Veeraraghaviah vs Seshachalam

Viswanatha Sastry, J.—The Plaintiff is the Appellant in this second appeal filed against the decree of the Subordinate Judge of Masulipatnam, reversing ''the decree of the District Munsif and dismissing the Plaintiff''s suit for rendition v. of accounts by the Defendant on the ground that the suit was barred by res judicata and by limitation.

The relevant facts are these: The Defendant and one Pitchayya carried on business as partners in purchase and sale of groundnuts, pulses elc Pitchayya filed O. S. 565/42 for dissolution of the partnership and for recovery of Ins share of the profits from the Defendant. The suit was decreed on 31-10-1944 and the decree was affirmed on appeal on 12-9-1946. As a result of the decree, it was established that the Defendant had a ten an as share in the partnership and Pitchayya had a six tenannas share and that the amount due and payable to the tenannas share of the Defendant was Rs. 777-7-2.

While O. S. 565 of 1942 was pending, the Plaintiff herein filed O. S. 12 of 1943 in the same Court against the present Defendant as well as Pitchayya for dissolution of partnership and for recovery of five annas in the profits of the firm, alleging that he (the Plaintiff) was a partner in the business with Pitchayya and the present Defendant. He also alleged that he gave a sum of Rs. 330-11-2 in the shape of profits derived under a forward contract entered into by him with Louis Dreyfus and Co., for the sale of groundnuts treating the said sum as his contribution towards the share capital.

O.S. 12 of 1943 was dismissed on the ground that the Plaintiff was not a partner along with the Defendant and there was no evidence that he had deposited the sum of Rs. 330-11-2 with the firm. The Plaintiff thereupon filed the present suit on 9-9-1949 within six years from the date of the Appellate decree in O. S. No. 565 of 1942 and the final decree in that suit.

In the present suit the Plaintiff claims to be a sub-partner of the Defendant entitled to a five tenannas share of the profits pertaining ''to the tenannas share of the Defendant in the firm and prays for a decree for an account from the Defendant and for the recovery of such amount as might be due to him on taking the account with subsequent interest. The plea of the Defendant is that the suit is barred by res judicata by reason of the adverse decision given against the Plaintiff in O. S. No. 12 of 1943 and also by the expiry of the period of limitation applicable to the suit.

It may be stated at the outset that the parties adduced no oral evidence and were content to argue the case on the documentary evidence brought on record. The evidence by the Defendant in the earlier suit was marked as Ex. A-3. He distinctly admitted therein that the present Plaintiff sold 25 tons of groundnuts under the forward contract for delivery to Louis Dreyfus Co. by November 1936, that there was a profit of one rupee per bag to be earned out of that contract and that he (the Defendant) took a transfer of that contract and got a difference of Rs. 330/- as profits.

This amount was. credited in the books of the firm of which Pitchayya and the Defendant were partners to the account of the Defendant. He further admitted that the firm had the advantage of the contract and earned the profits derived there From These admissions of the Defendant in the suit support the Plaintiff''s case that he deposited Rs. 330/- with the Defendant. In the absence of any explanation from the Defendant as to why this" sum was deposited with him if it was not a deposit of share capital for the sub-partnership pleaded by the Plaintiff, the Plaintiff''s case that there ''was a sub-partnership between the Plaintiff and the Defendant in the- partnership business carried on by the Defendant with Pitchayya, must be held to be established.

The finding of the learned District Munsif accepting the Plaintiff''s case of a sub-partnership with the Defendant, has therefore to be accepted.

The first point argued is whether the suit was barred by res judicata under Order 2 Rule 2, CPC Order 2, Rule 2 CPC does not compel the Plaintiff to include every cause of action in the same suit but merely requires him to include the whole of the claim arising out of a cause of action. If the cause of action in the subsequent suit is different from that in the prior suit, the subsequent suit is not barred. All that the rule requires is that the whole of the claim arising from one and the same cause of action should be included in the suit and not that every suit shall include every claim or every cause of action which the Plaintiff may have against the Defendant.

The Plaintiff''s cause of action to sue as a sub-partner of the Defendant and demand an account from him as such sub-partner, is different from the cause of action on which he based his earlier suit which was that the Plaintiff was a partner along with the Defendant and Pitchayya and was entitled to sue Yog. dissolution of that him. In the present suit, the Plaintiff claims to be a sub-partner of the Defendant and seeks to share the profits which had been decreed to the Defendant''s share in the suit brought by Pitchayya against the Defendant for dissolution of the partnership.

under Section 29 of the Partnership Act, a transfer by a partner of his interest in part or whole in the firm would not make the assignee a partner in the eye of law. The transferee cannot demand accounts from the other partners or a settlement of the share of the profits of the firm. The right of the transferee against the firm arises only after the dissolution of the firm and even then, he could only file a suit for the share to which the transferring partner is entitled and, for that purpose, he could assert his right to an account only from the date of the dissolution of the firm.

