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2004 DIGILAW 987 (SC)

MUKUND BALKRISHNA KULKARNI v. KULKARNI POWDER METALLURGICAL INDUSTRIES

2004-08-13

ARUN KUMAR, RUMA PAL

body2004
ORDER 1. LEAVE GRANTED. 2. THE APPELLANT HAD FILED A SUIT AGAINST THE RESPONDENTS STYLED BY HIM AS A "SUIT FOR DISSOLUTION OF PARTNERSHIP FIRM AND ACCOUNTS". IN THE BODY OF THE PLAINT IT WAS CLAIMED BY THE APPELLANT THAT THE PARTIES HAD AGREED TO FORM A PARTNERSHIP IN CONNECTION WITH THE MANUFACTURE OF CERTAIN GOODS. IT WAS THE FURTHER CLAIM OF THE APPELLANT THAT HE HAD IN FACT INVESTED MONIES PURSUANT TO THE AGREEMENT AND HAD TAKEN PART IN THE BUSINESS OF THE FIRM. ON THE ALLEGATION THAT RESPONDENT 2 HAD DENIED THAT THE BUSINESS WAS A PARTNERSHIP BUSINESS, THE SUIT WAS FILED FOR A DECLARATION THAT RESPONDENT 1 WAS A PARTNERSHIP BUSINESS IN WHICH BOTH THE APPELLANT AND RESPONDENT 2 HAD EQUAL SHARES AND PRAYING FOR DISSOLUTION OF THE FIRM, ACCOUNTS AND PAYMENT OF THE AMOUNT AS MAY BE FOUND ON THE TAKING OF SUCH ACCOUNTS. THE SUIT WAS CONTESTED BY THE RESPONDENTS WHO CLAIMED THAT THERE WAS NO PARTNERSHIP AS CLAIMED BY THE APPELLANT, AND THAT RESPONDENT 1 WAS A SOLE PROPRIETOR CONCERN OF RESPONDENT 2. IT WAS ALSO STATED THAT THE APPELLANT HAD MERELY LENT MONEY TO THE BUSINESS, WHICH MONEY HAD BEEN RETURNED TO THE APPELLANT. RELIANCE WAS PLACED IN PARTICULAR ON THE MINUTES OF A MEETING HELD BETWEEN THE PARTIES WHICH WAS SUBSEQUENTLY EXHIBITED AS EXHIBIT 95 IN WHICH IT WAS RECORDED IN THE PRESENCE OF THIRD PARTIES "WE HAVE COME TO THE CONCLUSION THAT PARTNERSHIP CANNOT TAKE PLACE BETWEEN S.B. KULKARNI AND M.B. KULKARNI" (BEING RESPONDENT 2 AND THE APPELLANT RESPECTIVELY). 3. THE TRIAL COURT HELD THAT THE APPELLANT HAD BEEN ABLE TO ESTABLISH THAT THERE WAS A PARTNERSHIP BUSINESS AS CLAIMED BY HIM AND THAT HE WAS ENTITLED TO SUE FOR DISSOLUTION OF THE BUSINESS. ACCORDINGLY, A DECREE WAS PASSED DECLARING THAT RESPONDENT 1 WAS A PARTNERSHIP BUSINESS IN WHICH BOTH THE APPELLANT AND RESPONDENT 2 HAD EQUAL SHARES AND THAT THE FIRM SHOULD BE DISSOLVED WITHIN A PERIOD OF TWO MONTHS. A PRELIMINARY DECREE FOR ACCOUNTS WAS ALSO PASSED. 4. THE FIRST APPELLATE COURT, BY AN EXHAUSTIVE JUDGMENT, RECONSIDERED THE ENTIRE EVIDENCE AND CAME TO THE CONCLUSION THAT THE FINDINGS OF THE TRIAL COURT H WERE CORRECT. BEFORE THE FIRST APPELLATE COURT AN ADDITIONAL ISSUE WAS RAISED BY RESPONDENT 2 VIZ. THAT THE SUIT WAS BARRED UNDER THE PROVISIONS OF SECTION 69 OF THE PARTNERSHIP ACT, 1932. 