Decided on February 18,1957

MANSHA RAM Appellant
TEJ BHAN Respondents


- (1.) THIS regular second appeal presented by the plaintiff arises out of preliminary decree for dissolution of partnership and rendition of accounts passed by the trial court and affirmed by the Senior Sub Judge, Ambala, on appeal.
(2.) PLAINTIFF Mansa Ram alleges that in June 1952 he and defendant Tej Bhan orally entered into a partnership, the object of which was to carry on the business of supplying bajri, ballast, shingle and stone-boulders etc. , to the Public Works department. The partnership was styled as Messrs. Mansa Ram Tej Bhan, 4, Rajas road, Dehra Dun, and the business done, was of tendering and executing contracts for supply of bajri to various branches of the P. W. D. The defendant invested Rs. 13000/- as his contribution and the plaintiff's investment amounted to Rs. 4,000/- only. Plaintiff contended that the share of the parties in the profit and loss of the firm was to be borne by the parties equally despite the difference in the capital contribution. The partnership functioned at Mubarikpur and Chandigarh and the supply of bajri was from the bed of river Ghaggar. The plaintiff alleged that the defendant being invalid could not personally work in the partnership business and did not provide for the service of a representative on his behalf. For the supply of bajri a tender was given by the parties firm on 10th June 1952 which was accepted by the P. W. D. Punjab on 16th June, 1952. This business con-tinned till 27th January, 1953 for about eight months. The terms of the partnership not having been reduced to writing, disputes arose regarding its conditions. It is stated that on 26th November, 1953, there was a meeting of the partners at dehra Dun but as their differences could not be amicably settled, the defendant on 27th of February 1953 visited the work at Chandigarh, and in the absence of the plaintiff and his son Dr. Sat Parkash, removed the account books and relevant papers relating to the business of the firm on the pretence that he wanted to go through them. On 27th of Feb. 1953 by letter P. W. 2/1 addressed to the Punjab national Bank, Kalka, the defendant instructed the Bank not to allow any withdrawals from the current account of the firm till further instructions. Instructions to similar effect were sent to the Imperial Bank, Ambala City, by letter pw/1 dated 27th February 1953, and also to the Imperial Bank Hissar, by letter pw/1 dated 19th of March, 1953. A recriminatory correspondence was also exchanged between the parties. On 11th of March, 1953, a notice was sent on behalf of the plaintiff to the defendant, complaining that the latter did not attend to the business on account of being invalid, that he had removed the account books and other records of the firm and had stopped operation of the accounts in the Banks. Plaintiff's counsel in Ex. P. 1 also wrote "you are further informed that my client is continuing the supplies to the department; in spite of all your obstruction, and shall continue to do so, unless some legal difficulties arise on account of your illegal action, for which you alone shall be responsible and you are informed that ray client shall be entitled to be compensated for working the contract without your co-operation. " Ex. P/3 is the reply sent on behalf of the defendant to the plaintiff, stating inter alia, that the share in profit and loss had been agreed to be in proportion to the investment, i. e. , three to one and that the stamp paper for drafting the partnership agreement was purchased in Dehra Dun in the Month of June 1952, but it could not be drafted as the plaintiff stated that it had been lost. It was denied, that the working had not been attended to personally by the defendant, owing to his ill health. The defendant accused the plaintiff of having resiled from the original terms, and for insisting upon new terms, which were not acceptable to the defendant. The defendant in the end stated, that he was not willing to work with the plaintiff in partnership, unless proper deed was executed within a week. By notice Ex. P 4 dated 7th April, 1953, the plaintiff's counsel averred that the profits were to be shared half and half regardless of the actual amount contributed. The plaintiff's counsel further seated "since your client is not willing to work in partnership with my client; therefore the partnership stands dissolved from this date, and your client is now called upon to render accounts of the partnership within ten days of the receipt of the notice, failing which a suit shall be filed against him for rendition of accounts at Ambala Courts wherein the partnership worked. Ex. P 5 dated 9th of April, 1953, is a reply sent on behalf of the defendant to the plaintiff and the following among others, are the passages, which deserve mention :- ". . . . . (1) That in