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2024 DIGILAW 988 (KER)

Sha Vallabhdas Vrajlal (Died), S/O. Sha Vrajlal Madhavjee v. Sha Mansukhlal Vrajla

2024-08-06

P.G.AJITHKUMAR

body2024
JUDGMENT : P.G. AJITHKUMAR, J. The plaintiff in O.S.No.10 of 2018 on the files of the Sub Court, Kozhikode is the petitioner. He filed I.A.No.168 of 2018 in O.S.No.10 of 2018 for appointment of a receiver. As per the order dated 19.11.2018 the learned I Additional Sub Judge dismissed that petition. He challenged that order by filing an appeal. The I Additional District Judge as per the judgment dated 20.03.2019 confirmed that order. Aggrieved thereby, he filed this original petition under Article 227 of the Constitution of India. 2. Heard the learned counsel for the petitioner and the learned Senior Counsel appearing, on instructions, for respondents No.2, 3, 4, 7 and 9. 3. The plaintiff and defendants were the partners of a partnership firm named Shah Parshotam Madhavjee. That was a partnership at will. The petitioner instituted the said suit for rendition of accounts. It was averred that the partnership firm was dissolved and on taking the accounts of the firm, the petitioner shall be allotted his share. The petitioner contended in I.A.No.168 of 2018 that the business of the partnership firm was closed with effect from September, 2008 and the building it owned had been let out. The rent being received has not been properly accounted, the entire portion of the building has not been properly utilised and huge loss was being occasioned. The petitioner therefore sought to appoint a receiver. 4. The respondents filed a counter affidavit. They maintained that rents for various rooms in the occupation of various tenants have been collected and accounted properly. The tenants have been making payments through the bank. From the rent being collected, maintenance of the building, payment of wages to the employees and such other necessary expenses were being met. The balance amount of Rs.15,73,570/-then available has been kept in the bank account of the partnership firm. The petitioner has only 20% share in the partnership firm. The respondents accordingly sought to dismiss the petition. 5. The plea for appointment of a receiver was found untenable by the trial court, both in law and on facts. The law that the trial court found to have barred the plea for appointment of the receiver is that the suit as framed was not maintainable. Also that, since no relief of dissolution of the firm was sought, the suit for rendition of accounts could not be entertained. 6. The law that the trial court found to have barred the plea for appointment of the receiver is that the suit as framed was not maintainable. Also that, since no relief of dissolution of the firm was sought, the suit for rendition of accounts could not be entertained. 6. The appellate court after referring to the law laid down by a four Judge Bench of the Apex Court in Banarsi Das v. Seth Kanshi Ram and others [ AIR 1963 SC 1165 ] and also this Court in Muraleedharan T.P. and another v. M.Irabhimkutty and others [ 2014 (1) KLT 820 ] concurred with the trial court on the question of law. 7. In Banarsi Das (supra) the dispute was concerning S. B. Sugar Mills, Bijnor, a partnership firm. It was a partnership at will. There were three suits. The first suit was filed by one of the partners on May 13, 1944 for declaring that the partnership stood dissolved on May 13, 1944 and rendition of accounts. On October 11, 1947, that suit was dismissed for default. On November 8, 1947, another partner instituted a suit for a permanent injunction to restrain the receiver from acting as the receiver. That suit was dismissed on March 3, 1948. The third suit was filed on October 7, 1948, claiming the reliefs of a declaration that the partnership was dissolved on 13th May, 1944 or in the alternative to dissolve it and for accounts and allotment of share in the assets. 8. In the interregnum several transactions took place regarding the firm property. Eventually the plaintiff in the third suit abandoned the claims except for relief of taking accounts and share of profits. In view of that concession by the plaintiff, the Court decreed that suit declaring that the partnership stood dissolved with effect from 13th May, 1944 and the plaintiff's share was 1/6th and to have rendition of accounts. 9. All the three decrees were challenged in appeals. The High Court on March 15, 1958 dismissed two appeals, but partially allowed the third appeal. The consequent decree was a declaration that the partnership stood dissolved with effect from May 13, 1944. One of the parties, Sri.Banarsi Das preferred three separate appeals before the Apex Court challenging the judgment and decrees of the High Court. A fourth appeal was also filed by another party. 10. The consequent decree was a declaration that the partnership stood dissolved with effect from May 13, 1944. One of the parties, Sri.Banarsi Das preferred three separate appeals before the Apex Court challenging the judgment and decrees of the High Court. A fourth appeal was also filed by another party. 10. One of the points raised before the Apex Court was, did the High Court go wrong in holding that the period of limitation for the third suit for an account and a share of profits of the dissolved partnership prescribed in Article 106 of the Limitation Act, 1908 (Article 5 of the Limitation Act, 1963) commenced on May 13, 1944, which was the date on which the first suit was instituted. The contention in that regard was that the partnership being one at will, it stood dissolved on May 13, 1944, the date of institution of the first suit. If the partnership firm stood dissolved on May 13, 1944, the suit for an account and a share of profits of the dissolved partnership filed on October 7, 1948 would be time barred, being the period of limitation as per Article 106 of the Limitation Act, 1908, as then applicable, was three years. The appellant took the stand that the mere filing of a suit for declaration that the partnership stood dissolved and rendition of accounts does not amount to a notice for dissolution of the partnership for the purpose of Section 43(1) of the Partnership Act, 1932. The question was considered in the light of the provisions of Section 43 of the Partnership Act and Rule 15 of Order XX of the Code. 11. Section 43 of the Partnership Act reads thus: "(1) Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. (2) The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice." 12. (2) The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice." 12. Rule 15 of Order XX of the Code reads thus: "Where a suit is for the dissolution of a partnership or the taking of partnership accounts, the Court, before passing a final decree may pass a preliminary decree declaring the proportionate share of the parties, fixing the day