IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.BHAVADASAN THURSDAY, THE 14TH JANUARY 2010 / 24TH POUSHA 1931 AS.No. 536 of 1996() -------------------- OS.167/1993 of SUB COURT, TIRUR .................... APPELLANT(S)/PLAINTIFF: ------------------------------------- CHERAPARAMBIL KUNHIKOYA'S SON KUNHEETHU, RESIDING AT MARAKKARA AMSOM, KALLARMANGALAM DESOM OF TIRUR TALUK REPRESENTED BY THE POWER OF ATTORNEY HOLDER KUTTIPURATHODI MOHAMMED, S/O. UNNEENKUTTY, KURUMBATHUR AMSOM, PUNNATHALA DESOM, TIRUR TALUK. BY ADV. SRI.K.R.KURUP,C.R.SYAMKUMAR RESPONDENT(S)/DEFENDANTS: --------------------------------------------- 1. ATHANIKKAL MARAKKAR'S SON KADHER, RESIDING AT MARAKKARA AMSOM, KALLARMANGALAM DESOM OF TIRUR TALUK. 2. KUNNATH MUHAMMED'S SON KUNHAPPA, RESIDING AT VALAVANNUR AMSOM, CHERUVANNUR DESOM OF TIRUR TALUK. 3. KONDOTH KUNHIMARAKKAR'S SON, KUNHIKKARMED RESIDING AT ATHAVANAD, AMSOM AND DESOM OR TIRUR TALUK. SR. ADV. SRI.T.KRISHNANUNNI THIS APPEAL SUIT HAVING BEEN FINALLY HEARD ON 07/01/2010, THE COURT ON 14/01/2010 DELIVERED THE FOLLOWING: P. BHAVADASAN, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - A.S. No. 536 of 1996 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 14th day of January, 2010. JUDGMENT The plaintiff, who was non-suited by the court below is the appellant. 2. The plaintiff along with three others formed a partnership firm. They decided to conduct transport service. For the said purpose they purchased a lorry bearing Registration No. KRK 2205. Ext.A1 is the partnership deed. Lorry was purchased under hire purchase scheme. The first defendant was put in possession of the vehicle and to maintain and run the same. He was to keep the accounts also. 3. According to the plaintiff, at the time of entering into the partnership and thereafter he had to go abroad. He used to come to his native place occasionally. Whenever he attempted to get the details of accounts of the lorry service, the first defendant used to postpone the submitting of the same under one pretest or other. Finally, the plaintiff was A.S.536/1996. 2 constrained to send Ext.A2 notice dated 13.7.1993. First defendant chose to sent a false reply. The plaintiff was constrained to seek dissolution of partnership and accounts. He however restricts his claim to Rs.56,000/-. 4. The first defendant resisted the suit. He admitted the partnership agreement. He pointed out that the registration of the vehicle stood in the name of Ashraf and since the lorry was purchased under hire purchase, the registration certificate could not be transferred in the name of the partners of the firm. He also admitted that he was conducting the service for sometime, and accounted the profit and loss to one Koya, the brother-in-law of the plaintiff, who was nominated by the other three partners to look after the affairs. Soon thereby the business ran into a loss. When this was informed to the other partners, the third defendant took over the business and employed another driver. That too did not result in any progress. Thereafter this defendant would say that the third defendant sold the vehicle to one Manalath Mohammed and A.S.536/1996. 3 he purchased a jeep. Later the jeep was also disposed of . This defendant would contend that the partnership came to an end by sometime in 1987 and there was no partnership available for dissolution. On the basis of these contentions, he prayed for a dismissal of the suit. 5. The third defendant filed a written statement supporting the plaintiff. He too would contend that without the consent or knowledge or the other partners, the first defendant had disposed of the vehicle. He too sought for dissolution of partnership and his share of profits. 6. The second defendant chose to remain ex-parte. 7. The court below framed necessary issues for consideration. The evidence consists of the testimony of P.W.1 and the documentary evidence marked as Exts.A1 to A3 from the side of the plaintiff. The defendant had examined D.W.1 and marked Exts.B1 and B2. On a consideration of the evidence before it, the court below came to the conclusion that the partnership had A.S.536/1996. 4 ceased to exist long ago and therefore the plaintiff is not entitled to any relief. Accordingly the suit was dismissed. The said judgment and decree are assailed in this appeal. 8. The only question that arises for consideration is whether the finding of the court below is correct. 9. The constitution of the firm and purchase of the lorry are admitted. It is also admitted by the first defendant that he was in possession of the vehicle and running the business initially. He has however pointed out that as per Ext.A1 partnership agreement, he was to submit all the accounts to one Mr. Koya, the nominee of the other partners and he was to supervise the business. He has been promptly accounting and he has not committed any laches in that regard. Further contention of the first defendant is that since the business began to run at a loss, he informed the partners and the business was taken over by the third defendant. Later he would contend that the third defendant sold the vehicle with the consent A.S.536/1996. 