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2008 DIGILAW 860 (AP)

Syed Azam (died) Per LRs v. Syed Mahaboob Hussain

2008-09-30

G.V.SEETHAPATHY, V.ESWARAIAH

body2008
Judgment :- G.V. Seethapathy, J. This appeal is directed against the judgment and decree dated 11-09-1996 in O.S.No.237 of 1994, on the file of the VIII Additional Chief Judge, City Civil Court, Hyderabad, wherein the suit filed by the first respondent herein against the appellants and Respondents 2 to 4 for rendition of accounts of the firm known as M/s Deccan Builders, was decreed. 2. Thefirst respondent herein filed the suit with the following averments:- The plaintiff and defendants were partners in the firm known as M/s Deccan Builders, which was constituted on 14-04-1979 and subsequently re-constituted under a partnership deed on 04-04-1981. The firm was engaged in the business of construction of multi-storied commercial complex known as ‘Paigah Plaza’ at Basheerbagh, Hyderabad. D-1 and D-5 were the Managing Partners of the firm. The plaintiff’s share in the profit and loss was 20%. The firm constructed the complex from 1979 to 1983. D-1 and D-5, the Managing Partners, did not furnish statement of account to the partners and did not render any accounts in spite of the demands by the plaintiff. The plaintiff filed O.P.No.386 of 1983, on the file of the Additional Chief Judge, City Civil Court, Hyderabad, seeking reference of dispute to arbitration. On being assured by the Managing Partners that the dispute would be amicably settled, the plaintiff withdrew the said petition. Even thereafter, the Managing Partners evaded amicable settlement of dispute. The plaintiff, therefore, got a notice issued on 13-10-1985 dissolving the firm and calling upon the Managing Partners/D-1 and D-5 to render true and proper accounts. The defendants received the notice, but failed to comply with the same. In view of the notice issued by the plaintiff, the firm stands dissolved and the Managing Partners are liable to render true and proper accounts of the firm and pay the plaintiff’s share thereof. The plaintiff tentatively valued his share of profit of the firm at Rs.10 lakhs. D-1 to D-4 filed a joint written statement contending, in brief, as follows:- The firm was re-constituted for the third time on 01-04-1989. The plaintiff is no longer partner of the firm as he had already withdrawn and retired himself from the firm through a letter dated 30-03-1982 addressed to D-5, plaintiff and D-6, who were jointly having 50% of the share. The plaintiff did not invest any amount. The plaintiff is no longer partner of the firm as he had already withdrawn and retired himself from the firm through a letter dated 30-03-1982 addressed to D-5, plaintiff and D-6, who were jointly having 50% of the share. The plaintiff did not invest any amount. He was only working with D-5 in a tourist travel business of D-5. The plaintiff was only a name lender to D-5 for the purpose of taxation. The entire amount was invested by D-1. D-5 was in-charge of all the accounts of the firm, having custody of the account books with him. D-5 did not show the accounts to D-1 in spite of demands and he had misappropriated several lakhs of rupees. D-1 also filed a criminal complaint against D-5, plaintiff and D-6 before the V Metropolitan Magistrate, Hyderabad. D-1 also filed a suit O.S.No.674 of 1985 before the IV Additional Judge, Hyderabad, for recovery of the amount invested by him. The plaintiff has no locus standi to file the suit or demand rendition of accounts. D-5 and D-6 filed separate written statements supporting the claim of the plaintiff and pleading that the account books of the partnership firm were in the custody of D-1, who was the Managing Director. 3. Onthe strength of the above pleadings, the trail Court framed the following issues for trial: i) Whether the plaintiff is entitled for a direction to the defendant to render true and proper accounts as prayed for? ii) To what relief? 1. 4. The plaintiff was examined as P.W.1 and Exs.A.1 and A-2 were marked on his side. DWs.1 to 3 were examined and Exs.B.1 to B.4 were marked on behalf of the defendants. Ex.C-1 is the Commissioner’s Report. 2. 5. On a consideration of the evidence on record, the trial Court held that the plaintiff is entitled for a direction to the defendants to render true and proper accounts and accordingly granted a preliminary decree. Aggrieved by the same, D-1, D-3 and D-4 filed the present appeal. During the pendency of the appeal, the first appellant/D-1 died and his legal representatives were brought on record as Appellants 4 to 7. 3. 6. Arguments of the learned counsel for the appellants and the learned counsel for the respondents are heard. Perused the records. 4. 7. Aggrieved by the same, D-1, D-3 and D-4 filed the present appeal. During the pendency of the appeal, the first appellant/D-1 died and his legal representatives were brought on record as Appellants 4 to 7. 