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2001 DIGILAW 280 (CAL)

RATHINDRA NATH DEY v. DILIP KUMAR DEY

2001-05-15

AMITAVA LALA

body2001
AMITAVA LALA, J. ( 1 ) THIS is a suit for : (A) A decree of declaration that the partnership under the name and style of Messrs. Wooma Churn Dey stood dissolved with effect from 17th January, 1992; (B) Alternatively, a decree directing dissolution of the said firm on and from such date as to this Hon'ble Court deem fit and proper; (C) Rendition of accounts ; (D) Payment of the respective shares of the plaintiffs in the profits, goodwill and assets of the said partnership after liquidation of the just debts and liabilities of the partnership business; (E) Attachment; (F) Receiver; (G) Injunction; (H) Costs; (I) Further and other reliefs. ( 2 ) IT appears from the description in the plaint that the said partnership is a registered family partnership in between the plaintiffs being step brothers and defendant beingcousin i. e. uncle's son of the plaintiffs. The aforesaid suit was registered and filed on 20th January, 1992. ( 3 ) ON the self-same day, i. e. 20th January, 1992 the defendant herein as a plaintiff instituted a suit in the City Civil Court at Calcutta as against the plaintiffs herein by making defendants therein praying inter alia (A) a Decree for Declaration declaring that the Plaintiff has right, title and interest to carry on business under the name and. style of "wooma Churn Dey" as is being carried on at present; (B) a Decree for Declaration declaring that the Defendants have no right, title and interest to stop the smooth running of the business as is being carried on; (C) a Decree for Declaration declaring that the Plaintiff has every right, title and interest to carry on business and to make operation of the Bank's account and to make payments to the persons concerned with supply, works and to recover payments for sales thereof; (D) a Decree for Permanent Injunction restraining the Defendants from creating any trouble to the smooth running of the business in any form of stopping Bank operation payments to Sales-tax, Income-tax, salaries whatsoever and/or from creating any trouble to its running in any manner whatsoever; (E) Such other relief or reliefs as the plaintiff may be found entitled to; (F) Costs and Advocate's fees ; ( 4 ) FROM the nature and character of the suits in between the parties herein it appears that both the suits are counter to each other as a result whereof the suit being title suit No. 53 of 1992 which was pending before the City Civil Court at Calcutta was transferred to this Court to avoid the Multiplicity of the proceedings and renumbered as extraordinary suit 7 of 1994. Both the Suits were taken up for analogous hearing at the appropriate joint suggestion of the parties. ( 5 ) THIS Court was pleased to frame the following issues for the purpose of disposal of both the suits. :1. Is the business of Wooma Churn Dey 'partnership-at-will?2. Is it just and equitable to dissolve the firm of Wooma Churn Dey as claimed by the plaintiffs?3. Are the plaintiffs unwilling to carry on the business as alleged in paragraph 3 of the Written Statement filed in a Suit No. 53 of 1992?4. Is Dilip Kumar Dey entitled to carry on the business of Woom Churn Dey without any let or hindrance by the plaintiffs as alleged in paragraphs 19 and 20 of the plaint in Extraordinary suit No. 7 of 1994?5. Are the plaintiffs entitled to pray for any other relief apart from seeking retirement from the business as alleged in paragraph 21 of the written statement in Suit No. 53 of 1992?6. To what reliefs the parties are entitled to in both the suits? Are the plaintiffs entitled to pray for any other relief apart from seeking retirement from the business as alleged in paragraph 21 of the written statement in Suit No. 53 of 1992?6. To what reliefs the parties are entitled to in both the suits? ( 6 ) THE defendant in this suit filed his written statement almost taking the similar plea as he had taken in the plaint of the suit originally instituted in the City Civil Court and subsequently transferred to this Court. ( 7 ) AT the threshold, both the parties contended before this Court that the issue No. 1 as above is a preliminary issue as to the question of law which can be determined by this Court independently without going into the factual matrix relating to further issues. The result of the issue No. 1 will vitally control the other issues. Under such circumstances, I was inclined to hear out such issue at first irrespective of hearing of the suit on the other factual aspects on the basis of documentary and oral evidences. It is pertinent to mention here that issue No. 1 is arising out of a common document which is a registered partnership deed. Therefore, there is no question of ascertaining any further factual aspects to come to a definite conclusion on the question of law based on such common document on which both the suits are lying. The relevant clause of the partnership deed is as follows :"so long as the said partnership will continue no partner will be entitled to carry on business of the nature now carried on by the firm of Woom Churn Dey at any place whatsoever in his own name or in the benami name of any other person either openly or clandestinely and in such case the partner committing any breach will cease to be a partner of the firm of the said Wooma Churn Dey and will be entitled to the money value of his share after deducting the