JUDGMENT
S.D. Pandit, J.
(1) NO. 2619/92 is filed by Gurmukh Singh Anand against his brother Surja Singh Anand and his sons for the dissolution of the partnership between the plaintiff and the defendants and to take accounts of the said partnership business.
(2) It is the case of the plaintiff that the late Sardar Pachu Singh father of Gurmukh Singh and defendant Surja Singh had started the business of distribution of petroleum products, like petrol and lubricants in the name and style of M/s. Gurmukh Singh at 2775, Lodium Road, Kashmiri Gate, Delhi. The said Sardar Pachu Singh expired in the year 1954 and his sons, plaintiff Gurmukh Singh and defendant Surja Singh inherited the said business and then they entered into a partnership and carried out the said business partnership from 1954 to 1992. But plaintiff Gurmukh Singh had gone to United States of America in 1972 and he was there for about 10 years. When he came back he found that defendants had opened a separate bank account and instead of crediting the sales proceeds in the partnership account in the Canara Bank, they were depositing amount in the account opened in their name. They were not also allowing him to participate in the management of the business. They were also not giving any share in the profits of the said business and prevented him from entering into the partnership business premises and, therefore, he has come to the Court with this suit.
(3) The claim of the plaintiff is resisted by the defendants and it is the contention of the defendants that after plaintiff had gone to U.S.A. in 1972 plaintiff had obtained American citizenship and from June,1977 plaintiff Gurmukh Singh had seized to be Indian citizen and he had obtained the citizenship of U.S.A. Plaintiff Gurmukh Singh was prevented by the provision of law from carrying out any business in India in view of the provision of Foreign Exchange Regulation Act, 1973. The plaintiff could not legally carry out any business in India and consequently, the partnership between the plaintiff and the defendant stands dissolved on the .date when he seized to be Indian citizen and became an American citizen. Therefore, in the circumstances, the suit for dissolution of partnership filed in the year 1992 is not at all tenable in law and, therefore, the same is liable to be dismissed –
(4) The defendants had not disputed the relationship between the plaintiff and the defendants. They had not also disputed in the written statement that the partners Gurmukh Singh and Surja Singh had entered into a partnership for carrying business in question after the death of their father in the year 1954 and that they were carrying out the business of partnership in the year 1972 when the plaintiff Gurmukh Singh left India for America.
(5) After the defendants filed their written statement, the plaintiff has filed this Interim Application No. 3670/95 under Order Xii Rule 6 read with Section 151 of Code of Civil Procedure to pass a preliminary decree for dissolution of partnership firm. It is contended in this interim application by the plaintiff that the defendants have clearly admitted existence of the partnership firm M/s. Surja Singh Gurmukh Singh. They also accepted that in the said partnership firm plaintiff had 50% shares and defendants have 50% shares. When the existence of partnership is accepted and when the shares also accepted and when the partnership is at their will the Court should be pleased to pass decree under Order Xii Rule 16 read with Order Xx Rule 15 in view of the admission given by the defendants in their written statement.
(6) The claim of the plaintiff is resisted by the defendants by filing the reply. It is their contention that in view of the provisions of Foreign Exchange Regulation Act, 1973 the plaintiff has seized to be a partner of the said partnership when he seized to be Indian citizen and when he became American citizen. Admittedly, that event has taken place in the year 1977. Therefore, the plaintiff has ceased to be a partner in the said partnership-firm under the provisions of law and the partnership-firm stands dissolved. When the partnership is already dissolved long before the date of the suit, the plaintiff is not entitled to get the preliminary decree as on the said date of the suit, the partnership was not in existence. Thus, it is contended on behalf of the defendants that the suit, in question, is not tenable and consequently, there is no question of passing any preliminary decree in the suit.
(7) Therefore, in view of the contentions raised by the plaintiff and defendants the issues which arise for my consideration and my findings thereon for the reasons thereon are as under : Issue Finding 1. Whether the partnership between the plaintiff and the defendants stand dissolved in view of the provisions of Foreign Exchange Regulation Act, 1973 ? No. 2. Whether a preliminary decree for dissolution of partnership is to be passed in the suit? Yes. 3. What order and decree has per the order. As per Final Order.