spite of the aforesaid notice you L. Mansa Ram have refused by your conduct to execute the partnership agreement. (2) That you L. Mansa Ram have contrived to get the contract which had been originally taken out jointly by yourself and my client, altered in the name of M/s Mansa Ram and sons, after receipt of my client's notice aforesaid. (3) That the department quite illegally effected the said transfer, without the knowledge and consent of my client about which separate action is being taken by my client. The defendant then called upon the plaintiff to execute a proper deed of partnership, on terms and conditions mutally agreed upon, as mentioned in the defendant's notice, dated 14th March, 1953, Ex. P 3 within a week from the receipt of the notice Ex. P 5. On 20th of April, 1953, the present suit was instituted by the plaintiff. The defendant in his written statement denied the various allegations of the plaintiff as detailed above, and averred, that the partnership had been entered into for carrying on the business of supplying bajri only to the P. W. D. , and the conditions of partnership were, that the tenders were to be filed in the name of Mansa Ram Tej Bhan and the accounts were to be opened in the Banks, in that name. The defendant would invest 3/4ths as against the plaintiff's investment of 1/4th and that the shares of the profit and loss would be in the ratio of 3 to 1 respectively. The defendant also alleged that the amount of investment of each of the partners was to carry interest at 6 per cent per annum to the extent of Rs. 10,000/-and for subsequent advance at the rate of 9 per cent per annum. The defendant further contended that till the termination of partnership, and rendition of the accounts, neither of the parties would be entitled to carry on separate business of supplying bajri. The defendant admitted having taken possession of the books, and explained his conduct, by stating that had he not done so, it would have been impossible for him to prove the extent of his investment. He also stated that the partnership was continuing and had not been dissolved. He denied that it was a partnership at will, but it was during the full period of the lease of the quarry, that his rights would remain unaffected despite the plaintiff having in collusion with the P. W. p. authorities got the name of Mansa Ram and his sons inserted in place of Mansa Ram "tej Bhan.
(3.) THE additional pleas of the defendant round which the main controvery centred may be reproduced in extenso. " (1) That the business is being carried on with the assets of the partnership. So, if the Court holds that the partnership is to be dissolved then the defendant is entitled to the profits in the ratio of 3 to 1 till the distribution of the assets of the partnership. (2) That the defendant has come to know from a reliable source, that the plaintiff has started depositing the amount realised from the various departments on account of the business of the partnership, in the name of Mansa Ram and Sons without the defendant's consent. That account shall be deemed to be the account of the partnership and may be considered as such. " At this stage it is desirable to mention one important transaction. A stamped deed of partnership between the plaintiff's sons, namely, Sat Parkash Gian Parkash and dharam Parkash had been executed, in which, it was stated that the three brothers who were the executants of the deed having separated from their father mansa Ram, intended to carry on the partnership business the terms of which were being reduced to writing. This firm was called 'messrs. Mansa and Sons' and its business, among others, included quarrying minerals and supply works, and other such allied works. The deed was silent as to the actual contribution of each partner, although their shares were mentioned at six annas, five annas and five annas respectively in a rupee. All that was mentioned regarding investment was as under:- Para 6. "that whenever necessary, the partners with common consent and with consultation of each other, can raise loans from outside parties for the purposes of Firm's business and the interest on such loans shall be payable by the Partnership Firm. " It is significant to note, that although the deed was executed on 23rd of May. 1953, it was provided in the deed that "the business is deemed to have commenced from 1st March, 1953. " It is necessary to remember that rupture took place on 26th February, 1953, between Mansa Ram and Tej Bhan when they met at Dehra Dun. with a view to settle the terms of the partnership before they were reduced to writing, and that on 27th February, 1953, the defendant had taken away the books from Chandigarh. The plaint in this case contains no reference whatsoever to the partnership deed constituting firm Mansa Ram and sons. This deed was executed on 23rd May, 1953, a little over a month after this suit had been instituted. The trial Court in the first instance framed two issues reproduced below. 