour of the partnership Firm. The share capital contributed by each of the partners was Rs. 20,000 and it was a partnership at will, commencing from 1.7.1962. In the partnership deed, provision was made for retirement from partnership, in which event, the retiring partner would only receive the balance existing in his share of profit or loss, on the date of withdrawal. Clause 12 specifically prohibits any transfer of rights in the partnership concern to anybody, without the consent of the other partners. The firm picked up business gradually and traded in several consumer products such as motor cars, tractors, petroleum products, etc., The premises where it's branch offices are located, were taken on lease. In 1968, the father expressed a desire to retire from the partnership, and he executed a deed of retirement on 1.8.1968. His entitlement was to receive his capital balance existing in his account after the share of profit and loss on the date of retirement had been transferred. In that document, it was clearly provided that the four sons shall divide the profit and loss equally, and that it shall be managed and administered by all the continuing partners. After the firm was so reconstituted, further businesses dealing with Refrigerator, Air-conditioners, Bajaj three wheelers, etc. were started. By about 1973, its turnover reached Rs. 1,07,00,0001 Plaintiff demanded statement of accounts by quantifying the actual net profits, but it was not relished by third defendant, who with the support of defendants 1 and 2 evaded the issue. There is another partnership firm named Evergreen Tube Well Service, in which plaintiff was a partner along with others including one Md. Issak, was carrying on business, Md.Issak is the brother-in-law of plaintiff and defendants 1 to 3, and son-in-law of fourth defendant. It was formed on 17.7.1970, and it was re-constituted on 1.7.1973. He with the connivance of the third defendant began to interfere with the running of the suit partnership firm in 1975. Since plaintiff objected to it, defendants 1 to 3 had been making attempts to exclude the plaintiff from participating in the suit partnership business. After referring to investment of money of the partnership firm in 1973 in the purchase of transport buses in the same and style of Dharialakshmi; it is stated that third defendant formed a private limited company, i.e. fifth defendant which had taken away the suit partnership firm and which was contrary to Clause 12 of partnership deed, and this was in May, 1978. Therefore, mismanagement having taken place, plaintiff in July, 1978 made his last attempt to have the accounts settled, but defendants 1 to 3 have adamantly refused to do so, and therefore, having no other alternative remedy, he has filed the suit for dissolution of partnership firm and for other reliefs.
4. Defendants 1 to 3 in a lengthy written statement had claimed as follows:
The partnership deed dated 20.7.1962 was executed under the provisions of the French law, and the subsequent deed of retirement dated 1.8.1968 was in continuation of the former deed, and therefore, the rights and liabilities attached to the partnership deed dated 20.7.1962 are preserved, and the rights of parties will have to be decided as per the law obtaining in July, 1962. French Law does not contemplate dissolution, and hence, the suit as filed is not maintainable. The partnership deed dated 20th July, 1962 states that the firm shall continue so long as two of the partners are still living and have retired and hence plaintiff could only seek for retirement, if the desires to quit from the partnership, and receive the balance, if any, existing in his account after the share of profit or loss on the date of retirement has been transferred. As for Clause 12 of the deed, it only means that third parties cannot be inducted into the partnership without the consent of other partners. The partnership is not at will. There was no reconstitution as claimed. No demand was made by plaintiff for accounts in 1973, nor was there any refusal. All the partners are jointly entitled to manage the business, and plaintiff has been actively associating with the management of the firm till date of filing of suit. He has signed all vouchers and receipts. Regarding his share of profit in the partnership business, he has overdrawn and is liable to repay to the partnership firm. As for the brother-in-law's roll in the partnership firm "Evergreen Tube Well Services", plaintiff and third defendant represent that firm in the suit firm, as partners. The true circumstances under which the misunderstanding arose between plaintiff and defendants are as follows:
1) Till a few days prior to the filing of the suit, plaintiff was actively associating with the management of the firm. In January, 1978, the suit firm started a business in the name of plaintiffs wife, called "S.S. Agencies" which deals with Spencer Drinks.
2) As for Dhanalakshmi Bus Service, their mother had monies to her credit in the suit partnership firm, and the operation of the buses was done by the partnership firm by paying a sum of Rs. 2500 monthly to her.
The true circumstances under which the Private Limited Company was formed are as follows:
1) The partnership firm was advised that for tax purposes and for expansion of business, it will not be commercially advantageous to have an unlimited joint and several liability of partners, and it is better to form a private limited company. This idea was mooted in March, 1978. Defendants and plaintiff discussed this matter threadbare, and as third defendant happened to be a Chartered Accountant, he explained to the plaintiff about the particulars regarding the formation of such a company, and the latter agreed to its formation with the same partners as share holders. The understanding was that two of the partners should first form the company, and later shares will be allotted to all the partners in the same proportion as their respective shares in the suit firm. There was no necessity for any formal writing of this proposal since it was done by mutual discussions and consultations, and in view of the close relationship of the parties. In pursuance of this understanding, defendants 2 and 3 formed the Private Limited Company. As a follow up, an agreement was executed between the suit partnership firm and the company, it being the fifth defendant herein. Copies of the agreements are filed as annexures and treated as part and parcel of the written statement. A further agreement came into existence on 6.7.1978 mentioning the valuation of the various assets. Plaintiff is aware of both the documents and has consented to the same. The Private Limited Company has taken over the assets of the partnership firm, and plaintiff would become a shareholder in the company in the same proportion in which he had a share. This mere change in the constitution of the set up, does not affect the position of the plaintiff, but on the other, plaintiff will be more benefited by this process. Apart from the consent of the plaintiff, the transaction is even otherwise valid because the partnership was represented by one of its partners as provided in Clause 4(b).
Hence, reference made to Clause 12 of the partnership deed in this context is irrelevant. Certain items which do not belong to the firm had been included in the plaint with an ulterior motive. The suit is bad for non-joinder of parties. The suit is not maintainable since he seeks relief in respect of properties not standing in the name of the partnership but only third parties. After referring to the usual aspects like suit valuation, court-fee, particulars in the schedule to the plaint, etc., it is stated that at present there is no subsisting franchise in favour of the suit partnership firm, and therefore, there is no question of accounting. The partnership firm being a society under the French Law, no relief of dissolution of the firm could be granted. "Plaintiff may at best can pray for dissolution of the partnership by giving notice to all the partners of his intention to have the partnership relationship dissolved." There was no valid notice which is a condition precedent for filing the suit for dissolution. Hence, they have prayed for dismissal of the suit.
5. Fourth defendant in her written statement by referring to Dhanalakshmi Bus Service, had denied the claim made by the plaintiff, and stated that plaintiff was aware of the arrangement made, and neither himself nor his brothers have any right of ownership in respect of Dhanalakshmi Transport owned by her.
