IN THE HIGH COURT OF KERALA AT ERNAKULAM
AS.No. 536 of 1996()
1. C.K.KUNHEETHU
... Petitioner
Vs
1. A.M.KADHER
... Respondent
For Petitioner :SRI.K.R.KURUP,C.R.SYAMKUMAR
For Respondent :SRI.T.KRISHNANUNNI
The Hon'ble MR. Justice P.BHAVADASAN
Dated :14/01/2010
O R D E R
P. BHAVADASAN, J.
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A.S. No. 536 of 1996
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Dated this the 14th day of January, 2010.
JUDGMENT
The plaintiff, who was non-suited by the court
below is the appellant.
2. The plaintiff along with three others formed a
partnership firm. They decided to conduct transport service.
For the said purpose they purchased a lorry bearing
Registration No. KRK 2205. Ext.A1 is the partnership deed.
Lorry was purchased under hire purchase scheme. The first
defendant was put in possession of the vehicle and to maintain
and run the same. He was to keep the accounts also.
3. According to the plaintiff, at the time of entering
into the partnership and thereafter he had to go abroad. He
used to come to his native place occasionally. Whenever he
attempted to get the details of accounts of the lorry service, the
first defendant used to postpone the submitting of the same
under one pretest or other. Finally, the plaintiff was
A.S.536/1996. 2
constrained to send Ext.A2 notice dated 13.7.1993. First defendant
chose to sent a false reply. The plaintiff was constrained to seek
dissolution of partnership and accounts. He however restricts his
claim to Rs.56,000/-.
4. The first defendant resisted the suit. He admitted the
partnership agreement. He pointed out that the registration of the
vehicle stood in the name of Ashraf and since the lorry was
purchased under hire purchase, the registration certificate could
not be transferred in the name of the partners of the firm. He also
admitted that he was conducting the service for sometime, and
accounted the profit and loss to one Koya, the brother-in-law of
the plaintiff, who was nominated by the other three partners to look
after the affairs. Soon thereby the business ran into a loss. When
this was informed to the other partners, the third defendant took
over the business and employed another driver. That too did not
result in any progress. Thereafter this defendant would say that the
third defendant sold the vehicle to one Manalath Mohammed and
A.S.536/1996. 3
he purchased a jeep. Later the jeep was also disposed of . This
defendant would contend that the partnership came to an end by
sometime in 1987 and there was no partnership available for
dissolution. On the basis of these contentions, he prayed for a
dismissal of the suit.
5. The third defendant filed a written statement
supporting the plaintiff. He too would contend that without the
consent or knowledge or the other partners, the first defendant had
disposed of the vehicle. He too sought for dissolution of
partnership and his share of profits.
6. The second defendant chose to remain ex-parte.
7. The court below framed necessary issues for
consideration. The evidence consists of the testimony of P.W.1
and the documentary evidence marked as Exts.A1 to A3 from the
side of the plaintiff. The defendant had examined D.W.1 and
marked Exts.B1 and B2. On a consideration of the evidence before
it, the court below came to the conclusion that the partnership had
A.S.536/1996. 4
ceased to exist long ago and therefore the plaintiff is not entitled to
any relief. Accordingly the suit was dismissed. The said judgment
and decree are assailed in this appeal.
8. The only question that arises for consideration is
whether the finding of the court below is correct.
9. The constitution of the firm and purchase of the lorry
are admitted. It is also admitted by the first defendant that he was
in possession of the vehicle and running the business initially. He
has however pointed out that as per Ext.A1 partnership agreement,
he was to submit all the accounts to one Mr. Koya, the nominee of
the other partners and he was to supervise the business. He has
been promptly accounting and he has not committed any laches in
that regard. Further contention of the first defendant is that since
the business began to run at a loss, he informed the partners and
the business was taken over by the third defendant. Later he would
contend that the third defendant sold the vehicle with the consent
A.S.536/1996. 5
of all the partners and purchased a jeep. He would say that he had
no liability to account and he had not committed any default.
10. The court below, on an appreciation of the evidence
found that the claim of the first defendant is established and there
was no partnership to be dissolved. The court below held that the
conduct of the parties would show that there is an implied
agreement to dissolve the partnership and accordingly it was
dissolved. Even if later on some of the partners conducted the
business, it could be construed only as a reconstituted firm.