on which the partnership shall stand dissolved or be deemed to have been dissolved, as much, accounts to be taken, and other acts to be done, as it thinks fit." 13. Before proceeding further I may point out the provisions in the Partnership Act relating to dissolution of a partnership. Section 40 says that a firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners. Section 41 covers compulsory dissolution of a firm. It is more statutory in nature. Section 42 deals with dissolution on the happening of certain contingencies such as expiry of the term; fulfillment of the objective; death or insolvency of a partner, etc. Section 43 covers the dissolution of a partnership at will, which is by giving a notice. Section 44 contains the grounds on which a court can order dissolution of a partnership firm. 14. The Apex Court in Banarsi Das (supra) considered the question concerning dissolution of a partnership at will, which is covered by Section 43 of the Partnership Act. It was held that a partner of a partnership at will can call for the dissolution of the firm by giving a notice as provided in subsection (1) of Section 43 i.e. without the intervention of the court. But, if he does not choose to do so and he wants to go to the court for effecting the dissolution of the firm, he will, no doubt, be bound by the procedure laid down in Rule 15 of Order XX of the Code. It was observed that this rule is of general application, that is, to partnerships at will as well as those other than at will; there are no limitations in this provision confining its operation only to partnerships other than those at will. 15. It was observed that this rule is of general application, that is, to partnerships at will as well as those other than at will; there are no limitations in this provision confining its operation only to partnerships other than those at will. 15. Sub-section (1) of Section 43 of the Partnership Act does not say what will be the date from which the firm will be deemed to be dissolved on giving a notice. But if a notice fixing date is given, the date of dissolution is the date of receipt of the notice by other partners by virtue of the provisions of Sub-section (2) of Section 43. After referring to Sub-section (2) of Section 43 of the Partnership Act and Rule 15 of Order XX of the Code the Apex Court held,- “13. Now, it will be clear that this provision contemplates the mentioning of a date from which the firm would stand dissolved. Mentioning of such a date would be entirely foreign to a plaint in a suit for dissolution of partnership and therefore such a plaint cannot fall within the expression "notice" used in the sub-section. It would follow therefore that the date of service of a summons accompanied by a copy of a plaint in the suit for dissolution of partnership cannot be regarded as the date of dissolution of partnership and Section 43 is of no assistance.” (underline supplied) 16. The said observation was concerning a plaint in a suit for dissolution of partnership wherein the date from which the firm would stand dissolved has been mentioned. It was not regarding a suit for an account and a share of profits. It may be noted that the High Court granted a decree that the partnership firm stood dissolved with effect from May 13, 1944, the date on which the first suit was instituted. The contention before the Apex Court was that if the partnership was dissolved on May 13, 1944, the third suit would be time barred. In that context, the Apex Court laid down the principle that a partnership firm would be deemed to be dissolved when the summons accompanied by a copy of the plaint in a suit for accounts and a share of profits of the dissolved partnership is served on the defendant. That is explicit from the following observations of the Apex Court; “14. That is explicit from the following observations of the Apex Court; “14. Even assuming, however, that the term "notice" in the provision is wide enough to include within it a plaint filed in a suit for dissolution of partnership, the sub-section itself provides that the firm will be deemed to be dissolved as from the date of communication of the notice. It would follow, therefore, that a partnership would be deemed to be dissolved when the summons accompanied by a copy of the plaint is served on the defendant, where there is only one defendant, and on all defendants, when there are several defendants. Since a partnership will be deemed to be dissolved only from one date, the date of dissolution would have to be regarded to be the one on which the last summons was served. xx xx xx” 17. The Apex Court thus held in unequivocal terms that a partnership at will would be deemed to be dissolved when the summons accompanied by a copy of the plaint in a suit for an accounts and a share of profits is served on the defendant, where there is only one defendant, and on all defendants, when there are several defendants. Since a partnership will be deemed to be dissolved only from one date, the date of dissolution would have to be regarded to be the one on which the last summons was served. 18. In Muraleedharan T.P. [ 2014 (1) KLT 820 ] this Court followed the proposition of law laid down in Banarsi Das (supra). This Court dilated the principle further and held that the term "notice" in Section 43(2) is wide enough to include within its fold a plaint filed in a suit for dissolution of the partnership. I doubt whether such a proposition was evolved by the Apex Court in Banarsi Das (supra). Since that question does not arise in the instant case, I am leaving that question unanswered. 19. The Appellate Court did not conceive the principle of law in its correct perspective. That resulted in holding incorrectly that the date of service of a summons accompanied by a copy of a plaint even in a suit for accounts of a partnership at will cannot be regarded as notice of dissolution of the partnership firm. That incorrect application of law resulted in holding that the suit was not maintainable. 20. That resulted in holding incorrectly that the date of service of a summons accompanied by a copy of a plaint even in a suit for accounts of a partnership at will cannot be regarded as notice of dissolution of the partnership firm. That incorrect application of law resulted in holding that the suit was not maintainable. 20. I have ventured to consider the said question of law only because the courts below failed to deduce the ratio of Banarsi Das [ AIR 1963 SC 1165 ] correctly. Inasmuch as the view taken by the courts below based on facts that a receiver was not liable to be appointed, I find no reason to take a different stand. It is especially so when more than six years elapsed after filing of the suit, and the need for appointing a receiver is faded away. Accordingly, I find that this petition deserves only to be dismissed. The original petition is dismissed.