1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD SECOND APPEAL NO. 112 OF 1989 01. Hukumchand Bhaulal Patani 02. Ashok Bhaulal Patani 03. Abhay Bhaulal Patani 04. Anil Bhaulal Patani 05. Ajit Bhaulal Patani Each aged 49,39,37, 35 and 33 years respectively, all by occupation Businessmen, Appellants/ori. All residents of Shrirampur, Defendant Nos. District : Ahmednagar. 1 to 5. versus 01. Dhanlal Premraj Kale (since deceased through his legal representatives ) :- 1A. Smt. Kanchanbai Dhanlal Kale- wife, age 60 years, occupation household, 1B. Anil Dhanlal Kale-son, age 40 years, occup.business, 1C. Atul Dhanlal Kale-son, age 38 years, occup. business, 1D. Abhay Dhanlal Kale age 36 years, occup.business, 2 1E. Sanjay Dhanalal Kale-son, age 32 years, occup.business, All residents of Kopargaon, Tq.Kopargaon, Dist.Ahmednagar. 02. Vijaykumar Premraj Kale 03. St. Putlabai wd/ Premraj Kale, 04. Sau Mosambabai Lalchand Lohade, 05. Sau Kamalabai Devichand Lohade Each aged 51, 48, 68, 57 and 46 respectively. Nos. 1 and 2 by occupation businessmen, and Nos. 3,4, and 5 are doing household work. Nos. 1,2,3 and4 residents of Respondents/ori Kopargoan, District Ahmednagar plaintiff Nos. No.5 r/o Bhandarkar Road, Pune. 1 to 3 and Deft.Nos. 6 & 7 ----- Shri V.J. Dixit, Senior Counsel instructed by Shri S.P.Deshmukh, Advocate for the appellants. Shri S.D.Kulkarni, Advocate for the Respondents. Coram : P.R.Borkar,J. Date : 21/01/2010. ORAL JUDGMENT 01. This second appeal is preferred by original Defendant Nos. 1 to 5, being aggrieved by the judgment and decree passed by the learned Civil Judge, Senior Division, Ahmednagar, in Special Civil Suit No.21 of 1982 decided on 4.11.1987, which judgment and decree 3 is further confirmed by the learned Additional District Judge, Ahmednagar in Regular Civil Appeal No. 533 of 1987 decided on 16.12.1988. 02. Present Respondent Nos.1 to 3 were the original plaintiffs. They filed above referred suit for declaration that the partnership firm in the name and style "H.B. Patani & Company" had been dissolved and for settlement of accounts with interest on amount due. The suit was also for perpetual injunction in respect of municipal house No.626 situate at Shrirampur and for appointment of Receiver. The Trial Court decreed the suit declaring that the partnership had been dissolved on 20.1.1980 and the share of the plaintiffs in partnership firm was 1/2 and that of present appellants-defendants Nos. 1 to 5 was 1/2. The Court also directed appointment of Advocate Shri A.S.Pingale as Receiver of the partnership estate and effects and for taking accounts and do all other acts as required to be done. However, the trial court did not grant perpetual injunction as prayed. 03. In brief, the facts giving rise to this appeal are that Respondent Nos. 1 to 3 filed above referred special civil suit No.21 of 1982 alleging 4 that appellant No. 1 Hukumchand and deceased Premraj Kale had formed partnership firm by name "H.B.Patani and Company" and only they two were the partners therein. Premraj Kale died on 14.12.1980. He had executed a Will on 1.11.1980 whereby he appointed Respondent Nos. 1 and 2 (original plaintiff Nos. 1 and 2) as executors and trustees. It is further stated that as per law, Respondent Nos. 1 to 3 were the legal heirs of deceased Premraj Kale. However,Defendant Nos. 6 and 7 (who are Respondent Nos. 4 and 5 in the present appeal), being the daughters of deceased Premraj, were added as formal parties to the suit. The partnership was for dealing in kerosene and crude oil. Premchand Kale had 1/2 share and appellant Nos. 1 to 5 who formed joint family had 1/2 share in the partnership. The partnership was at will and therefore partner had a right to terminate partnership with three months notice. Appellant No.1 Hukumchand had joined the partnership as Karta of the Joint Undivided Hindu Family ("HUF"for short) of appellant Nos.1 to 5. 04. By notice dated 26.10.1979, Premraj Kale terminated the partnership. In spite of that accounts were not settled and false reply was given by appellant No.1 Hukumchand on 29.1.1980. In the 5 circumstances suit was filed for reliefs as afore- stated. It is also stated that due to death of Premraj Kale on 14.12.1980 also, the partnership had come to an end. In paragraphs 2 and 3 it is also stated that partnership firm was doing its business from Municipal House No. 626 owned by Premchand and after his death by the plaintiffs-respondents. It is also said that after dissolution of partnership firm, the defendants-appellants have no right to do business in the property of the plaintiffs and so injunction