6. Fifth defendant after adopting paragraphs 1 to 14 of the written statement filed by defendants 1 to 3, would state that the Private Limited Company was incorporated on 6.5.1978, and also entered into a valid agreement with the partnership firm on 25.6.1978 for transfer of the assets of the said partnership on 30.6.1978. To give effect to the first stage of such transfer, a further agreement was entered into on 6.7.1978, and the fixed assets valued at Rs. 1,55,000 of the partnership firm were taken over by the company at a value of Rs. 3,16,000. The other assets remain to be transferred are stock-in-trade like cars, tractors, motor cycles, etc. All these took place with the concurrence of the plaintiff. Even apart from it, the transfer was made under Clause 4(b) of the partnership deed dated 1.8.1968. Hence, the suit is liable to be dismissed.
7. During the course of the hearing of the suit, on 4.5.1973, five issues were framed. The first issue was:
Whether the Suit is not maintainable?" (as found in notes paper) The other issues relate to court-fees; whether plaintiff is entitled to the relief of dissolution; whether fifth defendant is not a necessary party; and to what other reliefs are the parties entitled? The suit was then posted to 19.10.1978, and again to 14.12.1978, and thereafter to 16.12.1978. On that day, it was recorded by the trial court as follows:
Both sides counsel agree that they will argue on preliminary issue regarding maintainability. Call on 22.12.1978.
Hence, the preliminary issue was taken up for hearing, and defendants filed the partnership agreement dated 20.7.1962 as Exhibit B.1, a translation copy in English as Exhibit B-l/a and the retirement deed dated 1.8.1968 as Exhibit B.2. No witness was examined on either side.
8. The trial court held that the suit filed for dissolution of the firm is not maintainable in law, and plaintiff has to seek other remedies open to him. Hence, it dismissed the suit. As against the said decision, A.S. No. 509 of 1979 was filed in this Court, and the learned Judge concurred with the conclusion of the trial Judge, and dismissed the appeal. Therefore, this Letters Patent Appeal came to be filed by plaintiff.
9. The trial court held ...Thus the two Clauses 4 and 5 in the agreement are mutual and alternate remedies to suit different circumstances..
It posed the question as to whether the unilateral act of a single partner should prevail and decide the fate of a commercial organisation of repute against the dominant unanimous will of the other three partners not to dissolve the firm? It then dealt with the next contention of the plaintiff regarding dissolution under Section 44(d) and (g) of Indian Partnership Act, after referring to the decisions cited by both the plaintiff and defendants, it concluded that the principle laid down in, V.M. Nissar ahmed Ahmed v. Rahima Bi (1970) 1 M.L.J. 513 would apply to the present case regarding maintainability of the suit. It was held therein that the partnership deed must be read as a whole to ascertain its true meaning, and any intention must be manifest, and that an agreement between the partners that a single partner cannot determine the partnership between all although he can determine it as between himself and others, is not a partnership at will. Even though defendants had not raised the point relating to limitation, the trial court took upon itself this point, and held that Article 5 of 113 of II Schedule of Limitation Act, 1963 applies to this case, and therefore, the suit for accounts from 1962 to 1968 is barred by limitation.
10. Learned Judge on the preliminary point held that Clauses 4 and 5 of Exhibit B.1 will have to be read and harmoniously construed, and that Clause 5 clearly spells out the duration of the firm viz., till two partners are available, and that the dissolution of the partnership at will of one of the partners was never in the minds of the partners and their father, and therefore, Clause 5 of Exhibit B.1 will prevail over Clause 4. As for Clause 4, it was incorporated in case a contingency arises where all partners agree to dissolve the partnership firm. It was then held:
...In the present case, the contract of partnership was for an unlimited period till two partners agreed to continue...As already stated, in the present case, the contract of partnership made for unlimited period contains a specific clause permitting any partner to retire from the firm at any time. Therefore, the contract in question before us, which was made for an unlimited period, does not attract the application of Articles 1865 and 1869 of the French Code...
In spite of holding that it is a Partnership for an unlimited period, it was held by the learned Judge...
...Clause 4 of Ex. B. l is subject to Clause 5 and both the clauses must be read together as a whole...
After referring to the provisions of French Code Civil, it was held that there is no corresponding provision therein relating to Sections 43 and 44 of Indian partnership Act, and therefore, parties are governed by French Code Civil provisions relating to partnership which have not been expressly or impliedly repealed. On the transfer of the assets of the firm to fifth defendant company, it was held that this contention would be Valid only so far as plaintiff is concerned, and he cannot seek for dissolution of the firm which is contrary to the intention of the parties in Clause 5 of Exhibit B.1. Regarding arguments advanced about invocation of Section 44 of the Indian Partnership Act, after referring to it in two places in the judgment, it was held that even on principles of justice and fair-play, it is neither proper nor expedient to ask for dissolution of the firm, because the intention of the father-founder was to carry on business. Hence, the appeal was dismissed without prejudice to the rights of plaintiff to seek for the alternative remedy for accounts.
11. Out of the many points which have come up for consideration the foremost is; whether under the facts and circumstances of this case, the provisions of the French Code Civil dealing with the partnership would apply, or the provisions of the Indian Partnership Act would apply?
12. Learned Counsel for defendants/respondents herein, submits that since Exhibit B-l partnership deed was executed on 20.7.1962 at a time when French Code Civil was applicable to the territory of Pondicherry, the rights of parties could be worked out only by applying the provisions of the said code, because Exhibit B.2, the retirement deed dated 1.8.1968 is in continuation of the terms and conditions found in Exhibit B.1. Under the Pondicherry (Laws) Regulation, 1963; the Indian Partnership Act, 1932 was extended to Pondicherry on and from 1.10.1963, except for Section 69, which came into force on and from 1.7.1964. It is submitted that, in spite of the said Regulations having been repealed the suit filed on 17.8.1978 could be heard and disposed of only as per the provisions of the French Code Civil. It is also contended by defendants that plaintiff had never disputed this proposition, and in fact, in Ground Nos. 5,14 to 18 and 20 of the Grounds of Appeal in A.S. No. 509 of 1979, he claimed that it is only the French Law relating to partnership which governs the facts of this case. Even in this appeal, no definite stand having been taken by plaintiff, the rights of parties could be worked out only based on French Law. Reliance is placed on Section 4(2)(b) which states that nothing in Sub-section (1) shall affect any right, privilege, obligation or liability acquired, accrued or incurred under any law so repealed. Under Section 4(1), any law in force in Pondicherry corresponding to any Act referred in Section 3 shall stand repealed as from the coming into force of such Act in Pondicherry. It is the contention of learned Counsel for defendants that as the provision is in parimateria with Section 6 of the General Clauses Act, the rights conferred on each partner under Exhibit B.1 read with Exhibit B.2, being a vested right; by the saving provision in Section 4(2)(d), in spite of Indian Partnership Act made applicable to Pondicherry on and from 1.10.1963, in so far as the suit partnership firm is concerned, for years to follow, the rights of parties could be worked out only as per French Code Civil. Though there are many decisions dealing with vesting of right, instead of multiplying the decisions, reliance is placed on Garikapati v. Subbiah Choudhry point out as to what extent vested right gets preserved by the said saving provision. It was a case in which a point was involved as to whether the right of appeal is a vested right or not. A suit was filed on 22.4.1949 which was before the date of the constitution, and it was held that, from the date of institution of the suit, a vested right of appeal upon terms and conditions then in force, accrued to the party, and as per the provisions of the old Civil Procedure Code, if the subject matter is above Rs. 10,000 then the aggrieved party had a vested right of appeal to the Federal Court, and therefore, after the ushering of the Constitution, he would have a right to come up on appeal before the Supreme Court under Article 135. It was further held:
...The right of appeal is a vested right and such a right to enter the superior court accrues to the litigant and exists as on and from the date the lis commences and although it may be actually exercised when the adverse judgment is pronounced such right is to be governed by the law prevailing at the date of the institution of the suit or proceeding and not by the law that prevails at the date of its decision or at the date of the filing of the appeal.
