Andhra HC (Pre-Telangana)
Mavuri Manikyam (Died) By Lrs. And Anr. vs G. Hanumanth Rao on 11 April, 2007
Equivalent citations: 2007(4)ALD515
JUDGMENT S. Ananda Reddy, J.
1. The legal heirs of the first defendant and the 2nd defendant are the appellants herein and the appeal is directed against the judgment and decree passed by the III Additional Chief Judge, City Civil Court, Hyderabad AS No. 145 of 1992, dated 31-12-1996, under which the judgment and decree passed by the 9th Assistant Civil Judge, City Civil Court, Hyderabad in OS No. 3185 of 1983, dated 20-4-1992, dismissing the suit was reversed and decreed the suit. The parties are referred as arrayed in the original suit.
2. In the second appeal, the appellants raised the following questions of law as substantial questions of law arising out of the judgment and decree of the lower Appellate Court:
(1) Whether Ex.B-1, an undertaking signed by all the parties at the time of dissolution of partnership after settlement of accounts requires registration under Section 17(c) of the Registration Act?
(2) Whether the plaintiff ceased to have any interest in the assets and other properties left to deceased Defendant No. 1, in lieu of the amounts due and payable by the plaintiff and defendant No. 2 under Section 48 of the Partnership Act on dissolution of the partnership firm?
(3) Whether the admissibility of Ex.B1 can be questioned, after it was marked without any objection during evidence?
(4) Whether the Defendant Nos. 3 and 4, the legal representatives of the deceased Defendant No. 1 can be made liable to render accounts of the firm of which deceased Defendant No. 1 was partner before dissolution, in the absence of Defendant Nos. 3 and 4 being taken as partners of the firm in the event of the firm not being dissolved?
3. The brief facts of the case are:
The plaintiff and defendants 1 and 2 were the partners of the firm M/s. Jagadamba Trading Company, located in the premises Mulgi No. 5-2-200/A-B of New Osman Gunj, Hyderabad, which came into existence on 29-9-1972. The plaintiff and defendants were dealing with grain, pulses oil etc., and were also acting as Commission Agents. Initially the partnership deed dated 15-11-1972 was executed by all the partners. Subsequently, they have executed another partnership deed dated 18-9-1980. The said partnership business was carried on upto 2-3-1982 and was orally dissolved on 3-3-1982 with the consent of the partiers to the suit. The account books of the said partnership firm and business are with the defendants. The defendants promised to render the accounts for ascertaining the profit and loss, but they did not do so. Ultimately, the defendants handed over a deed of dissolution of the partnership. The plaintiff did not see the said deed, as the defendants have not rendered the accounts, nor they have given any balance sheet for the period from 23-11-1980 to 2-3-1982, and it is not mentioned in the dissolution of partnership deed about the agricultural land of Acs.6-09 guntas bearing Sy. No. 273/1 at Nandigam Village, Sangareddy Taluk, Medak District, in which the two firms, M/s. Narsing Traders of Mukthiergunj and M/s. B. Jagadamba Trading Company (dissolved firm) have equal shares. Therefore, the plaintiff got issued a notice dated 26-7-1983 through his Advocate requesting the defendants to send the balance sheet and asked them to clarify the above agricultural lands. But the defendants instead of complying with the request of the plaintiff flatly denied in doing so. The defendants are liable to render accounts of the partnership firm for ascertaining the profit and loss for which the plaintiff is entitled. It is further stated that the dissolved firm has not sustained any loss but gained sufficient profit. Therefore, the defendants are avoiding to render the accounts of the dissolved partnership firm. Hence, the plaintiff is entitled to sue, and the defendants are liable to answer.