3. 6. Arguments of the learned counsel for the appellants and the learned counsel for the respondents are heard. Perused the records. 4. 7. The learned counsel for the appellants would contend that the plaintiff by his letter dated 30-03-1992 retired from the partnership firm and the said letter addressed to D-5 alone would show that the plaintiff, D-5 and D-6 constituted one group among the partners and D-1 to D-4 constituted another group, as can be seen from Ex.B-3 counter-affidavit filed by the plaintiff in I.A.No.882 of 1985 in O.S.No.674 of 1985. The plaintiff is, therefore, not an independent partner, having a distinct share. He would further contend that there has been settlement of accounts under Exs.B-1 and B-2 in the presence of D.Ws.2 and 3 and the trial Court erred in disbelieving their evidence on the ground that they are partisans, being Advocates for the appellant/D-1. The learned counsel for the appellants would further contend that the claim of the plaintiff is barred by limitation. .8. The learned counsel for the first respondent/plaintiff would, on the other hand, submit that as per the partnership deed, the plaintiff is admittedly an independent partner having 20% share and it is not open for the defendants to contend contra to the terms and conditions reduced into writing by way of Articles of Partnership under Ex.A-1. He would further submit that by letter Ex.B-4 the plaintiff only expressed his intention to retire and as there was no response to the said letter, the plaintiff continued as a partner thereafter and in the suit O.S.No.674 of 1985 filed by the D-1 the plaintiff was described as a partner and D-1 sought recovery of his share of the amount as against the plaintiff also, being a partner of the firm. He would further contend that Exs.B-1 and B-2 are not binding on the plaintiff, as he was not a party to the said documents and even otherwise the said documents do .not contain any particulars of the accounts nor do they reflect settlement of any dispute. He would further contend that Exs.B-1 and B-2 are not binding on the plaintiff, as he was not a party to the said documents and even otherwise the said documents do .not contain any particulars of the accounts nor do they reflect settlement of any dispute. He would further submit that the plea of limitation is not raised either in the written statement or at any stage of the suit before the trial Court and not even raised in the grounds of appeal and it is not open for the appellants to raise the same for the first time at the time of arguments of the appeal and even otherwise the suit is not barred by any limitation, as the plaintiff continued to be a partner till filing of the suit. 5. 9. The learned counsel for the appellants fairly submitted that as per the recitals in the partnership deed Ex.A-1, the articles of partnership drawn at the time of re-constitution of the firm on 04-04-1981, the plaintiff was a partner with 20% share. A perusal of Ex.A-1 would disclose that there were seven partners with varying shares, including the plaintiff, who was having 20% share. Ex.A-1 does not disclose formation of any groups among the partners. In the light of the contents of Ex.A-1, the contention of the appellants that D-1 to D-4 constituted one group having 50% share and plaintiff, D5 and D-6 constituted another group, having the remaining 50% share, cannot be countenanced. Similarly, Ex.A-1 would show that D-1 and D-5 shall be the Managing Partners of the firm with a joint responsibility and accountability in all aspects, including maintenance of account book and rendition of accounts. In view of the recitals in Ex.A-1, the contention of the appellants that the plaintiff was only a nominal partner and a name lender for D-5 and, therefore, has no locus standi to seek rendition of accounts, is clearly untenable. The recitals in Ex.A-1 would establish that the plaintiff is an independent partner in his right having 20% share. .10. The next question that would arise for consideration is whether the plaintiff continued to be a partner of the firm as on the date of filing of the suit or retired from the partnership firm under the letter-Ex.B-4. The recitals in Ex.A-1 would establish that the plaintiff is an independent partner in his right having 20% share. .10. The next question that would arise for consideration is whether the plaintiff continued to be a partner of the firm as on the date of filing of the suit or retired from the partnership firm under the letter-Ex.B-4. In the said letter addressed to D-5, the plaintiff conveyed his inability to continue as a partner and requested that the formalities of retirement may be completed by 31-03-1982 and hoped that his retirement would be accepted. From the contents of the letter-Ex.B-4 the appellants/defendants would contend that the plaintiff ceased to be a partner