IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. (1) R.S.A. No.2002 of 2005 .... Guru Nanak Industries, Faridabad and another. ....... Appellants through Shri Shri Harsh Aggarwal, Advocate. Versus Amar Singh. ....... Respondent through Shri Arun Jain, SeniorAdvocate with Shri Amit Jain, Advocate. (2) R.S.A. No.2003 of 2005 .... Ms.Mohinder Kaur. ....... Appellants through Shri Shri Harsh Aggarwal, Advocate. Versus Amar Singh. ....... Respondent through Shri Arun Jain, SeniorAdvocate with Shri Amit Jain, Advocate. Date of Decision: 18.05.2009 CORAM: HON'BLE MR.JUSTICE MAHESH GROVER .... 1. Whether Reporters of Local Newspapers may be allowed to see the judgment? 2. To be referred to the Reporters or not? R.S.A.No.2002 of 2005 -2- .... 3. Whether the judgment should be reported in the Digest? .... Mahesh Grover,J. This order will dispose of the above two Regular Second Appeals which have been directed against judgment and decree dated 24.9.2004 passed by the Additional District Judge, Faridabad (hereinafter referred to as `the First Appellate Court') vide which the judgment and decree dated 17.2.2000 of the Civil Judge (Senior Division), Faridabad (described hereinafter as `the trial Court') were set aside and two appeals filed by Amar Singh, respondent herein, were accepted and the one filed by Guru Nanak Industries and Smt. Mohinder Kaur, (both of them are appellants in R.S.A.No.2002 of 2005, whereas Smt.Mohinder Kaur is appellant in R.S.A.No.2003 of 2005) was dismissed. Since the facts are intermingled, therefore, the same are being noticed in consolidated form. Sardar Swaran Singh (since deceased and now represented by his legal heir – Smt. Mohinder Kaur, being his widow) and Sardar Amar Singh, real brothers, formed a partnership firm, namely, Guru Nanak Industries , Faridabad, vide deed dated 6.5.1981 and started business of manufacturing, converting and printing machinery for paper, polythene etc. As per the averments made in the suit filed by Guru Nank Industries and late Swaran Singh, respondent-Amar Singh retired from the partnership business with effect from 24.8.1988 and withdrew his share as per terms of the partnership deed as it was already settled that on the retirement of any of R.S.A.No.2002 of 2005 -3- .... the partners, the firm would not dissolve and the retiree partner would be entitled to the capital standing to his credit in his books of account. It has further been averred in that suit that the firm was availing cash credit loan facilities from the Bank of India, Faridabad Branch and both the partners were operating the accounts with the said bank and they were responsible for all outstanding liabilities, but before the dissolution, the relations between them became strained and this was the reason for ending the partnership. The respondent, vide letter dated 19.8.1988, had informed the said bank to stop the operation of the account of the partnership firm and acting on the said direction, the account was frozen with an intimation to the partners. It was pleaded in that suit that the matter was settled and the respondent left the partnership business and retired therefrom with effect from 24.8.1988 by voluntarily taking away his capital share of Rs.89277.11 and he was also advanced loan from the funds of the firm and on the same day, it was also agreed that he would not be entitled to profits or liabilities of the firm and an intimation was also sent to the bank vide letter dated 5.10.1988. The grievance as highlighted in that suit was that since the respondent had withdrawn from the partnership firm, he started claiming himself to be the partner despite the above fact and also did not return the loan amount. It was also alleged that he did not return Maruti Van bearing registration no.DDA 3160, scooter no. DEO 4547 and telephone no.8126665 which were the properties of the firm. Therefore, Guru Nanak Industries, Faridabad and Sardar Swaran Singh, in their suit, had prayed that a decree of declaration to the R.S.A.No.2002 of 2005 -4- .... effect that the respondent had got no concern with the partnership firm-Guru Nanak Industries of which Swaran Singh was the sole proprietor and he had no right to keep, possess and alienate the properties of the partnership firm after his retirement therefrom be passed. A consequential decree of permanent injunction was also prayed for. The respondent filed his written statement contesting the claim of Guru Nanak Industries and Swaran Singh. It was averred by him that he never retired from the partnership firm and never withdrew his capital share. It was denied that there was any settlement