THE HON’BLE SRI JUSTICE K.G. SHANKAR A.S.No.217 of 2000 Date: 20.12.2011 Between: Cherukuru Munaiah, R/o. Srikalahasti, Chittoor District. .. Appellant/ 9th defendant AND Chinnam Sankaraiah, r/o. Srikalahasti, Chittoor District and 8 others .. Respondents/ Plaintiff & D.1 to D.8 THE HON’BLE SRI JUSTICE K.G. SHANKAR A.S.No.217 of 2000 JUDGMENT: Defendant No.9 (D-9, for short) in O.S.No.39 of 1995 on the file of the Senior Civil Judge, Srikalahasti laid the present appeal against the sole plaintiff and defendants 1 to 8. The suit was filed for recovery of ` 3,15,730/-. It is claimed that the share of the rent of the first plaintiff for leasing out the premises to D-9 was at ` 2,700/- per month, as the rent of the premises was ` 13,500/- per month and that the plaintiff holding 20% interest in the premises is entitled to ` 2,700/- per month. The claim was from 01.10.1990 till 15.08.1995 at a total of ` 1,26,900/-. The plaintiff sought interest at 24% per annum and claimed a total of ` 3,15,730/-. 2. The plaintiff, defendants 1 to 4 and one M.C. Nagaraja (husband of the fifth defendant) constituted a firm under the name and style of Sri Paramjyothi Kumara Swamy Rice Mill. The partnership deed was executed on 25.02.1987. Late Nagaraja died prior to the date of suit. The plaintiff, consequently, impleaded the wife of Nagaraja as fifth defendant and the children of Nagaraja as defendants 6 to 8 in the suit. The firm was doing business in hulling paddy and other analogous and miscellaneous activities. 3. The plaintiff laid O.S.No.26 of 1991 on the file of the Principal Senior Civil Judge, Srikalahasti for the dissolution of the partnership firm and for rendition of accounts. The plaintiff also filed O.S.No.28 of 1993 on the file of the Principal District Munsif, Srikalahasti for perpetual injunction against strangers from interfering with the partnership firm. The partners of the firm other than the plaintiff leased out the rice mill of the firm to D-9 for a period of three years with effect from 01.08.1987 (concluding on 30.09.1990). The rent was fixed at ` 7,000/- per month. When the lease was sought to be renewed at ` 13,500/- per month, the plaintiff did not agree for the proposal. It would appear that the plaintiff was interested to take the rice mill and run the same personally. Without bothering for the consent of the plaintiff, the lease was renewed in favour of D-9 on a monthly rent of ` 13,500/-. The share of the plaintiff in the rent is ` 2,700/- per month, as he owns 20% of the partnership business. The plaintiff laid the suit contending that D-9 stopped paying the share of the plaintiff to the plaintiff for which D-9 is liable. The plaintiff, consequently, laid the suit for the rent at ` 2,700/- per month from 01.10.1990 till 15.08.1995 together with interest at 24% per annum thereof. 4. Curiously, defendants 1 to 8 also contested the case because this is in fact a fight between the plaintiff and D-9 as a lessee. The defendants 1 to 8 contended that they are not necessary parties to this case. They also claimed that the lease stood expired with effect from 01.04.1993. 5. D-9 contended that there is no privity of contract between the plaintiff and D-9. He contended that the very suit is misconceived where plaintiff laid the suit for dissolution of the firm. 6. Initially, issue relating to the question of limitation was framed. Subsequently, additional issues were framed by the trial Court, out of which issue No.5 deals with the plea of privity of contract. The trial Court held that there is no privity of contract. The trial Court also held that the plaintiff was not entitled to interest over the total amount of ` 70,700/-. Inter alia, the suit, however, was decreed by the trial Court on compassionate grounds. 7. It would appear that the plaintiff was satisfied with the judgment and decree for a sum of ` 70,700/-. He did not prefer any appeal. D-9 against whom the decree was granted preferred the present appeal contending that no amounts are payable by D-9 to the plaintiff. His case is that whatever amounts that are payable as rent by D-9 were paid to the firm and it is for the partners to allocate the rents among themselves as per their understanding. He primarily contended that there is no privity of contract between the plaintiff and D-9 and that the plaintiff cannot maintain the suit against D-9. 8. It may be noticed that the findings of the trial Court barring for the additional issue No.5 relating to the privity of contract is not questioned by either side. The plaintiff neither filed an appeal nor cross-objections, so much so, the plaintiff would appear to have been satisfied with the decree. D-9 is also satisfied with the decree to the extent of quantum of money as calculated by the trial Court but contended that as there is no privity of contract, the very suit is not maintainable. 