E.S. Ismail Mohideen Rowther vs R. Shaik Mohideen Rowther

Anantanarayanan, J.—This civil miscellaneous appeal is by the defendant in the first Court in a suit for dissolution of partnership. The suit

was dismissed with costs by the learned Subordinate Judge, upon certain findings of fact. It was taken up in appeal by the learned Additional

District Judge, Tirunelveli (A. S. No. 84 of 1959), and the learned Judge set aside the decree of the trial Court dismissing the suit entirely, but

confirmed the decree in so far as it related to the dismissal of the claim for dissolution of the lorry partnership between the parties, remanding the

rest of the suit for fresh disposal. In brief, the claim of the learned Counsel for the defendant-appellant (Sri T. M. Krishnaswami Iyer) is that this

remand was unjustified upon the frame of the suit and the merits of the findings of the trial Court and that, consequently, the learned Additional

District Judge should really have dismissed the appeal outright. It has to be conceded that, judging merely from the discussion as it appear in the

judgment of the appellate Court, there seems to be something to be said for the view that the remand is not consistent with the observations of the

learned District Judge himself. The essential facts are that the suit was between the father (the plaintiff) and the son (the defendant), and related to a

partnership in trade carried on between them in pursuance of an oral understanding, as and from 17th October 1957. There was originally a

business in paddy which was conducted till 31st December 1957. Thereafter, since the paddy business functioned upon a basis of recurring loss,

the partners (according to the plaintiff) changed the nature of the business by purchasing two lorries with the assets of the partnership, and by

conducting a lorry business instead. The defendant (appellant) was rendering accounts etc., in respect of the business till 1st February 1958, but he

refuted to do so thereafter, which led to the institution of this suit, after the plaintiff had made an oral demand for dissolution of the business on 10th

April, 1958, which was not complied with. The reliefs as preyed for in the plaint, are of some importance. They were set out in the following form;

firstly, that a decree be passed against the defendant for dissolution of the partnership business; secondly, that an account be taken from the

defendant, and a decree be passed in favour of the plaintiff for the amounts found due, together with costs of suit; thirdly, that a receiver be

appointed pendente lite for the management of the partnership business, a relief with which we are not now concerned.

Now, upon the merits the trial Court definitely came to the following conclusions. Firstly, the parties to the suit were never partners in any

subsequent lorry business as alleged by the plaintiff; secondly, the lorry business was the exclusive proprietary concern of the defendant

(appellant), in which the plaintiff had no interest whatever; thirdly, the suit for dissolution was not maintainable, as the firm was not registered under

S. 69, Sub-S. (1) of the Partnership Act. The principle of S. 69, Sub-S. (3) could not apply, as there was no such partnership emanating as a

paddy business and evolving into a lorry business as between father and son, as claimed in the plaint (issue 4). Those were the findings upon which

the suit was dismissed outright by the trial Court.

The reasoning of the learned District Judge, in taking a different view of the matter, was as follows. Admittedly, there was a paddy business

conducted as between the parties till 31st December 1957, which was never dissolved, and the accounts of which have not been determined so

far. The appellate Court totally accepted the view that this business did not mature into a lorry business, conducted as such between the partners.

In fact, this finding was not questioned in the appellate Court at all. But the learned District Judge said:

It is true that the patties really missed this point and went into trial only relating to the lorry business. In order to avoid multiplicity of proceedings, I

think this is a fit case where the suit should be remanded to the lower Court for trial as to whether the plaintiff is entitled to a decree for dissolution

of the partnership of the paddy business, and further taking of accounts.

Now, Sri T. M. Krishnaswami Aiyar for the defendant (appellant) contends that the frame of the suit was that there was a paddy business

between the partners which evolved into a lorry business conducted as such, and that this was the suit partnership; once this is held disproved, the

suit falls to the ground, and no remand would be strictly justified, But, I find from a scrutiny of the plaint allegations, that the plaintiff sued for

dissolution of the partnership between the parties as such giving the history of the partnership according to his case. He did not confine it to the

lorry business, by any words so limiting his relief. On the contrary, the defendant (the appellant) does not deny that there was, in fact, a partnership

between the parties. which stands undissolved to this date, which was at least conducted as a business in paddy from 17th October 1957 to 31st

Dec. 1957, and which was working at a loss. According to the case of the plaintiff, the plaintiff contributed Rs. 12000 towards this business, and

the defendant contributed Rs. 8000. The further case of the plaintiff that two lorries were purchased from these assets, and the lorry business

conducted as a partnership between father and son, has been definitely disproved. But that does not mean that the actual and undeniable

partnership between the parties cannot be dissolved as upon the date when it came to end (31st December 1957) and the accounts of this

partnership be taken, if the plaintiff is entitled to this relief. 1 might immediately state that Sri T. M. Kriahnaswami Iyer for the defendant (appellant)

has no objection whatever to a. dissolution of the partnership, and to a declaration that the partnership stands dissolved as and from the relevant

date, to be ascertained by the Court below. This partnership, of course, is exclusively the paddy business. But Sri T. M. Krishnaswami Iyer

strenuously contends that his client, the defendant (appellant) does not possess the accounts of this business, that he never possessed them, and

that, on the contrary, it is plaintiff who had possession of the accounts and who should renter them and account further for any assets of this

partnership if now dissolved. The parties are at variance only upon this extent of controversy.