It has been always held that a right of appeal is not a mere matter of procedure, but is a substantive right. Once a suit is instituted, it carries with it the implication that all the rights of appeal then in force are preserved to the parties till finality is reached in litigation, unless such a right is taken away by a subsequent enactment, either expressly or by necessary intendment and not otherwise.
13. This decision could have no relevance in so far as the contract of relationship of parties is concerned, as found in Exhibits B.1 and B.2. The section states that the right, if any acquired or accrued or incurred, must be one which had been derived under the law there in force. The right to enforce the terms and conditions of a contract emanates by agreement of parties. They may be governed by a law in force at that time, quite different from the law which supersedes. The right to ask for dissolution or retirement from the partnership is also dependent upon the terms and conditions of the two deeds. The right of dissolution is not a vested right solely acquired because of French Code Civil. It is not a vested right, which could be equated to the right of appeal, which accrued because of institution of proceedings before coming into force of subsequent legislation and which aspect came up for consideration before the Supreme Court in the aforesaid decision.
14. In spite of whatever stand the parties to proceeding may take regarding the applicability of a particular law, it is for the court to decide as to which law governs the rights of parties. Because of ignorance of law by parties or due to unwillingness on the part of counsel to take a specific stand about the correct applicability of law, a court cannot non-suit a plaintiff, if the law under which he could enforce his rights, is available to him.
In spite of plaintiff taking the stand that French Code Civil applies; defendants have placed decisions before court on the point, whether Section 44 of the Partnership Act would apply or not? Rather, they got the suit dismissed by relying upon the decision in V.M. Nissar Ahmed v. Rahima Bi (1970) 1 M.L.J. 513 which dealt with the provisions of Indian Partnership Act, and therefore, the nebulous stand taken by the plaintiff as to the applicability of the correct law, cannot be ground to dismiss the suit, once a court is able to decide as, to which of the two laws applicable to the facts and circumstances of the case.
15. Relating to partnership agreements entered into in the territory of Pondicherry before 1.10.1963, if suits are instituted after that day in respect of any part of the cause of action having arisen subsequent to that day, then the provisions of the Indian Partnership Act alone could govern the rights of parties. In the instant case, even notice was not issued prior to that date, and no dispute arose prior to that date between the parties. The two instances relied upon in paragraphs 9 and 10 of the plaint are referable to happenings in 1973 and 1978. About what had happened in 1973, plaintiff states that he became aware of it only in 1976, when misunderstandings arose. Therefore, the relief claimed in this suit could be considered only by reference to the provisions of the Indian Partnership Act.
16. In the light of this finding, certain submissions made as to the nature of the partnership firm which could come into existence and to what extent, in a partnership-at-will, dissolution could be asked for under French-law, need not be gone into in this appeal.
17. The second point is, whether the partnership agreement (Exhibit B.1) is a partnership-at-will or not?
18. Section 7 of the Partnership Act reads as follows:
Where no provision is made by a contract between the partners for the duration of their partnership, or the determination of their partnership, the partnership is partnership-at-will.
The learned judge held:
...In the present case, the contract of partnership was for an unlimited period till two partners agreed to continue...
As already stated, in the present case, the contract of partnership made for unlimited period contains a specific clause permitting any partner to retire from the firm at any time...
In spite of it, the learned judge had concluded differently. Learned Counsel for the defendants, submits that it is not the use of the words "at will" in a partnership deed, which could be determinative of the nature of the partnership; and that the terms and conditions of a partnership deed must be read as a whole, and the intention of the parties must be spelt out by a harmonious construction of all the clauses contained therein; and if need be, it has to be read without the numbers assigned referring to paragraphs in the deed. In support of this contention, reliance is placed on Thiagarajan v. Muthappa which deals with the scope of Section 7 of the Act. It was held by the Supreme Court as follows:
Section 7 contemplates two exceptions to a partnership at will. The first exception is where there is a provision in the contract for the duration of partnership; the second exception is where there is provision for the determination of the partnership. In either of these cases the partnership is not at will. The duration of a partnership may be expressly provided for in the contract; but even where there is no express provision, the partnership will not be at will, if the duration can be implied.
It was a case wherein managing agency rights in a mill was involved, and a notice of dissolution was given treating it as a partnership-at-will, but it was held:
...As we read the terms of the agreement it seems to us clear that the intention could not be to create a partnership at will. The partners contemplated that the management would be carried on in rotation between them in four yearly periods. It was also contemplated that the heirs of the partners would also carry out the management in rotation. Considering this provision as well as the nature of the business of partnership it could not be contemplated that the partnership could be brought to an end by notice by either partner. The intention obviously was to have a partnership of some duration though the duration was not expressly fixed in the agreement...in any case even if there is some doubt as to whether the terms of this contract implied any duration of the partnership, there can in our opinion be no doubt that the terms do imply a determination of the partnership when the managing agency agreement comes to an end. It is clear that the partnership was for the sole business of carrying on the managing agency and therefore by necessary implication it must follow that the partnership would determine when the managing agency determines. Therefore on the terms of the contract in this case, even if there is some doubt whether any duration is implied, there can be no doubt that this contract implies that the partnership will determine when the managing agency terminates. In this view the partnership will not be a partnership at will as Section 7 of the Act makes it clear that a partnership in which there is a term as to its determination is not a partnership at will. Our attention was drawn in this connection to a term in the contract which lays down that either partner may withdraw from the partnership by relinquishing his right of management to the other partner. That however does not make the partnership a partnership at will, for the sentessence of a partnership at will is that it is open to either partner to dissolve the partnership by giving notice. Relinquishment of one partner's interest in favour of the other, which is provided in this contract, is a very different matter...
19. A Division Bench of Gujarat High Court in Keshavlal v. Bhailal , by reference to Section 7 of the Act, held that a contract may expressly provide that a partnership will determine under certain circumstances, but even if there is no such express term, whether there is any implied term as to when it will determine, could be gathered from the terms and conditions of the contract, and the nature of business.
