IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID WEDNESDAY, THE 15TH JULY/24TH ASHADA 1931 SA.No. 650 of 1995() -------------------- AS.10/1992 of II ADDL.DISTRICT COURT,ERNAKULAM OS.250/1987 of PRINCIPAL SUB COURT,KOCHI .................... APPELLANT /RESPONDENT /PLAINTIFF ------------------------------------------------------- M.P.JOHN, AGED 40, S/O PAPPACHAN RESIDING AT MANKUZHY HOUSE, DOOR NO.206/9 OF NARAKKAL PANCHAYAT,NARAKKAL VILLAGE NARAKKAL BY ADV. SRI.K.V.SADANANDA PRABHU SRI.SOMASUNDARA MENON RESPONDENT APPELLANT/DEFENDANT: ------------------------------------------------------ 1. M.P. JOSPEPH, AGED 48, S/O MANKUZHY PAPPACHAN AYYAMPILLY P.O, CHERUVAIPPU. 2. M.P.XAVIER, AGED 37, S/O PAPPCHAN RESIDING AT MANKUZHY HOUSE AYYAMPILLY P.O, CHERUVAIPPU ADV. SRI.A.K.SRINIVASAN SRI.M.A.MANHU FOR SRI.M.A.FAYAZ SRI.A.S.BENOY THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 11/06/2009, THE COURT ON 15.07.2009 DELIVERED THE FOLLOWING: HARUN-UL-RASHID, J. ---------------------------------------- S.A.No. 650 of 1995 & Cross Appeal ---------------------------------------- Dated this the 15th day of June, 2009 JUDGMENT The Second Appeal is directed against the judgment and decree in A.S. No. 10/1992 on the file of the District Court, Ernakulam which arises from the decree and judgment in O.S. No. 250/1987 on the file of the Principal Sub judge Kochi. The suit was filed for dissolution of partnership and for accounting, by the appellant herein, as plaintiff. The 1st defendant in the suit also filed a cross appeal before this Court The trial court passed a preliminary decree declaring that the partnership firm by name and style “ Joseph Brothers Jewellery and Vessels” stands dissolved from the date of the suit and that the accounts of partnership be taken in accordance with the provisions of the Indian Partnership Act and allowing the plaintiff to recover such amounts as found due to him from the defendants. The trial court also declared that the plaintiff is also entitled to 1/3 share out of the assets and goodwill of the firm with costs of suit. The 1st defendant in the suit filed appeal as A.S. No. 10/1992. The lower appellate court allowed the said appeal and set aside the decree and judgment passed by the trial court. Hence this Second Appeal. The parties hereinafter referred to as plaintiff and defendants as arrayed in the Suit. 2. The facts of the case in brief is as follows: The plaintiff and S.A. No. 650 of 1995 2 & Cross Appeal defendants 1 and 2 are brothers. They have been carrying on a partnership business in the name and style “ Joseph Brothers Jewellery and vessels” at Narakkal. Originally the business was started at Ayyampilly in 1970 . In the year 1975 the business was shifted to Narakkal a nearby place to Ayyampilly. In the year 1982 there was difference of opinion among the partners. It is alleged that the plaintiff and 2nd defendant were not allowed to verify the accounts and participate in the business by the 1st defendant. Consequently, the partnership was brought to a standstill Subsequently the 1st defendant started a similar business by name 'Joesph Jewellery' with an intention to solicit the business from the same customers. The 1st defendant also surrendered half portion of the rented premises to the landlord after receiving a huge sum as 'Pakidi' and thereby made a secret profit. , Mediators and relatives intervened for settlement and the disputes were referred to arbitration. The arbitrators passed an award on 20.4.1982. But the award was not acted upon by the parties. According to the plaintiff, the 1st defendant with the intention to induct strangers in the rented premises and to avoid the liability of accounting, has removed a sizable stock-in-trade to a nearby place and also a large number of books to the family house and thus it has became impossible to carry on the partnership business and prayed that the partnership firm has to be dissolved. S.A. No. 650 of 1995 3 & Cross Appeal 3. The 1st defendant in his written statement interalia contended that the suit has been filed mis-representing and distorting facts with an intention to make undue enrichment. According to the 1st defendant, it is incorrect to say that he received 'Pakidi' from the landlord when the premises was surrendered. The plaintiff and the 2nd defendant have been trying to tarnish the image of the 1st defendant and his proprietory concern. The circumstances under which the mediators and the arbitrators intervened was only to put an end to the mischief committed by the plaintiff. The award is invalid and not enforceable in law. The allegation that stock-in-trade was diverted by the 1st defendant is incorrect. He has never carried on business with plaintiff or 2nd defendant either as a partner or otherwise. There was no understanding to share the profits of the business with them. There is no joint or common interest in the business. Since there was no partnership business the question of dissolution does not arise at all. The suit is frivolous and vexatious and he is entitled to get compensatory cost. 4. The 2nd defendant in his written statement contended that “ Joseph Brothers Jewellery “ was a proprietory concern of the 1st defendant. Neither the plaintiff nor the 2nd defendant had any manner of right or interest in that business. The suit is filed only to harass the defendants and that he has no connection with the business activities. He S.A. No. 650 of 1995 4 & Cross Appeal also prayed for the dismissal of the suit with compensatory cost. 5. The evidence in this case consists of the oral testimony of PWs 1 to 9 and Exts.A1 to A 14 on the plaintiff's side and the oral testimony of DWs 1 to 3 and Exts B1 to B47 series on the defendants side. Ext.X1 was marked as court exhibit. 