4. On behalf of the defendants, a written statement was filed admitting the fact that the plaintiff and the defendants were the partners of the firm, which was constituted under the partnership deed, dated 15-11-1972. It is also stated that another partnership deed dated 18-9-1980 was executed only to reduce the rate of interest on the capital investment as far as this defendant recollect and the said partnership deed is not in possession of the defendants, which might be with the plaintiff. As disputes between the partners have arose, first the 2nd defendant and subsequently the plaintiff also expressed their desire to retire from the firm. All the partners were not reaching to any amicable settlement in that regard and there was also a dispute and claim of M/s. Narsingh Traders about me land admeasuring 6 acres 09 gutnas referred to earlier, which was originally belongs to one Gandam Veerappa and others, who were the customers of the said partnership firm to which they were due a sum of Rs. 7,076-87 paise, and they further took a sum of Rs. 2,812-86 paise in cash through the said Veerappa. Thus, they were in all due and liable to pay the total sum of Rs. 9,889-73 paise to M/s. B. Jagadamba Trading Company and similarly the said persons were also due Rs. 2,560-27 paise to M/s. Narsing Traders. As the said customers were unable to pay the dues, in proportion to their dues in discharge of their respective liabilities, they have transferred the above said 6 acres 9 guntas of agricultural land by registered sale deed dated 21-6-1978. In pursuance of the said understanding this defendant made expenses of Rs. 3,750/- for the purchase of the stamps for the said sale deed and Rs. 1,498.40 paise for other expenses for registration, and to and fro charges etc., in total Rs. 15,078.13 paise. In pursuance of the said understanding M/s. Narsing Traders have claimed a sum of Rs. 15,078-13 paise and Rs. 2,560-27 paise towards interest. Therefore, differences and disputes between the defendants and other partners of the firm arose regarding the assets of the firm and also about the above said land. So the parties referred the matter to twelve mediators. During the settlement before the mediators, the plaintiff was found due huge amount to the defendants. Thus, to accommodate the plaintiff, it was agreed that all the assets of the firm, including the said land and the interest of M/s. Narsing Traders would stand transferred to this defendant in settlement of his claim and the plaintiff will settle and pay the amounts of M/s. Narsing Traders, for which M/s. Narsing Traders through its partners agreed as referred to before the said mediators. It is stated that in the presence and on the advise of the said mediators, it was agreed and decided on 5-3-1982 that the firm M/s. Jagadamba Trading Co., would stand dissolved from 5-3-1982 and the entire assets including the said agricultural land measuring Acs.6-09 guntas in Sy. No. 273/1 of Nandigam Village were given to the share of this defendant, as the investment of this defendant and all the persons, who invested at his instance and responsibility for which he undertook to make the payments to exceed the profits. At the time of the settlement, the plaintiff and defendant No. 2 were found due huge amounts to this defendant. Thus, all the rights, claims and interest of other two partners of M/s. Jagadamba Trading Co., were transferred and assigned to this defendant since the firm was dissolved and even the interest of M/s. Narsing Traders to compensate this defendant for the dues of the plaintiff. So the entire land was transferred and assigned to this defendant and this arrangement was reduced in writing and signed by all the partners. All the title deeds and possession of the said agriculture land of 6 acres 9 guntas in Sy. No. 273/1 of Nandigama Village were given and delivered to this defendant, and since then this defendant is in exclusive possession and enjoyment of the said land and paying land revenue as sole and absolute owner. It is stated that even other partners have agreed to execute the required document in favour of the 1st defendant in respect of the land as and when demanded. The said original dissolution deed is still with the plaintiff, wherein all the details of the terms agreed and settled between the parties for dissolution of the partnership firm are mentioned. Therefore, it is claimed that there is no further question of accounting of the profits and losses of the firm. The defendants have denied the allegation that the defendant No. 1 handed over a deed of dissolution dated 26-2-1983 to the plaintiff. In fact, the alleged deed was brought by him and he represented to the defendant that it is in accordance with the settlement and decision made before the mediators on 5-3-1982. Therefore, the defendant sought for dismissal of the suit, since the disputes have already been resolved.
5. It is stated that subsequently, the 1st defendant died during the pendency of the suit. The trial Court after framing appropriate issues recorded evidence. On behalf of the plaintiff, plaintiff himself alone was examined as PW-1 and marked Exs.A-1 to A-10; while on behalf of the defendants, Defendant No. 1 was examined as DW-1 and defendant No. 2 was examined as DW-2, and some of the mediators were examined as DWs.3 to 5, and marked Ex.B-1 on their behalf. The trial Court after considering the evidence, both oral and documentary as well as the contentions, has come to the conclusion that the document Ex.B1, which was executed between the partners as claimed by the defendants in the presence of mediators, as per their settlement, is only an undertaking under which the plaintiff has given up his claim against the firm including the claim with reference to the amounts referred to in the pleadings, and it was even agreed to execute a regular document for transferring the title with reference to the above amounts as and when demanded by the plaintiff. In view of the execution of the said document as per the settlement of the disputes with reference to the accounts of the firm in the presence of 12 mediators, who have signed Ex.B1 in proof of their settlement, the question of further settlement of the accounts or being accounted does not arise. Therefore, the trial Court dismissed the suit.
