MUKHERJEA - (1.) THIS appeal by certificate from a judgment and order of the Punjab and Haryana High Court raises a very simple point which has unfortunately been laid over with a thick cloud of confusion caused by the long and cheque red history of the litigation. The facts and circumstances out of which this appeal arises may be set out in the beginning.
(2.) ON 1/12/1950 the appellants entered into a partnership agreement with the respondent for the purpose of carrying on the business of supply of blankets to the Army. The formal deed of partnership was executed on 6/03/1951. The partnership deed recites that the appellants (who were parties Nos. 2 and 3 to the deed) were weaving experts while the respondent (who was party No. 1 to the deed) used to do the work of spinning woollen yarn. It further recites that the three parties had formed a partnership for the purpose of supplying 5000 blankets to the Government of India in conformity with Specification No. I. N. 2689. The deed of partnership indicates the proportion of shares held by the three parties in the venture in the following manner: JUDGEMENT_95_1_1974Html1.htm The partners were to be responsible for profit and loss in the ratio of their shares. The respondent, Haryana Woollen and General Mills Ltd. (hereinafter briefly described as the defendant or the defendant mill) was to spin the yarn and the appellants were to manufacture the blankets and produce the finished products according to the aforesaid specification. We are not concerned with all the terms of the partnership deed and it is not necessary to set them out here. We shall, however, be concerned with three terms which are set out below. "20. That the parties Nos. 2 and 3 will purchase and supply wool to party No. 1 for spinning. If parties Nos. 2 and 3 could not supply wool, party No. 1 will not at all be responsible, but in that event, the said firm will be responsible for all the losses. 21. That the party No. 1 will have to spin yarn of 35-40 counts for the contract. Party No. 2 and Party No. 3 will continue to enter in a register the verification of correctness of count at the time of receiving yarn. If party No. 1 could not prepare yarn of this count, then the parties Nos. 2 and 3 will not at all be responsible for the supply of the material, blankets and losses. If the yarn of the specified count is continually received, then the said firm will be liable for any loss that may take place. 22. That, if the Party No. 1 had to dispose of any yarn or wool of the said firm, then the Party No. 1 would endorse in favour of Parties Nos. 2 and 3 the payment of the bill of sale and would not himself receive any payment.'' It appears that though the supply of blankets was to be made by 30/04/1961, no supply in fact was made. Indeed, no supply was ever made. It further appears that neither party to the contract sued the other party for breach of contract. In October 1951, the appellants filed a suit against the defendant mill for dissolution of partnership and for rendition of accounts. We shall, for the sake of convenience refer to the appellants as "plaintiffs'' hereinafter. The plaintiffs case in the plaint was mainly on the following lines. Though the plaintiff No. 1 had invested Rs. 21,411/12as./9ps. and plaintiffs Nos. 2 and 3 had invested Rs. 21,450/10as/ops. the defendant mill had not invested its share of the capital. Further, though the defendant mill was required under the agreement of partnership to spin yarn of 35-40 counts, the defendant mill did not do so and the yarns prepared by the defendant mill were of a much lower count from which blankets could not be manufactured according to the specification. The defendant mill had also, it is alleged, prepared yarn much below the normal yield and misappropriated a part of the wool supplied by the plaintiffs by mixing it with inferior wool supplied by the defendant mill. In respect of a total quantity of 174 mds. 32 srs. and 8 chs. of wool supplied by the plaintiffs the defendant mill had not rendered any account whatsoever.
(3.) IT was contended that the contract for supply of blankets could not be executed on account of the negligence, carelessness and breach of the partnership agreement on the part of the defendant mill and the government department concerned had in consequence cancelled the contract by a letter dated 11-6-1951, Since the contract for which the partnership firm had been formed had been cancelled the plaintiffs wanted dissolution of the partnership and rendition of accounts. IT was claimed that if accounts were to be taken of the firm's transactions the defendant would be found liable to pay a sum of Rs. 40,000.00 to the plaintiffs. In the written statement the defendant mill denied that the defendant was liable to prepare yarns of 35-40 count. It is claimed that the original understanding between the parties was that the defendant would prepare the yarn according to the instructions of the plaintiffs and that this the defendant had been doing. Subsequently on 6/03/1951 the plaintiffs had persuaded the Managing Director of the defendant mill by use of undue influence to agree to the condition that the yarn to be spun by the mill should be of 35-40 count. The defendant further states that the defendant prepared yarn according to the instructions of the plaintiffs and that the failure of the venture was because of the inexperience of the plaintiffs in the making of blankets. The defendant also claimed that whatever wool had been received by them from the plaintiffs had been returned in the shape of yarn and wool.;