1. Whether the partnership of the firm Mansa Ram Tej Bhan is liable to be dissolved for the reasons given in the plaint? O. P. P. 2. What are the shares of the parties in profits and losses of the partnership? O. P. Parties. " Evidence of the plaintiff was led on these two issues. After ten witnesses had been examined on behalf of the plaintiff including the plaintiff him self and his son P. W. 7 Dr. Sat Parkash who looked after the partnership business, an application was made for framing of additional issues which was allowed. The additional issues are as under:- "1. Whether allegations in para Nos. 2, 4, 5 and 6 of the plaint are correct? O. P. P. 2. If additional issue No. 1 is not proved, whether the partnership is still liable to be dissolved? O. P. P. 3. If the partnership is liable to be dissolved then from what date it is to be taken as dissolved? O. P. P. 4. Has the contract of the supply of Bajri by the partnership in dispute with the P. W. D. been cancelled and if so, with what effect? O. P, P. 5. If additional issue No. 1 is not proved, whether the plaintiff got the name of Mansa Ram and Sons inserted in place of Mansa Ram Tej Bhan with the P. W. D. in the old contract and if so, was it done mala fide? O. P. D. 6. Whether the work carried on by the plaintiff in the name of Mansa ram and Sons after March 1953 was with property of the partnership in suit and if so, to what effect? O. P. D. 7. Whether the plaintiff has deposited the amount realised from the various departments towards the account of the partnership in the name of Mansa Ram and Sons? O. P. D. 8. If additional issue No. 7 is proved, could the plaintiff do so, without the consent of the defendant and if not with what effect? O. P. P. 9. Whether the defendant participated to transact the business of the firm Mansa Ram Tej Bhan? O. P. D. 10. Whether the bajri was supplied from the quarry taken on lease by the partnership in dispute to 1st Circle Patiala 4th Sub-Division Khan, nauri and other persons and if so to whom? O. P. D. 11. Relief. " After the additional issues had been framed, the plaintiff led his evidence and P. W. 7 Sat Parkash and P. W. 8 plaintiff himself made supplementary statements. The trial Court held that the partnership between the parties was at will and stood dissolved on 7th April, 1953. It also came to the conclusion that the firm Mansa ram and Sons had no capital of its own and had carried on its work with the assets of the firm Mansa Ram Tej Bhan. The constitution of firm Mansa Ram and sons was a device on the part of Mansa Ram, to pocket the entire income of firm mansa Ram Tej Bhan for himself. It held, that under Section 37 of the Indian partnership Act, the defendant was entitled at his option to such share of the profits made since 7th of April, 1953, as might be attributed to the use of the defendant's share of the property of the firm, or to interest at six per cent per annum to be calculated on his investment. It was found that the bajr which had been supplied in the name of Mansa Ram and Sons had been taken out of the stock of Messrs Mansa Ram Tej Bhan from the quarry, which had been taken on lease by that firm. It was also found that the investment of the defendant in the firm, was three times more than that of plaintiff but in view of the provisions of Section 13 (b) of the Indian Partnership act, in the absence of the contract between the parties, the two partners Mansa ram and Tej Bhan were entitled to share the profits and losses equally, regardless of their unequal contribution in the capital of the firm. In the result, a preliminary decree for dissolution of the partnership and rendition of accounts was passed. The partnership of firm Mansa Ram Tej Bhan stood dissolved by 7th April 1953 and shri Ram Sarup Advocate of Ambala was appointed local commissioner to go into his accounts. It was ordered that the local commissioner should go into the accounts of Messrs. Mansa Ram Tej Bhan upto 7th April, 1953. It was also ordered that the local commissioner shall also go into the accounts of Messrs. Mansa Ram and Sons upto the date he submits his report, and that defendant shall be entitled to the profits and losses of Messrs. Mansa Ram Tej Bhan upto 7th of April, 1953, to the extent of one-half share and that in Messrs. Mansa Ram and Sons the defendant shall be entitled to such share of the profits made since 8-4-1953, as may be attributable to the use of his share of the property of the firm Mansa Ram tej Bhan alternatively to Interest at the rate of 6 per cent per annum on the amount of his share in the property of firm Mansa Ram Tej Bhan upto the final decree. The parties were left to bear their own costs by the trial Court.;

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