was prayed for. 05. Appellant No.1 Hukumchand filed written statement on behalf of all defendants at Exh.55. According to written statement, appellant No.1 Hukumchand was representing joint family consisting of appellants and they have the right to continue the business of the partnership firm even after notice by Premchand and also after his death and, therefore, it cannot be said that the partnership stood dissolved. Therefore, according to the defendants-appellants there cannot be decree for dissolution. Moreover, right to file suit is also challenged on the ground that necessary parties were not added to the suit. It is stated that (1) M/s Shanlal Premraj Kale,Kopargaon 6 (2) M/s Dipchand Premraj Kale at Kopargaon and (3) Smt. Urmila Vijaykumar Kale though were the necessary parties to the suit, were not made parties. The plaintiffs have no right to file suit. 06. The trial court framed various issues and by its judgment and order dated 4.11.1987 decreed the suit holding that the suit was maintainable in the form as filed; that the partnership was at will; there was dissolution of the partnership and that the plaintiffs were entitled to the accounts. The District Court by its judgment and order dated 16.12.1988 has also held that the partnership stood dissolved both, by notice issued by Premchand and also due to his subsequent death. It is held that the partnership was at will; accounts were not settled; the suit was maintainable. In the circumstances, the decree passed by the trial court for declaration and settlement of account was confirmed, which is challenged in the present second appeal. 07. This second appeal is admitted by order dated 14.3.1989 on substantial questions of law involved in ground Nos. (E), (J) and (K) of the appeal 7 memo which are as follows;- "(E). Both the learned Lower Courts failed to notice that the suit could not proceed, much less decided until and unless (1) M/s Shanlal Premraj Kale Petrol Shop, (2) M/s Dipchand Premraj Kale Adat shop of Kopargaon and (3) Mrs. Urmila Vijaykumar Kale are impleaded as parties to this litigation. They are essential parties in view of the Will Exh.56, and the Courts ought to have ordered sou moto even to bring them on record under the provisions of Order 1 Rule 10 of Code of Civil Procedure, 1908. (J). Both the learned Lower Courts have erred in holding that the said Partnership was at WILL. This is contrary to the provisions of the Partnership Deed, Provisions of the Partnership Act and the facts of the case. (K). Both the learned Lower Courts failed to see that the Partnership Deed Exh.D, makes a provision for retirement of a Partnership only and this must be so as Late Premraj was Maternal uncle of the Appellants. Further the Notice at Exh.F, in the alternative claims a retirement from the firm. Then the Will at Exh. G does not make a mention of Accounts but clearly shows the dues of the Partnership as mentioned in the Capital Account. Lastly even the conduct of the Plaintiffs is very eloquent in as much as they have claimed a fixed amount of Rs. 30,520= and then valued the suit tentatively (in name only) at Rupees 30,000/= contrary to the practice in Court of valuing such suits at a mere R.200/= to Rs.300/=. " 8 08. Heard Shri V.J. Dixit, learned Senior Counsel, instructed by Advocate Shri S.P.Deshmukh for the appellants and Shri S.D.Kulkarni Advocate for the Respondents. 09. So far as ground (E) in the appeal memo is concerned, it is necessary to have reference to the Will executed by deceased Premchand. By the said Will, Respondent Nos. 1 and 2 (original plaintiffs No. 1 and 2) were appointed as executors and trustees. Admittedly they have obtained probate pending suit. Reference to the assets in the partnership firm in the name and style H.B. Patani & Co. is made in para 4 clause (vii) of the Will and in para 7(vi) of the Will. Following directions are given with regard to the credit balance in the capital account with the said partnership firm. "4(i)to(vi) ................................ (vii) Credit balance in Capital account with:(a) Messrs H.B. Patani & Co. Shrirampur and (b) Messrs. Poonam Picture Palace, Kopargaon in which firm I had contributed my house property C.T.S. No.1900 to 1909 at Kale Mala, Kopargaon, known as "Cinema Godown" as my share of Capital distribution in the said partnership business. 