20. Learned Counsel for defendants would then rely upon Abbot v. Abbot (1936) 3 All E.R. 823, which took the view that if the partnership is not at will, the right of dissolution which is a superior right under the Partnership Act, 1890 will not be available. The point at issue therein was "whether upon the proper construction of the deed, the partnership was not a partnership at will, but one to continue as regards the remaining two partners until the retirement of one partner." It was a case in which a partnership was entered into on 11.3.1924 between a father and his five sons to carry on business, and Clause 2 says that "the partnership shall commence as and from October 11, 1923, and that the death or retirement of any partner shall not terminate the partnership." C1.10 states that if any partner has become unfit physically or mentally, then he shall be considered as having retired form the partnership, and the other partners shall have the option to purchase his share. Clause 11 states that if any partner dies or retires, the other surviving partners shall have the option to purchase his rights. Plaintiff therein claimed that it is a partnership at will as per the last annual balance-sheet, and sought for dissolution by giving notice. In construing C1.2, it was held that a partner who says "I want to go out of the partnerr ship", does not determine the partnership by doing that, and according to C1.2, the partners have agreed that the partnership shall continue notwithstanding that one partner dies, and the clause is consistent with the view that so long as there are two partners, the partnership is to continue, because no partnership could exist without two partners. No clause similar to C1.4 in Exhibit B.1 was incorporated in that partnership and in no part of it, was there any mention about the character of the firm. This decision has been relied upon in Thiagarajan v. Muthappa referred to in para 17
21. The decision in Moss v. Elphic (1910) 1 K.B. 465 is also relied upon to claim that only if no fixed term is agreed upon for the duration of the partnership, then only one of the partners may determine it at any time by notice. C1.4 of the partnership deed therein would state as follows:
This agreement shall be terminated by mutual agreement only.
When plaintiff therein gave notice of his intention to terminate the partnership, it was resisted upon by claiming that it could be determined only by mutual consent. It was held that, when partners had agreed to terminate the partnership in a specific manner, in the absence of mutual consent, it cannot be terminated at the instance of one of the partners. This decision was confirmed by the Court of Appeal reported in (1910) 1 K.B. 846. It was emphasised therein that, when the parties have not said that the partnership is to be for their joint lives, but have said that it is determinable "by mutual arrangement only", it is not a partnership at will, because it is expressly provided that it could be determined only by mutual consent of both parties.
22. Reference is also made to the decision reported in Abbashai v. R.G. Shah , but the situation which arose in that case has no relevance to the facts and circumstances of this case, and therefore, the rationale adopted therein cannot be of any guidance, in interpreting the terms of Exhibit B.1.
23. In the decision reported in Iqbalnath v. Rameshwamath , it was held that, any provision in a partnership deed as to retirement of a partner cannot be considered to be a provision for determination of their partnership within the meaning of Section 7.
24. In the present case, the terms and conditions of the partnership deed are now to be looked into, to find but whether it is a partnership-at-will or not?
25. Exhibit B.1, the partnership deed dated 20.7.1962 is in French Exhibit B. l a is the authenticated and translated English version of Exhibit B.1 Clauses 4 and 5 of Exhibit. B. l read as follows:
(4) The business of that firm has been started on the 1st of July, 1962 and the partnership will be brought to an end at will.
(5) The partnership will continue till there are two: partners, even in case of one or several partners withdraw themselves or die the partnership will continue between the two partners who will remain owners of all the capital on condition that they should pay back to the withdrawing partners and to the heirs of the deceased partners and to the heirs of the deceased partners only the amount of their rights according to the last inventory.
It is the contention of the learned Counsel for the plaintiff that these two clauses deal with different situations, and they are independent of each other. As already pointed out, the trial court held:
...Thus the two Clauses 4 and 5 in the agreement are mutual and alternate remedies to suit different circumstances.
Learned Judge held that these two clauses will have to be read together and harmoniously construed. Learned Counsel for the defendants, submits that these clauses must be read along with all the other clauses in the deed, and the document must be taken as a whole, and has to be read as if there are no paragraphs; and if there are two clauses, one dealing with dissolution and the other with retirement, it is only the clause dealing with retirement which would be enforceable so long as two partners are there in the partnership. Only in the event of all the partners agreeing for dissolution, Clause 4 would get activated Otherwise, it has to subordinate itself to C1.5 and other terms and conditions in the partnership deed. It is also pleaded that the earlier part of Clause 5 which states that the partnership has to continue till there are two partners, will have to be read along with Clause 4 as forming part of it, and the later part of Clause 5 has to be read along with all the other clauses upto the clause which deals with retirement or what would happen when one of the partners dies.
26. In drafting a deed when scrupulous effort had been taken to deal with different topics with different headings or with paragraphs with an intent to avoid any confusion or any anomalous situation being developed; the effort taken in that direction cannot be thrown to winds by breaking up sentences, or adding a portion of it to an earlier sentence or later portion of a later sentence and the like. Such a manner of reading cannot be termed as harmonious construction of terms and conditions of an agreement. As held in the decisions above referred to, the document has to be read as a whole, and the intention of the parties must be culled out, and even if expressly a relevant or apposite word is not spelt out, still is could implied; and in respect of partnership transactions the nature of business carried on also could be a guiding factor. The argument put forth by the learned Counsel for defendants that, if there is a clause for retirement, then a clause dealing with right of dissolution at the instance of one of the partners would become nugatory, if the partnership is to continue with two partners, cannot be accepted. There is no permissible scope to read the first nine words in Clause 5 as part of Clause 4. Partnership Act itself contemplates a right of dissolution and a right of retirement as distinct and different rights inhering in a partner, under different circumstances. There are provisions in the French Code Civil and in the Indian Partnership Act dealing with right of dissolution, and the right of retirement, as distinct rights. Hence, merely because a clause relating to retirement is found is Exhibit B.1, the right of dissolution at the instance of one of the partners which accrues on C1.4 characterising it as partnership-at will cannot be made nugatory or to read it differently as if such a right could be exercised only when all the partners agree for dissolution. The word 'all' is nowhere used either in the French Code Civil or Indian Partnership Act. In the absence of agreement between the parties, in such of those cases where Section 7 gets applied, the right of dissolution would be available to each partner. It is only in such of those cases where there is an agreed term that the right of dissolution could be exercised only by all partners, such a restriction on the partner could be enforced. Clause 4 states that it is a partnership will, and there being no restraint put up on the right of each one of the partners to seek for dissolution, it could be exercised by any one of the partners. C1.4 states that it is a partnership-at-will, and therefore, under Section 43 of Indian Partnership Act, it could be dissolved by any partner by giving notice in writing to all the partners of his intention to dissolve the Firm. At the time when the partnership deed was executed, the partners were aware that the law in force provided for right of dissolution at the instance of one partner, if it is a partnership-at-will. Even though the learned Judge in para 19 of the Judgment had stated that there is no corresponding provision in French Code Civil regarding Sections 43 and 44 of the Partnership Act, plaintiff refers to Article 1869 which reads as follows:
The rule that a partnership can be dissolved at the will of the partners does not apply to partnerships the duration of which has been fixed. The dissolution is effected by the partner who wishes to retire sending a notice of such intention to all his co-partners. Such notice of dissolution of the partnership must be given in good faith, and not at an inopportune moment.