4. THE FIRST APPELLATE COURT, BY AN EXHAUSTIVE JUDGMENT, RECONSIDERED THE ENTIRE EVIDENCE AND CAME TO THE CONCLUSION THAT THE FINDINGS OF THE TRIAL COURT H WERE CORRECT. BEFORE THE FIRST APPELLATE COURT AN ADDITIONAL ISSUE WAS RAISED BY RESPONDENT 2 VIZ. THAT THE SUIT WAS BARRED UNDER THE PROVISIONS OF SECTION 69 OF THE PARTNERSHIP ACT, 1932. ALTHOUGH THE PLEA WAS ALLOWED TO BE RAISED, IT WAS NEGATIVED BY THE FIRST APPELLATE COURT BY HOLDING THAT THE SUIT WAS IN EFFECT A SUIT FOR DISSOLUTION OF THE PARTNERSHIP FIRM AND AS SUCH MAINTAINABLE A BY REASON OF THE PROVISIONS OF SECTION 69(3) OF THE 1932 ACT. 5. THE HIGH COURT INITIALLY FRAMED TWO QUESTIONS OF LAW IN THE SECOND APPEAL WHICH WAS PREFERRED BY THE RESPONDENTS UNDER SECTION 100 OF THE CODE OF CIVIL PROCEDURE. THESE QUESTIONS WERE: (1) WHETHER THE FINDING RECORDED BY THE COURTS BELOW THAT THERE WAS ORAL AGREEMENT OF PARTNERSHIP IS PERVERSE AND RESULTS OF NON-CONSIDERATION B OF THE ADMISSIONS OF THE PLAINTIFF? (2) WHETHER THE COURTS BELOW COMMITTED ERROR OF LAW IN MISINTERPRETING AND MISREADING THE RECEIPT DATED 28-2-1993 AND EXHIBIT 95? IN ADDITION A FURTHER QUESTION OF LAW, NAMELY, "WHETHER THE SUIT WAS NOT MAINTAINABLE FOR WANT OF REGISTRATION UNDER SECTION 69 OF THE PARTNERSHIP ACT, 1932?" WAS ALSO RAISED. 6. AS FAR AS THE THIRD QUESTION WAS CONCERNED THAT WAS DISPOSED OF FIRST BY HOLDING THAT THE SUIT WAS NOT MAINTAINABLE UNDER SECTION 69. IT WAS ALSO FOUND BY A REAPPRAISAL OF THE EVIDENCE THAT THERE WAS NO PARTNERSHIP IN FACT. AS FAR D AS THE SECOND QUESTION WAS CONCERNED, THE COURT CAME TO THE CONCLUSION THAT THE DOCUMENT DID NOT EVIDENCE THE EXISTENCE OF A PARTNERSHIP AS HAD BEEN FOUND BY THE LOWER COURTS. 7. WE ARE OF THE VIEW THAT THE DECISION OF THE HIGH COURT ON THE FIRST TWO QUESTIONS WERE OUTSIDE THE SCOPE OF ITS JURISDICTION UNDER SECTION 100 OF THE CODE. THE INCLUSION OF THE WORDS "PERVERSE" AND "INTERPRETATION" IN THE E QUESTIONS DID NOT GIVE A LICENCE TO THE HIGH COURT TO IN FACT SIT IN APPEAL AND REAPPRAISE THE ENTIRE EVIDENCE AS IF IT WERE SITTING AS A COURT OF FIRST APPEAL. THE INCLUSION OF THE WORDS "PERVERSE" AND "INTERPRETATION" IN THE E QUESTIONS DID NOT GIVE A LICENCE TO THE HIGH COURT TO IN FACT SIT IN APPEAL AND REAPPRAISE THE ENTIRE EVIDENCE AS IF IT WERE SITTING AS A COURT OF FIRST APPEAL. THE FINDING THAT THERE WAS A PARTNERSHIP FIRM, HAD BEEN ARRIVED AT AS A CONCLUSION OF FACT NOT ONLY ON THE BASIS OF THE MATERIAL WHICH HAD BEEN PRODUCED BEFORE THE LOWER COURTS BUT ALSO ON THE BASIS OF THE DEPOSITION OF THE PARTIES. THE HIGH COURT COULD NOT HAVE DISTURBED THE FINDING, WITHOUT F DEMONSTRATING THAT THE CONCLUSION WAS SUCH THAT IT WAS WHOLLY IRRATIONAL OR WAS ARRIVED AT WITHOUT TAKING INTO CONSIDERATION MATTERS WHICH WERE RELEVANT OR THAT THE CONCLUSION WAS BASED UPON LEGALLY INADMISSIBLE OR IRRELEVANT EVIDENCE. 