Madras High Court
P. Venu Alias Venugopal vs Jeya And Ors. on 23 March, 1993
Equivalent citations: (1993)2MLJ434
Author: Pratap Singh
Bench: Pratap Singh
ORDER Pratap Singh, J.
1. These revision petitions are directed against the orders in C.M.A. Nos. 20 and 21 of 1992 on the file of Principal Subordinate Judge, Tirunelveli, in which the learned Subordinate Judge has allowed the appeals and thereby set aside the orders passed by him in I.A. Nos. 652 and 653 of 1992 in O.S. No. 154 of 1992 on the file of District Munsif, Valliyur.
2. Short facts are: The revision petitioner has filed O.S. No. 1 of 1992 on the file of District Munsif, Tirunelveli which was later transferred to the Court of District Munsif, Valliyur and re-numbered as O.S. No. 154 of 1992, for dissolution of partnership firm, carried on at Door No. 1, Periyar Bus Stand Buildings, Madurai Road, Tirunelveli Junction and at Stall at 2, platform in the Periyar Bus Stand buildings, Tirunelveli junction, for rendering real accounts of the partnership firm, for appointment of receiver and for interest on the misappropriated funds and for costs, against the respondents herein. He had also filed two petitions in I.A Nos. 652 and 653 of 1992 praying for temporary injunction, restraining the respondents from disposing of the leasehold rights and the goods of the firm till the disposal of the suit and for temporary injunction restraining the respondents from preventing the petitioner from conducting and participating in the administration and management of the said business respectively. Those petitions were opposed by the respondents. After hearing the parties, the learned District Munsif had passed a common order in which he had allowed both the petitions. Aggrieved by the same, these respondents had filed C.M.A. Nos. 20 and 21 of 1992 before the Principal Subordinate Judge, Tirunelveli. After hearing the parties, the learned Subordinate Judge allowed C.M.A. No. 20 of 1992 in part and thereby had given the modified injunction. The learned Judge allowed C.M.A. No. 21 of 1992 and thereby vacated the interim injunction granted in I.A. No. 653 of 1992 and had dismissed the said I.A No. 653 of 1992. Aggrieved by the same, the petitioner in the trial court has come forward with these two civil revision petitions.
3. Mr. G. Subramaniam, learned senior counsel, appearing for the revision petitioners, would submit that the plaintiffs case is that he is a partner of the firm under an oral agreement, that it is not in dispute that the petitioner is a partner of the firm, but according to the defendants, it was under a written agreement and the disputed region is only with regard to share and whether the petitioner was a partner under an oral agreement or under a written agreement. He would further submit that in para 4 of the written statement, it is averred that the firm was started including the plaintiff as a partner along with the defendants only on 21.9.1987 and the agreements setting forth the terms of the partnership was engrossed on stamp papers of the value of Rs. 70 on 2.11.1987 and was signed by the plaintiff and the defendants and in para. 7 of the written statement, it is stated that the defendants are always ready and willing at all material times to pay over such amount as standing to his credit in the accounts of the firm on his retirement from the firm or dissolution of the firm, and in para. 12 of the written statement, it is averred that the plaintiff, after filing the suit, still continues to attend the partnership firm business, transacts business at the Hotel itself and receives cash and does all acts as partner as he was doing earlier before the filing of the suit, and these averments would go to show that the plaintiffs status as a partner is admitted and his participation as partner is also admitted and in these circumstances, the prayer granted by the trial court ought to have been confirmed by the lower appellate court. He would further submit that the petitioner has got the benefit of injunction all through right from the time of filing of the suit and it may be permitted to continue and there will be no prejudice to the other side. He would further submit the lower appellate court had erroneously thought that service of summons along with the plaint would have the effect of the dissolution of the partnership and it is not correct. He would further submit that even if it is taken that the partnership was already dissolved from the date of service of summons with plaint on the defendants, till final winding up, the petitioner has got a right to participate in the business of the firm.