6. Aggrieved by that, the plaintiff carried the matter in appeal reiterating his contentions and the sole point that was framed by the Appellate Court was whether the defendants are liable to render the accounts of the partnership firm as claimed by the plaintiff. The Appellate Court on appreciation of the evidence found that Ex.B1 is a relinquishment deed, relinquishing the rights of the plaintiff in the partnership firm, including the immovable property, which was the property of the partnership firm. Therefore, the said document requires registration as well as stamp duty. For want of the above two aspects, the said document cannot be relied upon since it is inadmissible document. Therefore, the Appellate Court reversed the findings of the trial Court. Further, on appreciation of evidence, the Appellate Court has come to the conclusion that the defendants did not adduce evidence showing that the accounts were settled by reference to any entries that have been made either in the books of accounts, which were got seized during the pendency of the proceedings, and therefore, decreed the suit directing the defendants to account for the profits and loss of the firm for the period for which it was sought for by the plaintiff. Aggrieved by that, the present second appeal is filed.
7. The learned Counsel for the defendants contended that the lower Appellate Court has committed an error in coming to the conclusion that Ex.B1 is an inadmissible document. It is contended by the learned Counsel that it was never the case of the plaintiff that Ex.B1 is inadmissible in evidence. Not even a plea was raised as to the admissibility of the said document. Further, as the said document was already admitted in evidence, and marked as an Exhibit, the Court below is not entitled to look into the issue as to its admissibility or otherwise of the said document. The learned Counsel also contended that the disputes as to the accounts of the firm in question were considered in the presence of 12 mediators, who are the signatories to Ex.B1, apart from all the three partners. The plaintiff has signed admitting that he has no claim with reference to the firm, and further even with reference to the firm's property, it is decided and agreed that the property is to be given to the 1st defendant for which a document was agreed to be executed by the other partners, as and when demanded by the 1st defendant. In view of the said circumstances, it is not open to the plaintiff to contend that Ex.B1 is an inadmissible document. The learned Counsel also contended that it is only with regard to the settlement of the disputes between the parties, whereunder the plaintiff has agreed not to make any claim from the firm, as is claimed by the defendant No. 1 that his investment was more, and in fact, the plaintiff has already withdrawn the amounts from the firm. Therefore, he was due to the firm itself. Same is the case even with reference to the 2nd defendant. Taking into account all these aspects into consideration in the presence of the mediators, who are 12 in number and belongs to the same business community, Ex.B1 was executed. When once the plaintiff has accepted that his claim was settled, it is not open to him to go back and claim that still he is entitled to demand for settlement of the accounts. The learned Counsel also contended that though Ex.A-10 is stated to have been executed or signed by defendants 1 and 2, the same would not lead to anything as it is also the reiteration of the dissolution of the firm and even under the said document it was not shown that the plaintiff is entitled for any amount payable by the defendants. Therefore, the learned Counsel contended that the view taken by the Court below is illegal and unsustainable. The learned Counsel also contended that since Ex.B1 was already admitted in evidence without any objection by the plaintiff, it is not open either to the plaintiff or even to the Court to hold that the said document is inadmissible in evidence. Therefore, the learned Counsel sought for setting aside the impugned judgment and decree under appeal.
8. The learned Counsel for the appellants/defendants, in support of her contention that it is not open to the Court below to hold that Ex.B1 is inadmissible, relied upon the following decisions:
P.C. Purushothama v. S. Perumal ; Uma Devi v. Shaik Hussain ; Javvadi Koteswara Rao v. Sonti Sambasiva Rao and Shyamal Kumar Roy v. Sushil Kumar Agarwal 2007 (1) ALD 38 (SC).
9. The learned Counsel for the respondent/plaintiff, on the other hand, sought to sustain the judgment and decree of the Appellate Court. The learned Counsel contended that though the firm is claimed to have been dissolved on 3-3-1982, Ex.B1 was executed among the partners, where it was agreed that the plaintiff would have no claim against the other defendants in respect of the firm's assets, including the profit and loss; where it was even recorded that the firm is dissolved with effect from 5-3-1982. But, however, when the immovable property was proposed to be transferred or in respect of which the plaintiff had proposed to give up his right and interest in the said immovable property under Ex. B1, since the said document was not properly stamped and registered, it is inadmissible. Therefore, the Court below was right in coming to the conclusion that the said document is inadmissible and cannot be relied upon by the defendants. The learned Counsel also contended that on appreciation of evidence, the Appellate Court has come to the conclusion that there is no evidence of any sort showing the accounts were taken up between the parties and after looking into the accounts they were settled between the parties, and in the absence of any such evidence, the claim of the defendants that the accounts are settled or the disputes are resolved is clearly devoid of any merit. Therefore, the same is liable to be rejected. The learned Counsel also contended that since the lower Appellate Court recorded its findings based on the material on record, the said findings do not call for any interference, and therefore, sought for dismissal of the second appeal.