5 of all the partners and purchased a jeep. He would say that he had no liability to account and he had not committed any default. 10. The court below, on an appreciation of the evidence found that the claim of the first defendant is established and there was no partnership to be dissolved. The court below held that the conduct of the parties would show that there is an implied agreement to dissolve the partnership and accordingly it was dissolved. Even if later on some of the partners conducted the business, it could be construed only as a reconstituted firm. 11. Learned counsel appearing for the appellant pointed out that the court below was not justified in coming to the above conclusion. Learned counsel drew the attention of this court to the provisions of the Indian Partnership Act and pointed out that the Act provides for the methods of dissolution of a firm. The relevant provisions, according to learned counsel, are Sections 40, 41, 42, 43 and 44. The present claim of the first defendant that the firm was dissolved does not come under any of those provisions A.S.536/1996. 6 and therefore it could not be contended by him that the firm was dissolved. Learned counsel also contended that may be that the firm had become defunct. But that is far from saying that it is dissolved and the liability of the first defendant to account for the profit and loss continues. Since the partners do not wish to continue, they seek dissolution. In support of his contention, learned counsel relied on the decision reported in Mangilal v. Bhanwarlal (AIR 1963 Rajasthan 153). In the said it was held as follows: “Where dissolution by agreement is put forward as a foundation for a suit for accounts, a mere closing of the business or the failure of some of the members of the partnership to take interest in its affairs, or the mere vacating of the shop where the business was carried on or the discharge of its servants would not be enough to constitute “dissolution”. For the firm may still continue its existence in order to recover its outstandings or to pay of its debt, and, if so, the jural relation between the various partners would still subsist. Therefore whether dissolution of a firm has A.S.536/1996. 7 been brought about or not would, in the ultimate analysis depend on the intention of te parties and where there is no document in the shape of a public notice or otherwise, evidencing such intention, the same will have to be gathered from the facts and circumstances of a given case and if the collective effect thereof should unequivocally an unmistakably lead to the inference of dissolution, then such a result may weil be inferred. It must also be borne in mind in this connection that according to Indian law of partnership, mere assignment by a partner of his entire interest in the partnership to a stranger does not and cannot have the consequence of disrupting a partnership business.” 12. Learned counsel appearing for the contesting respondents on the other hand pointed out that he had no quarrel with the proposition that the partnership can be dissolved only under one of the modes provided under the Act. One of the modes, according to the learned counsel, is by agreement of partners. Learned counsel stressed that it is not necessary that there should A.S.536/1996. 8 be an express agreement to that effect and it could be implied from conduct. That is what the court below has precisely done. An impartial analysis of the evidence in the case will clearly reveal that the parties had put an end to the partnership long ago and the plaintiff and the third defendant were taking undue advantage out of the situation. 13. At the outset itself, it may be noticed that for the plaintiff, his power of attorney has been examined. While the power of attorney may be competent to say about the things which are known to him, it has been held that he is incompetent to speak about the matters which are within the exclusive personal knowledge of the plaintiff. [See the decisions reported in Shaji v. Reghunandanan 1(999(3) KLT SN 82) and Anirudhan v. Philip Jacob (2006(3) K.L.T. 554)]. 14. In Ext.A1 agreement, it is seen stated that the first defendant has to initially run the business. But, Clause 6 is relevant in the present context. It states that the first defendant had A.S.536/1996. 9 to maintain proper accounts and he has to present them to one Koya, who is closely related to the other partners. The first defendant has to convince Koya about the accounts and Koya was to supervise the business. 15. It is seen that Koya was not examined by the plaintiff. It is not clear as to what had prevented the plaintiff from examining the said Koya. True, he is also related to the plaintiff. But a reading of Ext.A1 would clearly revel that Koya was in fact a nominee of the other three partners, who were working abroad. One shall not forget the fact that Koya is the brother-in-law of the plaintiff. 16. P.W.1 in his chief examination says about the case of the plaintiff. He would say that even though there were repeated demands from the part of the plaintiff for accounts, the first defendant did not submit the same. He would complain that the vehicle had been sold without the knowledge and consent of the plaintiff. It is interesting to note that in cross-examination he A.S.536/1996. 