Kerala High Court
K. Balakrishnan Nair And Anr. vs K. Gopalan Nair on 18 November, 2003
Equivalent citations: AIR2004KER271, AIR 2004 KERALA 271
Author: A.K. Basheer
Bench: A.K. Basheer
JUDGMENT S. Sankarasubban, J.
1. This appeal is filed by the defendants in O.S. No. 2 of 1996 of the Sub-Court, Koyilandy. Respondent is the plaintiff. According to the plaintiff, there was a partnership consisting of the plaintiff and the defendants under the name and style "Udaya Boarding and Lodging". The plaintiff was the Managing Partner. 50% of the share in the Firm was contributed by the plaintiff, 40% of the share was contributed by the first defendant and 10% was contributed by the second defendant.
2. According to the plaintiff, the Firm was running smoothly. But by 1991, the defendants obstructed the plaintiff from continuing as Managing Partner, which compelled the plaintiff to retire from the Partnership. According to the plaintiff, he was offered Rs. 9,95,205/- by mediators to be given by the defendants for his retirement from the Partnership. Towards that amount, Rs. 1 lakh was paid on 30-4-1991 and the defendant agreed to deposit the balance amount in the Canara Bank. But the defendants have not complied with. The plaintiff is still continuing as partner of the Firm.
3. The plaintiff filed a suit, O.S. No. 169 of 1994 for getting an order of permanent injunction against the defendants. Subsequently, that suit was withdrawn. No amount has been paid to the plaintiff by the defendants so far. The Firm is not properly run by the defendants. The defendants have not paid any share of profit to the plaintiff from 30-4-1991 onwards. The plaintiff is entitled to get back his 50% of share value and his share of profits from 30-4-1991.
4. The defendants filed a joint written statement. According to the defendants, they have never obstructed the plaintiff from functioning as the Managing Partner of the Firm. It is not correct to say that the plaintiff was forced to retire from the Partnership on account of the alleged obstructions and pressure exerted by the defendants. There was no agreement by the defendants to pay to the plaintiff an amount of Rs. 9,95,205.30. So also, there was no undertaking by the defendants to deposit a sum of Rs. 8,95,205.30 on 31-12-1991. The plaintiff had voluntarily retired from the Partnership and he retired accordingly from the partnership. A deed of dissolution on proper stamp papers was got prepared and executed by the plaintiff and the defendants, on 30-3-991 in the presence of witness. On the retirement of the plaintiff on 30-3-1991, the defendants continued as Partners of the Firm. The deed of dissolution came into force on 31-3-1991 and the defendants are the only partners of the Firm from 1-4-1991.
5. The fact of retirement of the plaintiff from the Partnership of the Firm was duly communicated to the Registrar of Firms and the change in constitution of the Firm has been accepted and recognised by the Registrar of Firms. The plaintiff, on retirement, has relinquished and surrendered all his rights and got absolved of the rights and liabilities as a Partner from 31-3-1991. He has agreed to settle the accounts later. But a provisional settlement relating to the accounts of the plaintiff was made on 30-4-1991 in the presence of M/s. C.P. Appukutty Nambiar and K. V. Sathya Narayana. The capital amount contributed by the plaintiff was Rs. 6,95,205.30. A sum of Rs. 5,88,000/-was paid by the first defendant to the plaintiff in cash on 30-4-1991. Towards the balance amount two cheques for Rs. 1,00,000/-drawn on the Canara Bank were issued by the first defendant to the plaintiff. The plaintiff has encashed those two cheques as admitted in the plaint. The balance amount on settlement of accounts was agreed to be paid by the first defendant to him within three months from that day. An agreement embodying the above terms was reduced in writing on proper stamp papers and executed by the parties in the presence of the above mentioned witnesses on 30-4-1991. The original of the agreement was retained with the plaintiff and a photostat copy of the same was delivered to the first defendant. The balance sheet of the Firm as on 31-3-1991 was prepared later in September, 1991. As per the accounts, the plaintiff was found to be entitled to a sum of Rs. 12,889.90 more in full settlement of his claim as a partner. As against the said amount, the plaintiff was paid a round sum of Rs. 15,000/- by means of a cheque dated 12-12-1992 issued by the second defendant in favour of the plaintiff and drawn on Canara Bank.
6. On the basis of the above pleadings, necessary issues were raised by the Court below. Exts. A1 and A2 were marked on the side of the plaintiff and Exts. B1 to B34 were marked on the side of the defendants. The plaintiff was examined as P.W. 1 and D.Ws. 1 to 3 were examined on the side of the defendants. Ext. XI is the Exhibit of the Court. The Court below found that the plaintiff was continuing as Partner. It found that the case set up by the defendants is not proved. The plaintiff was given a decree for Rs. 6,85,750/-. He is also entitled to get 50% of the share in the income of the Firm with effect from 30-4-1991. A preliminary decree was passed. It is against the above, that the present appeal is filed.