In support of his contentions, the learned Counsel for the respondent/plaintiff relied upon a decision of this Court in Raghavareddi v. Venkatareddi .
10. Heard both the learned Counsel and considered the material on record.
11. The issue that arises for consideration is whether the lower Appellate Court was right in holding that Ex.B1 is inadmissible in evidence, and therefore, there is no settlement of accounts and accordingly the plaintiff is entitled to seek rendition of accounts by the defendants?
12. The majority of the facts, as narrated above, are not in dispute. The plaintiff as well as the defendants are the partners in the firm M/s. Jagadamba Trading Company. They have carried on business and it is also not in dispute that disputes arose among the partners in the year 1982, and therefore, orally the partnership firm was dissolved on 3-3-1982 with the consent of the parties. In order to settle the disputes among the partners, the partners have invited as many as 12 mediators, who are the signatories to Ex.B1. In the presence of the said 12 mediators, who belong to the same business community, the disputes were settled and Ex.B1 was executed in their presence with the consent of the parties to the dispute. In Ex.B1 it was clearly stated that the said document was executed with their free will, giving up the rights of the plaintiff and the 2nd defendant in favour of the 1st defendant. It was also agreed that the land, which was with the firm is also being given to the 1st defendant. Further, as and when required, it was agreed to execute a registered document in favour of the 1st defendant. Therefore, it is clear that both the plaintiff and the 2nd defendant have given up their right in the partnership firm in view of the respective claims including the goodwill of the business and with reference to the land of the firm, it was also given to the 1st defendant, and further it was agreed to execute necessary registered document in favour of the 1st defendant. The said document was signed not only by three partners but also by the mediators. Some of them are stated to be closely related to the plaintiff, like his brother and brother-in-law. The said document when filed on behalf of the defendants, it was not disputed and admitted in evidence by marking the same as an exhibit. The trial Court after considering the rival contentions has come to the conclusion that the said agreement is only an undertaking, whereby the plaintiff and the 2nd defendant have agreed to execute necessary document with reference to the immovable property of the firm, while at the same time giving up their rights with reference to the profits and losses of the firm, including the goodwill. The lower Court took the view that Ex.B1 was only an undertaking, and dismissed the suit holding that when the plaintiff has agreed to give up his claim against the firm, for further rendition of the accounts, the suit is not maintainable. But, when it comes up before the lower Appellate Court, a new ground was raised that Ex.B1 was inadmissible in evidence for want of registration and stamp duty. In fact, that was not the ground raised even in the plaint The lower Appellate Court, however, found favour with the plaintiff relying upon a judgment of this Court in Raghava Reddi v. Venkata Reddi (supra), where a learned Single Judge of this Court while considering a document, styled as 'partition deed or an award', held that since the document is an unregistered document, either treating it as partition deed or as an, award, it requires to be registered as the value of the property involved in the said document was exceeding Rs. 100/-. It was held that the transaction of partition is invalid. Therefore, it is not a question of admissibility of the document, but validity of the transaction. Therefore, it was held that the said document cannot be relied upon. Basing on the said decision, the lower Appellate Court has come to the conclusion that Ex.B1 is an invalid document and therefore, cannot be relied upon.
13. However, the learned Counsel for the appellant relied upon the judgments referred to earlier:
In P.C. Purushothama v. S. Perumal (supra), it was held by the Apex Court that it is not open to a party to object to the admissibility of documents, which are marked as exhibits without any objection from such party. When once a document is properly admitted, the contents of that document are also admitted in evidence, though those contents may not be conclusive evidence.
In Uma Devi v. Shaik Hussain (supra), a learned Single Judge of this Court while considering a document stated to have been executed by the plaintiff in favour of the defendant, under which the terms of settlement was arrived at by the parties through the intervention of the mediators was recorded, where it was acknowledged by the plaintiff the receipt of Rs. 36,300/-. The document specifically recites that hereafter the executant of the document shall not have any concern with the land which is the subject-matter of the suit and that Ramanujam, the defendant in the suit shall be in possession and enjoyment of the suit property along with his other properties. It was also recited if the defendant Ramanujam, desires to have a registered deed, the plaintiff shall execute and register a proper deed, whenever demanded. While considering the said document, the learned Single Judge of this Court has come to the conclusion that no rights or interest in the property are transferred or relinquished, and therefore, the said document does not require any registration or stamp duty, and therefore, the said document is admissible in evidence. It was held that the nomenclature given to the document is not decisive.
