R.S.A. No. 2759 of 1988 1 IN THE PUNJAB AND HARYANA HIGH COURT AT CHANDIGARH R.S.A. No. 2759 of 1988 Date of Decision : 24.2.2010 Des Raj .......... Appellant Versus Mohan Lal & others ...... Respondents CORAM : HON'BLE MR. JUSTICE VINOD K. SHARMA Present : Mr. Sanjiv Gupta, Advocate and Mr. C.B. Goel, Advocate for the appellant. Mr. Ashok Aggarwal, Sr. Advocate with Mr. Piyush Bansal, Advocate for the respondents. **** VINOD K. SHARMA, J. (ORAL) This appeal by the defendant / appellant is directed against the judgment and decree dated 6.10.1988 passed by the learned Courts below vide which the suit filed by the plaintiff / respondents for dissolution of partnership and rendition of accounts of M/s Mohan Lal Satish Kumar, which was incorporated on 1.4.1973, for carrying on business of Kiryana and general merchandise at Cheeka. The plaintiff and the defendants were active partners to the firm. The partnership deed was drawn on 10.5.1973, which stipulated, that all the parties were to share the profit and loss equally. In the case of any dispute between the parties, regarding the partnership deed or affairs of the firm, it was to be referred to an arbitrator mutually agreed upon. The stand of the plaintiff was that defendants R.S.A. No. 2759 of 1988 2 excluded the plaintiff from looking after and supervising the business of the firm, which was being run in shop No. 160 at Cheeka Mandi. It had become impossible for the plaintiff / respondent to continue as a partner in the firm. It was in these circumstances, the decree for dissolution of partnership and rendition of accounts was prayed for. The Court noticed that the plaintiff was brother of Sohan Lal, defendant No.1 and son of Kali Ram, defendant No.2, these partners were the family members. The suit was contested by filing two separate written statements. One on behalf of defendants No.1 & 2 and the second on behalf of defendant No.3. The defendants No.1 & 2 admitted the case of the plaintiff. It was asserted by defendants No.1 & 2 that they had also been excluded by defendant No.3. The suit was contested only by defendant No.3 by taking a plea, that the partnership stood dissolved on 31.3.1979/ 1.4.1979 with the mediation and intervention of Sarvshri Om Parkash Kathania, Som Nath, Amar Nath and Lala Narsi Dass and the accounts were also settled. The plaintiff and defendant No.1 were allowed to run their business in the name of M/s Sohan Lal Satish Kumar, which was started at shop No. 24 at Cheeka. It was the case of the appellant / defendant No.3, that the plaintiff and defendants No.1 & 2 had taken away the telephone and account books in terms of the settlement. Since 1.4.1979, defendant No.3 was running his own business under the name and style of M/s Des Raj Satish R.S.A. No. 2759 of 1988 3 Kumar at shop No. 160, which belonged to defendant No.3. The averments were denied that the plaintiff and defendants No.1 & 2 were excluded from the partnership firm. It was also asserted, that after dissolution of the partnership, there was business dealings between M/s Des Raj Satish Kumar and M/s Sohan Lal Satish Kumar. It was also the case of the defendant No.3, that there had been dealings with M/s Sohan Lal Satish Kumar of shop No.24, with other firms of different places. The suit was said to be barred in view of the arbitration clause in the partnership deed. In the replication, the averments made in the plaint were reiterated and those in the written statements were denied. The plaintiff denied, that any business was being run under the name and style of M/s Sohan Lal Satish Kumar at shop No.24. M/s Raj Kumar Sanjiv Kumar were doing business in the said shop, which was a firm having Sat Pal, Raj Kumar and Pista Devi as partners. It was also pleaded, that the persons named in the written statement, who were said to have carried out mediation between the parties were inimical to the plaintiff. On the pleadings of the parties, the learned trial Court framed the following issues on 2.12.1981 :- 1. Whether the partnership firm was in existence at the time of institution of the suit, as alleged?OPP 2. Whether there was any condition in the partnership agreement regarding reference and any dispute to an arbitrator; if so, to what effect? OPP 3. Whether the plaintiff is liable to pay R.S.A. No. 2759 of 1988 4 special costs; if so, to what amount?OPD 4. Relief.” and subsequently on a revision being preferred by the plaintiff this Court vide order dated 3.5.1983 reframed issues No.1 & 2 as under :- 1. Whether the partnership of the firm in question stood dissolved and the accounts were settled?OPD 2. Whether there was any condition in the partnership agreement regarding reference of any dispute to an arbitrator; if so, to what effect? OPD In support of the issues, defendant No.3 examined seven witnesses, whereas plaintiff, Mohan Lal himself appeared in rebuttal. The documentary evidence was also led by the parties to prove their case. The learned trial Court on consideration of oral and documentary evidence decided all the issues against the defendant / appellant and decreed the suit. Appeal filed by the defendant / appellant was dismissed by the learned lower appellate Court. The learned counsel for the appellant contended, that this appeal raises the following substantial questions of law :- 1. Whether the learned Courts below have misread and misconstrued the pleadings and the evidence, therefore, the findings recorded by the learned Courts below were perverse? 2. Whether the admission of the plaintiff R.S.A. No. 2759 of 1988 5 regarding separation of the business could be taken to be dissolution under the Indian Partnership Act, 1932? In support of the substantial questions of law the learned counsel for the appellant, referred to para 3 of the replication to the written statement of the appellant, to contend, that this amounted to admission on the part of the plaintiff / respondent that this was dissolution of the firm. Para 3 of the written statement reads as under :- “3. That para No.3 of the plaint is absolutely wrong and denied. The partnership of this firm with the parties was dissolved on 31.3.1979 / 1.4.1979 with the mediation and intervention of S/Shri Om Parkash Kathania, President, Food Grain Dealers Association, Cheeka, Amar Nath of M/s Amar Nath Nanu Ram, Cheeka and Lala Narsi Dass of M/s Narsi Dass Satish Kumar, Cheeka and accounts were settled. The plaintiff and defendant No.1 were allowed to run their business in the name of M/s Sohan Lal Satish Kumar which they actually started at shop No. 24 at Cheeka. They also took away the telephone and the accounts books in terms of the settlement. Since 1.4.1979, the defendant No.3 has been running his own business under the name and style M/s Des Raj Satish Kumar at shop No. 160 which belongs to defendant No.3. So there is no question of any exclusion of the plaintiff when there is no such firm. The further question of inspection of business or bahis at shop R.S.A. No. 2759 of 1988 6 No.160 does not arise. The suit is absolutely false and baseless. After the dissolution there have been business dealings between M/s Des Raj Satish Kumar and Sohan Lal Satish Kumar. Similarly, after 1.4.1979 there have been dealings of M/s Sohan Lal Satish Kumar of shop No. 24 with other firms of different places.” Para 3 of the replication reads as under :- “3. That para No.3 of the written statement is wrong and that of the plaint is correct. The firm has never been dissolved as stated by the defendant, nor the accounts have been settled. It is wrong that M/s Sohan Lal Satish Kumar are funning the business in shop No. 24. As a matter of fact the plaintiff has no concern with Shop no. 24. In the premises of shop no. 24 M/s Raj Kumar Sanjeev Kumar is running the business, which is a partnership firm constituted by Sat Pal, Raj Kumar and Pista Devi. It is wrong that the telephone or the account books were taken by the plaintiff. The account books are in possession of deftd. no.3. However, it is correct that after the exclusion of the R.S.A. No. 2759 of 1988 7 plaintiff from the business the defendant has started to run business under the name and style of Des Raj Satish Kumar. The persons mentioned in this para in whose presence it is alleged that the firm has been dissolved and the accounts have been settled, are inimical towards the plaintiff on account of party faction.” On consideration, I am unable to agree with the contention raised by the learned counsel for the appellant. The pleading in para 3 of the replication can not be taken to be an admission of dissolution of partnership firm, rather defendant / respondents specifically denied the averment, that the firm was dissolved. Rather a positive stand was taken, that the persons named in para 3 of the written statement who were said to be mediators, were inimical to the plaintiff / respondent. The learned counsel for the appellant by referring to the statement of PW-1 contended, that in the cross-examination