9. It is pertinent to notice that it is only the plaintiff and D-9 that are locked up in this lis. Defendants 1 to 8 more or less have become mere proforma parties. Indeed, D-9 has taken several pleas regarding the non- maintainability of the decree. However, Sri M. Rama Mohan, learned counsel representing D-9 confined his arguments to additional issue No.5 viz., issue relating to privity of contract. He gave a go by to his other pleas taken in the grounds of appeal. I, therefore, confine myself to the question of privity of contract. As there is no cross-objections by the plaintiff regarding the quantum of the decretal amount and as D-9 confined himself to the question of privity of contract, the suit would be decreed or dismissed for a sum of ` 70,700/-. The entire amount is the principal amount. It would be just and proper to award interest at 6% per annum from the date of the decree till realization, at least in view of equities, in the event the plaintiff ultimately succeeds in the present appeal. 10. Sri R.K. Suri, learned counsel for the plaintiff explained the calculation regarding the amount of ` 3,15,730/- for which a decree is sought. 11. D-9 was a lessee of the rice mill owned by the firm. It may be noticed that D-9 entered into contract with the firm by name Sri Paramjyothi Kumara Swamy Rice Mill. It is rather curious that neither side filed the original or the copy of the lease deed between D-9 and the firm. Unless the lease deed is perused, it cannot be determined whether the lessor was the firm or partners of the firm. 12. Admittedly, the plaintiff did not sign the lease deed. Curiously, the plaintiff as PW.1 speaks as if other partners signed the lease deed. Indeed, the Indian Partnership Act, 1932 (the Act, for short) provides that every partner has a right to participate in the conduct of the business of the firm, vide Section 12 (a) of the Act. It is the practice for the firms to appoint one of the partners as the managing partner and to entrust the management of the firm to such managing partner. It is not clear who the managing partner of Sri Paramjyothi Kumara Swamy Rice Mill is. At any rate, if it is the case that the partners other than the plaintiff entered into lease agreement with D-9 in their individual capacity, where the plaintiff admittedly did not sign the lease deed, there would be no privity of contract between the plaintiff and D-9. On the other hand, if the contract of the lease is between the firm and D-9, whether the plaintiff signed the agreement or not perhaps is an irrelevant point. I shall advert to this point a little later once again. Suffice it to notice at this stage that D-9 would be answerable to the partners if his lease was with the firm. 13. The plaintiff left the impression from the pleadings and from his evidence that the contract was indeed with the firm and that barring for him the rest of the partners executed the lease deed. D-9 as DW.2, however, made it clear that the agreement was with the firm. At the same time, D-9 contended that the plaintiff cannot maintain the suit, as there is no privity of contract between the plaintiff and D-9. 14. Sri R.K. Suri, learned counsel for the plaintiff contended that in partnership transactions, the conduct of one partner binds the other partners. He placed reliance upon Section 12 of the Act in support of his contention. He also referred to Sections 13 and 14 of the Act. Section 12 of the Act ordains that every partner has a right to participate in the conduct of business. On the basis of this contention, it is urged by the learned counsel for the plaintiff that any agreement between defendants 1 to 4 and the husband of D-5 jointly or severally with D-9, on behalf of the firm would enure to the benefit of the plaintiff as well. Sri M. Rama Mohan, learned counsel for D-9, on the other hand, contended that in view of the beginning of Sec.12 of the Act commencing with the phrase “subject to contract between the partners …….”, the right of every partner to participate in the conduct of business operates in the absence of contract to the contrary and that in view of the partnership deed, the lease entered into between the partners other than the plaintiff cannot be enforced by the plaintiff, as he was stranger to the lease agreement. 