even by 1982 and, therefore, he was not entitled to seek rendition of accounts, especially in view of the settlement of accounts between the plaintiff and D-5 under Ex.B-2. The plaintiff would contend that he only expressed his desire to retire under the letter-Ex.B-4, but there was no response to the said letter by way of acceptance of his retirement and he continued to be a partner, notwithstanding Ex.B-4 letter as admitted by D-1 in the suit filed by him in O.S.No.674 of 1985. The plaintiff categorically denies the genuineness of Ex.B-2. In the evidence P.W.1 admitted that he wrote letter-Ex.B-4 to one of the Managing Partners seeking permission to retire, as proper accounts were not furnished. He further deposed that the defendants did not give him any reply and did not complete the formalities for his retirement. Admittedly, no reply was given by any of the Managing Partners to the said letter-Ex.B-4 accepting the plaintiff’s offer to retire. On the other hand, three years later, D-1 filed the suit O.S.No.674 of 1985, seeking recovery of the amounts due to him from the firm, not only against the other partners, but also against the plaintiff, showing him as the partner of the firm. D.W.1 .categorically admitted that he impleaded the plaintiff herein as a party to the suit O.S.No.674 of 1985, being a partner of the firm viz., M/s Deccan Builders. D.W.1 .categorically admitted that he impleaded the plaintiff herein as a party to the suit O.S.No.674 of 1985, being a partner of the firm viz., M/s Deccan Builders. In the absence of any evidence to show that the letter-Ex.B-4 was acted upon and pursuant thereto the plaintiff ceased to be a partner of the firm and D-1 having admittedly filed the suit O.S.No.674 of 1985 against the plaintiff also, describing him as a partner of the firm, the contention of D-1 that plaintiff ceased to be a partner w.e.f 31-03-1982, cannot be accepted. The evidence on record shows that the letter-Ex.B-4 was not acted upon and the plaintiff continued to be a partner of the firm even thereafter and D-1 had also acknowledged the same by filing a suit against the plaintiff in O.S.No.674 of 1985, describing him still as a partner of the firm. It is not disputed that prior to filing of the suit the plaintiff issued a notice under the original of Ex.A-2, seeking dissolution of the firm and demanding rendition of accounts as a partner. Admittedly, no reply was given to the effect that the plaintiff ceased to be a partner of the firm even in 1982 and, therefore, he has no locus standi to seek dissolution of the firm. The conduct of the parties, as borne out by the evidence on record, clearly establishes that the letter-Ex.B-4 was not given effect to and the plaintiff continued to be a partner even thereafter. 6. 11. The question which next arises for consideration is whether there was settlement of dispute under Ex.B-1 dated 3-4-1982 and Ex.B-2 dated 20-05-1982, as contended by the defendants. According to the first defendant/D.W.1 after he filed a criminal complaint against plaintiff, D-5 and D6 before the V Metropolitan Magistrate, Hyderabad, D-5 executed the letter-Ex.B-1 on 03-04-1982 admitting that D-1 is entitled for Rs.21 lakhs towards his share and subsequently on 20-05-1982, there was another round of settlement in the office of their Advocate Sri Mukramuddin and after hearing D-1 and D-5, the said counsel Sri Mukramuddin drafted Ex.B-2 showing the number of the flats which fell to the share of D-1 and his group and also the amount in cash. According to him, as D-5 and plaintiff did not pay the amount due to him as per Ex.B-2, he filed O.S.No.674 of 1985 for recovery of amount. According to him, as D-5 and plaintiff did not pay the amount due to him as per Ex.B-2, he filed O.S.No.674 of 1985 for recovery of amount. In the cross-examination, D.W.1 admitted that Exs.B-1 and B-2 do not contain the signatures of the plaintiff. According to him, the plaintiff, though present, did not sign on Exs.B-1 and B-2 because he was a nominee of D-5. He denied the suggestion that the plaintiff was not present at the time of Exs.B-1 and Ex.B-2 and he was not a nominee of D-5. He further denied the suggestion that there was no settlement of account on 20-05-1982 among the partners. If really the plaintiff was present at the time of Exs.B-1 and B-2 and the said chits were prepared in pursuance of the alleged settlement of the accounts, there is absolutely no reason as to why the signatures of other partners, including the plaintiff, were not taken on the said documents, especially when they were said to have been prepared by a counsel in his office. The explanation offered by D.W.1 that because the plaintiff was only a nominee of D-5, his signature was not obtained, does not merit any consideration, as the evidence on record establishes that the plaintiff was an independent partner having 20% share in his own right and D-1 