4. Per contra, Mr. P. Peppin Fernando, learned Counsel appearing for the respondents, would submit that in the typed set filed along with the counter-affidavit, he has filed the copy of partnership deed entered into between the petitioner and respondents on 2.11.1987 and that it is not the petitioner's case that his signature was obtained in any blank paper or stamp papers and it was utilised at a later point of time and this written agreement would show that the petitioner was only a working partner, that this agreement also provides for payment to him in the event of his retirement from the firm and as well in the event of the dissolution of the firm by virtue of Clause 14 in it and as per the said Clause 14, he is entitled only to the amount payable to him as per the accounts. Learned Counsel would further submit that he had also filed Form No. 11 submitted to the 3rd Income-Tax Officer, Tirunelveli, duly signed by the petitioner as well as respondents on 30.3.1988 and as per para. 2 of the same, the certified copy of the instrument evidencing the partnership was enclosed along with this Form No. 11 and that would prima facie vouch to the genuineness of the partnership deed referred to supra. He would further submit that even according to the plaintiff, the petitioner was in charge of the accounts and the plaintiff and 2nd defendant namely the petitioner and 2nd respondent herein, were doing business on behalf of the firm and so, the petitioner knew the accounts and as per clause-14 referred to supra, he is entitled only to the amounts standing to his credit in the accounts and that on service of summons along with the plaint on the defendants, the dissolution had already taken place and while so, there is no point in contending that he should be allowed to participate in the business of the firm. He would further submit that already an inventory was taken of the properties of the firm in the court below and no prejudice would be caused to the petitioner and this being a revision, scope is very narrow and when there was no prejudice to the revision petitioner, the revision petition cannot be sustained. 5. Before considering the facts, I would consider the submissions as to whether in law, the service of summons with a copy of the plaint on the defendants would effect the dissolution of a partnership at will. The lower appellate court had relied upon Bansari Das v. Seth Kanshi Ram and had held that on service of summons with the copy of the plaint on the defendants, the partnership firm had become dissolved and what remains is only the settlement of accounts and disbursement of money due to each partner. Mr. G. Subramaniam would submit that the ruling of Apex Court of the Land has not been properly understood by the Lower appellate and hence he had come to an erroneous conclusion that on service of summons with the copy of the plaint, the dissolution takes place by virtue of Section 43(2) of the Indian Partnership Act. For better appreciation of the plaintiffs submission, Section 43(1) and (2) of the Indian Partnership Act need extraction. It reads as follows:
43. Dissolution by notice of partnership at will:
(1) Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm.
(2) The firm is dissolved as from the date mentioned in the notice as the date of dissolution, or, if no date is so mentioned, as from the date of the communication of the notice.
In the aforesaid ruling, the Apex Court has referred to Order 20, Rule 15 of Civil Procedure Code which reads as follows:
Where a suit is for the dissolution of a partnership, or the taking of partnership account, the court, before passing a final decree, may pass a preliminary decree declaring the proportionate shares of the parties, fixing the day on which the partnership shall stand dissolved or be deemed to have been dissolved, and directing such accounts to be taken, and other acts to be done, as it thinks fit.
After extracting Order 20, Rule 15, Civil Procedure Code, the Apex Court has held as follows:
This rule makes the position clear. No doubt, this rule is of general application, that is, to partnerships at will as well as those other than at will; but there are no limitations in this provision confining its operation only to partnerships other than those at will. Sub-section (1) of Section 43 of the Partnership Act does not say what will be the date from which the firm will be deemed to be dissolved. For ascertaining that, we have to go to Sub-section (2) which reads thus:
The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice.
Now, it will be clear that this provision contemplates the mentioning of a date from which the firm would stand dissolved. Mentioning of such a date would be entirely foreign to a plaint in a suit for dissolution of partnership and therefore such a plaint cannot fall within the expression "notice" used in the sub-section. It would follow therefore that the date of service of a summons accompanied by a copy of a plaint in the suit for dissolution of partnership cannot be regarded as the date of dissolution of partnership and Section 43 is of no assistance.
[emphasis supplied]
6. After dying down the law. Their Lordships would further proceed and observe that even assuming that the term "notice" in the provision is wide enough to include within it a plaint filed in a suit for dissolution of partnership, the sub-section itself provides that the firm will be deemed to be dissolved as from the date of communication of the notice and it would further follow that the partnership would be deemed to be dissolved when the summons accompanied by a copy of the plaint is served on the defendant, where there is only one defendant, and on all defendants, when there are several defendants and the date of dissolution would have to be regarded to be the one on which the last summons was served in that case and it held that the High Court was in error in holding that the suit was barred by time. Thus, on the facts of that case, the Apex Court has held that even assuming that such interpretation was accepted, it would not help the party which puts forward such a proposition of law. Those observations would not help the respondents. I am clear that this Ruling lays down the following proposition of law, viz.:
A plaint cannot fall within the expression I "notice" used in Section 43(2) of the Indian Partnership Act. It would follow therefore that the date of service of summons accompanied by a copy of plaint on the defendants in the suit for dissolution of partnership, cannot be regarded as date of dissolution of the partnership and Section 43 is of no assistance.