11. Learned counsel appearing for the appellant
pointed out that the court below was not justified in coming to the
above conclusion. Learned counsel drew the attention of this court
to the provisions of the Indian Partnership Act and pointed out that
the Act provides for the methods of dissolution of a firm. The
relevant provisions, according to learned counsel, are Sections 40,
41, 42, 43 and 44. The present claim of the first defendant that the
firm was dissolved does not come under any of those provisions
A.S.536/1996. 6
and therefore it could not be contended by him that the firm was
dissolved. Learned counsel also contended that may be that the
firm had become defunct. But that is far from saying that it is
dissolved and the liability of the first defendant to account for the
profit and loss continues. Since the partners do not wish to
continue, they seek dissolution. In support of his contention,
learned counsel relied on the decision reported in Mangilal v.
Bhanwarlal (AIR 1963 Rajasthan 153). In the said it was held as
follows:
“Where dissolution by agreement is put forward
as a foundation for a suit for accounts, a mere closing
of the business or the failure of some of the members of
the partnership to take interest in its affairs, or the
mere vacating of the shop where the business was
carried on or the discharge of its servants would not be
enough to constitute “dissolution”. For the firm may
still continue its existence in order to recover its
outstandings or to pay of its debt, and, if so, the jural
relation between the various partners would still
subsist. Therefore whether dissolution of a firm has
A.S.536/1996. 7
been brought about or not would, in the ultimate
analysis depend on the intention of te parties and
where there is no document in the shape of a public
notice or otherwise, evidencing such intention, the
same will have to be gathered from the facts and
circumstances of a given case and if the collective
effect thereof should unequivocally an unmistakably
lead to the inference of dissolution, then such a result
may weil be inferred. It must also be borne in mind in
this connection that according to Indian law of
partnership, mere assignment by a partner of his entire
interest in the partnership to a stranger does not and
cannot have the consequence of disrupting a
partnership business.”
12. Learned counsel appearing for the contesting
respondents on the other hand pointed out that he had no quarrel
with the proposition that the partnership can be dissolved only
under one of the modes provided under the Act. One of the modes,
according to the learned counsel, is by agreement of partners.
Learned counsel stressed that it is not necessary that there should
A.S.536/1996. 8
be an express agreement to that effect and it could be implied from
conduct. That is what the court below has precisely done. An
impartial analysis of the evidence in the case will clearly reveal
that the parties had put an end to the partnership long ago and the
plaintiff and the third defendant were taking undue advantage out
of the situation.
13. At the outset itself, it may be noticed that for the
plaintiff, his power of attorney has been examined. While the
power of attorney may be competent to say about the things which
are known to him, it has been held that he is incompetent to speak
about the matters which are within the exclusive personal
knowledge of the plaintiff. [See the decisions reported in Shaji v.
Reghunandanan 1(999(3) KLT SN 82) and Anirudhan v. Philip
Jacob (2006(3) K.L.T. 554)].
14. In Ext.A1 agreement, it is seen stated that the first
defendant has to initially run the business. But, Clause 6 is
relevant in the present context. It states that the first defendant had
A.S.536/1996. 9
to maintain proper accounts and he has to present them to one
Koya, who is closely related to the other partners. The first
defendant has to convince Koya about the accounts and Koya was
to supervise the business.
15. It is seen that Koya was not examined by the
plaintiff. It is not clear as to what had prevented the plaintiff from
examining the said Koya. True, he is also related to the plaintiff.
But a reading of Ext.A1 would clearly revel that Koya was in fact a
nominee of the other three partners, who were working abroad.
One shall not forget the fact that Koya is the brother-in-law of the
plaintiff.