The right of the transferee to an account from the date of the dissolution is a statutory right u/s 29 of the Partnership Act. It is well settled that if there is a contract of partnership, one of the partners cannot, by his action, introduce a third party without the consent of the other partners, so as to give the third party a right to interfere in the management of the business of the firm or to ask for an account. It is only on a dissolution of the firm that the assignee of die interest of a partner gets the right to take action in the same was as his assignor Could have done to claim an account from the date of the dissolution. See Dhanaji Jhelaji Vs. Gulabchand Pana, .

A sub-partner is in the position of an assignee of a part of the1 interest of one of the partners and is entitled to share the ''''pfcfitiJ'' deifved by imp the partner from the ''find, ''''Such being the legal position,'' the cause of action accruing to a" partner to sue for a dissolution of the partnership and for accounts is different from the cause of action accruing to the sub-partner to ''sue after ''the dissolution of the partnership for recovery of his share in the profits of the firm realised by the1 partner.

It was argued that in the previous suit the. Plaintiff could have asked for'' an alternative relief on the basis of his being a sub-partner with the Defendant and his omission to. do so bars'' the present suit. The contention is Clearly untenable because the Plaintiff could not have asked for relief'' in his capacity as a sub-partner in the previous'' suit and his right as a sub-partner would accrue only after the partnership was dissolved under the decree O. S. No. 565 of 1942. Such a dissolution took place only on 12-9-46.

It was further argued that the finding in the earlier suit that the Plaintiff did not deposit the sum of Rs. 330/-.with the firm would operate as res judicata. In that suit; the Plaintiff claiming to he a partner of the firm (alleged that he deposited there said sum with the firm and, as already pointed out,-the present Defendant admitted in: that suit that the amount had been. ;credited in the accounts.-Nevertheless the Court held that the said sum'' was not deposited with the, firm as the .Plaintiffs share of the capital.

The Plaintiff''s case is that as a sub-partner he deposited the amount with the Defendant and this question was not raised or decided in the previous suit. The only question that was decided in the previous suit was whether or not the: Plaintiff'' was a partner in the firm and the question whether the Plaintiff was a sub-partner With die'' Defendant" was not germane r to that suit The argument of this: learned Advocate for the Defendant: that the Plaintiff ought to have put forward the present case of a sub partnership is in my opinion, untenable:

The right claimed in the present suit is different from that in the former suit and is claimed under a different title.- It cannot be said that the present case of a sub-partnership should have-.been put forward as- a, ground of attack, in .the former suit because its introduction would have been, incongruous to the matter of that suit. If the relief on the basis of a sub-partnership had .been included in the former suit, it would have made that suit bad for multifariousness and therefore it need not have been made a ground of attack in the'' former suit.

In the former suit, the Plaintiff was claiming to be a partner of the firm .while, in the present suit the, Plaintiff claims to be a sub-partner will the Defendant who was a partner of the firm and the partnerships on which the two .suits have been. based are different For these reasons 1 am of the opinion that the plea of res judicata fails.

The next question is whether the suit is barred by limitation. The -learned Subordinate Judge erred in'' treating'' the suit as one for recovery of the sum of Rs. 330/- deposited by the Plaintiff with the Defendant when the sub-partnership, was entered into. The suit is for, rendition of accounts and for recovery of the Plaintiff share of the Profits that had been ascertained to be due to the de fendant in the partnership business in the prior it suit for dissolution of the firm. The cause of action for the Plaintiff to proceed against the dissolved firm or the partner with whom he had entered into a sub-partnership, accrued to him only when the main partnership stood dissolved and that was finally dissolved on 12-9-1946.

The present suit, which was filed on 9-9-1949, would be within three years of that date. In Lingamallu Seenayya Vs. Lingamalla Ramalingayya, , a partner who had paid his share of the loss incurred in the partnership sued his sub-partner for recovery of a portion of such loss pursuant to the terms of the contract between them. The court held that neither Article 106 nor Article 61 of the Limitation Act applied to the case and that the suit was governed by Article 120. That was the converse of the present case, which is one by a sub-partner against a partner.

There is no specific Article governing suit filed by a sub-partner for accounts and for recover/ .of his share of the amount of profits ascertained to be due to the partner and in these circumstances, one has to fall back upon the residuary Article, Article 120 of the Limitation Act. The right to sue accrued to the Plaintiff only when a decree was made in the previous suit dissolving the partnership and the suit having been filed within six years from that date, would be held to be in time.

In the result, I allow the second appeal, reverse the decree of the Lower Appellate Court and restore the decree of the trial Court with costs here and in the Court below.