Manubhai K. Mehta v. Apurva Mahendrakumar Shah — 1996 DIGILAW 643 (GUJ)

JUDGMENT : K.R. Vyas, J. This appeal has been filed by the original defendants Nos. 2 and 1 of Civil Suit No. 1877 of 1973 challenging the judgment and order dated 23rd January, 1979 passed by the learned City Civil Judge, Ahmedabad. By the impugned judgment and order, the learned Judge has passed a preliminary decree and sent the matter to the Commissioner for Taking Accounts. 2. Respondent No. 1-original plaintiff has filed the said suit for accounts of defendant No. 1-firm wherein he was admitted to the benefit of the partnership contending, inter alia, that defendants Nos. 2, 3 and 4 constituted a partnership for doing the business in ready cotton silk at Ahmedabad on 17th October, 1971 and the plaintiff was admitted to the benefit of the said firm. Since the plaintiff was minor, within six months of his attaining the majority, he exercised the election by a legal notice not to become a partner of the partnership firm However, he has claimed that he is entitled to the accounts of the partnership firm and the payment of the share of the property and also profit of the firm. 3. Appellant No. 1 (defendant No. 2) by filing written statement, Ex.16, has denied the claim of the plaintiff. A preliminary contention was also raised regarding the maintainability of the suit. According to the defendants, the suit firm was dissolved on 15-12-1972 by a dissolution deed dated 17th January 1973 and since the plaintiff had become major on 22-12-1972 and before he could exercise his option, the firm was already dissolved, the suit itself was not maintainable. It was further contended that the plaintiff was merely a Benamidar and in fact the father of the plaintiff introduced the name of the plaintiff to the partnership and it was the father of the plaintiff who in fact was doing the business of the firm. According to the said defendant, no transactions in the name of the plaintiff were done. It is the case of the said defendant that the name of the father of the plaintiff was not shown as a partner because of his personal difficulties and, therefore, the plaintiff was never a partner in the suit firm. According to the said defendant, no transactions in the name of the plaintiff were done. It is the case of the said defendant that the name of the father of the plaintiff was not shown as a partner because of his personal difficulties and, therefore, the plaintiff was never a partner in the suit firm. In substance, it was the case of the respondent-defendant No. 2 that since the plaintiff was not a partner, he is not entitled to the accounts and his father was the real partner who is entitled to the accounts and is also liable for the profit and loss of the firm. 4. Defendant No. 4 by his written statement, Ex.23, while contending that the suit is false, has stated that the accounts of the firm were maintained by defendant No. 2. According to this defendant, she was a sleeping partner as neither she nor anybody on her behalf had taken any part in the management of the firm. According to her, the plaintiff is entitled to the accounts only upto the date of the dissolution of the firm and not thereafter. 5. Defendant No. 3 though duly served has not filed any written statement nor remained present at the trial. 6. The learned City Civil judge, Ahmedabad, after appreciating the evidence on record, has negatived the plea of defendant No. 2 that the plaintiff's name was only Benami and the plaintiff's father was the real partner as contended in the written statement. The learned City Civil Judge recorded the finding in favour of the plaintiff that he was admitted to the benefit of the partnership firm and on his attaining majority, he exercised his option within six weeks not to become the partner of the firm by giving a legal and valid notice and accordingly the suit was held to be maintainable. In view of this finding, the learned Judge held that the appellant No. 1 is liable to render the accounts of the suit partnership and consequently the plaintiff is entitled to the relief’s as prayed for in the suit. 7. Mr. Adhyaru, learned Advocate appearing for the appellants, submitted that since the firm was not in existence, there was no question of admitting the plaintiff to the benefits of the firm. It was also contended by Mr. 7. Mr. Adhyaru, learned Advocate appearing for the appellants, submitted that since the firm was not in existence, there was no question of admitting the plaintiff to the benefits of the firm. It was also contended by Mr. Adhyaru that since there was no consent on the part of the defendant No. 2 and other partners of allowing the plaintiff to become a partner and since the plaintiff was a minor, his entry in the firm itself was not legal. 