9 "7. I give and bequest the following legacies to be paid and delivered as soon as practicable after my death. (i)to(v) ................................... (vi) The credit balance in the capital account with M/s H.B. Patani and Co. Shrirampur and M/s Poonam Picture Palace, Kopargaon, should be utilised for the repayment of the amount due by me to the firms M/s Dhanalal Premraj Kale, Petrol shop and M/s Dipchand Premraj Kale, Adat shop of Kopargaon. After the repayment of the amount due to the above two firms and any debt due by me to any other person, if any credit balance which is payable to me should be given to my daughters-in-law Mrs. Urmila Vijaykumar Kale. 10. If we consider the Will as a whole, it is clear that Respondent Nos. 1 and 2 (original plaintiff Nos. 1 and 2) were appointed as joint executors and trustees and as such it is for them to realise the estate of partnership to the extent of share of deceased Premraj and thereafter they have to deal with the said assets as per clause 7(vi) of the Will quoted above. In the circumstances, I am not satisfied that M/s Dhanalal Premraj Kale, Petrol shop, M/s Dipchand Premraj Kale, Adat shop at Kopargaon or Smt. Urmila Vijaykumar Kale ought to have been made as parties to the suit. They are only beneficiaries of the assets which would have to be obtained by filing 10 present suit by Respondent Nos.1 and 2. I am, therefore, not satisfied that the suit is in any way barred under Order 1 Rule 10 of the Code of Civil Procedure,1908. 11. So far as ground (J) is concerned, both the courts below have held that the partnership was at will and terms of the partnership deed at Exhibit 51 show that as per paragraph 2 thereof, the partnership business shall be carried on at Shrirampur or at such other place or places as partners may from time to time agree upon. As per paragraph 7 of the partnership deed, should any partner desire to separate or retire from the partnership business he may do so by giving three months notice to the other partner of his intention to do so and the partnership as regards to him shall be terminated at the expiry of such notice. Paragraph 8 is to the effect that partner Shri Hukumchand Bhaulal is admitted on behalf of his H.U.F. and Shri Premraj Punamchand Kale is admitted as individual. It is argued on behalf of appellants that aforesaid clauses indicate that the partnership was not at will. 11 12. Section 7 of the Indian Partnership Act, 1932 defines "Partnership at will" to mean that where no provision is made by contract between the partners for the duration of their partnership, or for the determination of their partnership, the partnership is "partnership at will". Section 43 prescribes the manner for dissolution of partnership at will. It says that where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. As per section 42(c), subject contract between the partners a firm is dissolved by the death of a partner. In the present case, there is nothing to show that the partnership deed Exh.51 indicates that that even after death of one partner, another partner is entitled to continue the partnership firm. So, in the absence of any specific term in the deed of partnership for its continuation after death of one of the partners, it is to be presumed that after death of Premchand, the partnership firm stood dissolved in terms of Section 42(c) of the Partnership Act. 13. In the present case, there were only two partners in the partnership firm, namely, Hukumchand who was admitted as Karta on behalf of HUF(Hindu 12 Undivided Family) and Premchand who was admitted in his individual capacity. It is submitted by Advocate Shri S.D.Kulkarni on behalf of the Respondents that the HUF of Hukumchand is one unit and it is not that all its constituents or co-parceners were made partners in the firm individually. There is no provision in the partnership deed to include any new partner by either partner or by the surviving partner. So, it does not appear that the partnership firm was expected to continue even after termination notice by Premchand or subsequent to his death. 14. Learned Counsel cited some authorities before me. In the case of Abbashbhai K. Golwala vs. R.G. Shah AIR 1988 Bombay 187, as para. 1 thereof discloses, there was specific clause i.e. clause No.2 in the partnership deed to the effect that the Partnership with the change in the constitution of the firm, has commenced the partnership business on and from the 1st day of January 1971 and shall continue unless dissolved or determined by and with the mutual consent of all the partners provided that any of the parties thereto may retire from the partnership after giving to the others a previous notice in writing of not less than three calendar months of his intention 13 to retire from the partnership and he shall be deemed to have retired from the partnership at the expiration of the period of