Therefore, an identical concept having existed in the French Law, the parties to the partnership deed, had known that anyone of the partners has the right to seek for dissolution if circumstances warrant, and that was why Clause 4 had been incorporated to state that it is a partnership-at-will. The nature of the clause as framed is such that the right of dissolution thereunder is traceable in law.
27. What then is the scope and ambit of Clause 5?. It is contended by defendants that if Clause 5 deals with retirement, then there is no need to have Clause 10. According to them, it is Clause 10 which alone deals with the right of retirement, and that Clause 5 has to be read with Clause 4, If not the whole of it, then in any event, the first nine words in Clause 5 has to be treated as part of Clause 4. As for Clause ll, it deals with what would happen if one of the partners dies. The word used in Clause 5 is "withdrawal" and it is the common case that it refers to the right of retirement from partnership. The same word is used in CL10 also. Though it is claimed by defendants that the first nine words in Clause 5 have no relevance relating to retirement and will have to be read along with Clause 4, once it is realised that the word withdrawal is retirement and that the right of retirement is distinct and different from the right of dissolution as spelt out in Thiagarajan v. Muthappa , there is no incongruity if Clause 5 dealing with the right of retirement, is read as a whole. The first nine words are followed by the words "even in case of one or several partners withdraw themselves or die..." and they are a guiding factor to hold that the partnership firm will not stand dissolved merely because one or more of the partners either retires or dies, and that it will continue till two of them remain as partners. It is made clear that its reduced strength would not bring it to an end. In law, there cannot be a partnership consisting of less than two partners. To make it clear that retirement of a partner or by the death of a partner, or two or more of them and the like, it shall not result in dissolution of the firm, so long as there are two partners. As for Clause 10 is concerned, it deals with quota rights and other rights benefited by the firm, when anyone or more partners retire from the partnership and as to what rights they would then be entitled to. Clause 5 deals with what would happen to partnership and to the retiring partner, whereas Clause 10 deals with how and in what manner, the quo rights and other rights benefited by the Firm are to be worked out as between the partners, and as to what limited benefits, the outgoing partner will get when he retired from the partnership Certainly, Clause 10 is not a term conferring any right of retirement on parties. As contended by defendants, it is not the only clause relating to retirement is clearly made out in Ex. B.2. where in all the partners state that partnership deed i.e., Exhibit B.1 provides for retirement under Cls. 5 to 10. Yet it is contended that Clause 5 as a whole does not deal with retirement. Clause ll deals with rights which the heirs of a deceased partner would get in the partnership Firm.
28. Hence, Cls.4 and 5 in the partnership deed, deal with different situations, and there is no need to mix up these clauses and read them as if there are no paragraph numbers, no full stop, or comma or Semi Collan etc. The terms and conditions of a deed cannot be read as collection of words, from beginning to end, without any formation of sentences. It is only if the nine words in Clause 5 are read with Clause 4 it would result in an abnormal reading relating to the rights of a partner in a partnership-at-will, when he wants to exercise his right of dissolution.
29. Yet another contention of the defendants is that, it is the intention of the father M.C. Hasan Kuthoos Maricar, which has to be remembered and implemented and the terms and conditions in the deed could be properly understood, only if this intention to keep the partnership firm alive forever is read into the clauses of that deed. This argument of the defendants, who proclaim about the intention of their father to prevail in understanding the terms and character of the partnership deed, and which in a way impressed the learned Judge, cannot be advanced no longer by them, because of what they have stated in para. 12 of their written statement. Copies of the agreements about the take over of partnership firm by t he fifth defendant private Limited Company were filed along with their written statement, so that they may be treated as part and parcel of the written statement. They have asked the Court to take notice of the contents therein. On reading them it is self-evident that they have completely put an end to the partnership firm as early as 1978 in an indirect manner, and which is one of the reasons for the plaintiff to file the present suit. Fifth defendant in the written statement had stated that it was incorporated on 6.5.1978, and it had entered into a valid agreement with the Partnership Finm on 25.6.1978 for transfer of the assets of the partnership firm as on 30.6.1978, and that with reference to the first stage of the transfer, if had taken over the fixed assets belonging to the Firm at a value of Rs. 3,16,000. In the agreement dated 25.6.1978, it is stated as follows:
Whereas further that the actual closing of business of the firm would take some more time, the transferor firm would continue to do whole or part or any of the business in the mutual interest of both the parties until the actual final transfer is made. The profit and loss of the business of the firm shall be divided or borne between the parties of the firm in their existing ratio during that period...
Clause 5 of the said agreement deals wkh transfer of assets including good will and as per C1.8, the partnership firm agreed to execute further deed or instrument for assuming title to the fifth defendant Company, in respect of franchise or other dealership rights, bus route permits and in respects of immovable properties. This was followed by another agreement dated 6.7.1978, which -states that partnership Firm shall transfer for valuable consideration the assets and liabilities as set out in the schedule to the Private Limited Company, as on 1.7.1978. Plaintiff has claimed in the plaint that his consent was never obtained. Defendants contended that it was done with his concurrence, but no written consent was taken from him. He is not a signatory to the agreements referred to above.
30. Written statement of defendants 1 to 3 proceeds on the basis that signatories to these documents had the authority to represent the plaintiff. How far they would be binding upon the plaintiff, is an aspect which cannot be gone into in this appeal. It is because defendants themselves had relied upon these two agreements and have asked for these agreements to be read as part and parcel of their written statement; to the extent permissible and for the limited purpose of showing as to how far the sons have understood the terms of the partnership deed regarding the intention of their father and implemented it, the contents of these two agreements have been referred to herein.
31. For the purpose of expanding the business and for taxation purposes, a private limited Company was incorporated, and assets of the partnership Firm was transferred to that Company.Certain valuable rights of a partner, would not now be available. It is claimed that the father had intended that the partnership in the manner constituted by him, shall continue till two partners are there. It is vociferously pleaded that what was conceived by him to be adhered to by his sons regarding the nature of their inter-se relationship was to have a long lasting existence by keeping alive the partnership firm, and which should not be destroyed by anyone of the partners seeking for dissolution. It is contended that this intention of the father should be read into with every clause of the deed, to prevent dismemberment of the partnership between the sons. The terms and conditions of the partner between the sons. The terms and conditions of the partnership deed or the retirement deed do not contain any unusual or special terms, to highlight this so called intention. Like any father, on reaching the old age, and when time comes for entrusting the financial affairs to his off-springs; he had, at the first stage, created a partnership associating them in his business, and within five years thereafter, he had retired from - the partnership. Like any father being quite aware that, when the family expands there is likelihood of estranged feelings developing amongst his issues,he has provided for two methods as found in law, they being, for any partner either to retire or to seek for dissolution depending upon his volition and circumstances warranting him to do so. that was why he made a partnership-at-will. There is nothing unusual in enabling a partner thereby acquiring the right of dissolution at his will along side an enablement for him to retire, if he so desires. In spite of their own conduct, on what they had done in 1978 to the partnership firm, if the intention now claimed by defendants really existed, then he would have provided in Clause 4 that unless all of them agree, the partnership-at-will cannot be dissolved. Why he provided for this right by making it as partnership-at-will. A right of dissolution at the instance of a partner is always considered as resulting in checks and balances between partners, when all of them have the right of management over its affairs. A dominating partner cannot then lightly encroach upon the rights pf another partner and scuttle him out from managing the affairs of the firm. When this right exist, then undue or unreasonable domination of one partner, or a set of partners over a single partner or minority of them, does not exist. Evidently, being aware that opportunism and avariciousness may develop amongst his sons, and that a younger or an ill-equipped or an illiterate son can be taken for a ride by the domination of his elder brother or brothers, he has chosen to make it as a partnership-at-will, so that right of dissolution as known to law, could be availed of by anyone of the partners, and which would safeguard the aggrieved partner's rights. In turn it would facilitate the partnership to continue to exist effectively. Existence of such a right, prevents anything being done to the detriment of the partnership firm, and thereby it continues to exist for longer period than otherwise. Hence, the intention of the father was to make it a partner-ship-at-will in the interests of his sons, but the defendants have dene differently, but still in Courts take a different posture against plaintiff and make it appear as if he is acting contrary to the wishes of the father. Hence, father's intention had been misunderstood by defendants. Therefore, on what has been stated above, it is held that the partnership firm is a Partnership-at-will. Therefore, the undue emphasis laid by the learned judge and the trial Court, on the so called intention of the father, and the extent to which it is sought to be highlighted by the defendants in this appeal, cannot result in holding that Clause 4 and first nine words in Clause 5 have to be read together, to find out whether the partnership firm is at will or for a particular duration.
