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Gauhati High Court · body

1952 DIGILAW 23 (GAU)

Ghanasyam Das v. Bajranglal Agarwalla

1952-03-13

RAM LABHAYA

body1952
This is an appeal from the judgment and decree of the Subordinate Judge L.A.D. by which the order of the Munsif of Barpeta granting plaintiff a preliminary decree for rendition of partnership accounts was reversed and plaintiff's suit dismissed. The plaintiff, who has appealed to this Court, instituted a suit for settlement of accounts of a partnership business between him and the defendants. His case was that on the 1st day of July 1946. he and the defendants entered into an agreement of partnership with the object of doing hardware business. According to the agreement, Ext. 2, defendant 1, Bajranglal Agarwalla, representative of the firm Narsingdas Srilal, was to finance the business. Plain­tiff Ghanasyam Das (appellant) and Madhusudan Das, 'pro forma' defendant 2, were to try to secure orders from the Government of Assam. The business was to be jointly super­vised by all. The plaintiff and defendant 2 Madhusudan Das were, given 1/4th share each in the profits. Defendant 1 was to have 1/2 share. It was provided in the agreement that the firm will be registered in the name of 'Narsingdag Srilal Firm'. It is admitted that no firm of this name had been registered before. Plaintiff alleged that the agreement of partner­ship was duly registered with the Registrar of Firms and in conformity with the terms of the partnership agreement, the plaintiff and the 'pro forma' defendant 2 were obtaining orders from the Government of Assam for the implements of iron and steel and defendant 1 was purchasing and supplying the goods ordered. On plaintiff demanding his share of the profit by settlement of accounts, the defen­dant evaded. A notice was also served on him but without any effect. The claim was valued tentatively at Rs. 750/-. (2) The 'pro forma' defendant 2 supported the plaintiff-appellant. Defendant 1 resisted the claim. He admitted that an agreement of partnership was executed between the parties in the case but pleaded that this agreement was not given effect to and the partnership formed was not registered. He denied plain­tiff's securing orders from the Government and alleged that the plaintiff and defendant 2 "were frustrated in obtaining" them. He fur­ther denied the truth of the allegation that he got any orders from the Government through the recommendation or the efforts of the plain­tiff and defendant 2. He denied plain­tiff's securing orders from the Government and alleged that the plaintiff and defendant 2 "were frustrated in obtaining" them. He fur­ther denied the truth of the allegation that he got any orders from the Government through the recommendation or the efforts of the plain­tiff and defendant 2. He claimed to have se­cured necessary orders as a result of his own efforts after about a year from the date of the agreement. He further pleaded that the agreement of partnership was without consi­deration. It had not been acted upon and the plaintiff and the 'pro forma' defendant 2 had not even supervised the joint business. (3) No less than 6 issues were framed in the first instance and later on another issue was added. We are, at this stage, concerned only with issues Nos. 5 and 7. They overlap and deal with the same question. These issues are as follows: 'Issue No. 5': Whether the plaintiff and the 'pro forma' defendant had ever work­ed to secure business from the Gov­ernment, if so, to what extent of busi­ness they secured and the profit accru­ed thereon? 'Issue No. 7': Whether the plaintiff as the 'pro forma' defendant secured orders from the Government and did the other works mentioned in the agreement filed by the plaintiff? If not, are they or any of them entitled to claim a share in the profit? (4) The learned Munsiff was of the view that the partnership agreement was duly registered. A partnership came into existence. It had not been dissolved. The business in the name of the firm continued. The burden, in these cir­cumstances, was on the defendant to show that the plaintiff had ceased to be a member of the firm and was debarred from participating in the profits and losses of the firm. His ans­wer to the question raised was that the main defendant had failed hopelessly to prove that the plaintiff had violated the terms of the partnership agreement and therefore was not entitled to participate in the profits or losses of the business. This was the finding on Issues 5 and 7 reproduced above. (5) The learned Subordinate Judge appro­ached the question from a very different view point. This was the finding on Issues 5 and 7 reproduced above. (5) The learned Subordinate Judge appro­ached the question from a very different view point. He noticed that the non-performance on the plaintiff's part of the contract was alleg­ed in Para 4 of the written statement and held that it was for the plaintiff to prove that he had performed his part of the part­nership agreement. After examining the evid­ence produced by the plaintiff, his conclusion was that the plaintiff had failed to show that he had performed his part of the contract and was, therefore, not entitled to sue for accounts. (6) On behalf of