Venkatlal Baldeoji Mahajan vs Kanhiyalal Jankidas And Ors. on 30 March, 1962

Madhya Pradesh High Court
Venkatlal Baldeoji Mahajan vs Kanhiyalal Jankidas And Ors. on 30 March, 1962
Equivalent citations: AIR 1963 MP 155
Author: S Dayal
Bench: S Dayal


Shiv Dayal, J.

1. This second appeal arises out of a suit for dissolution of partnership and accounts. The trial Judge passed a preliminary decree to that effect, but the first appellate Court has reversed it on the ground that the suit is barred by time and also there have been laches on the part of the plaintiff.

2. Venkat La! plaintiff, Kanhaiyalal s/o Jankidaa defendant No. 1 and two others, namely, Hiralal and Ramlal were the original partners of Shri Niwas Gopal Cotton Ginning Factory, Soyat, under a registered agreement 9S ‘ partnership dated August 14, 1929. The last mentioned two partners, Hiralal and Ramlal having died, their heirs are defendants Nos. 2 to 12 in this suit which was instituted by Venkat Lal on June 27, 1952. Kanhaiyalal s/o Jankidas is the only contesting defendant. He resisted the suit on the ground that since Samvat year 1990 he alone is in possession of the business. Ha also contended that the deed of 14-8-29 was not a partnership deed and, even if it was, the partnership was dissolved on the death of Ramlal. Moreover, during the period of his long possession he constructed buildings, laid gardens and worked the factory without any interference or intervention by any of the defendants so that they were estopped by conduct and were guilty of laches.

3. Before me the nature of the deed of 14-8-29 has not been disputed. It is undoubtedly a deed creating partnership. Further, it contains a clause that on the death of any of the initial partners his heirs would automatically become partners in the firm. The limited question in this appeal is whether the plaintiffs suit has been rightly dismissed because of the first defendant’s long possession for about 19 years. The learned Judge of the first appellate Court applying the principle of laches and also Article 120 of the Limitation Act, computed the period of limitation from 1933, and non-suited the plaintiff.

4. Prior to the present litigation a suit had been Instituted against Venkatlal by Hiralal and others (Civil Original No. 106 of Samvat 2000) in City Sub Judge’s Court Ujjain in which Kanhaiyalal s/o Jankidas (who will hereinafter be referred to as Kanhaiyatal) was examined as a witness on September 17, 1946, on which date the

deposition remained unccncluded and was resumed on October 14, 1946. In his deposition Kanhaiyalal stated that there were five partners in the Soyat Ginning Factory; his share was of 3 annas, Venkatlal’s 3 annas, Baldeoji laxmi Narayan’s 3 annas, Hiraial’s 3 annas and Ramlal’s 4 annas; that Venkat Lal agreed to run the business for five years. But since he could not carry it on successfully the contract was cancelled after one year; that the factory was then given on lease for one year to him (Kanhaiyalal) in Samvat year 1990 and he worked the mill successfully; that in this arrangement if there was much damage it was for the firm to repair it but if the damage was not much it was for the lessee to make the repairs; trial he was entrusted with the management of the factory by all the partners; that he worked in the capacity of a partner (“Apne pantidar hone ki haisiat se kiya tha”); that since Samvat 1990 the factory was in his possession that he was not the manager but a partner (“Main manager nahin hun Bhagidar hun ….. kisi ne nahin
smbhala is se mere pas bhagidar ki haisiat se hai . . .”); and that he was entitled to the share of -/3/- in the profit or loss on accounts being taken (Sare jin ka hisab hokar mujhe 3 anna ki raqam milna hai”)

5-6. The above statement of Kanhiayalal leaves no manner of doubt that he was entrusted with the business qua partner and this arrangement was made with the consent of all the partners. It is, therefore, impossible to hold that the possession of the defendant was unlawful from its inception. It is also absolutely clear from his statement that Kanhaiyalal was all along treating the factory as a partnership concern and his own capacity as that of a partner. This was the position up to October 14, 1946. it is remarkable that in his statement he claimed to be entitled to a share of three annas on accounts being taken for the entire period, This statement of the defendant was not taken into consideration by the first appellate Court. It must be mentioned that the plaintiff issued interrogatories to Kanhaiyalal calling upon him to admit his statement. In the first question he was asked whether the statement was his which he admitted in these words :

“106/2000 E. Di. ki koi misil mujhe dekhne ko nahin mili kintu usmen mera bayan avashya hua that jahan tak mujhe khyal hai pramanit pritlipi men batlaya hua hi bayan mera hona chahiye.”

