IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN MONDAY, THE 27TH JULY 2009 / 5TH SRAVANA 1931 AS.No. 578 of 1996() -------------------- OS.128/1993 of SUB COURT, PAYYANNUR .................... APPELLANT/DEFENDANT: ------------------------------------ PUTHIYAVEETTIL NARAYANAN, S/O NARAYANAN, RESIDING AT MAZHOOR DESOM, PANNIYOOR AMSOM, TALIPARAMBA TALUK. BY ADV. SRI.O.RAMACHANDRAN NAMBIAR RESPONDENT/PLAINTIFF: ------------------------------------ AYYIPPUZHA NARAYANAN NAMBISSAN, S/O SANKARAN NAMBISSAN, RESIDING AT KANHIRANGAD DESOM, KUTTIYERI AMSOM, THALIPARAMBA TALUK. (DIED) addl. R2. SARASWATHY, W/O AYIPPUZHA NARAYANAN NAMBISSAN, VADAKKEMADATHIL, KANHIRANGADU POST 670142, KANNUR DISTRICT. R3 NARAYANAN, S/O DO. DO. R4 RADHAMANI, D/O DO DO. R5 SHIVASANKARAN, S/O DO. DO. R6 BALAKRISHNAN, S/O DO. DO. (LEGAL HEIRS OF THE DECEASED SOLE RESPONDENT ARE IMPLEADED AS SUPPLEMENTARY RESPONDENTS 2 TO 6 VIDE ORDER DTD.27.8.2008 ON I.A.NO.3507/2008) ADV. SRI.P.RAMAKRISHNAN NAIR FOR R2-6 THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 27/7/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON CMP NO.3434/1996 IN A.S.NO.578/1996 DISMISSED 27/7/2009 SD/- K.SURENDRA MOHAN, JUDGE true copy P.A.TO JUDGE K. SURENDRA MOHAN, J. ------------------------------------------------------------ A.S. NO: 578 OF 1996 ----------------------------------------------------------- Dated this the 27th July, 2009. JUDGMENT The appellant is the defendant in O.S.128 of 1993 of the Sub Court, Payyannur. He challenges the judgment and decree dated 24.1.1996 passed against him in the said suit. 2. The appellant-defendant was conducting ration shop No.222 at Kanhirangad desom under the Kerala Civil Supplies Corporation. Since the defendant had no money for the conduct of the shop, he requested the plaintiff to invest some money in the business. Accordingly, an amount of Rs.20,000/- was paid by the plaintiff to the defendant. An agreement dated 22.12.1988 was executed among the parties. The said agreement has been marked as Ext.A1 by the court below. As per the terms of the agreement, the profit and loss from the ration shop was to be shared by them equally. The accounts were to be settled on the 1st day of each month. It is further agreed that when the defendant stops the business of the ration shop, the amount of A.S.No.578 of 1996 2 Rs.20,000/- that was advanced would be repaid to the plaintiff. 3. After the execution of Ext.A1 agreement the business was conducted by the parties jointly. The defendant had settled the accounts up to 31.12.1990. But thereafter he defaulted in settling the accounts. The amount due to the plaintiff each month was also not paid. Subsequently, accounts up to 31.12.1991 were inspected and the profit was found to be Rs.25541.78. The amount due to the plaintiff, representing half the above amount is Rs.12,770.89. Out of this amount, the defendant paid an amount of Rs.2062.33 on 21.3.1991. The balance amount of Rs.10,708.56 was due to the plaintiff. Though the same was promised to be paid on 20.4.92, he paid only an amount of Rs. 4000/- on the said date. The accounts for the period from 1.1.1992 to 31.12.1992 was also inspected and the amount due to the plaintiff was found to be Rs.3315.01, which is half of the commission amount. The plaintiff also claimed the value of empty gunny bags sold by the ration dealer. Thus, the total amount due to the plaintiff was Rs.17,859.57, as profits of the A.S.No.578 of 1996 3 business. It is further alleged that the defendant had defaulted in taking delivery of the ration articles and his dealership was suspended by the authorities. Therefore, the plaintiff demanded return of the amount of Rs.20,000/- advanced by him on 22.12.1988 also. However, the amount was not paid. Therefore, the plaintiff filed the suit for recovery of a total amount of Rs.44,821.30. 4. The suit was contested by the defendant. He filed written statement admitting the execution of Ext.A1 agreement. He also admitted receipt of the amount of Rs.20,000/- advanced by the plaintiff. However, he denied the allegation that only the accounts up to 31.12.1990 were settled. The averment that he had defaulted in settling the monthly accounts for the subsequent period was also denied. According to the defendant, the plaintiff had requested for the return of the amount of Rs.20,000/- at the time of the marriage of his son. Accordingly, he had paid the said amount on 19.5.1993. The marriage was on 23.5.1993. The plaintiff had paid the said amount out of the money that was kept aside for taking delivery of ration articles. Since the plaintiff A.S.No.578 of 1996 4 did not return the amount that was paid by the defendant, the defendant was not able to conduct the ration shop business thereafter. Thus, the shop was lost to the defendant by 25.5.1993. The defendant further contended that an amount of Rs.5,000/- was required for the purchase of ration articles every week. Since the plaintiff had withdrawn the amount that was advanced by him, loss was caused to the defendant. According to the defendant, the amount shown in the plaint was imaginary. He contended that the plaintiff had received the amounts due to him, each month. Therefore, he disputed that any amount was due or payable by him to the plaintiff. He also contended that the suit was not maintainable. The plaintiff ought to have filed a suit for accounting of the income of the partnership business. Therefore, he prayed for dismissal of the suit. 5. The suit was tried by the court below after framing four issues. The evidence in the case consists of the oral testimonies of PWs.1 and 2 and DW1 and Exts.A1 to A5 documents. On a consideration of the rival contentions of the parties in the light of the evidence on record, the court below A.S.No.578 of 1996 5 came to the conclusion that Ext.A1 was not a partnership agreement. It has been further found that there is no evidence to prove that the defendant had repaid the amount of Rs.20,000/- on 19.5.1993 as contended by him. On a perusal of the accounts Exts.A2 and A3, the court below found that the plaintiff was entitled to recover a total amount of Rs.30,023.57 with interest thereon at the rate of 6% per annum. The above findings of the court below are under challenge in this appeal. 