liabilities then existing in the said business on account and in such accounting the Good Will, furniture and the tenancy will not be taken into account and the other partner will be entitled to carry on the said business Wooma Churn Dey as the Sole Proprietor thereofwithout any let or hindrance by the defaulting partner. " ( 8 ) THE plaintiffs, upon giving various descriptions in the plaint, specifically urged in Paragraph 11 of the same that the partnership was a partnership-at-will and it stood dissolved with effect from 17th January, 1992 by virtue of the notice of dissolution dated 16th January, 1992. ( 9 ) ON the other hand, the defendant upon giving various descriptions in the written statement specifically urged in Paragraph 19 of the same in dealing with Paragraph 11 of the plaint contended that it is explicit from the deed of partnership of the forefather's business and/or unequivocal terms of deed including the right of the survived partners to carry on the forefather's business. The deed of partnership contains reservations and/or conditions laid down by forefathers and as such cannot be termed as "partnership-at-will. " ( 10 ) BEING descriptive, the defendant also stated there that it would appear not only from the deed of partnership dated 4th July, 1967 but also from the previous deed dated 5th of October, 1958 that the deed contained and/or contains the terms and conditions as to its smooth running as well as the situation after the death of any partner, survival of the firm's business, in case of unwillingness of partner or partners to carry on partnership business along with the procedure of calculation of assets for determining the share of unwilling partner so as to seek retirement from the firm. ( 11 ) MR, Dipak Shome, Learned Senior Counsel, appearing in support of the plaintiffs has drawn my attention to the various provisions of the Indian Partnership Act, 1932. Section 7 of the Act, provides for partnership-at-will. As per such Section where no provision is made by a contract between the partners for the duration of their partnership, or the determination of their partnership, the partnership is partnership-at-will. Section 32 (l) (c) makes a room for retirement of a partner. A partner may retire, where the partnership is at will, by giving notice in writing to all the other partnerships of his intention to retire. Section 43 of the Act speaks about dissolution by notice of partnership-at-will. ( 12 ) ACCORDING to such Section, where the partnership is at will, the firm may be dissolved by any party giving notice in writing, to all other partners of his intention to dissolve the firm. Section 43 of the Act speaks about dissolution by notice of partnership-at-will. ( 12 ) ACCORDING to such Section, where the partnership is at will, the firm may be dissolved by any party giving notice in writing, to all other partners of his intention to dissolve the firm. The firm is dissolved from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as and from the date of communication of notice. Section 44 of the Act gives power to the Court on account of dissolution. Section 44 (g) of the Indian Partnership Act, 1932 as regards dissolution of firm by the Court is pari material with S. 433 (f) of the Companies Act (1 of 1956) which deals with circumstances in which the Company may be wound up by the Court. In effect, such Clause in the aforesaid two Sections of the different Acts are omnibus in nature. ( 13 ) HE has cited a judgment reported in AIR 1968 Guj 157 (Keshavlala Lallubhai Patel v. Patel Bhailal Narendras ). In analysing such cited decision it was contended before this Court that as per Section 7 of the Act two conditions are to be fulfilled. The first condition is that there should be no provision in the contract between the partners for the duration of the partnership. The second condition is that there should be no provision in the contract for the determination of that partnership. If all these two provisions exist the partnership would not be a partnership-at-will. Where there is no express agreement to continue a partnership for a definite period, there may be an implied agreement to do so. The same principle, also applies to a case of determination. The law of partnership draws a distinction between the retirement of a partner and dissolution of a firm. Partnership is a jural relation who are collectively called a firm and when such jural relationship is snapped between all the partners inter se, that constitutes dissolution of the firm. But where the partner wishes to withdraw from the firm without affecting the jural relation subsisting between the other partners then the jural relationship to the other parts inter se remain unaffected. But where the partner wishes to withdraw from the firm without affecting the jural relation subsisting between the other partners then the jural relationship to the other parts inter se remain unaffected. ( 14 ) IN the cited decision the ratio of a judgment as reported in AIR 1961 SC 1225 (Karumuthu Thaigarajan Chettiar v. E. M. Muthappa Chettiar) was relied upon. Therefore, it is necessary for this Court to examine the ratio of such judgments. In interpreting Section 7 of the Act the Supreme Court held that in all these cases the partnership is not at will. The duration of a partnership may be expressly provided in the deed of partnership. But even where there is no express provision,courts have held that the partnership will not be at