32. The third point taken is that, without prior notice of dissolution, the suit filed as not maintainable. This aspect need not be considered at length because of the decision in Banarasi Das v. Seth Kanshi Ram that the last of the service of suit summons on the defendants would be notice of dissolution with effect from that date, and will be a valid service of notice of dissolution.
33. On these three points, the appeal could be disposed of. But defendants have put more hurdles in the way of plaintiff securing the eluding relief at an early date by the suit being disposed of an merits. This shows as to what extent they are desperately clinging to non-existing technicalities, to prevent proper trail of the suit. To a query made as to whether the plaintiff is being paid his share in the partnership firm during the past ten years when his attempts in Courts have failed, and when defendants claim that the partnership continues to exist; they gave an evasive reply. Plaintiffs counsel stated that not a pie had been paid to his Client during the past 10 years. When his suit for dissolution is dismissed, and when he had not retired, yet at no point of time, any communication had been sent to him calling upon him to take his share in the partnership firm. After the constition of the fifth defendant company, on communication had been sent to him, pertaining to his interests. It is not as if the plaintiff got any relief from Court hitherto, which disentitled him to claim his rights. No order was obtained by him from Court, which denies him his rights, until otherwise decided. Defendants have thus clearly demonstrated that they would act in any way they want; like transferring the assets of the partnership firm as claimed by them in the written statement, and deny the share or profits to plaintiff for all these years. Still they contest the claims in the suit by all sorts of technical points, which could give them a way to prolong the proceedings, because any legal proposition taken will have to be argued out. Being fully aware that in the nature of set of existing, endless legal points are taken so that litigation cannot come to an end for decades even on a preliminary point. Already 10 years have passed by and the plaintiff had not been paid a pie. Each one of the defendants had thus acted unfairly and unreasonably.
34. Apart form the points taken about the nature and character of the firm, they have now taken various technical points which are hereunder dealt with.
35. The first of these points is that even though paragraphs 8 to 10 in the plaint refer to certain acts of mismanagement, which would give him a right to seek for dissolution under Section 44 of the Indian Partnership Act; he having agreed for a preliminary decision to be rendered as to "whether the suit is not maintainable"?, he cannot any longer claim any relief by relying upon Section 44 of the Act. In spite of the Court framing five issues, because an objection was taken that the partnership firm is not at will; the maintainability of the suit was taken up as preliminary issue. The framing of the issues show that defendants have asked for this preliminary issue, and hence both the Counsel agreed for it to be argued out. The records of the Court would show that plaintiffs counsel was ready to argue the case straight away on this preliminary issue. It is ununder standable as to how plaintiff by agreeing to have this issue heard and disposed of as a preliminary issue; could be prevented from any longer relying upon Section 44 of the Partnership Act, and claim relief for dissolution. Necessary averments pertaining to Section 44 are found in paragraphs 8 to 10 of the plaint; and in this regard, in the written statement, defendants 1 to 3 have admitted transfer of interests of the partnership firm to a Private Limited Company, and strongly defend their action. As to whether it will be a valid ground, and whether Section 44 of the partnership Act could be invoked, could be decided only when the merits of the suit are taken up for hearing. Therefore, the point that plaintiff cannot rely upon Section 44 any longer, is a fruitless objection.
36. The next point taken is that, in the plaint, he having asked for dissolution of the partnership firm "with effect from the date of filing of the suit", he cannot rely upon Section 44, because according to it; it is only the court which can fix the date for dissolution. As held in Banarsi Das v. Seth Kanshi Ram , it is not the date which is relied upon by the plaintiff which would be relevant for dissolution; and in spite of whatever date mentioned by him, it is the Court which has to fix it, and therefore, he cannot be prevented from relying upon Section 44 to seek for the relief of dissolution.
37. Yet another point taken is that, having resisted the claims of the defendants in regard to the preliminary issue about the character of the firm, and consequently, whether he has a right to seek for dissolution; he cannot in this appeal for the first time take up the point that irrespective of whether it is a partnership at will or otherwise, he can still secure relief under Section 44 of the Act. There being no alternative relief claimed in the plaint, he cannot be allowed to abandon his case and adopt a different claim based on what the defendants have stated in the written statement. Learned Counsel for defendants, submits that, mutually exclusive and destructive pleas cannot be allowed. Plaintiff must either stand on his claim that it is a partnership-at-will, or fail in the suit; and having not incorporated any alternate relief in the plaint, he has to file a fresh suit based on any allegation of mismanagement or on any of the grounds which could enable a partner to seek for the equitable relief under Section 44 of the Act. He relies upon the decision of this court in Subnmania Mudaliar v. Ammapet Co-op. Society , which holds that a plaintiff cannot be allowed to abandon his own case and then turn round and adopt that of the defendant and claim relief on that footing. It was a case in which plaintiff deposed that the entire terms of the contract were not communicated to him, and he was only informed about its acceptance; but later on wanted to plead by relying upon the defendant's case that the entire resolution was communication to him. Therefore, on a material factual point, when he came forward with contradictory claims, it was held that he cannot adopt the case of the defendant and seek for relief on that ground. No such contrary claim is made by the plaintiff herein on any factual aspect. The preliminary issue was confined to, for the purpose of finding out as to the character of the firm, in claiming dissolution, alongside, he had alleged about the acts of mismanagement in paragraphs 8 to 10, constituting further grounds for dissolution. When his claim is based on his rights under the partner-ship deed, he can seek for dissolution of the firm since it is a partnership at-will; and along with it, he has claimed that because of the acts of mismanagement, he has a right to seek for dissolution, which would come under Section 44. Hence there is no mutually destructive or exclusive plea put forth by him, whether it is the one or other ground relief claimable is only dissolution.