and he was paid Rs.89277.11 or was advanced any loan. He pleaded that if there was any dissolution of the partnership firm, all the formalities as per the provisions of Indian Partnership Act, 1932 (for short, `the Act') were to be completed. He denied that any letter dated 5.10.1988 regarding dissolution of the partnership firm was written by him to the bank discharging him from the liabilities, as alleged. The other averments were also refuted and it was pleaded that Swaran Singh could not claim the firm to be his sole proprietorship firm. In his separate suit filed against Swaran Singh, the respondent prayed for dissolution of the partnership with consequential relief of partition of asserts possessed by the firm. He also filed an application for appointment of a receiver to the take charge of the properties, assets, machineries, goods and all records and account books of the firm and preserve them intact till the decision of the suit. In the written statement filed by Swaran Singh, it was pleaded that the respondent had voluntarily retired from the partnership firm and he R.S.A.No.2002 of 2005 -5- .... had in fact floated a new proprietorship concern under the name & style of M/S Guru Nanak Mechnical Industries with effect from 14.9.1988 and has started manufacturing the same products. The other averments made in the suit were also denied. On 12.10.1990, the following issues were framed in the suit filed by the respondent:- 1.Whether the plaintiff is a partner of firm of M/S Guru Nanak Industries having 40% share in the same?OPP 2. If issue No.1 is proved, whether the plaintiff is entitled to dissolution of partnership firm?OPP 3. Whether the plaintiff is entitled to partition of the movable and immovable assets of the firm if so its effect?OPP 4. Whether the plaintiff is entitled to rendition of account?OPP 5. Whether the suit is not maintainable in the present form?OPD 6. Whether the firm already stood dissolved w.e.f. 24.8.88, if so its effect?OPD 7. Whether the plaintiff has no cause of action to file the present suit?OPD 8. Whether the plaintiff has no locus standi to file the present suit?OPD 9. Relief. On 6.2.1992, the following issues were framed in the suit filed by Guru Nanak Industries and Swaran Singh:- R.S.A.No.2002 of 2005 -6- .... 1. Whether the plaintiff is entitled to the relief of declaration and permanent injunction as prayed for?OPP 2. Whether the description of plaintiff no.1 is wrong and incorrect?OPD 3. Whether the suit is not maintainable in the present form?OPD 4. Whether the plaintiff has not come to the court with clean hand?OPD 5. Whether the plaintiff has got no cause of action to file the present suit?OPD 6. Whether the suit is premature?OPD 7. Relief. During the pendency of the proceedings, Sardar Swaran Singh expired on 29.5.1995 and his widow Smt.Mohinder Kaur filed an application claiming herself to be his sole legal heir on the basis of will dated 26.5.1995. On 17.1.1996, the following additional issues were framed in the suit filed by the respondent:- 1.Whether Smt. Mahinder Kaur is the sole legal heir of deceased Swaran Singh on the basis of will dated 26.5.95?OPP 2. Relief. Similarly, on 5.11.1996, the following issues to were framed in the suit filed by Guru Nanak Industries and Swaran Singh:- 1. Whether Smt. Mahinder Kaur is the sole legal heir of R.S.A.No.2002 of 2005 -7- .... deceased Swaran Singh on the basis of will dated 26.5.95?OPP 2. Relief. Again, on 25.11.1998, the following issue was framed in this suit:- 1-A. Whether Mohinder Kaur is the only legal heir of the deceased plaintiff Sardar Swaran Singh, as alleged?OPP It is pertinent to mention here that the suit filed by Guru Nanak Industries and Swaran Singh was assigned no.233 of 29.3.1989, whereas the suit filed by the respondent was given no. 191 of 29.4.1989 and both these suits were consolidated as per order dated 6.8.1993 passed by this Court in Civil Revision No.2231 of 1993. The evidence of the parties was recorded in the suit filed by Guru Nanak Industries and Swaran Singh. After appraisal of the entire evidence on record, the trial Court partly decreed the suit of Guru Nanak Industries and Swaran Singh and passed a decree of permanent injunction restraining the respondent from interfering in their business in any manner and from collecting payment etc. from their customer by pretending himself as partner. In so far as the prayer for decree of declaration was concerned, the trial Court declared that the van and the scooter were the property of the respondent and the firm had no concern with them, whereas the telephone being in the name of the