8. In order to appreciate the contention of Mr. Adhyaru, it is necessary to consider certain documentary evidence on record. Ex.55 is the partnership deed executed on 17-10-1971. Clause 8 thereof clearly mentions that the plaintiff Apurva Mahendra aged 17 has been admitted to the benefit of the partnership with a right to share the profit in the firm. It has been clearly stated in the said deed that in the event of loss, the said plaintiff Apurva would not be liable. Ex.51 is the deed of dissolution dated 17-1-1973 entered into between defendants Nos. 2, 3 and 4 wherein also the right of the plaintiff Apurva to the share in the benefit of the partnership firm is admitted. Ex.71 is an abstract of the register of the firm wherein the name of the plaintiff was entered on 17-10-71 as the admission to the benefit of the firm. It is also mentioned therein that 22-12-1972 is the date on which he would attain the majority. One more entry dated 17-11-77 recorded in the abstract of the Registrar of Firms shows that minor Apurva Mahendra attained the majority on 22-12-1972 and he had not opted to become the partner of the said firm. In view of this documentary evidence, the denial on the part of appellant No. 1 that the plaintiff Apurva was never admitted to the benefits of the firm is of no consequence. Section 68 of the Indian Partnership Act, 1932 clearly provides that any statement, intimation or notice recorded or noted in the Register of Firms shall, as against any person by whom or on whose behalf such statement, intimation or notice was signed, be conclusive proof of any fact therein stated. In view of this provision, entry of the plaintiff in the Register of Firms is a conclusive proof of his being in the firm and which cannot be disputed by the appellants herein. 9. Mr. In view of this provision, entry of the plaintiff in the Register of Firms is a conclusive proof of his being in the firm and which cannot be disputed by the appellants herein. 9. Mr. Adhyaru, relying on the decision of the Bombay High Court in the case of Shriram Sardarmal Didwani v. Gourishanker alias Rameshwar Joharmal, AIR 1961 Bombay 136, contended that before a minor can be admitted to the benefit of a partnership, there must be existence of the partnership He, there fore, contended that in the present case as the partnership was not in existence, the question of admission of the minor-plaintiff to the benefits of the partnership does not arise. The Bombay High Court in Shriram Sardarmal's case (supra), held that there can be no partnership of all minors and a minor can be admitted to the benefits of partnership provided the partnership existed before the minor was admitted to the benefit of the partnership, and that there must be a partnership of at least two partners before a minor can be admitted to the benefit of the partnership. There can be no dispute about the principle laid down in this decision. However, the facts in the case before the Bombay High Court in Shriram Sardarmal's case (supra) were quite different from the facts in the present case. In the case before the Bombay High Court, admittedly three brothers who were minors, wanted to form a partnership firm and in that context, the Bombay High Court observed as above. In view of what is stated above, the case on hand is quite different from the case before the Bombay High Court. Except bare denial of the appellant No. 1, no evidence is led by the appellant to disprove the claim made by respondent No. 1-plaintiff. In any case, in view of the provisions of section 68 of the Partnership Act, it hardly lies in the mouth of the appellant No. 1 to deny the claim made by the respondent No. 1-plaintiff. Reliance is also placed by Mr. Adhyaru on the decision of the Supreme Court in Shivagonda Ravji Patil and others v. Chandrakant Neelkanth Sadalge and others, AIR 1965 SC 212 . Reliance is also placed by Mr. Adhyaru on the decision of the Supreme Court in Shivagonda Ravji Patil and others v. Chandrakant Neelkanth Sadalge and others, AIR 1965 SC 212 . In that case, after considering the provisions of section 30 of the Partnership Act, the Supreme Court observed that the entire scheme of section 30 posits the existence of a firm and negatives any theory of its application to a stage when the firm ceased to exist. One cannot become or remain a partner of a firm that does not exist. Considering the facts of the case, the Supreme Court held : "It is common case that the first respondent became a major only after the firm was dissolved. Section 30 of the Partnership Act, therefore, does not apply to him. He is not a partner of the firm and, therefore, he cannot be adjudicated insolvent for the acts of insolvency committed by respondents Nos. 2 and 3, the partners of the firm..." There cannot be any dispute with the principles laid down by the Supreme Court. However, before applying the ratio of the decision of the Supreme Court, one has to consider the facts of each case The facts before the Supreme Court were that a partnership firm consisting of two major partners was carrying on business of commission agents and manufacturing and selling The partnership deed was executed on 25-10-46. At that time a minor was admitted to the benefits