10 says that he had no idea about the terms of the contract, which constituted the partnership. It is clear from his evidence that defendants 2 and 3 are his close relatives. To certain questions regarding the remittance of the amounts in Bank obtained by plying the lorry, P.W.1 pleads ignorance. When it was very specifically put to him that the first defendant had submitted all the accounts to Koya, this witness had stated that he had no idea. It could thus be seen that to certain crucial and important questions, his answer was that he does not know. This is no reason as to why the plaintiff should remain away from the box. 17. The first defendant examined himself as D.W.1. He has spoken about his case in detail. There is no challenge to his version that he had submitted the accounts to Mr.Koya and that the vehicle had been sold by the third defendant after getting the consent of all the partners. One must notice here that the complaint of P.W.1 is that the transfer of the lorry was not informed to the plaintiff. P.W1 says that he had no idea about the A.S.536/1996. 11 contents of Exts.A2 and A3, which are the notice and reply notice respectively. 18. The evidence in the case reveals that the lorry was sold in 1987. There is nothing to indicate that the first defendant had ever run a jeep on behalf of the firm. It is significant to notice that the defendants had produced Ext.B1 agreement, which shows that the third defendant had entered into an agreement to transfer the lorry involved in these proceedings to a stranger. This would clearly show that the claim of the first defendant that long ago he had ceased to be in possession of the vehicle is true. It also belies the claim of the plaintiff that other partners were unaware of the transaction relating to the transfer of the lorry. 19. It is true that the Indian Partnership Act provides for various modes of dissolution. One such mode contained in Section 40, which provides for dissolution of the firm with the consent of all the partners. It is settled law that in case of a A.S.536/1996. 12 partnership at will, sending a notice in writing to all other partners is sufficient. 20. Admittedly in the case on hand, there is no agreement evidencing the dissolution of the firm on consent of all the partners. But it is useful to refer to a passage from Indian Partnership Act – Pollock and Mulla, Seventh Edition, page 201, wherein it is referred to a follows: “In cases of express agreement to dissolve the firm between all the partners, barring questions as to its construction and effect, no problem arises. However, circumstances may also indicate existence of such agreement and consequential dissolution. It has now been affirmatively decided that the doctrine of repudiation has the same applicability to partnerships as in the case of other contracts. The repudiation of the partnership by one or more of the partners which is accepted by the others would indicate an an implied agreement to dissolve. Dissolution may also be inferred where the service by a partner or his partners of an invalid notice to determine the partnership is A.S.536/1996. 13 accepted by the co-partners as a valid notice or where the conduct of the partners is inconsistent with the continuance of partnership. In a case where in a partnership at will, notice of dissolution was given to the other partner who did not do anything in respect of the notice or partnership business for about three years after the notice, it was held that failure to do anything amounted to consent for dissolution. 21. The fact remains that till 1993 there was no demand from the part of the plaintiff seeking accounts or any other details regarding the business. Ext.B1 dated 25.10.1987 clearly shows that the third defendant was aware of the entire facts and it was in fact he who had sold the vehicle to a stranger. The plaintiff has no case that the third defendant was on enimical terms with him. One must remember that going by Ext.A1 Koya is the common nominee of the plaintiff and defendants 2 and 3. When the third defendant admitted to sell the vehicle, Koya must have known about the same. The plaintiff has also no case that that Koya had betrayed him. A.S.536/1996. 14 22. It was the above facts and circumstances, which has persuaded the court below to hold that the claim of the plaintiff is absolutely false and he is aware of the entire transaction and he has consented to the same. Therefore, the court below had found that there is an implied agreement between the partners for the dissolution of the firm. The finding of the court below seems to be fully justified going by the evidence on record. No interference is called for with the judgment and decree of the court below. The appeal stands dismissed with costs to the contesting respondents. P. BHAVADASAN, JUDGE sb. A.S.536/1996. 15 P. BHAVADASAN, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - A.S. No. 536 of 1996 - - - - - - - - - - - - - - - - - - - - - - - - - - - JUDGMENT 14.01.2010.