15. Curiously, the partnership deed was not filed by anybody in this case. The case went by the assumption that there is a partnership between the plaintiff and defendants 1 to 8 under the name and style of Sri Paramjyothi Kumara Swamy Rice Mill. Consequently, it is not clear as to the terms of the deed. In the business of a partnership deed, I have no alternative but to assume that every partner has a right to participate in the business of the firm. Section 13 of the Act provides rights and liabilities of the partners inter se. The action of every partner is binding on the other partners in the absence of the contract to the contrary. No partner of a partnership firm can claim that he is not bound by the conduct of another partner on behalf of the firm, so much so, each partner enjoys the privileges and profits that arise from conduct of other partners. The evidence is clear that the plaintiff was not willing to extend the lease period of D-9, since the plaintiff personally wanted to take the mill on lease. At the same time, when the mill was leased out to D-9, the plaintiff as one of the partners is as much entitled to receive the profits as the remaining partners are. The lessee cannot be heard to say that although the plaintiff is a partner of the firm, the lessee is not liable, as the plaintiff was not a signatory to the lease deed. 16. D-9, however, could take the stand that the liability of D-9 was to the firm and not to the individual partners and that once he paid the rent to the firm, the liability of D-9 as the lessee stands discharged. D-9, however, did not take such stand. On the other hand, D-9 stated that about ` 47,600/- towards the share of the rent payable to the plaintiff was deposited by him in the Indian Bank and that he later paid ` 30,000/- to the brother-in-law of the plaintiff and ` 10,000/- to the brother of the plaintiff, so much so, he paid ` 40,000/-, out of the amount payable by him on behalf of the plaintiff. It is thus evident from the very stand of D-9 is that the plaintiff is entitled to receive ` 47,600/- towards the share of rent. 17. It may be noticed that the calculation, as submitted by the plaintiff, has not been disputed by D-9. What D-9 disputes is the right of the plaintiff to make the claim on the ground of lack of privity of contract. It, therefore, is not open now for D-9 to contend that the amount payable by him to the plaintiff is not ` 70,700/- as claimed by the plaintiff, but is only ` 47,600/- or some other amount different from ` 70,700/-, as claimed by the plaintiff (as the principal amount). I, accordingly, go by the assumption that the amount due to the share of the plaintiff is ` 70,700/- in the rent. I also go by the assumption that the amount is payable to the plaintiff separately. 18. The only question is whether the plaintiff can demand the same from D-9 or whether the plaintiff can demand defendants 1 to 8 for this amount. 19. The trial court calculated that the rent due from D-9 to the plaintiff was ` 1,10,700/- in all and that as D-9 had already paid ` 40,000/- to the brother-in-law and brother of the plaintiff covered by Exs.B.1 to B.20 receipts, the amount due from D-9 to the plaintiff was ` 70,700/-. Thus, the trial Court gave credit of ` 40,000/- allegedly paid by D-9 to the brother-in-law and brother of the plaintiff and not to the plaintiff. Where the plaintiff did not prefer any cross objections, I consider that the plaintiff has no objection for this view taken by the trial Court. Even in the oral submissions of the learned counsel for the plaintiff, no objection was taken regarding this part of calculation. Consequently, the amount payable is worked out at ` 70,700/-. I may now examine the main question whether the suit is maintainable against D-9. 20. The learned counsel for D-9 placed reliance upon Aries Advertising Bureau v. Devara[1], which is the fulcrum of his case. In that case, a suit was laid for recovery of advertisement charges against the financier and the owner of a circus company. However, the plaintiff-advertiser was not a party to the agreement between the financier and the owner of the circus company. Proposal of the plaintiff was approved by the financier, which was on behalf of the owner of the circus. The approval was not in writing. The Supreme Court considered that there was no privity of contract between the complainant and the financier. It is the contention of the learned counsel for D-9 that in the present case also, where the plaintiff not only did not agree but was also against engaging D-9 as lessee, the plaintiff would not be entitled to seek the relief against D-9 and that the plaintiff at best is liable to proceed against defendants 1 to 8 only. 21. I am afraid that in view of the lessor being a firm of which the plaintiff admittedly is/was a partner, the plaintiff is protected by Sections 12 to 14 of the Act empowering the plaintiff to lay a suit against D-9. On the strength of Devaraj, it