38. The other decision relied upon by defendant is reported in Govindaraj v. Kandaswami Goundar . This was relied upon in the earlier decision. It was a case in which plaintiff claimed that there was a partnership relationship between himself and the defendants but on defendants claiming that they were only agents of the plaintiff, he turned round and claimed relief on that footing. This was rightly rejected by the learned Judge.
39. Yet another decision taking this view is Nagayasami Naidu v. Kochadai Naidu (1970) 1 M.LJ. 105 in which it was held that it is only the clear admission of the opposite party in the pleadings that could be relied upon to award relief on a basis different from one covered by the issues on which parties went to trial.
40. The last of the decisions on this aspect is L.Balamukundas v. Kothandapani A.I.R. 1971 Madras 422 wherein the learned Judge of this Court held that it is not open to a plaintiff who came to the Courts with a specific case and with a specific ground of relief, to go back upon them and abandon the same and seek to claim the same relief on the facts alleged by the defendant. No such situation has arisen in the instant case, and therefore, none of these decisions have any relevance, and hence, on this point, it is held that by agreeing for the preliminary issue to be framed, plaintiff had not been deprived of his right to claim relief along side, under Section 44 of the Partnership Act.
41. Yet another point taken is that, it is for the first time in this appeal a plea, is put forth that whether it is a partnership at will or otherwise still the plaintiff could seek for relief under Section 44; and therefore, such a stand cannot be allowed to be taken and that too at a time when the learned Counsel for the plaintiff had chosen to argue this point in reply to the arguments made by learned Counsel for the defendants. It is a fact that learned Counsel for the plaintiff while presenting the case, has confined it to the main point about the character of the firm, which had led to a litigation to last for 10 years until now; and after the learned Counsel for the defendants dealt with that point, it was submitted that even if for any reason, it is held that the partnership firm is one of duration, still there are several allegations already incorporated in the plaint, which entitles the plaintiff to invoke Section 44, and without going into the merits of the same, the suit could not have been dismissed. He submitted that, if on the point already argued, a decision could be made for the suit to be taken up for hearing, it will be unnecessary to deal with the applicability of Section 44 at this stage because it would in any event be available during trial of suit. When plaintiff has asked for dissolution, there is no need to have an alternate prayer stating that dissolution is asked for, under Section 44 of the Act as well.
42. It is not correct, as claimed by defendants, that Section 44 aspect is being considered by this Court, considerable arguments had been advanced as to whether plaintiff could maintain the suit under Section 44 or not? Three pages of its judgment deal with the applicability of Section 44. Plaintiffs counsel had relied upon three decisions Sanjeevaraya Chetty In res. A.I.R. 1954 Mad. 8 A.I.R. 1978 Notes of Cases 25 P.M.T. 13 and Sardar Hardutt Singh v. Muktha Singh A.I.R. 1973 J. & K. 46. Defendant's Counsel had relied upon Gur Dayal Prasad v. L. Raghunath Prasad A.I.R. 1976 All. 141 and S.G Desai v. Director or Education Pondicherry (1970) 1 M.L.J. 517. The learned trial Judge had arrived at a curious reasoning as here under:
...Thus to reach the ultimate situations of a complete breakdown among the majority of partners, there is a long distance to travel before which stage effective and satisfactory solutions are contemplated by providing suitable remedies in the agreement of partnership itself which are to be considered in depth and spirit of law. To that limited extent it is reasonable to hold that Section 44 of the Act is suspended in its operation and jurisdiction, whereby the court will hesitate to hasten disastrous consequences just for the sake of satisfying personal animosity and vendetta of a lone partner. These aspects do not appear to have been dealt with and discussed in the above case laws cited-by the plaintiff counsel, whereas the defendant's counsel placed reliance to the following authorities which fortify the views of this court.
After relying upon S.G.Desai v. Director of Education, Pondicheny (1970) 1, M.L.J. 517, the learned trial Judge held that the facts and principles laid down therein directly applies to the present case for considering the maintainability of the suit. It is regrettable that in spite of such a point taken and considered by the trial Court, defendants have chosen to raise an objection of this nature.
43. It is pointed out by plaintiff that even before the learned Judge of this Court, arguments had been advanced relating to the applicability of Section 44, and for which purpose, he had relied upon the written arguments submitted before Court. To prevent any reliance being placed upon it, defendants relied upon State of Maharashtra v. Ramdas Srinivas Nayak dealt with a case wherein written submissions made to the Court were relied upon to prove certain claims made as to what had happened during the. course of the proceedings; and it was held that what are recorded in the judgment by the learned Judge as to what had transpired in Court cannot be allowed to be disputed. Hence it is submitted that written arguments submitted before the learned Judge cannot be relied upon to plead, that the rights under Section 44 were canvassed before him. This objection raised is purposeless is clear from what are stated in the next para as well.
44. On reading the judgment of the learned Judge, straightaway, it is made out that this point was argued before him, because in para 13, learned Judge says:
Therefore, it is argued that the only remedy for the appellant/plaintiff will be to ask for dissolution of the firm as contemplated under Section 44 of the Indian Partnership Act...
Again in Para. 14, it is stated:
...Now, the stand taken by the plaintiff is that whatever be the provisions under the French Code, the plaintiff is entitled to file the suit for dissolution of partnership under Section 44 of the Indian Partnership Act...
Hence, it would not be correct on the part of the defendants to claim that the applicability of Section 44 is canvassed for the first time in this appeal.
45. Against it is claimed that the relief of dissolution based upon the character of the firm as a partnership-at-will, and the relief claimed under Section 44 of the Act, are mutually exclusive and destructive pleas, because the relief claimed under Section 7 read with Section 43 is a legal right, whereas the relief claimed under Section 44 is an equitable relief, and hence without amending the plaint, no relief under Section 44 can be granted. To show that relief of dissolution under Section 44 is discretionary and could be exercised only if it is found to be just and equitable; learned Counsel for the defendants, would first refer to Hind Overseas v. R.P. Jhunjhtinswalla dealt with the scope of not only Section 433 of the Companies Act, but also the scope of Section 44(g) of the partnership Act. It was held that the Court should see that a 'prima facil case' has been made out, before it is admitted on the allegations in the petition. There must be material to show that when "just and equitable clause" is involved, that it is just and equitable not only to the persons applying for winding up but also to the company and to all its shareholders.
46. At page 584 of the Thirteenth Edition of Lindley on Partnership, it is stated as follows:
Before considering the particular case mentioned in the Partnership Act, 1890 in which the court may decree a dissolution of partnership, it is to be observed that the Act has given the court a wide discretion, and though in exercising that discretion it will no doubt be guided by previous decisions, the court will not be bound to dissolve a partnership ex debito justice in any of the cases mentioned in Section 35 of the Act.