also recognized the same by impleading the plaintiff in the suit O.S.No.674 of 1985. .12. Admittedly, the firm had constructed the multi-storied commercial complex known as ‘Paigah .Plaza’ at Basheerbagh, Hyderabad and it comprised 44 flats in 11 floors and the construction went on for about four years. It is highly improbable and hard to believe that the settlement of accounts pertaining to such massive construction spreading over several years would have culminated in the form of chits-Exs.B-1 and B-2, wherein some figures are scribbled without any terms and conditions reflecting the alleged settlements and even the said chits-Exs.B-1 and B-2 are admittedly not signed by other partners, including the plaintiff. Exs.B-1 and B-2 ex facie cannot be treated as evidence of the alleged settlement of accounts among the partners. Ex.B-2 is said to have been attested by Gaffar Khan and Asif Khan. According to D.W.3, Gaffar Khan is no more, but there is no reason as to why the other attestor Asif Khan is not examined. Exs.B-1 and B-2 ex facie cannot be treated as evidence of the alleged settlement of accounts among the partners. Ex.B-2 is said to have been attested by Gaffar Khan and Asif Khan. According to D.W.3, Gaffar Khan is no more, but there is no reason as to why the other attestor Asif Khan is not examined. D.W.2 is admittedly a junior in the office of Sri Mukramuddin, who is an Advocate for D-1. D.W.3 was also an Advocate appearing for D-1. Neither of them signed on Ex.B-2 or Ex.B-1. Ex.B-1 is not attested by anyone and Ex.B-2 though is said to have been attested by two other persons, they were not examined. A perusal of the testimony of D.Ws.2 and 3 does not show that any accounts were perused at the time of alleged settlement before scribbling the notings appearing on Ex.B-1 and B-2. The trial Court has rightly rejected the contention of D-1 that there was final settlement of accounts under Exs.B-1 and B-2. Even according to D-1, the said settlement of accounts was only between himself and D-5. In view of the finding that the plaintiff was an independent partner in his own right and was not a nominee of D-5 as alleged by D-1 any settlement between D-1 and D-5 even if true, the same is not binding on the plaintiff, as admittedly, he has not signed on either Exs.B-1 or B-2. 7. 13. The next contention raised by the appellants is that the suit having been filed on 25-08-1988 i.e., more than three years after the letter Ex.B-4 and settlement of accounts under Exs.B-1 and B-2 is barred by limitation. The plea of limitation was admittedly not raised either in the written statement or at any stage of the suit before the trial Court nor is it mentioned in the grounds of appeal. .14. The learned counsel for the appellants relied upon a decision in GANNAMANI ANASUYA v. PARVATINI AMARENDRA CHOUDHARY ( AIR 2007 SC 2380 ), wherein the Apex Court held that in terms of Section 3 of the Limitation Act, it is for the Court to determine the question as to whether the suit is barred by limitation or not irrespective of the fact as to whether such a plea has been raised by the parties and such a jurisdictional fact need not, thus, be pleaded. In the plaint, the plaintiff had specifically pleaded that with the issuance of notice dated 13-10-1985 by him, the firm stands dissolved and the Managing Partners became liable to render true and proper accounts and the suit is filed for rendition of accounts for a dissolved firm and the same is within limitation under Article 5 of the Limitation Act. Article 5 of the Limitation Act prescribes the period of three years from the date of dissolution of the firm for a suit for accounts and a share of profits of the dissolved partnership. In spite of the said specific averments made in the plaint pertaining to the limitation, there is no plea in the written statement to the effect that the suit is barred by limitation. The defendants only pleaded that the plaintiff has no locus standi and no cause of action to file the suit on the premise that the plaintiff ceased to be a partner in 1982 itself. The plea that the suit was barred by limitation was .neither raised in the written statement nor any issue framed in that regard. Even otherwise, considering that such a legal plea can be permitted even at the time of first appeal, in view of the finding that the plaintiff admittedly continued to be a partner even subsequent to 1982 and D-1 failed to establish the alleged settlement of accounts in 1982 that could be binding on the plaintiff, the suit cannot be held to be barred by limitation. 8. 15. In the circumstances, it is held that the impugned judgment and decree passed by the trial Court directing the defendants to render true and proper accounts of the firm and pay the plaintiff’s share of the profits, do not call for any interference by this Court. 9. 16. In the result, the appeal is dismissed. No order as to costs.