(8) It must be stated at the outset that inadvertantly, the I.A. No. 3670/95 is wrongly typed as an application under Order 20 Rule 6. It seems that there is a mistake in quoting Order 20 instead of Order 12 of Code of Civil Procedure. It is settled law that the Court has to consider the application by reading the contents of the application as a whole and not to be mislead by mere title of the application. I, therefore, treat this application as an application under Order 12 Rule 6 of Code of Civil Procedure.
(9) It is an admitted fact that plaintiff Sardar Gurmukh Singh had left India sometime in the year 1970-71 and had gone to United States of America., It is also not in dispute that Sardar GurmukhSingh has obtained American citizenship in the year 1977. In view of these admitted facts a contention is raised on behalf of the defendants that in view of the provisions of Foreign Exchange Regulation Act, 1973, the plaintiff Gurmukh Singh could not continue the partnership between him and his brother Sardar Sucha Singh and the moment he obtained the American citizenship, he ceased to be the partner of the partnership between two brothers., This contention raised on behalf of the defendants is resisted by the plaintiff on two counts. It is contended that H.U.F. of Sardar Gurmukh Singh and H.U.F. of Sardar Sucha Singh are the partners of the partnership-firm. Therefore, though Sardar Gurmukh Singh had obtained American citizenship, his son was the members of the Hindu Undivided Family of Sardar Gurmukh Singh and he must be presumed to have continued the same partnership and the partnership would not come to an end on Gurmukh Singh seizing to be an Indian citizen and become an American citizen. Secondly, it is contended that even if Gurmukh Singh had obtained an American citizenship, his partnership with his brother in India would not become illegal and unvalid.
(10) The first contention raised on behalf of the plaintiff that H.U.F. of Gurmukh Singh and H.U.F. of Sucha Singh are the partners and consequently, the partnership would not come to an end. But the said contention is not a proper and legal contention. It must be remembered that H.U.F. is a legal entity and it is not a juristic person for all the purposes. A Hindu Undivided Family may be included as a person as defined in the Income Tax Act as well as the Excise Profit Act but it is not a juristic person for all the purposes. Consequently, there could not be a partnership of two H.U.F. as claimed by the plaintiff. Similarly, a H.U.F. could not be a partner though the Karta of H.U.F. could become a partner and the loss and profits which are incurred by Karta could be of the H.U.F. of which he is Karta but that does not mean that H.U.F. is a partner in the partnership. The question of considering as to whether Hindu Undivided Family could be a partner or not is considered by the Supreme Court in the case of Kshetra Mohan Sanayasi Charan v. Commissioner of Income Tax [24 (1953) 1,T.R. 488] and the following principles are laid down :- “THE Hindu Undivided Family is included in the expression person as defined in the Income Tax Act as well as Excise Tax but it is not a juristic person for all the purposes. When two Kartas of any Hindu undivided family entered into a partnership agreement, the partnership property described as one between two Hindu undivided families. But in the eyes of law, it is a partnership between two Kartas and all members of family does ipso-facto partners. There is, however, nothing to prevent the members of one Hindu undivided family from entering into a partnership when individual members of Hindu undivided family and in such a case, it is a partnership between individual members and it is whole in appropriate to describe such a partnership as one between two Hindu undivided families”.
Similar view is again expressed by the Supreme Court in the case of Ram Laxman Sugar Mills v. Commissioner of Income Tax [66 (1966) I.T.R. 613] where the following principles arc laid down :- “THE Hindu Undivided Family is undoubtedly “person” within the meaning of Indian Income Tax Act; it is, however, not a juristic person for all purposes and cannot enter into an agreement of partnership with either Hindu Undivided Family or individual”
From the very nature of its fluctuating composition consisting of members some of whom may not have attended the age of majority and some may at a given time unborn, the joint Hindu family is incapable of entering into a partnership agreement contemplating the creation of rights of agency amongst its members. Therefore, the contention raised on behalf of the plaintiff that the partnership of two H.U.Fs. is not tenable in law., The plaintiff Gurmukh Singh and defendant Sucha Singh are two individual partners and they are the sole partners of partnership firm in question and the members of their H.U.F could not be treated and considered as the partners of the partnership in question. Therefore, in the circumstances, the contention raised on behalf of the plaintiff that even after the plaintiff obtained the American citizenship the members of his H.U.F.and the partners of the partnership in question is not tenable.