partnership was declared to be its property. The suit filed by the respondent for dissolution of the partnership firm with consequential relief of parition R.S.A.No.2002 of 2005 -8- .... of the assets and rendition of accounts was dismissed. Feeling dis-satisfied with the judgment and decree of the trial Court, the respondent filed two appeals, whereas Guru Nanak Industries & Smt.Mohinder Kaur filed one appeal. By the impugned judgment & decree, the First Appellate Court set aside the judgment & decree of the trial Court, accepted the appeals of the respondent and dismissed that of Guru Nanak Industries & Smt.Mohinder Kaur. The suit of the respondent was decreed as prayed for, whereas the suit of Guru Nanak Industries & Swaran Singh was dismissed. A preliminary decree was ordered t be prepared accordingly. This has resulted in filing of these two Regular Second Appeals, one by Guru Nanak Industries & Smt.Mohinder Kaur and the other by Smt.Mohinder Kaur alone. Learned counsel for the appellants has contended that there is overwhelming evidence on record that on 24.8.1988, the partnership stood dissolved and further subsequent thereto, a sum of Rs.1 lac was paid to the respondent as full and final settlement of the accounts. He further contended that this amount was paid on 17.8.1988 and the receipt thereof is on record as Exhibit P9. He submitted that entire share capital of Rs.89277.11 was paid to the respondent and he was also given Rs.1,15,000/- by way of loan on the said date. It was further submitted that according to Clause 10 of the partnership deed dated 6.5.1981, which is to the following effect, either of the partners could retire from the partnership by giving one month prior notice to the other side:- “10.That if any party desires to retire, he can do so by giving R.S.A.No.2002 of 2005 -9- .... one month prior notice in writing to the other party concerned. The retirement of any partner shall not dissolve the firm but the retiring partner shall be entitled only to the capital standing to his credit in the books of account.” Learned counsel for the appellants argued that the First Appellate Court has gone wrong in holding that notice was not served in the instant case. He submitted that since there were two partners and the settlement was mutual, there was no need of any notice as in any eventuality, the conduct of the parties was sufficient notice to each other. He further submitted that the respondent has not denied the receipt of the amount and has also not disputed the receipt of Rs.1 lac which was paid as final settlement and a perusal of the contents of Exhibit P9 clearly shows that the matter was adequately settled. He drew my attention to Exhibit P9, which reads as under:- “ R e c e i p t Received with thanks a sum of Rs.1,00,000/- (Rs.One Lac only) by cash from S.Swaran Singh,Mg. Partner of M/S Guru Nanak Industries (Regd.) Plot No.: C.P.-6 & 7, N.H.5, Rly.Road, Faridabad (Haryana) on account of Part payment of the settlement made between both the partners of firm. The above amount is being received by the undersigned with regard to dissolution of our Partnership on 24/8/1988. With the receipt of this amount my total amounts are settled. Nothing is due to me from S.Swaran Singh & his firm. R.S.A.No.2002 of 2005 -10- .... Sd/- (Amar Singh ) (Retiring Partner) For Guru Nanak Industries (Regd.)” It was contended that according to Section 63 of the Act, notice to the Registrar of Firms is not mandatory and, therefore, the inference which has been derived by the First Appellate Court that no notice was given to any of the authorities regarding change of partnership firm is totally erroneous. He referred to the testimony of PW3-Ramesh Kumar Vasudev, Accountant, who proved the payment of the amounts to the respondent and also proved the account statements. He also referred to the cross-examination of the respondent who appeared as DW8 wherein the receipt of this amount was admitted. It was, thus, argued that in view of this overwhelming evidence, the findings recorded by the First Appellate Court are totally perverse and deserve to be set aside. On the other hand, learned counsel for the respondent argued that clause 10 of the partnership deed clearly stipulated that if any partner desires to retire, he can do so by giving one month prior notice in writing to the other partner. He contended that no such notice was given because the respondent never retired from the partnership and continued to remain in the firm. He further contended that the accounts books are not reliable because a bare perusal of the same reveals that there are interpolations