In the second question he was asked whether the 3 anna share described by him in that previous statement related to the same ginning factory which was in dispute in the present suit. The answer was in the affirmative. The third question was whether his statement in the previous suit that the ginning factory was in his possession in the capacity of a partner related to the ginning factory in dispute in the present suit. This question was also answered in the affirmative.

7. It is urged by Shri Bhagwan Sarup that that statement could not be taken into consideration here for want of compliance with the provisions contained in Section 145 of the Evidence Act inasmuch as Kanhaiyalal was not confronted with that statement when he , was in the witness-box. As to this, firstly, it is transparent that the deposition was not merely put to the defendant to be admitted but his attention was pointedly drawn to his admission that he was in possession of the factory in the capacity of a partner and this he answered in the affirmative. There was no question of confronting him again. He should have explained it if he so wanted. AH that is required is that the witness’s attention must be call-fid to that particular portion of the previous statement

which is sought to be relied on. Here it was amply called and called quite in advance.

8. Secondly, I am of the opinion that the admission, of Kanhaiyalal contained in that statement falls within the purview of Section 21 of the Evidence Act. Venkat Lal plaintiff was entitled to prove it against its maker. Since the statement was admitted by Kanhaiyalal to be his, it required no further proof. It was substantive evidence and it was not obligatory on the part of the plaintiff to draw his attention to those admissions is cross-examination. Where in a civil case a document containing any admission, has already been admitted by the opponent, it can be used to contradict the testimony subsequently given by such opponent in the witness box without drawing his attention to those admissions. It is for the maker to come forward and explain it away in his examination-in-chief. I tn this view I am supported by a Full Bench decision of the Allahabad High Court in Ajodhya Prasad v. Bhawani Shanker, ILR (1956) 2 All 399 : (S) AIR 1957 All 1 (FB), Reliance is placed on the Bombay Agarwal Co. v. Ramchand Diwan-chand, AIR 1953 Nag 154. But that decision is clearly distinguishable. In that case the established principle was summed up that when a previous statement of a witness, is sought to be used for contradicting him it should be put to him and the witness questioned as to draw out from him whether there was any truth in the statement; and where no opportunity was afforded to explain it, an admission should not be used against the maker. There the admission was made in a police case in which the plaintiff company was in danger of being prosecuted.

9. Thirdly, here the defendant had ample opportunity to explain his admission, but he did not. When he answered the interrogatories, he could have explained his statement. That was the first opportunity. The second opportunity was when he examined himself in-chief. Moreover before his examination in-chief was concluded the trial Judge recorded the following note.

“At this stage the pleader for the defendant submitted an application. Plaintiff may submit his reply tomorrow”.

In the application (dated 22-12-55) the witness expressed a desire to inspect the record of civil suit No. 106 of Samvat 2000 in order to explain his answers to the interrogatories : (Jis se Pratwadi byan ko explain kar sake”). This means that he was quite alive to the fact that he had to explain his admission. However, when his examination-in-chief was resumed on the following day it was stated on behalf of Kanhaiyalal that he did not want to press his application of the 22nd December.

10. The object of Section 145 of the Evidence Act is to afford an opportunity to the witness to explain his provious statement when it appears to be contradictory to his deposition made in the witness box. Here Kanhaiyalal had more than one opportunity and at first he wanted to avail himself of it, but thereafter gave up the idea. For these reasons 1 am of the opinion that the admission made by Kanhaiyalal in his deposition in Civil Suit No. 106/2000 is admissible to prove his admission.