of the partnership. The partnership thereafter became indebted to the appellants and was dissolved on 18-4-51. The minor who was admitted to the benefits of the partnership became major subsequently and he did not exercise the option not to become a partner of the firm under section 30(5) of the Indian Partnership Act. When the appellant demanded their dues, the partners of the firm informed them that they were unable to pay their dues and that they had suspended payments of the debts. The appellants thereafter filed an application for adjudicating the two partners and the minor as insolvents on the basis of the said debts. The learned Civil Judge found that the major partners committed acts of insolvency and that the minor had also become a partner and, therefore, he was also liable to be adjudicated along with them. The minor preferred an appeal to the District Judge but the appeal was dismissed. The learned Civil Judge found that the major partners committed acts of insolvency and that the minor had also become a partner and, therefore, he was also liable to be adjudicated along with them. The minor preferred an appeal to the District Judge but the appeal was dismissed. On the second appeal, the High Court held that the minor was not a partner of the firm and, therefore, he could not be adjudicated insolvent for the debts of the firm. It is in these context that the Supreme Court,in the appeal preferred by the creditors, held that where the partnership was dissolved before the minor became a major, the partnership has become non-existent when the minor became a major and it is legally impossible to hold that he became a partner of the dissolved firm by reason of his inaction in the matter of exercising his option after he became a major within the time prescribed under section 30 (5) and a minor after attaining majority cannot elect to become a partner of a firm which ceased to exist and section 30 of the Act therefore does not apply to him. He is not a partner of the firm and therefore he cannot be adjudicated insolvent for the acts of insolvency committed by the major partners of the firm. In the present case, the minor had never claimed to be a partner of the firm. On the contrary, within six months of his attaining majority, by public notice, Exs.53 and 58, he exercised his option not to become a partner. Moreover, he was admitted to the partnership for sharing the benefit of the partnership and was not liable to the loss, if caused to the partnership. In other words, the firm was in existence upto 15-12-1972 and by virtue of the entry in the firm for sharing the benefits, the 1st respondent was admitted to it. Therefore, it cannot be contended that the first respondent was not entitled to be a partner of a dissolved firm. It is to be noted that the first respondent had never applied for being a partner of the firm and, therefore, the decision in the case of Shivagonda Ravji Patil's case (supra) has no application to the facts of the present case. It is to be noted that the first respondent had never applied for being a partner of the firm and, therefore, the decision in the case of Shivagonda Ravji Patil's case (supra) has no application to the facts of the present case. At this stage, a reference may be made to section 30 (4) of the Indian Partnership Act, which reads as under: "30(4) Such minor may not sue the partners for an account or payment of his share of the property or profits of the firm, save when severing his connection with the firm, and in such case the amount of his share shall be determined by a valuation made as far as possible in accordance with the rules contained in section 48: Provided that all the partners acting together or any partner entitled to dissolve the firm upon notice to other partners may elect in such suit to dissolve the firm, and thereupon the Court shall proceed with the suit as one for dissolution and for settling accounts between the partners, and the amount of the share of the minor shall be determined along with the shares of the partners." 10. The facts of this case are very clear. The partnership was dissolved on 15-12-72. The minor became major on 22-12-72. The minor exercised his option within six months of his attaining majority and declared his intention not to become a partner of the firm by giving notice on 5-4-73. Therefore, once it is held, and it is also not in dispute, that the respondent No. 1 was admitted to the benefits of the partnership, as per the provisions of section 30 (4) of the Partnership Act by, severing his connection with the firm, he is entitled to the amount of his share. That is exactly what the respondent No. 1 has done in the instant case. Therefore, the judgment and decree passed by the learned trial Judge does not warrant interference by this Court in this appeal. 11. No other contentions, except the above, have been urged on behalf of the appellants. 12. There being no substance in the appeal, the same is dismissed with costs. Appeal dismissed.