in the same and further that PW3, the Accountant, has admitted that he has not produced any material on the basis of which such entries were made. It was submitted that in the absence of the original entries and basis of such entries, the account books cannot be relied upon. It was further submitted that when R.S.A.No.2002 of 2005 -11- .... the dispute erupted between the parties, the respondent had written a letter asking the bank to freeze the account of the partnership firm, which prayer was accepted and thereafter, the matter was sorted out between the partners and again a letter was written on 24.10.1988 to the bank, which was signed by him as a partner. Learned counsel for the respondent, thus, contended that had the respondent retired from the partnership firm, he would have never signed the letter as a partner. He argued that even though the respondent has admitted the receipt of Rs.1 lac, the writing, Exhibit P9, is fabricated document. He submitted that the respondent had specifically denied the execution of this document and set up a plea of fraud and to substantiate this, he had examined a handwriting expert, who proved that this document was fictitious and the signatures of the respondent thereon did not appear. He further submitted that the appellants did not bring any evidence despite this overwhelming evidence pointing to the fabricated document, Exhibit P9. He, thus, contended that the findings of the First Appellate Court on this point also cannot be faulted with. It was further contended by the learned counsel for the respondent that throughout the case of the appellants was that the partnership was dissolved,but it is not their case that he had retired from the partnership and if the partnership was dissolved, then an intimation had to be given to the Registrar of Firms regarding the same. He submitted with reference to Section 43 of the Act that where the partnership is at will, the firm may be dissolved by any partner by giving notice in writing to all the other partners of his intention to do so and if it is a case of retirement of a R.S.A.No.2002 of 2005 -12- .... partner, the retirement of such a partner had to be with consent or agreement between the partners or in accordance with a contract between them. It was argued that no such evidence has come on record which could suggest that the respondent had ever retired from the partnership firm and, therefore, the findings recorded by the First Appellate Court do not warrant interference and the appeal deserves to be dismissed. I have thoughtfully considered the rival arguments/contentions/ submissions and have carefully gone through the whole record. There is certain amount of convergence on the facts between the disputing parties. That is that there was an existing partnership firm in which there were two partners. The partnership deed was executed on 5.6.1981. Clause 10 thereof gave option to the partners to retire after giving one month prior notice in writing to the other partner. A dispute arose between the partners, as a result of which the respondent wrote a letter to the bank vide which he sought freezing of the account of the firm, which was done. The dispute is regarding the fact as to whether or not the respondent retired from the partnership firm on 24.8.1988 as alleged by the appellant or whether there was any settlement of accounts between the parties or not? It is the positive case of the appellants that on 24.8.1988, a writing was recorded between the parties according to which the respondent stood retired from the partnership firm. This letter was written to the bank subsequent to the earlier letter written by the respondent by which the freezing of the account of the partnership firm was sought. This letter R.S.A.No.2002 of 2005 -13- .... has been signed by both the partners,i.e., Swaran Singh and the respondent. The respondent had signed the letter as a partner of Guru Nanak Industries. It is, therefore, not a reflection of the contention as raised by the learned counsel for the appellants that on that date, the respondent stood retired. In fact, an adverse inference should be drawn from Exhibit P9 wherein the reference of dissolution of partnership on 24.8.1988 has been made. From the cumulative reading of Exhibit P9 and letter dated 24.8.1988 written by the respondent, the learned counsel for the appellant sought to contend that the respondent had retired from the partnership firm. However, after perusing the same, I am of the opinion that such an inference as sought to be derived by the learned counsel for the appellant cannot be sustained for the reason that