11. Relying on the following passage in Lindley on Partnership the first appellate Court has held that th9 plaintiff is guilty of laches :

“Laches presupposes not only lapse of time, but also the existence of circumstances which render it unjust to give relief to the plaintiff. Laches may preclude relief, although actual assent or acquiescence on the part of the Plaintiff may not be proved”.

 It Is clear that the question of laches comes in when the plaintiff seeks to     obtain  an  equitable     relief.    But the

principle of laches, which is based on the equitable doctrine is not applicable to a case where the Court has to

determine the legal rights of a party. An objection as to delay or laches does not avail the defendant when a legal relief is sought against him except as a circumstance to show abandonment. He can of course rely on the statute of limitation but if the suit is instituted within the period prescribed by the Limitation Act his suit cannot be thrown out because of any amount of laches or delay. This position is piain enough. But if any authority is needed 1 may quote with respect a decision of Abdur Rehman J. in Krishnamachari v. Chengalraya, AIR 1940 Mad 281.

12. This brings me to the question of limitation. The starting point of limitation for a suit for taking accounts is the dissolution of the partnership (Art. 106). And for a suit to dissolve an existing partnership, in the absence of any specific Article, the residuary Article 120 applies. I have already said that at least up to October 14, 1946, Kahaiyalal admitted his position to be that of a partner. The suit was instituted within six years from that date, that is, on June 27, 1952, so that without considering any other fact the suit must be held as within limitation. In my opinion, tha learned Addl. District Judge was clearly in error when he computed the period of six years from 1933 (Samvat year 1990) when the working of the factory was entrusted to Kanhaiyalal, admittedly, as a lessee.

13. It is then urged by the learned counsel for Kanhaiyalal that the plaintiff by his conduct abandoned his rights in the partnership and that the finding to that effect reached by the first appellate Court being one of fact cannot be disturbed here. On a perusal of the judgment of the first appellate Court I find that it did not at all consider the admission of the defendant contained In his statement in suit No. 106 of Samvat 2000. A finding reached in disregard to an important piece of evidence cannot be binding on this Court. It is enacted in Section 40 of the Partnership Act that a firm may be dissolved with the consent of all the partners or in accordance with the contract between the partners. It is under this provision that it is urged that if a partner abandons bis part in a partnership he is not entitled to profits subsequently made by the business. Now it is always a matter of inference whether or not there has been such abandonment and it depends upon the facts and circumstances of each case. Reliance is placed on Moung Tha Hnyin v. Mahthein Myah, 27 Ind App 189 (FC). In that case it was observed :

“However precarious the subject matter of partnership may be, it is a matter of inference to be drawn from the facts of each case whether or not a partner has either abandoned his interest therein, or lost it by laches, evidence that he declined to advance more money for partnership purposes, and left, with occasional intervention the management to a co-partner, was held in the circumstances to be wholly Insufficient to show that he had lost his position”.

As laid down by the Judicial Committee in this case the inference will depend upon the peculiar facts in each case. Here, it seems that It was a mutual arrangement to allow one of the partners to work the business on behalf of all. It was first entrusted to Venkat Lal for five years, but when he could not successfully run it it was taken bach from him after one year and then entrusted to Kanhaiyalal. It cannot, therefore, be said that the other partners abandoned their right. It has been said that there

is not a word in the English language used in a more highly artificial and technical sense than the word “abandon”. See Rankin v. Potter, (1873) 6 H. L. 83 quoted in Burrows, Words and Phrases. It was held by Mr. Justice Kania, as he then was in Wazir Bhai v. Gadmal, AIR 1940 Bom 263, that the question whether from certain proved or admitted facts an inference can be drawn that partnership has been dissolved is a question of law. In that case the principle broadly enunciated by the Privy Council in Wall Mohd. v. Mohd. Bux, AIR 1930 PC 91, was relied on.

14. For these reasons, the suit is held to be within time. This appeal is allowed. The judgment and decree passed by the First Appellate Court are set aside and those of the Trial Judge are restored. The first defendant that is, Kanhaiyalal s/o Janki Das shall pay the plaintiff costs in all the Courts.

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