In Javvadi Koteswara Rao v. Sonti Sambasiva Rao (supra), a learned Single Judge of this Court, while considering the admissibility of an unregistered agreement of sale in a suit for specific performance of an agreement, after referring to the provisions of Section 17 as well as Section 49 and also after referring to earlier decision of this Court in Dadi Reddi Sivanarayana Reddy v. Kasi Reddi Chinnamma , held that the agreement in question does not require registration and it can be marked on behalf of the plaintiff in the suit, which was filed for specific performance of agreement of sale.
In Shyamal Kumar Roy v. Sushil Kumar Agarwal (supra), the Apex Court while considering the provisions of Stamp Act, as amended by the State of West Bengal Amendment Act, with reference to an agreement to develop the property. In a suit for specific performance of a Development Agreement, the agreement was filed and exhibited without any objection on the part of the appellant. Parties adduced their respective evidence. Subsequently, applications filed by appellant for recalling order admitting Development Agreement and for sending the same to Collector for impounding thereof, which was rejected and confirmed by the High Court in revision. On appeal, the Apex Court while confirming the order, held that the objection a regards admissibility of a document, specifically required to be taken that it was not duly stamped. On such objection only, the question is required to be determined judicially. If no objection had been made by the appellant in regard to the admissibility of the said document, he, at a later stage, cannot be permitted to turn round and contend that the said document is inadmissible in evidence. Appellant having consented to the document being marked as an exhibit has lost his right to reopen the question. What was necessary was that the document should be marked in the presence of the parties and they had an opportunity to object to the marking of the document. The question of judicial determination of the matter would arise, provided an objection is taken when document is tendered in evidence and before it is marked as an exhibit in the case. After referring to Section 36 of the Stamp Act, it was observed that the same categorically prohibits a Court of law from reopening a matter in regard to the sufficiency or otherwise of the stamp duty paid on an instrument in the event the same has been admitted in evidence.
14. On the other hand, the learned Counsel for the plaintiff relied upon a decision of this Court in Raghavareddi v. Venkatareddi (supra). A reference to the above judgment makes it clear that the learned Single Judge of this Court rejected the document on the ground that the transaction that was affected under the document was invalid and not on the ground of inadmissibility of the document.
15. In view of the above decisions of the Supreme Court, wherein it was held that once a document is admitted, the admissibility cannot be reopened, and the contents of the document are also admitted in evidence. Further, as rightly held by the trial Court, under Ex.B1 the plaintiff as well as the 2nd defendant have given up their claims against the firm, including the goodwill. It is nobody's case that there are any other immovable properties, except the agricultural land referred to in Ex.B1. With reference to the rights in respect of the said agricultural land, which is an immovable property, it was specifically agreed that the parties would execute a registered document in favour of the 1st defendant as and when demanded or required by the 1st defendant. In the light of the above, it is clear that under Ex.B1 no interest or rights in the immovable property are transferred. On the other hand, the claims of other partners with reference to the partnership firm were given up in view of the settlement of their claims before the mediators. May be, there is no specific evidence stating that the accounts are settled. If the accounts ate not settled, how the plaintiff has signed the said document giving up his right and claim against the firm. It is not the case of the plaintiff that he was coerced or under undue influence Ex.B1 was obtained, and in fact, there is no explanation on the part of the plaintiff as to how Ex.B1came to be executed. It is the plaintiff, who has come to the Court, who has to explain how Ex.B1 was executed and why Ex.B1 cannot be acted upon. On the other hand, the lower Appellate Court proceeded throwing the burden on the defendants that the defendants did not show any evidence about the settlement of the accounts by making endorsement either in the books of accounts or in any other document. No doubt, none of the parties have stated what was the material placed before the mediators and how the claims were settled. But, merely, the details of the materials that were placed before the mediators were not disclosed, by that, the settlement that was effected under Ex.B1, would not become ineffective or can be ignored. The parties at their free will have executed Ex.B1 as per the settlement that was arrived at between them in the presence of 12 mediators, some of them were even examined as DWs.3 to 5, and some of the mediators are even closely related to the plaintiff. Under the above circumstances, the lower Appellate Court was not justified in setting aside the judgment and decree reversing the judgment of the lower Court, especially on the ground that Ex.B1 is inadmissible in evidence.
16. Under the above circumstances, the judgment and decree of the lower Appellate Court is reversed; and the judgment and decree of the trial Court dismissing the suit is restored.
17. The second appeal is accordingly allowed. However, there shall be no order as to costs.