16. P.W.1 in his chief examination says about the case
of the plaintiff. He would say that even though there were
repeated demands from the part of the plaintiff for accounts, the
first defendant did not submit the same. He would complain that
the vehicle had been sold without the knowledge and consent of
the plaintiff. It is interesting to note that in cross-examination he
A.S.536/1996. 10
says that he had no idea about the terms of the contract, which
constituted the partnership. It is clear from his evidence that
defendants 2 and 3 are his close relatives. To certain questions
regarding the remittance of the amounts in Bank obtained by
plying the lorry, P.W.1 pleads ignorance. When it was very
specifically put to him that the first defendant had submitted all the
accounts to Koya, this witness had stated that he had no idea. It
could thus be seen that to certain crucial and important questions,
his answer was that he does not know. This is no reason as to why
the plaintiff should remain away from the box.
17. The first defendant examined himself as D.W.1.
He has spoken about his case in detail. There is no challenge to his
version that he had submitted the accounts to Mr.Koya and that
the vehicle had been sold by the third defendant after getting the
consent of all the partners. One must notice here that the
complaint of P.W.1 is that the transfer of the lorry was not
informed to the plaintiff. P.W1 says that he had no idea about the
A.S.536/1996. 11
contents of Exts.A2 and A3, which are the notice and reply notice
respectively.
18. The evidence in the case reveals that the lorry was
sold in 1987. There is nothing to indicate that the first defendant
had ever run a jeep on behalf of the firm. It is significant to notice
that the defendants had produced Ext.B1 agreement, which shows
that the third defendant had entered into an agreement to transfer
the lorry involved in these proceedings to a stranger. This would
clearly show that the claim of the first defendant that long ago he
had ceased to be in possession of the vehicle is true. It also belies
the claim of the plaintiff that other partners were unaware of the
transaction relating to the transfer of the lorry.
19. It is true that the Indian Partnership Act provides
for various modes of dissolution. One such mode contained in
Section 40, which provides for dissolution of the firm with the
consent of all the partners. It is settled law that in case of a
A.S.536/1996. 12
partnership at will, sending a notice in writing to all other partners
is sufficient.
20. Admittedly in the case on hand, there is no
agreement evidencing the dissolution of the firm on consent of all
the partners. But it is useful to refer to a passage from Indian
Partnership Act – Pollock and Mulla, Seventh Edition, page 201,
wherein it is referred to a follows:
“In cases of express agreement to dissolve the
firm between all the partners, barring questions as to
its construction and effect, no problem arises.
However, circumstances may also indicate existence of
such agreement and consequential dissolution. It has
now been affirmatively decided that the doctrine of
repudiation has the same applicability to partnerships
as in the case of other contracts. The repudiation of
the partnership by one or more of the partners which is
accepted by the others would indicate an an implied
agreement to dissolve. Dissolution may also be
inferred where the service by a partner or his partners
of an invalid notice to determine the partnership is
A.S.536/1996. 13
accepted by the co-partners as a valid notice or where
the conduct of the partners is inconsistent with the
continuance of partnership. In a case where in a
partnership at will, notice of dissolution was given to
the other partner who did not do anything in respect of
the notice or partnership business for about three years
after the notice, it was held that failure to do anything
amounted to consent for dissolution.
21. The fact remains that till 1993 there was no demand
from the part of the plaintiff seeking accounts or any other details
regarding the business. Ext.B1 dated 25.10.1987 clearly shows
that the third defendant was aware of the entire facts and it was in
fact he who had sold the vehicle to a stranger. The plaintiff has no
case that the third defendant was on enimical terms with him. One
must remember that going by Ext.A1 Koya is the common nominee
of the plaintiff and defendants 2 and 3. When the third defendant
admitted to sell the vehicle, Koya must have known about the
same. The plaintiff has also no case that that Koya had betrayed
him.
A.S.536/1996. 14
22. It was the above facts and circumstances, which has
persuaded the court below to hold that the claim of the plaintiff is
absolutely false and he is aware of the entire transaction and he has
consented to the same. Therefore, the court below had found that
there is an implied agreement between the partners for the
dissolution of the firm. The finding of the court below seems to be
fully justified going by the evidence on record.
No interference is called for with the judgment and
decree of the court below. The appeal stands dismissed with costs
to the contesting respondents.
P. BHAVADASAN,
JUDGE
sb.
A.S.536/1996. 15
P. BHAVADASAN, J.
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A.S. No. 536 of 1996
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JUDGMENT
14.01.2010.