the execution of Exhibit P9 has specifically been denied by the respondent and he had also denied his signatures thereon. He produced a writing expert to support his plea, who, vide his report, Exhibit DW13/A, has opined that the signatures of the respondent on Exhibit P9 did not tally with his sample signatures. While appearing as DW13, Shri Veer Kumar Sakhuja, Handwriting Expert, categorically deposed that the subsequent lines in Exhibit P9 had been added to the already typed matter. The opinion of DW13 as contained in Exhibit DW13/A with regard to Exhibit P9, is reproduced below for ready reference:- “As a cumulative effect of the observations detailed with regard to this comparison and the demonstrative manifestation on the relevant enlargements, I am of the considered opinion that the R.S.A.No.2002 of 2005 -14- .... writer of comparative signatures, has has not written the signature `Amar Singh' as affixed to the receipt under scrutiny. The signatures on the receipt are product of free hand forgery with the help of some mental model of the signatures of the signatory of the comparative signatures.” The appellants did not produce any evidence to counter the plea of the respondent. It is a settled proposition of law that if a plea is set up that a document is the result of fraud or fabrication, then the same has to be proved by producing sufficient evidence on record by the person, who alleges so. It is the respondent, who alleged the fabrication of Exhibit P9 and he adequately proved it with no persuasive evidence from the side of the appellants. It is, thus, to be held that Exhibit P9 is a fabricated document and no reliance can be placed on the same. The impact of these two documents, i.e., Exhibit P9 and the letter dated 24.8.1988 written by the respondent to the bank, if as evaluated above, takes the entire sting out of the case of the appellants. That apart, clause 10 of the partnership deed clearly stipulates the service of notice by a partner who desires to retire on the other. If it was to be treated under Section 43 of the Act, then also the notice was required and if it was to be treated under Section 32 of the Act under which a partner may retire, then in such an eventuality also, there should have either been the consent of the other partner or the express agreement between the parties or a notice regarding the retirement. None of these three ingredients has come on record. R.S.A.No.2002 of 2005 -15- .... Lastly, it is to be seen that the account books which were produced, were not really worthy of credence for the reason that PW3, the Accountant, who had appeared to prove them, could not reveal as to what was the source of these entries and on what basis, the same had been made. There are also certain interpolations therein which have not been denied by PW3. At the time of admission of these appeals, the following questions of law were framed:- (1)Whether issuance of notice envisaged by Section 32(i)c) for dissolution of partnership is mandatory even if there are circumstances showing one of the three partners has retired by accepting certain amounts? (2) Whether receipt Ex.P9 could be discarded by the lower Appellate Court from consideration? As discussed above, under Section 32(1), a partner may retire by following modes:- (a) with the consent of all the other partners; (b) in accordance with an express agreement by the partners, or ( c ) where the partnership is at will, by giving notice in writing to all the other partners of his intention. In any case, giving of notice may not be mandatory if it is accompanied by other circumstances, such as an agreement of the partners, but in the instant case, as seen above, there is no material to show that there R.S.A.No.2002 of 2005 -16- .... was consent inter se between the partners regarding the retirement of the respondent and also there was no agreement between them regarding his retirement. Therefore, in these circumstances when the consent of the partners and consequent agreement based on such agreement were missing, then giving of notice to the other partner before retiring another, is certainly the requirement of law which has to be met. In so far as Exhibit P9 is concerned, on the basis of the discussion made above, I am of the opinion that the same has rightly been discarded by the First Appellate Court. Consequently, the questions of law as framed above are answered against the appellants and in favour of the respondent and the appeals are dismissed being without any merit, while the judgment & decree of the First Appellate Court are upheld. May 18,2009 ( Mahesh Grover ) “SCM” Judge