will if the duration becomes implied. The same principle applies in a case of determination. The contract may expressly contain that the partnership will determine in certain circumstances, but even if there is no such express term, and implied term as to when the partnership will determine may be found in the contract. What we have, therefore, to see whether in the present case it is possible to infer from the deed of partnership that there is any implied term as to its duration or at any rate of the implied term as to when it will be determined. The Supreme Court held on the factual matrix therein that the contract was made for carrying out a managing agency business. Therefore, it postulates by necessary implication that partnership will be determined when the managing agency is terminated. ( 15 ) IN interpreting the position of the judgment of the Supreme Court as above a single Bench of this Court in AIR 1973 Cal 279 (Talakchand Kanji Vora v. Keshavalal Dullabhajji Sethi) came to a conclusion that the implied conditions about the duration will come out from the period so fixed in carrying out the managing agency business. Therefore, it is true that the partnership was made to carry out a partnership venture for a particular period. Hence, the same was not a partnership-at-will. ( 16 ) HOWEVER, said single Bench, in coming to a conclusion in respect of the dissolution or determination of the partnership between two partnership held that having two partners or more in a partnership firm does not make any difference. Hence, the same was not a partnership-at-will. ( 16 ) HOWEVER, said single Bench, in coming to a conclusion in respect of the dissolution or determination of the partnership between two partnership held that having two partners or more in a partnership firm does not make any difference. The law of partnership does not say that a different law will apply if the there are two partners only. All that the Partnership Act provides that there cannot be partnership unless there are at least two partners. ( 17 ) THE Supreme Court held in AIR 1961 SC 1225 (supra) that it is true that when there are only two partners, the partnership will come to an end as soon as one partner relinquishes his right in favour of the other. That, however, is a fortuitous circumstances. The single Bench of this Court observed that this is not understood how the partnership can continue is one the two partners does not want to continue business with the other partner. If the Court held in such circumstances that one partner can continue with the partnership-at-will that will be a situation contrary to law where it is provided that the partnership business will be carried out between two partners or more. In spite of such observation the single Bench held that on relinquishment of right by one partner in between two partners, the partnership is to be treated as Partnership-at-will. I think there is a vacume which ought to be filled up. I have tried to do so. So far the other judgment being, AIR 1976 Bom 405 (Iqbalnath Premnath Anand v. Rameshwarnath Premnath Anand) is concerned, it has followed the ratio of AIR 1968 Guj 157 (supra) and relied on AIR 1961 SC 1225 (supra ). Therefore, I do not want to multiply. ( 18 ) NOW coming back to the discussions as above I say that an interesting point cropped up. Section 7 of the Partnership Act provide (a) duration of their partnership and (b) determination of their partnership. According to me, the word "their" is a guiding factor for the situation. The words 'duration' and 'determination' are supplementary to each other effective with expressed or implied conditions visible from the deed of Partnership. Section 7 of the Partnership Act provide (a) duration of their partnership and (b) determination of their partnership. According to me, the word "their" is a guiding factor for the situation. The words 'duration' and 'determination' are supplementary to each other effective with expressed or implied conditions visible from the deed of Partnership. As and when plurating evaporates from the partnership of two partners by reason of relinquishment of right or death or occasion of one, the partnership cannot be known as 'their' partnership but 'his' partnership which is contrary to law since it prescribed minimum number of two partners for making partnership. Therefore, when there is a partnership of two partners, absence of one automatically give room of determination of partnership under Section 7 of the Act itself. This is the prime difference in between partnership made by two partners or made by more than two partners. Since the partnership of more than two partners can-not automatically evaporate by virtue of absence of any one, such partnership will have to be treated as partnership-at-will in absence of any condition of duration or determination. ( 19 ) MR. Swamendu Ghosh, learned Counsel appearing for the defendant has drawn my attention to the clause 'l' in addition to Clause 'k' of the partnership deed which provides :"in case of death of any of the partners his made heir or heirs would be entitled to the share of the deceased partner and the respective male heirs will be admitted into the share of the deceased partner, and such heirs will carry on the said business on the terms and conditions herein. " ( 20 ) HE has also drawn my attention to the clauses 'm', 'n' and 'p' of the partnership deed which are governing the field of right of the female heir of a deceased