47. These decision deal with the scope of Section 44, and it is not the claim of the plaintiff that as of legal right by making averments in paragraphs 8 to 10, he could seek dissolution of the suit partnerships firm. He had relied on two instances mentioned in plaint and has asked the Court to consider whether relief could be granted under Clauses (d) and (g) of Section 44 so that the Court may fix a date for dissolution. The dissolution asked on this basis will not in any manner result in inconsistent contentions being raised because, when a party is entitled to the same relief on more than one ground, he can always rely upon different grounds for the same relief. In Firm Srinivas Ram v. Mahavir Prasad It was held that a plaintiff may rely upon different rights alternatively, and there is nothing in the C.P.C. to prevent parties from making two or three inconsistent sets of allegations and claiming relief thereunder in the alternative. It was further held that a Court cannot grant relief on a case for which there was no foundation in the pleadings, but when the alternative case which the plaintiff could have made, was not only admitted by the, defendant in his written statement but was expressly put forward as an answer which the plaintiff made in the suit, then there is nothing improper in giving the plaintiff to a separate suit, relief could be granted in the same suit, if an alternative plea is put forth. When such an approach could be made; in the instant case, for the same relief, when law permits the plaintiff to rely upon more than one factor or circumstance or rights, there is no question of any mutually inconsistent or destructive pleas put forth by plaintiff. In para 10 of the plaint, he had referred to the formation of a Private Limited Company, which had resulted in wrongful loss and deprivation of legitimate benefits of the partnership to the plaintiff; and as the actual transfer took place in July, 1978, he has filed the suit on 17th August, 1978 seeking for dissolution. This claim is submitted in the written statement filed by defendants, and in paragraphs 11 and 12 of the written statement, it is claimed that the change in the constitutional set up of firm does not affect the position of the plaintiff, and by the company taking over the assets, the plaintiff would become a share-holder in the company in the same proportion in which he had shares in the partnership firm. A reading of these paragraphs shows that the partnership had virtually been abandoned. Plaintiff as a partner claims that this was done without his consent. Defendants would state that first defendant signed on behalf of the firm, he being the eldest, and the third defendant, the Managing Director of the company signed on behalf of the company. It is not the claim of the defendants that they have obtained any written consent from the plaintiff. In paragraph 11, it is stated:
There was no necessity for any formal writing of this proposal since it was done by mutual discussions and consent...
The two agreements having been filed, fifth defendant company had tried to justify the transfer and claimed we have acquired the rights in the partnership firm. All these go to show that a 'prima facie' case is made out that Clause (g) of Section 44 is applicable to the facts of this case, and to protect the interests of the plaintiffs share in the partnership firm, it will be necessary to entertain the suit, to be disposed of on merits regarding other issues. Hence, on this ground also, plaintiff succeeds.
48. Yet another contention put forth is that, plaintiff has to elect when he claims under different heads for dissolution of the partnership firm. The decision of this Court in R.S. Vijayam v. Srinivasa (1956) 1 M.L J. 276 : A.I.R. 1956 Mad. 301 is relied upon by defendants to claim the mutually contra-' dictory pleas cannot be put forth, It was a case in which the mortgagor has treated the tenant as holding under him and sought relief on that footing in the eviction proceedings. Later on, when he started asserting that there was no tenancy relationship, but it was one of wrongful occupation, which entitles the mortgagor to claim mesne profits; it was held that he was precluded by his election in so doing.
49. Yet another decision relied upon is Gopinath v. Chunnilal A.I.R. 1953 Nag. 316 wherein a Division Bench took the view that defendants having contested the suit that the will was a forgery, cannot subsequently put up an alternative plea of undue influence.
50. A passage at page 304 of The Law Relating to Estoppel by Representation by Spencer Bower and Turner (Second Edition) is relied upon and which is as follows:
...It very frequently happens that a party litigant is confronted with the necessity of immediately making a definite choice between two possible courses of action which are mutually exclusive. Whenever this occurs, the general rule of estoppel by election comes into play; that is to say, if by words, or (as is almost invariably the case) by conduct or inaction, he represents to the other party litigant his intention to adopt one of the two alternative and inconsistent proceedings or positions, with the result that the latter is thereby encouraged to adopt or persevere in a line of conduct which he otherwise would have abandoned or modified, as (as the case may be) to change tactics from which he otherwise would never have deviated, the first party is estoppel, as against his antagonist, from resorting afterwards to the course or attitude which, of his free choice, he has waived or discarded...
51. As repeatedly pointed out, when mutually inconsistent or destructive pleas had not had been put forth and for the same relief when more than one ground available in law having been pleaded in the plaint; there is no question of election to be made by the plaintiff.
52. Yet another hurdle put forth is that, plaintiff has come forward with a false claim that his consent had not been obtained for constituting the Private Limited Company, when in fact, he had actively participated in the discussions, and shared the enthusiasm in the formation of the limited company and the follow up action; he cannot secure any relief under Section 44, because it is a discretionary relief which cannot be extended to a person who conies to Court with unclean hands. The question whether plaintiffs consent was obtained or not, had not been gone into at all by the Courts below. .
53. Reliance is placed on the Division Bench decision of this court in Subbarayalu v. Tatayya 1937 M.W.N. 1158, which arose under the Specific Relief Act, and it was held that plaintiff was not entitled to specific performance because he gave false testimony about passing of consideration. It was further held that a court of equity would never extend relief to such a person. At a time when no evidence had been recorded, reliance is placed on a decision of this nature, which goes to show how desperate the defendants are to prevent the plaintiff on one ground or other, from seeking the relief, and to prevent the Court from holding a full-fledged trial.
54. Yet another plea put forth is the so called admission by plaintiff that it is a partnership with a duration. It is contended that in para 4 of the plaint, he has stated that the partnership will last so long as there are two partners, and this stand is destructive of the claim that it was a partnership at-will. In the plaint filed for dissolution of a partnership firm, it is necessary for the plaintiff to summarise some of the terms and conditions of the partnership deed. In drafting a plaint, a Counsel may choose to incorporate the entirety of the agreement of reproduce only relevant clauses or summarise them to the best of his ability. The condensed manner of summarising it ineptitude by a Counsel would never be misconstrued as a stand taken by the plaintiff about the nature of the partnership. Para 4 is confined only to summarising some of the clauses in the deed. It is unfortunate that a paragraph of this nature should have been relied upon in every Court to claim that plaintiff himself had pleaded that it is a partnership with duration limited by the terms contained therein.
55. Therefore, for all the reasons above stated, the suit partnership firm is a partnership-at-will, and therefore, in law, the plaintiff can seek for it's dissolution, and the rights of parties are governed by the Indian Partnership Act, and that the alternative ground relied upon under Section 44 of the Indian Partnership Act has also to be gone into by the trial Court on merits. Therefore, the suit as filed is maintainable, and now it is for the trial Court to take up the suit on it's file and dispose it off on merits, on other issues involved in the suit. Since ten long years have rolled by, it is just and proper to direct the trial Court to dispose of the suit within four months from the date of receipt of the steno-copy of this order.
56. The appeal is therefore allowed with costs. Counsel fee Rs. 2,500.