7. Learned counsel for the appellants, Sri. Sohan contended that Exts. B2 and B7 will convincingly show that the plaintiff has retired from the partnership and he was given his part of the share in the Partner -ship Firm. It is further stated that the case set up by the plaintiff is not true. On behalf of the respondent -- plaintiff, it was contended that the plaintiff has not signed either in Ext. B2 or in Ext. B7. Hence, they are not binding on him. He wanted to uphold the judgment of the Court below. Learned counsel for the appellants further contended that the suit is barred by limitation.
8. So far as the question of retirement of the plaintiff from the Partnership Firm is concerned, Ext. B2 will convincingly show that the plaintiff has retired. But he took the contention that the papers signed by him have been misused by the other partners for removing him from the Partnership. For this excepting for his interested testimony, there is no other evidence. According to us Ext. B2 has come into effect. The Registrar of Firms has been informed about the retirement of the plaintiff from the Partnership Firm. The plaintiff has not given any explanation as to why he gave signed blank papers. In the absence of any convincing evidence, we are of the view that the plaintiff retired from the Partnership Firm on the basis of Ext. B2.
9. We have already found, the partnership was dissolved as per Ext. B2. Then the question is with regard to the share of profit and the return of the assets prayed for by the plaintiff. So far as this aspect is concerned, according to the plaintiff, the defendants agreed to pay Rs. 9,95,205/- undertaking to deposit Rs. 8,95,205/- on 31-12-1991 and Rs. 1 lakh has been paid by the defendants. So far as the defendants are concerned, their case is that Ext. B7 was executed between the parties and as per that the amount fixed was Rs. 9,95,205.30. Out of this, Rs. 5,88,000/- was paid on 30-4-1991 by the first defendant to the plaintiff and for the balance amount, two cheques were issued. The Court below refused to take into account Ext. B7, which was only a photostat copy of the agreement.
10. P.W. 1 and DWs. 1 to 3 were examined. Learned counsel for the appellants submitted that they will be able to prove the payment of Rs. 5 lakhs and odd, if an opportunity is given to them. According to us, there is nothing to disbelieve the evidence of DWs. 1 to 3 with regard to the execution of Ext. B7 document. But so far as the payment of Rs. 5 lakhs and odd is concerned, excepting for the oral evidence, no documentary evidence has been produced to show for the payment of the above amount. It is at this juncture that learned counsel for the appellants prayed for an opportunity for proving this.
11. Learned counsel for the appellants further contended that the claim of the respondent is barred by limitation. He relied on two Articles of the Limitation Act, i.e. Articles 5 and 26. Article 26 of the Limitation Act states thus, "that for money payable to the plaintiff for money found to be due from the defendant to the plaintiff on accounts stated between them". We arc of the view that the claim made by the plaintiff will not come under this Article. Account stated imply that there must be reciprocal demands between the parties, i.e. where several cross-
claims are brought into account on either side and are set off against each other and a balance is struck. In this case, the relevant Article is Article 5. Article 5 of the Limitation Act states as follows :
For an account Three years The date of and a share of the disso- the profits of a lution dissolved partnership
According to the appellants, the Firm was dissolved on 30-3-1999 and the suit was filed beyond three years. Learned counsel submitted that this Article only applies for the share in profits and it does not apply for a share in the capital. But according to us, the contention raised by the plaintiff cannot be accepted. It has been stated in Rustomji on the Law of Limitation and Adverse possession. Seventh Edition at pages 562 and 563 thus :
"The expression "share of the profits" in Article 5 looks at first sight as if the Article were restricted to a claim for a share of the profits alone. But it is clear that the Article applies equally to a claim for a share in the capital. In other words, the Article covers a suit for a partnership account and to recover plaintiffs share of the assets and property of the partnership business".
Anyhow, the question of limitation was not raised before the Court below. Hence, we are not entering into a finding on this. We direct that the question shall be considered and decided by the trial Court.
12. In the above view of the matter, appeal is disposed as follows : (1) It is declared that the Partnership of which the plaintiff and defendants 1 and 2 were partners was dissolved by Ext. B2. (2) Ext. B7 is accepted in evidence. (3) The question whether Rs. 5 lakhs and odd was paid by the first defendants to the plaintiff is to be proved by the defendants by appropriate evidence. (4) The question whether the claim of the plaintiff is barred by limitation is to be considered by the Court below. The judgment and decree of the Court below are set aside and the matter is remanded for consideration of the two items mentioned above. Court fee paid on the memorandum of appeal be refunded to the counsel for the appellant.