partner, sale of the share of the partner in the partnership business to stranger and insolvency of any of the partners. According to the defendant, in none of the cases partnership can be dissolved by notice. ( 21 ) HE has cited a judgment in supporte of his case reported in AIR 1991 SC 1020 (M. O. H. Uduman v. M. O. H. Aslum) and contended that partnership will continue till there are two partners. Therefore, one partner out of three partners, cannot have any right to dissolve it. ( 21 ) HE has cited a judgment in supporte of his case reported in AIR 1991 SC 1020 (M. O. H. Uduman v. M. O. H. Aslum) and contended that partnership will continue till there are two partners. Therefore, one partner out of three partners, cannot have any right to dissolve it. ( 22 ) I am sorry to say that I cannot accept the submission of Mr. Ghosh in support of the defendant because the Supreme Court had proceeded with the factual matrix of the case therein but not in interpreting the applicability of Section 43 of the Act when the deed of partnership is silent about its duration or determination. In paragraph 18 of such judgment Supreme Court held that the duration of the partnership has been expressly provided in deed, namely, that the partnership will continue "till there are two partners" and that, therefore, it is not a partnership-at-will. The expression 'till' cannot make implication 'until' to apply the aforesaid legal analysis about partnership of two partners. In other words in view of expressed term of yet two partners exist make the partnership not as a partnership-at-will. On the other hand Section 43 contemplates that the firm may be dissolved by any party giving notice in writing to all the other partners of his intention to dissolve the firm. However, factually two partners have issued notice. ( 23 ) I have gone through the clauses of the partnership deed and upon thorough scanning I am not in a position to find it out that there is any specific clause about duration or determination of their partnership. Mere incorporation of the words "so long" in describing shares of the partners in clause 'a' of the partnership deed cannot make any necessary implication about the same. Moreover clause 'k' being the relevant clause has to be read in the proper prospective to come to a definite conclusion by way of necessary implication unlike the aforesaid Supreme Court judgment whereunder the condition is expressed. When the clause about duration or determination is expressed nothing is to be undertsood beyond the codified expression but when the same is implied it is to be understood from the language of the codified expression. When the clause about duration or determination is expressed nothing is to be undertsood beyond the codified expression but when the same is implied it is to be understood from the language of the codified expression. I find apparently, there is no whisper about the duration or determination of the partnership in any of the clauses but the clause 'k' of the same is to be understood whether it impliedly speaks for duration or determination for the sake of Section 7 of the Act or not. The clause starts with the words 'so long' speak for an indefinite period which under no strech of imagination can be construed as definite as duration or determination, therefore, at the threshold such clause is inapplicable herein. Moreover the clause is only regulating the position about carrying on business even by one partner as proprietor in the same trade name in case of cessation of defaulting partners on the ground of carrying out similar nature of business during the tenure of partnership. Therefore, again the question of uncertainty exists. Moreover if the law as explained earlier correctly applied, it will be understood when there are two partners, absence of one automatically ceases to be partnership but not when there are more than two partners, as in this case, by way of presupposing the position on the basis of notice of the partners when the matter is subjudice. Unless the condition is expressed like the above Supreme Court judgment, this Court cannot draw such line by necessary implication on the factual matrix. Therefore, not onlyduration or determination of theirpartnership are required to be understood for the sake of necessary implication unlike expressed provision but alsoexisting structure of the partnership, yet to be determined by the Courtbeing implied condition hidden under Section 7 of the Act as incidential in connection thereto. ( 24 ) THIS being the position, I have no other alternative but to hold affirmatively in favour of the plaintiffs in the suit instituted in the High Court as regards issue number 1 that the business of Wooma Churn Dey is "partnership-at-will". Therefore the suit is directed to be heard on all other issues. ( 25 ) PRAYER for stay is made, considered and refused. ( 26 ) XEROXED certified copies of this judgment will be supplied to the parties within seven days from the date of putting requisities. Therefore the suit is directed to be heard on all other issues. ( 25 ) PRAYER for stay is made, considered and refused. ( 26 ) XEROXED certified copies of this judgment will be supplied to the parties within seven days from the date of putting requisities. ( 27 ) ALL parties are to act on a signed copyminute of the operative part of this judgment on the usual undertaking and subject to satisfaction of the officer of the Court in respect as above. Order accordingly.