6. Ext.A1 is the copy of the award dated 20.4.1982. PWs 6, 7 and 9 ( the arbitrators and umpire) have given evidence that the parties had approached them for adjudication of the disputes and had submitted account books and other relevant documents. The trial court observed that the very fact that the reference for arbitration, would itself reveal that there was some common dispute among the parties and that if the business belonged to the 1st defendant alone, no such disputes would have arisen and there was no need for an arbitration. 7. Admittedly there is no partnership deed. According to the plaintiff it was an oral partnership. There were previous suits between the same parties. Ext.A6 is an affidavit filed by the mother of the parties, in O.S. 134/1982 of the Munsiff's Court Kochi. It reveals that the Jewellery as well as the Vessel business belonged to the family of the plaintiff and defendants and they were carrying on the business jointly. Therefore the trial court drew an inference that the business was run by all the three S.A. No. 650 of 1995 5 & Cross Appeal brothers jointly and there is no reason to disregard Ext.A6 affidavit. 8. Ext.X1 is the pass book regarding saving deposit scheme of Joseph Brothers Jewellery and Vessels, Narakkal, issued to PW4 a customer. He has sworn that he had joined the deposit scheme and had remitted the instalments. According to PW4 the business belongs to all the 3 brothers. The trial court noted the fact that in Ext.A12 ( the printed copy of judgment in O.S.87/1982 of Kochi Subcourt) there is an indication of a common business of all the three brothers together and that the oral testimony of PWs 6, 7, 8 and 9 also supports the case of the plaintiff that there was a partnership business. 9. The trial court also observed that if the contention of the 1st defendant that the business belonged to him exclusively and the plaintiff and 2nd defendant are only employees under him and they were paid for the same is accepted then there was no occasion for purchasing the properties in the joint names of all the 3 brothers . 10. After evaluating the evidence, facts and circumstances the trial court concluded that the business in jewellery and steel vessels is a partnership business of plaintiff and defendants 1 and 2. On the basis of the said finding the trial court decreed the suit. S.A. No. 650 of 1995 6 & Cross Appeal 11. The lower appellate court re-appreciated the very same evidence. The lower appellate court noted the fact that even though PW1 stated that he invested Rs. 25,000/- in the business, no documentary evidence was let in to substantiate the same, that no documentary evidence was produced by the plaintiff showing the reconstitution of the agreement of partnership between the plaintiff and defendants in 1975 and also for sharing of profits. The lower appellate court after referring to Ext.B32 counter affidavit filed by the plaintiff herein, in O.S. 134/1982 on the file of the Munsiff's Court, Kochi, stated that the plaintiff agreed therein that the jewellery and steel vessel business was the family business even though the licence for the jewellery business stands in the name of the 1st defendant, and that there was no partnership arrangement. Besides the above, the lower appellate also noted the fact in Ext.B4 written statement filed by the plaintiff in O.S. 508/1982 on the file of the Munsiff's Court, Paravoor, the stand taken by the plaintiff was that the business was family business and nobody had any independent right over the business, even though the licence for the jewellery business was in the name of the 1st defendant and the vessels business was in the name of the plaintiff. 12. Ext.A6 is the copy of the affidavit filed by the mother of the S.A. No. 650 of 1995 7 & Cross Appeal plaintiff and defendants herein, in O.S. 134/1982 on the file of the Munsiff's Court, kochi, In Ext.A6 affidavit the lower appellate court also noted that the mother had sworn that the jewellery business and the steel vessel business were family business, even though the licence for the jewellery shop was in the name of the 1st defendant and the vessels shop was in the name of the plaintiff. It was further averred that the business was started for the welfare of the family and money was invested for the business by selling the properties of her husband and her own gold ornaments, that her three sons were running the business for the family. 