Mr. T. M. Krishnaswami Iyer further contends that, as a matter of law, the plaintiff is entitled to a dissolution of the unregistered partnership, and

no more in this suit. As regards the interpretation of S. 69, Sub-S. 3 (a) of the Partnership Act, it is not open to a plaintiff in this suit to ask both for

dissolution and for the taking of accounts of the unregistered partnership. It is only open to the plaintiff to sue for dissolution of the partnership or to

sue for the taking of accounts of a dissolved partnership, that is, a partnership which has stood dissolved as between the erstwhile partners even

prior to the institution of the suit. This is a matter of some interest and significance in view of the authorities cited, and I shall immediately proceed

to address myself to this aspect.

Under S. 69 (1) of the Indian Partnership Act (IX of 1932) a bar is enunciated with reference to the enforceability of rights under the Act,

unless the firm has been registered. S. 69 (2) reiterates the bar with reference to third parties. But S. 69(3)(a) states that the provisions of Sub-Ss.

1 and 2 shall not affect

the enforcement of any right to sue for dissolution of a firm or for accounts of a dissolved firm or any right or power to realise the properly of a

dissolved firm.

The argument of the learned Counsel for the appellant (Sri T. M. Krishnaswami Iyer) is plain, and can be expressed in the following form. In

Ponnuswami Gounder v. Muthuswami Gounder AIR 1942 Mad. 252, Leach C.J, and Happell J. had to consider the effect of the bar laid down in

S. 69(2) where the firm was registered after the filing of the suit, apparently in an attempt to cure the defect. The learned Judges held that the

registration of the firm was a condition precedent to the right to institute the suit, according to the very terms of the statute, and consequently that

the Court had no jurisdiction to proceed with the trial when the condition precedent had not been fulfilled. Registration after the filing of the suit

could not cure this initial lack of jurisdiction. Learned Counsel would argue, by a parity of reasoning, that S. 69(3)(a) will not enable a plaintiff, in a

suit for dissolution of an unregistered firm, also to ask for accounts. If he desires to have the relief of accounts, it must be in respect of a dissolved

firm, even though unregistered, and the dissolution of the firm as a question of fact prior to the institution of the suit, is a condition precedent to such

institution.

The point does not appear to be decided by any authority of this Court but there are several authorities of other Courts for an opposite view. I

do not think it is necessary to refer to all of them, but I shall commence with the decision of the Calcutta High Court in Abdul Razack v. Ahmed 63

C.W.N. 766. The learned Judges held that the suit for dissolution of an unregistered firm was comprehensive enough to include the relief? of

accounts, the prayer for accounts being merely incidental, or consequential on the main relief, and a necessary corollary or concomitant thereof.

The learned Judges referred to a series of cases of different High Courts in support of this proposition, including the Allahabad and Nagpur High

Courts. In Mahendra v. Gurdayal 30 Pat. 109, S. 69(3) of the Partnership Act came in for interpretation and comment, and reference is made to

Shibbamal v. Gulabroy ILR 1940 All. 26, which Full Bench judgment held that a compendious suit for both dissolution of partnership and

accounting was not barred under the provisions of S. 69 of the Partnership Act. This was relied upon in this Patna decision. In AIR 1937 633

(Lahore) Tek Chand, J., was at some pains to explain the logic or rationale behind the view. The learned Judge pointed out that a prayer for

dissolution of partnership through Court was itself a compendious mode of asking for a four-fold relief, which would include a prayer that the

accounts be taken and the assets and liabilities determined as on the date of dissolution, and a further prayer that a final decree be passed in terms

of the ascertained rights. Vivian Bose, J., (as he then was) has taken the same view in AIR 1943 12 (Nagpur) .

Upon a consideration of these relevant decisions, I respectfully agree with the reasoning set forth in them, and adopt the same view upon the

interpretation of S. 69(3)(a) of the Partnership Act. It seems to me that the case for the opposite view is really founded upon a misconception. It is

undeniable that, where a plaintiff sues for the accounts of a dissolved partnership, under the latter part of S. 69(3)(a) , the dissolution should have

taken place prior to the institution of the suit, as a condition precedent thereto. But this does not necessarily imply that in a suit for dissolution

simpliciter of an unregistered partnership, the plaintiff cannot obtain the relief of accounting also, as a concomitant element of the relief of

dissolution. There is hence no logical conflict between the present view, and the fact that S. 69(3)(a) also refers to the suit ""for the accounts of a

dissolved firm."" I am hence of the view that, in this suit itself, the plaintiff is entitled both to dissolution of the partnership and to accounts. But I must

make it plain that, in view of the rival contentions of parties, it will be the business of the trial Court first to formally dissolve the partnership (paddy

business) as on the relevant date (to be ascertained by the Courts below) and then to ascertain who was conducting the partnership actually, and

had custody of the accounts, and should therefore account to the other party. In other words, accounting can be directed only after a clear

ascertainment of the custody of the accounts, and the partner liable to account. Similar remarks apply to the assets of the partnership, if any, at

dissolution. With this clarification, the order of remand of the suit for further trial will stand as a proper direction, and the civil miscellaneous appeal

is hence dismissed. Under the circumstances of the matter, there will be no order as to costs.