it was admitted by the plaintiff himself ,that it was defendants No.1 & 2 who had ousted the plaintiff / respondent from running the business. Defendants No.1 & 2 being father and brother of the plaintiff / respondent, therefore, would lead to the conclusion, that the case set up by the plaintiff was wrong, and the stand taken by the defendant / appellant that the firm was dissolved stood proved. He had also admitted that accounts were maintained by his brother. The contention of the learned counsel for the appellant by referring to the statement of PW1 was, that the admissions by the plaintiff / R.S.A. No. 2759 of 1988 8 respondent during cross-examination proved the factum of dissolution, specially the admission that it was not the appellant, but the brother of plaintiff, who was maintaining the accounts. The rendition of accounts, therefore, could not be asked from the appellant. This contention deserves to be noticed to be rejected, as it was not the case of the defendant / appellant, in the written statement that accounts were maintained by defendants No.1 & 2, or that he has no accounts. Stand taken was that the account books were taken away as the firm stood dissolved and accounts were settled. However, there is not an iota of evidence to prove the factum of dissolution of firm and settlement of accounts, as no documentary evidence has been led in this regard. The dissolution of firm can take place under the provisions of the Chapter VI of the Indian Partnership Act, 1932, Section 48 of the Indian Partnership Act reads as under :- “48.Mode of settlement of accounts between partners.-In settling the accounts of a firm after dissolution, the following rules shall, subject to agreement by the partners, be observed :- (a) Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and, lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits. (b) The assets of the firm, including any sums contributed by the partners to make up deficiencies of capital, shall be R.S.A. No. 2759 of 1988 9 applied in the following manner and order:- (i) in paying the debts of the firm to third parties (ii) in paying to each partner rateably what is due to him from the firm for advances as distinguished from capital ; (iii) in paying to each partner rateably what is due to him on account of capital ; and (iv) the residue, if any, shall be divided among the partners in the proportions in which they were entitled to share profits.” In absence of any evidence showing the settlement of accounts between the parties, and the share of profit or loss to which each partner was entitled to the oral evidence could not be accepted to hold that the partnership stood dissolved. The concurrent finding of fact recorded by the learned Courts below, therefore, cannot be said to be outcome of misreading of oral and documentary evidence, nor it has been pointed out as to which document was mis-interpretted to hold that the judgment and decree passed by the learned Courts below was perverse. The first substantial question of law, therefore, is answered against the appellant. The learned counsel for the appellant, on the second substantial question of law, contended that there was a clear admission by the plaintiff / respondent, that after the date of dissolution, he had started a separate business of his own and evidence was led to show, that the plaintiff / R.S.A. No. 2759 of 1988 10 respondent, even dealt with the firm of the defendant / appellant. This admission by the plaintiff / respondent proved that the firm stood dissolved, therefore, the suit framed was not competent. This contention of the learned counsel for the appellant cannot be accepted for the reasons mentioned on first substantial question of law. There is absolutely no evidence showing the dissolution of the firm or settlement of accounts in terms of Section 48 of the Indian Partnership Act, 1932. The mere fact that the plaintiff / respondent dealt with a firm which was run by the defendant / appellant could not lead to the conclusion that the firm stood dissolved after the settlement of accounts. The second substantial question of law also is decided against the appellant. It is made clear, that the rendition of accounts of the firm will require to be settled till the date of filing of the suit, and not thereafter. The concurrent findings of fact recorded by the learned Courts below do not call for any interference by this Court. No merit. Dismissed. 24.2.2010 ( VINOD K. SHARMA ) 'sp' JUDGE