Decided on October 31,1969

GATTULAL Respondents


A.P.SEN, J. - (1.) THIS is an appeal from a judgment of the III Additional District Judge, Jabalpur, pronounced on 27th March 1969, dismissing a suit brought by the appellants for a declaration of their alleged share in the profits of a partnership, for its dissolution and accounts.
(2.) SHORTLY stated, the facts are these. The respondent Gattulal along with one Babu Jagdeosingh had taken on lease the malguzari forest at Hathibhar from Thakur Lallusingh, the ex-Malguzar of Majhagawan, for a term of five years w. e.f. 28th June 1943, and formed a partnership for that venture which was to expire with the lease. After sometime Jagdeosingh assumed exclusive control of the forest and excluded the respondent from benefits of the partnership. As a result of this, the respondent by a registered instrument dated 13th July 1944, created the lessor Lallusingh's son Thakur Gulabsingh, the appellant No. 1 herein, to be a sub-partner so far as his share in that partnership was concerned as from that date, presumably with a view to retrieve the forest from the clutches of Jagdeosingh. The instrument of sub-partnership provided, inter alia, for two different contingencies under which the rights of the parties had to be worked out. In the first place, in the event of possession of the forest being secured from Jagdeosingh, the parties were to exploit the same in partnership under the name and style of M/s. Gulabsingh Gattulal, the profits and losses whereof were to be equally shared by them. Gulabsingh was to be the financial partner and ii there was a failure on his part to provide the necessary funds, Gulabsingh would have a right to terminate the partnership (Clause 2). On the other hand, if there was litigation with Jagdeosingh, then, Gulabsingh was to have met the costs of such litigation which were to be settled and borne equally at the final settlement of accounts of their firm M/s. Gulabsign Gattulal (Clause 3). The terms of partnership also provided for a term of five years whereafter the business of the firm was to be continued as before, subject to the same conditions, with the consent of the parties (Clause 4). The first contingency never arose because the parties never got possession of the forest from Jagdeosingh who remained in its exclusive enjoyment until the expiry oi the Theka. The second contingency, however, was an eventuality which happened. The respondent brought Civil Suit No. 118-A of 1961 /22-A of 1958 before the Civil Judge (Class II), Damoh against the aforesaid Jagdeosingh for the dissolution of the main partnership and for rendition of its accounts. That suit turned out to his benefit because it resulted in a final decree for Rs. 2,86,078.62 p. passed by the High Court in Babu Jagdeosingh v. Gattulal(S.A. No. 202 of 1960 decided on the 7th December 1963), arising out of the final decree proceedings. The Supreme Court by its order dated 14th April 1964 declined to grant Jagdeosingh special leave to appeal. On 25th November 1964, the appellant No. 1 transferred half of his interest in the profits to the appellant No. 2 Thakur Surajpalsingh under an Ikrarnama dated 25th November 1964. Thereafter, the appellant No. 1 Thakur Gulabsingh made a demand by a notice dated 26the November 1964 calling upon the respondent to render an account of the profits with a view to settle the affairs of the sub-partnership. The respondent repudiated his liability by a notice dated 17th December 1964 alleging breach on the part of the appellant No. 1 due to his neglect or failure to perform his part of the contract and alternatively, that the sub-partnership having been dissolved in the year 1949, the right to a rendition of its accounts could not now be enforced. On such repudiation, both the appellants commenced a suit on 21st January 1965 against the respondent basing their claim on the second contingency in the instrument of sub-partnership viz. the decre for Rs. 2,86,978.62 P. obtained by the respondent against Jagdeosingh towards his share of profits. The cause of action, as averred in para 16 of the plaint, accrued on 17th December 1964 when the respondent repudiated his liability. The respondent denied the claim of the appellants alleging that the instrument of sub-partnership was vitiated by fraud, undue influence, coercion/misrepresentation on the part of the appellant No. 1 Thakur Gulabsingh and his father Thakur Lallusingh; that alternatively, even if the factum of partition was established, the appellant No. 1 had abandoned his rights thereunder and that even otherwise, the claim was not enforceable by reason of his laches and also the suit was barred by limitation beeause the cause of action for it, if any, accrued on 28th June 1964 on the expiry of the forest lease or on 13th July 1949 when the sub-partnership stood dissolved by efflux of time. The learned Judge has upheld this defence and non-suited the appellants on the ground that their suit was barred by limitation and also on the ground that the alleged sub-partnership was the out-come of fraud practised on the respondent and, therefore, unenforceable and that, alternatively, the appellant No. 1 had abandoned all his rights to a share of profits in the sub-partnership by his failure to contribute Rs. 251 into capital assets and on account of his refusal to bear the costs of litigation with Jagdeosingh.
(3.) THE questions in this appeal are, firstly a question of law, as to whether the appellants' suit was barred by limitation; and secondly, a question of fact, as to whether the contract of partnership was un-enforceable on the ground of fraud or alternatively, on the ground that the appellant No. 1 had abandoned his rights under the contract. So far as the question of law is concerned, the learned Judge has dearly misdirected himself in assuming that the suit was one for accounts of the profits of a dissolved partnership. The conclusion rests on the following circumstances: (i) . The duration of sub-partnership was limited with that of the main partnership. (ii) . The sub-partnership being for a single venture i.r., exploitation of the Hathibhar forest, its duration would be co-terminus with that of the forest lease. Both, the partnership which respondent had with Jagdeosingh and their forest lease expired on 27th June 1948. (iii) The parties having themselves stipulated by clause 4 of the agreement for a period of 5 years w. e.f. 13th July 1944, the sub-partnership would stand dissolved by efflux of time on 13th July 1949. In all his premises, the learned Judge is mistaken in law. In the first place, there is no necessary presumption that the duration of a sub-partnership is to be the same as that of the main partnership [Frost v. Moulton(1856) 111 Revised Reports 215)]. As stated in Lindley on Partnership, 12th edition, P. 160- "If one of several partners forms a sub.partnership with a stranger, the fact that the principal partnership has been entered into for a certain number of years is no proof that the sub-partnership was intended to last for the same number of years, or for as many of them as were unexpired when the sub-partnership was formed." ;

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