13. In paragraph 16 of the lower appellate court judgment the learned District judge held that if the amount due to the plaintiff and 2nd defendant, was appropriated for purchase of property in the joint names of plaintiff and defendants, that itself would clearly indicate that the plaintiff and 2nd defendant were involved in the business, not as employees of the 1st defendant, but on the basis of some interest in the business and it was the income derived from the business that was utilised for acquiring properties in their joint names. If they were mere employees receiving remuneration, the properties ought not have been acquired in their joint name. The learned District judge further held that a close scrutiny of the accounts of the business would show that at different times, small amounts were seen invested by the plaintiff in the business and that also S.A. No. 650 of 1995 8 & Cross Appeal was credited in the accounts . 14. The further observation made by the learned District judge is that the evidence of PWs 6, 7 and 9 (arbitrators and umpire) would show that there was dispute between the three brothers, namely the plaintiff and defendants regarding acquisition of properties, the conduct of the joint business and they had filed statements and produced the accounts of the business before the arbitrators and the arbitrators after considering the documents and the accounts of the business in detail and inspecting the business, passed Ext.A1 award and that the award was not acted upon by the parties. After perusing Ext.A1 award, the lower appellate court found that the jewellery business as well as the vessels business were conducted by the plaintiff and defendants jointly , but it was not held by the arbitrators that it was a partnership business. On the basis of the above said evidence facts and circumstances the lower appellate court concluded that the case put forward by the plaintiff that there is a partnership business and the contention put forward by the 1st defendant that the jewellery business was his own proprietary concern were not true and both those claims were false. The lower appellate court concluded that the business was not a partnership business as alleged by the plaintiff and not a proprietary concern as contended by the 1st defendant but it was a family business where the money belonging to the parents S.A. No. 650 of 1995 9 & Cross Appeal was invested at the initial stage and later money and efforts were put in by the plaintiff and defendants and thus all the members of the family have equal rights over the entire business. 15. After going through the facts, evidence and circumstances of this case , I am of the view that the reasons stated by the lower appellate court for non-suiting the plaintiff cannot stand. In fact the lower appellate court misread the evidence and misunderstood the scope and ambit of the suit The questions involved in the suit were whether the business in question is a partnership as alleged by the plaintiff or a proprietary concern as contended by the 1st defendant. But the lower appellate court held that it was neither a partnership nor a proprietary concern but a family business. The observation of the lower appellate court that the business was a family business is neither pleaded nor canvassed by the parties to the suit . No body has a case that the business was a family business. If it was a family business the father and mother of the parties must have right and interest over the business. There is no proof of a family business. The trial court after considering the entire facts, circumstances and evidence , arrived at the right conclusion that the business run in the name and style “Joseph Brothers Jewellery and vessels” is a partnership business and that the plaintiff and defendant are the partners. The lower appellate court discussed the evidence facts and circumstances and S.A. No. 650 of 1995 10 & Cross Appeal recorded its own findings in a negative way and held that the business is a family business rather than deciding the case as pleaded by the parties. There is no occasion or reason for concluding that all the family members have equal right or interest in the business .In my view the only inference that can be drawn is that the business is a partnership business. I am of the view that the trial court rightly entered the findings on the basis of the evidence, facts and circumstances but the lower appellate court overlooked the evidence facts and circumstances and arrived at a perverse conclusion So there is no justification for the lower appellate court in holding that the business in question was a family business. In the result, the judgment and decree passed by the lower appellate court is set aside and the judgment and decree passed by the trial court is restored . The Second Appeal is allowed. There will be no order as to costs. The cross appeal filed by the 1st defendant in the suit, stands dismissed. (HARUN-UL-RASHID, JUDGE) es. HARUN-UL-RASHID, J. --------------------------- S.A.No. 650 of 1995 & Cross Appeal ---------------------------- ORDER 15th July, 2009