the plaintiff-appellant, the correctness of the appellate decree is assailed. The main contention raised is very simple. It is urged that even if the plaintiff failed to per­form his duties as a partner, his suit for ac­counts could not have been dismissed. The finding of the appellate Court that he failed to perform his part of the contract is also challenged as erroneous. (7) The first contention has got great force. In para 2, of the written statement the plea raised by the defendant was that the partner­ship agreement was not given effect to. The fact of its registration was denied. In para 4, it was conceded that the plaintiff and the 'pro forma' defendant could not obtain any orders from the Government for a whole year after the execution of the partnership agreement and it is after that period that defendant him­self secured orders by his own efforts. The learned counsel for the defendant-respondent also urges that the agreement of partnership was for all practical purposes abandoned or cancelled soon after its execution. Now, what is evident in the case is that the partnership agreement was duly registered with the Registrar of Firms under the Partnership Act. Defendant concedes in para 4 of the written statement that the plaintiff and the 'pro forma' defendant tried to obtain orders but they did not succeed. If they tried to ob­tain orders, they were acting under the part­nership agreement. Even after the expiry of the year when the defendant was alleged to have secured orders from the Government without any assistance from the plaintiff and the 'pro forma' defendant No. 2, he was doing his business in the name of the Firm. The orders were being obtained in the name of the registered Firm. Even after the expiry of the year when the defendant was alleged to have secured orders from the Government without any assistance from the plaintiff and the 'pro forma' defendant No. 2, he was doing his business in the name of the Firm. The orders were being obtained in the name of the registered Firm. The name of the Firm was not dropped. It was being utilised till the institution of the suit from which this appeal arises. '(8) The plaintiff has not retired from the partnership in any of the modes recognised by S. 32 of the Act. He was not expelled. There is no suggestion that there was a dissolution of the Firm. The partnership in this case was a partnership at will. It could have been dis­solved by a notice from any of the partners to other partners intimating his intention to dissolve the firm. The contesting defendant did not even adopt this course. No change was recorded in the name of the firm by the Re­gistrar of firms in the register of firms kept by him. No change in the constitution of the firm was indicated to the Registrar under S. 63 of the Partnership Act. In these circumstances, there can be no answer to the argument that the contesting defendant allowed the partnership to continue without any change in it on the ground of actual or potential gain that he could derive from the association of the plaintiff and the 'pro forma' defendant as partners in his busi­ness. The plaintiff was an M.L.A. Both he and the 'pro forma' defendant undertook to try to secure orders from the Government. This was the main duty assigned to them. In con­sideration of it, they were promised four anna share in the profits each. Defendant 1 had at no stage, made it clear by his conduct that the plaintiff and the 'pro forma' defendant were not his partners or had ceased to be partners. The burden of showing that the plaintiff and the 'pro forma' defendant had both ceased to have any interest in the business wag on the defendant and has not been discharged. The plaintiff therefore, was a partner till the date of the suit and as such his suit for ac­counts could not fail. (9) Mr. The burden of showing that the plaintiff and the 'pro forma' defendant had both ceased to have any interest in the business wag on the defendant and has not been discharged. The plaintiff therefore, was a partner till the date of the suit and as such his suit for ac­counts could not fail. (9) Mr. Sen, the learned counsel for the defendant-respondent, has contended, relying on 'BANWARI LAL v. SHAIKH SHUKRULLAH', AIR 1940 Pat 204, that the Court should not aid the plaintiff by reason of the laches on his part. According to the doctrine of laches where persons have agreed to become partners, and one of them has unfairly left the others to do all the work, and then, there being a profit, comes forward and claims a share of it, the Court should not aid him. The equitable rule is that a Court will not aid those who can be shown to have re­mained quiet in the hope of being able to claim a share of gain in case of ultimate suc­cess. (10) This doctrine has no application to the facts of this case. As held in the case relied on by the learned counsel, the doctrine should apply to cases where the plaintiff has by his conduct induced the defendant to suppose that the plaintiff had abandoned the common undertaking, usually in cases of a highly spe­culative character. These conditions are not satisfied. Here, it has not been shown that the plaintiff by his conduct induced the defendant to think or believe that he had abandoned the