8. AS FAR AS THE THIRD QUESTION IS CONCERNED, THAT, NO DOUBT, IS A QUESTION OF LAW. BUT THE CONCLUSION ARRIVED AT BY THE HIGH COURT IS FALLACIOUS. SECTION 69(1) OF THE 1932 ACT READS: "69. (1) NO SUIT TO ENFORCE A RIGHT ARISING FROM A CONTRACT OR CONFERRED BY THIS ACT SHALL BE INSTITUTED IN ANY COURT BY OR ON BEHALF OF ANY PERSON SUING AS A PARTNER IN A FIRM AGAINST THE FIRM OR ANY PERSON ALLEGED TO BE OR TO HAVE BEEN A PARTNER IN THE FIRM UNLESS THE FIRM IS REGISTERED AND THE PERSON SUING IS OR HAS BEEN SHOWN IN THE REGISTER OF FIRMS AS A PARTNER IN THE FIRM." 9. THE SUB-SECTION CONTAINS EMBARGOS WHICH MUST COEXIST BEFORE A PLAINTIFF CAN BE NON-SUITED UNDER THAT SUB-SECTION. THE TWO EMBARGOS RELEVANT FOR THIS CASE ARE: (1) THAT THE SUIT SHOULD BE FILED BY PERSON "SUING AS A PARTNER IN A FIRM" AND (2) THAT THE SUIT MUST BE TO ENFORCE A RIGHT ARISING FROM A CONTRACT. THE SUBMISSION OF THE RESPONDENTS WHICH WAS ACCEPTED BY THE HIGH COURT WAS THAT THE PRAYER OF THE APPELLANT, NAMELY, FOR A DECLARATION OF THE EXISTENCE OF THE PARTNERSHIP AND THE SHARE BETWEEN THE PARTIES WAS A SUIT TO ENFORCE A RIGHT UNDER A CONTRACT AGAINST THE FIRM. A PRAYER FOR SUCH DECLARATION COULD NOT BE SAID TO BE MADE BY PERSON SUING AS A PARTNER. IT WAS A PRAYER TO BE A PARTNER AND IS THEREFORE NOT DEBARRED UNDER THE PROVISIONS OF SECTION 69(1). A PRAYER FOR SUCH DECLARATION COULD NOT BE SAID TO BE MADE BY PERSON SUING AS A PARTNER. IT WAS A PRAYER TO BE A PARTNER AND IS THEREFORE NOT DEBARRED UNDER THE PROVISIONS OF SECTION 69(1). FURTHERMORE, WHAT WAS IN FACT BEING PRAYED FOR BY THE APPELLANT WAS A DECLARATION OF THE EXISTENCE OF A CONTRACT BETWEEN THE PARTIES. THAT COULD NOT BE SAID TO BE A SUIT TO ENFORCE A RIGHT ARISING FROM A CONTRACT. THE SECOND PRAYER OF THE APPELLANT WAS NOT TO CONTINUE AS A PARTNER OF THE FIRM BUT TO DISSOLVE THE FIRM. TO THAT EXTENT THE APPELLANT WAS SUING "AS A PARTNER". THIS HE WAS ENTITLED TO DO UNDER SECTION 69(3)(A) WHICH INSOFAR AS IT IS RELEVANT, READS AS FOLLOWS: "69. (3) THE PROVISIONS OF SUB-SECTIONS (1) ... SHALL NOT AFFECT- (A) THE ENFORCEMENT OF ANY RIGHT TO SUE FOR THE DISSOLUTION OF A FIRM OR FOR ACCOUNTS OF A DISSOLVED FIRM, OR ANY RIGHT OR POWER TO REALISE THE PROPERTY OF A DISSOLVED FIRM;" 10. THE RIGHT OF PARTNER TO ASK THE DISSOLUTION OF A FIRM IS A RIGHT THE ENFORCEMENT OF WHICH IS OTHERWISE FORBIDDEN UNDER SECTION 69(1). IT IS BECAUSE OF THE EXCEPTION UNDER SUB-SECTION (3) OF SECTION 69 THAT A PERSON SUING AS A PARTNER CAN ENFORCE A RIGHT UNDER THE CONTRACT FOR DISSOLUTION OF THE FIRM AND ACCOUNTS. THE CLAIM FOR A HALF SHARE IN THE FIRMS ASSETS WOULD BE A NECESSARY COROLLARY TO A PRAYER FOR DISSOLUTION. WITHOUT THE PRAYER FOR SPECIFIED SHARES IN THE FIRMS ASSETS AND BUSINESS, THE RELIEF THAT MAY BE GRANTED IN A SUIT FOR DISSOLUTION WOULD BE INEFFECTIVE. IN THE CIRCUMSTANCES OF THE CASE, WE ALLOW THE APPEAL AND SET ASIDE THE DECISION OF THE HIGH COURT AND AFFIRM THE DECISION OF THE FIRST APPELLATE COURT. THERE WILL BE NO ORDER AS TO COSTS.