7. When the date of service of summons with the copy of the plaint on the respondents, is not taken as the date of dissolution of the firm, the resultant position is that the petitioner continues to be the partner of the firm. However, in view of the copy of the Form 11 filed by the petitioner and the respondents to the Income Tax Authority, wherein a written agreement had been referred to and in view of the copy of the agreement of partnership signed by the parties, the copy of which is filed in typed set, prima facie it appears that there is a written agreement of partnership as per which the petitioner is only a working partner, and Clause 14 of the partnership deed provides for payment to the petitioner the amount due to him in the accounts. But, yet the material date would be the date of dissolution of partnership. As such, till the date, he cannot be precluded from his acting as a partner. Even as per the terms of the partnership deed relied upon by the respondents, the petitioner is entitled to 30% of the net profits, and he is a working partner. In the circumstances, if he is precluded from the partnership at this stage, definitely he will be prejudiced. Even according to the written statement, the petitioner is participating in the affairs of the partnership firm. The petitioner has got the benefit of interim injunction all through. As I have indicate, the lower appellate court has misconstrued the ruling of the apex ruling referred to supra and thus led itself to come to an erroneous conclusion and it has to be set aside.
8. Mr. Peppin Fernando would submit that there is no allegation in the affidavit filed by the petitioner that any prejudice would be caused to him if injunction is not granted in his favour. In his affidavit filed in I.A. No. 652 of 1992, he has stated that there are true accounts showing the real profits of the firm, that the respondents have removed all account books from the firm, that the 2nd respondent is in charge Of the fund and finance of the firm, that all the respondents joined together and have misappropriated large amount of income from the firm and recently, it is falsely shown in the account book that the hotel business is running at loss, but in fact, there is no loss incurred by the partnership firm. In I.A. No. 653 of 1992 also, he has filed an affidavit in support of the application making similar allegations. It is also alleged that unless the respondents are restrained, he will be put to loss and hardship. When admittedly he is a partner and when in law, it has not come to an end, his exclusion would definitely cause prejudice to him and so, his prayer that he should not be excluded is well founded. Mr. G. Subramaniam would rely upon Virdachala Nation v. Ramaswami Nayakkan, (1863)1 M.H.C.R 341. In it, this Court has observed as follows:
As regards, however, the granting of the injunction the case is different. Therefore is no doubt that Courts of Equity interfere by injunction between parties where the conduct of the defendant, either by misapplying the monies of the copartnership or by excluding from the business a partner entitled to join in it, is practically violating the partnership contract. This will sometimes be granted where the partnership is dissoluble at will, out always where it is, as the agreement in this case renders it, a partnership for a definite period. So upon the evidence in this suit, we think the plaintiff is equitably entitled to an injunction to restrain the first defendant from doing anything to exclude the plaintiff from participating in the contract and benefits of the partnership under the agreement.
The above observation would lead to the conclusion that even in the case of partnership at will, injunction can be granted if a partner was being excluded from the business when he is entitled to join in it. Mr. Peppin Fernando would submit that the prayer in I.A. No. 653 of 1992 for temporary injunction restraining the respondents from preventing the petitioner to conduct and participate in the administration and management of the business of the firm and that inasmuch as it had come to an end by service of summons with copy of plaint, cannot be granted. If the partnership had already come to an end, I am clear that this prayer cannot be granted. But, in view of the law propounded by the Apex Court, it cannot be stated that partnership had already come to an end by service of summons with copy of the plaint on the respondents. So, I am unable to accept this submission. In view of the above, C.R.P. No. 396 of 1993, has to be allowed.
9. So far as C.R.P. No. 395 of 1993 is concerned, the lower appellate court has passed a modified injunction, wherein the respondents have been restrained from alienating any property without notice to the other side and without getting permission of the court. I am clear that this order does not cause prejudice to either of the parties and that cannot be interfered with in civil revision petition.
10. In the result, C.R.P. No. 396 of 1993 is allowed, setting aside the order passed in C.M.A. No. 21 of 1992 by the Principal Subordinate Judge, Tirunelveli and thereby restoring the order passed by the trial Court in I.A. No. 653 of 1992. C.R.P. No. 395 of 1993 fails and shall stand dismissed. No costs.
11. C.R.P. Nos. 393 and 394 of 1993: In view of the orders passed in C.R.P. Nos. 395 and 396 of 1993 and since these C.R.Ps. arise out of the order passed in I.A. Nos. 654 and 655 of 1992 on the file of trial court for vacating injunctions granted in I.A. Nos. 652 and 653 of 1992, these civil revision petitions are dismissed. No costs.