(11) At the cost of repetition it must be said that it is an admitted fact that plaintiff Gurmukh Singh has left India and settled in America sometime in 1971. It is also an admitted fact that he was residing in America till 1992 and in the year 1977, he had obtained the American Citizenship. Admittedly, the partnership between the plaintiff and defendant started on 1st April 1963 and the said partnership was not dissolved till the plaintiff Gurmukh Singh had left India in 1970-71. It must be also mentioned here that it is not a claim of the defendant that the partnership in question has been dissolved by agreement between the parties or by a decree of the Court at any time before the date of the present suit. The contentions raised on behalf of the defendants is that in view of the provisions of Foreign Exchange Regulation Act, 1973, the partnership in question, stands dissolved. Therefore, in order to consider that contention of them we have to go to the provisions of Foreign Exchange Regulation Act, 1973. But before referring to the said provisions of Foreign Exchange Regulation Act, 1973, it is necessary to mention here that the partnership between the plaintiff and defendant had already come into existence and that said partnership carrying on the business of running a petrol pump and selling and disbursing petroleum products since the year 1963. It is also an admitted fact that the said business is continued at the same terms, viz. till this date. The provisions of Foreign Exchange Regulation Act, 1973 have come into force on 1st January, 1974. Thus, the said Act has come into existence when the partnership of plaintiff and defendant No. I was already in force and the said partnership was carrying on the business and when the plaintiff Gurmukh Singh had not obtained American citizenship and had not seized to be an Indian citizen. At the cost of repetition, it must be mentioned that in the year 1977 the plaintiff Gurmukh Singh had obtained American citizenship. Thus, he had obtained the American citizenship after the Foreign Exchange Regulation Act, 1973.
(12) In the light of the above admitted facts, the relevant provisions of Foreign Exchange Regulation Act, 1973 will have to be considered. The learned Advocate for the defendants is relying on the provisions of Sections 29 and 47 of the Foreign Exchange Regulation Act, 1973. Sub-section (1) of Section 47 reads as under :- “NO person shall enter into any contract or agreement which would directly or indirectly evade any way the portion of any provisions of this Act or any rule, direction or order thereunder”.
If the facts of the present case will be considered then it would be quite clear that provision of Sub-section (1) of Section 47 is not covering the partnership in question because admittedly, the partnership in question has taken place prior to the provisions of the said Act came into force. Section 29 of the said Act of 1973 is providing restrictions of establishment of business in India. The case before me as per the contention of the learned Advocate for the defendant is governed by Sub Section (2) of Section 29 of the said Act of 1973. In view of the said contention, it is necessary to sec the provisions of Sub-section (2) of Section 29 which are running as under:- 29(2) : (a)Where any person or company (including its branch) referred to in Sub-section (1) carries on any activity referred to in Clause (a) of that Sub- section at the commencement of this Act or has established.a branch, office or other place of business for the carrying on of such activity at such commencement, then, such person or company (including its branch) may make an application to the Reserve Bank within a period of six months from such commencement or such further period as the Reserve Bank may allow in this behalf for permission to continue to carry on such activity or to continue the establishment of the branch, office or other place of business for carrying on of such activity, as the case may be. (b) Every application made under Clause (a) shall be in such form and contain such particulars as may be specified by the Reserve Bank. (e) Where any application has been made under Clause (a) the Reserve Bank may, after making such inquiry as it may deem fit, either allow the application subject to such conditions, if any, as the Reserve Bank may think fit to impose or reject the application: Provided that no application shall be rejected under this clause unless the parties who may be affected by such rejection have been given a reasonable opportunity for making a representation in the matter. (d) Where an application is rejected by the Reserve Bank under clause (e), the person or company (including its branch) concerned shall discontinue such activity or close down the branch, office or other place of business established for the carrying on of such activity, as the case may be, if on the expiry of a period of ninety days or such other later date as may be specified by the Reserve Bank from the date of receipt by such person or company (including its branch) of the communication conveying such rejection. (e) Where no application has been made under Clause (a) by any person or company (including its branch), the Reserve Bank may, by order, direct such person or company (including its branch) to discontinue such activity or to close down the branch, office or other place of business established for the carrying on of such activity, as the case may be, on the expiry of such period as may be specified in the direction; Provided that no direction shall be made under this clause unless the parties who may be affected by such direction have been given a reasonable opportunity for making a representation in the matter.” As per the above provisions, it would be quite clear that any person carrying on the commerce and trade activities at the commencement of the said Act was permitted to make an application to Reserve Bank of India for granting a permission to continue to carry on the said commerce and trade. Admittedly, no such application is made in this case. But merely, because no such application in this case was made it could not be said that the contention of business is illegal act. The above quoted Sub-section (2)(e) clearly lays down that when no application is made under Clause (a), the Reserve Bank may order or direct such person to discontinue such activities or business within a specified period. It is admitted fact that no action is also taken as contemplated by Sub-section (e) of Section 29(2) of the Foreign Exchange Regulation Act,1973. The Sub-section (3) of Section 29 gives powers to the Reserve Bank of India to grant exemption. Therefore, if the provisions of Sub-sections (2) and (3) of Section 29 are read together then it would be quite clear that a nonresident Indian who was a citizen when he has started a partnership-firm in India and the said partnership firm has continued till the said Act of 1973 came into force and if the Reserve Bank of India does not issue any order or direct him to close the business or to discontinue business activity then the continuation of the said business could not be said to be illegal act.