6. According to the counsel for the appellant, a careful reading of Ext.A1 agreement clearly shows that the same was nothing but a partnership agreement. The counsel has drawn my attention to Section 6 of the Partnership Act to point out that all the ingredients necessary for the existence of a partnership are present in Ext.A1. Therefore, according to the counsel, the court below seriously erred in decreeing the suit. The suit itself was not maintainable and the proper remedy available to the plaintiff was to file a suit for settlement of accounts. 7. The contentions of the counsel for the appellant are A.S.No.578 of 1996 6 refuted by the counsel for the respondent - plaintiff. According to the counsel for the respondent, it is an admitted fact that an amount of Rs.20,000/- was advanced by him and received by the defendant. The amount was being gainfully utilized by the defendant all these years. The amount was advanced on 22.12.1988 and for the past 21 years the amount is retained by the defendant who has earned more profits than what has been accounted. The condition subject to which the amount was advanced was that the plaintiff would be given half share in the profits earned. Since there was default in complying with the said stipulation, the suit was filed for recovery of the amounts legitimately due to the respondent. Though a plea of discharge was put forward, there is no evidence to support the same. In the above circumstances, the judgment and decree of the court below does not suffer from any infirmity, it is contended. 8. I have been taken through the records of the case and the evidence. I have heard the counsel for the rival parties. 9. The point that arises for consideration is: “Whether Ext.A1 is a partnership agreement as contended by the appellant?” A.S.No.578 of 1996 7 10. It is admitted by the defendant that Ext.A1 agreement was executed on 22.12.1988. It is further admitted that the amount of Rs.20,000/- was received by him. It is also admitted that the amount was advanced by the plaintiff since the defendant was not having working capital to conduct the ration dealership that he had obtained. As per Ext.A1, it is stipulated that the plaintiff shall be given half share in the profits of the business. However, the agreement makes it clear that the business shall be carried on by the defendant alone. An essential ingredient of a partnership as per Section 6 of the Partnership Act is the concept of agency. Each partner is to act as the agent of the other. In the present agreement Ext.A1, the concept of agency is absent for the reason that the plaintiff is given no role in the conduct of the business. 11. A ration dealer is appointed under the provisions of the Essential Commodities Act and the orders promulgated under it. As per the relevant statutory provisions and the orders applicable, a ration dealer is prohibited from alienating or transferring in any manner, the right that is conferred on A.S.No.578 of 1996 8 him to conduct the dealership. It is clear that the clause in Ext.A1 has been incorporated with the above legal position in mind. It is also worth noticing that any violation of the statutory prohibition would attract action against the dealer including termination of the dealership. Therefore, the contention of the appellant that the essence of the agreement under Ext.A1 is a partnership is not sustainable. Ext.A1 agreement does not stipulate payment of any interest for the amount advanced. Instead, the plaintiff has been promised half of the share in profits. It was subject to the above stipulation that the amount was advanced by the plaintiff and received by the defendant. Therefore, the court below is right in finding that the suit is maintainable as framed and that the plaintiff is entitled to recover the amount so advanced. 12. The other contention of the defendant/appellant is that he had repaid the amount of Rs.20,000/- to the plaintiff on 19.5.1993 at the time of the marriage of his son. It is further contended that though the plaintiff had promised to return the amount a few days after the marriage, he did not do so and consequently, the defendant could not purchase the A.S.No.578 of 1996 9 required ration articles for his shop. Consequently, the authorities took action against him and suspended his dealership. Therefore, it is contended that he had suffered needless loss by the default on the part of the plaintiff. As rightly found by the court below, it is worth noticing that there is no evidence in this case to prove the plea of discharge that has been put forward by the defendant. Therefore, the finding of the court below on this aspect is also confirmed. 13. Regarding the amount due to the plaintiff on the basis of the accounts of the dealership evidenced by Exts.A2 and A3, the court below has considered the question in detail. After an examination of the books of accounts, it has been found that the actual amount due to the plaintiff as share of profit is Rs.10,023.57. Nothing has been pointed out by the counsel for the appellant to hold that the amount is wrong in any manner. Therefore, the said finding of the court below is also found to be justified. 14. The court below has decreed the suit and found the appellant entitled to recover an amount of Rs.30,023.57 with costs and interest at the rate of 6% per annum. The interest A.S.No.578 of 1996 10 awarded is only 6% and cannot be termed as unjust or excessive. For the above reasons, I do not find any ground to interfere with the judgment and decree of the court below. The appeal fails and is dismissed with costs. K.SURENDRAMOHAN,Judge css/ A.S.No.578 of 1996 11 K.SURENDRA MOHAN, J. A.S. No.578 of 1996 JUDGMENT 27.7.2009