undertaking. On defendant's own showing, he tried to obtain orders. This was his main duty. The conduct of the defendant, on the other hand, shows that he treated him as a partner till the institution of the suit. If there was any abandonment of the undertaking on behalf of the plaintiff, the defendant could easily have intimated this fact to the Regis­trar of Firms. He deliberately carried on the business in the name of the firm without ask­ing for or obtaining an entry showing a change in the constitution of the firm. There is noth­ing to show that he did not exploit the names of his partners in obtaining orders which he claims to have secured himself. The plaintiff, therefore, cannot be non-suited on the ground of any abandonment of the undertaking. There is noth­ing to show that he did not exploit the names of his partners in obtaining orders which he claims to have secured himself. The plaintiff, therefore, cannot be non-suited on the ground of any abandonment of the undertaking. (11) The learned counsel has also relied on GOKUL KRISHNA DAS v. SHOSHI MUKHI DASI', 16 Cal W N 299 presumably with a view to claiming some remuneration for de­fendant 1 on the ground of his doing the entire business of the partnership agreement unaided. In this case partnership business was carried on after the death of a partner on the assumption of the representative continu­ing as a partner. The representative was a 'purdanashin' widow. She did not take part in the business. It was held that where one of the partners wilfully leaves the other to carry on the partnership business unaided, the Court may upon dissolution decree an allow­ance in favour of the partner who had carried on the business alone. In the peculiar circum­stances of that case, the parties settled, by an agreement that an allowance of Rs. 150/- a year be allowed to the working partners from the date of the death of the husband of the plaintiff. (12) There can be no quarrel with the prin­ciple laid down in this case. But it cannot be applied to the facts of the present case. The task assigned to the plaintiff was to try to obtain orders from Government. It is not denied that he in furtherance of the partner­ship agreement tried to obtain orders. The defendant's case was that his (plaintiff's) efforts proved abortive and he had to suffer frustra­tion but the orders were obtained about a year after the partnership agreement was exe­cuted. The defendant claims that he himself obtained orders. If the contention of the de­fendant is correct, it cannot be said that the plaintiff wilfully left the defendant to carry on the work of partnership unaided. During the continuance of the partnership, defendant never asked the plaintiff for aid. The business of the partnership was not very large. The actual conduct of the business had been left to the contesting defendant. He had also to supply the funds. The joint supervision was more a right than an obligation. During the continuance of the partnership, defendant never asked the plaintiff for aid. The business of the partnership was not very large. The actual conduct of the business had been left to the contesting defendant. He had also to supply the funds. The joint supervision was more a right than an obligation. In these cir­cumstances no case has been made out for a monthly or annual allowance to defendant 1, nor was any such allowance claimed in the written statement. (13) The last question in the case is whe­ther the contesting defendant has become en­titled to claim damages from the plaintiff by reason of his continued failure during the period of partnership to perform his duties as a partner. (14) The learned Counsel for the plaintiff-appellant himself has relied on S. 13, Cl (f) of Partnership Act in support of the contention that the plaintiff's suit for accounts could not be dismissed even if there was wilful neglect on the part of the plaintiff in the conduct of the business of the firm. Clause (f) of S. 13 pro­vides that subject to contract between the parties, the partner shall indemnify the firm for any loss caused to it by his wilful neglect in the conduct of the business of the firm. The question then is whether loss or damage has been caused to the firm by wilful neglect in the conduct of the busi­ness of the firm on the part of the plaintiff-appellant. The extent of liability, if any, to indemnify the firm by reason of the loss caused to the firm by the neglect in the conduct of the business of the firm on the part of the plaintiff-appellant and pro forma defendant can before appropriately decided after the preliminary decree. Such neglect cannot justify dismissal of the suit for account. (15) The result of the foregoing discussion is that this appeal must succeed. It is allowed. The order of the learned Subordinate Judge dismissing the suit is reversed and that of the trial Court restored subject to this modifica­tion that the commissioner shall also determine the extent of the liability of plaintiff-appellant and 'pro forma' defendant 2 to indemnify the firm for loss or damage, if any, caused to it by reason of their wilful neglect in the con­duct of the business of the firm. Parties shall bear their own costs in this Court and in the lower Appellate Court. Appeal allowed.