(13) As stated earlier, it is an admitted fact that the agency of sale and distribution of petroleum products was initially taken by the father of the plaintiff and defendant and the said business was inherited by plaintiff and defendant and the said business was converted into a partnership business in 1963. The said business was going on for more than three decades prior to the date on which this Act came into force.. The business, in question, is not also been on large scale. If the provisions of Sub-section (1) of Section 29 are carefully read then it would be quite clear that the prohibition contemplated is for starting a commerce or trade by a nonresident Indian or a foreigner and it does not intend to create bar for all types of business activity. Therefore, in the circumstances, it seems that Reserve Bank of India thought it proper not to take any action under Sub-section (3) of Section 29 of the Foreign Exchange Regulation Act, 1973. If no action was taken by the Reserve Bank of India under Sub-section (3) of Section 29 and if it has not issued either an order or direction to the plaintiff to close down the said partnership business then the continuation of the said business would not become illegal under the Provisions of Section 29. It must be mentioned here that the business in partnership by a non-resident Indian was started before he became non-resident Indian and continued prior to the said Act came into force. Therefore, the said business cannot become an illegal business if no permission is obtained from Reserve Bank of India. The learned Advocate for the defendants has cited before me the. case of Mohrilal v. Ballabh and Another . In that case a partnership firm carrying on business of Tobbaco was not holding any license but only one partner of the said partnership is holding a license and, therefore, the partnership business in tobacco was held to be an illegal business and, consequently, the suit for its dissolution or rendition of accounts was held to be not tenable in law. Thus, the facts of the said case are not applicable to facts of the case before me. The learned Advocate for the defendants had also cited before me the case of Hudgellyates v. Watson [1978 (2) All England Reporter 363]. In that case, a partnership-firm of solicitors was created but one of the partners had his practicing license lapse and consequently, he was not entitled to act as a solicitor. Consequently, the partnership had come to an end on the day one of the partners had seized to have a practicing certificate. That case has also no application of facts with the case before me.
(14) Therefore, in view of the above discussion, I hold that the partnership in question had not come to an end and was not dissolved on account of plaintiff Gurmukh Singh becoming a citizen of America. Consequently, the plaintiff’s present suit is tenable in law. Admittedly, there is no dispute about the shares of plaintiff and defendants. Plaintiff does not want to continue with the partnership and hence, a preliminary decree for dissolution of partnership will have to be passed in this case. I, therefore, pass the following order:- “1.The partnership between the plaintiff Sd. Gurmukh Singh Anand and defendant No. 2 Sd. Sucha Singh Anand entered on April, 1963 stands dissolved from today. 2. Shri Muni Lal Jain, retired District Judge and practicing Advocate of this Court is appointed as Commissioner. The said Court commissioner should sell the partnership business and he should take accounts of the said partnership business from 1st April, 1971 till this day and find out to what amount the plaintiff is entitled towards his 50% share in the said partnership business. 3. The Commissioner’s fee is initially fixed at Rs. 10,000.00 . 4. A preliminary decree be drawn accordingly.