is the contention of the learned counsel for D-9 that when there was no written contract between the plaintiff and D-9, D-9 is not liable to answer the claim of the plaintiff. In the light of Sections 12 to 14 of the Act and where there is no proof that there was a contract contrary to the provisions of Sections 12 to 14 of the Act, I agree with the learned counsel for the plaintiff that D-9, who took the mill of the firm for lease, is liable to pay rent to the partners and that the plaintiff as one of the partners, therefore, is entitled to lay the suit. It may be noticed that the very basis of the suit is the admission of D-9 that he has initially deposited ` 47,600/- with the bank towards the amount payable to the plaintiff and that he paid ` 40,000/- out of the same on behalf of the plaintiff. This payment to a partner would not arise unless there was an agreement that rent should be paid to the partners separately. 22. I have no alternative but to make assumptions about the contract where neither side produced the contract for my scrutiny. It was left to my imagination to assume that the contract was by the firm and that one of the terms of the agreement of lease was that rent was payable to individual partners. I, therefore, have no hesitation to accept the stand of the plaintiff that the plaintiff is entitled to lay the present suit. Consequently, the principle of the privity of contract has no application to the present case, where D-9 agreed to pay rents to individual partners and in fact deposited the monies due to the plaintiff with the Indian Bank. In that view of the matter, D-9 is not entitled to take the plea of lack of privity of contract as a ground to dismiss the claim. 23. Where the plaintiff is entitled to sue D-9, D-9 is liable to answer the claim, as D-9 has given up the other claims relating to the merits of the case and confined himself to the claim of the privity of contract. The concept of privity of contract has no relevance when one of the parties is a partnership firm. The plaintiff being a partner of the firm, he is not hit by the Doctrine of Privity of Contract. D-9 himself gave up the scope to raise such a plea by admitting that he deposited ` 47,600/- in the Indian Bank, as the plaintiff refused to receive the same. The plaintiff is entitled to seek for recovery of the same. The suit is, consequently, is liable to be decreed. However, the suit is liable to be decreed only for the principal amount of ` 70,700/-, as already pointed out. The plaintiff shall be entitled to interest from the date of the decree, till realization. 24. Admittedly, the plaintiff filed O.S.No.26 of 1991 on the file of the Senior Civil Judge, Srikalahasti seeking for the dissolution of the firm called Sri Paramjyothi Kumara Swamy Rice Mill. The plaintiff and the first defendant jointly filed O.S.No.28 of 1993 on the file of the Principal District Munsif, Srikalahasti against third parties for perpetual injunction. Against such third parties O.S.No.26 of 1991 and O.S.No.28 of 1993 are pending adjudication. It is the contention of the learned counsel for D-9 that when the plaintiff laid O.S.No.26 of 1991 for the dissolution of the firm, a receiver was appointed. Again, ex parte ad interim injunction was granted in favour of the plaintiff and the first defendant on 17.04.1993 through orders in I.A.No.196 of 1993 in O.S.No.28 of 1993. Peculiarly, the learned counsel for D- 9 brought out these facts contending that in view of the pendency of the suit relating to the dissolution of the firm, the plaintiff is not entitled to the relief prayed for in the present case. I express my inability to agree with the contention of the learned counsel for D-9 in this regard. The cause of action for O.S.No.26 of 1991 on the file of the Principal Senior Civil Judge, Srikalahasti and O.S.No.28 of 1993 on the file of the Principal District Munsif, Srikalahasti are different from the cause of action in the present suit. Those two cases have no bearing on the result of this case. I, therefore, reject the contention of the learned counsel for D-9 that this suit is liable to be dismissed where the plaintiff laid O.S.No.26 of 1991 individually and laid O.S.No.28 of 1993 along with the first defendant. In that view of the matter, the decree passed by the trial Court is justified. 25. Accordingly, the appeal is dismissed. The judgment of the trial Court is confirmed with the modification that the plaintiff is found to be entitled to interest at 6% per annum from the date of the decree of the trial Court over the principal amount of ` 70,700/-. There shall, however, be no order as to costs. ________________ K.G. SHANKAR, J Date: 20.12.2011 Isn [1] AIR 1995 SC 1251