the said notice and remaining partners shall be entitled to continue to carry on the said business in partnership among themselves or with any other person or persons. So, clause 2 reproduced in paragraph 1 of the aforesaid judgment clearly shows that by retirement of any of the partners, the business of partnership shall not come to an end. The actions to be taken after retirement of a partner or in case of death or insolvency of any partner are given in paragraphs 18 and 19 of the partnership deed as reproduced in said paragraph 1 of the judgment. In the said case, on death of partner Kantilal, other four partners continued partnership. In paras 11 and 12 of the judgment, various clauses of the partnership deed were discussed. After referring to the case of Thiagrajan vs. E.M.Muthappa AIR 1961 SC 1225, it is observed that there may be a case where even after retirement of three partners, plaintiff can continue to carry on business in partnership by himself with any other person or persons. In the case of Thiagrajan before the Supreme Court, similar clauses were there and it is observed; 14 " It is true that in this particular case there were only two partners and the partnership will come to an end as soon as one partner relinquishes his right in favour of the other. That however is a fortuitous circumstance, for if (for example) there had been four partners in this case and one of them relinquished his right in favour of the other partners, the partnership would not come to an end." So, interpretation was in the light of particular partnership deed and its terms and conditions. It is observed in paragraph 15 in the case of Abbashbhai (supra): " There is an express provision under Cl. 2 which enables a remaining partner to continue the business in partnership with other parties also. In other words, there is a provision for taking new partners into the partnership." In the case before this court, there is no such similar provision in the partnership deed for taking new partner in place of the partner retired or died. 15. Another case relied upon is Vishnu Chandra v. Chandrika Prasad AIR 1983 SC 523. On construction of agreement, it was held that the partner could retire from an ongoing partnership without dissolving 15 the firm. He could retire after giving one month's notice, but if he retires within a period of one year capital invested by him would not be refundable to him till expiry of period of one year. We find necessary discussion in paragraphs 4 and 5 of the judgment and clauses 7, 18 and 20 of the partnership agreement were considered. It was observed that the partnership was not at will. 16. So, the cases cited were the decisions on facts of individual case. The terms and conditions of the partnership deed were interpreted. Those were peculiar. However, that is not so in the present matter. In the circumstances, I agree with both, the trial court and the first appellate court that the partnership was at will and it had come to an end and stood dissolved as a result of notice given by Premchand specifically stating that thereby he was dissolving the partnership firm, so also by his subsequent death. We find discussion to this effect in paragraphs 12 and 13 of the judgment of the District Judge. 17. So far as ground (K) is concerned, we have already considered the terms of partnership deed. We 16 may also refer to the notice of termination issued, copy of which is produced on record. There is no dispute that the said notice was replied to by the appellant and the learned Additional District Judge has observed that in the reply, nowhere present appellants have alleged that Premraj had no right to dissolve the partnership firm. All that they have said is that there was no necessity to dissolve the firm as the business was running in profit. So, even at the time of reply to the notice, it was not the case of the appellants that the partnership was not at will. In ground (K) of the appeal memo, it is stated that in the statement filed for estate duty purposes, the copy of which is produced at Exhibit H with the second appeal, value of the share of deceased was stated to be Rs.30,520/=. In my opinion, such a statement will not take away the merits of the present case. That was a statement filed on 14.12.1980 for the purpose of computation of estate duty on total estate of deceased Premchand and that will not in any way debar present Respondent Nos. 1 and 2 (original plaintiffs No.1 and 2) from getting decree of settlement of accounts. Having avoided to give accounts from 1982 when the suit was filed, the appellants are not entitled to rely on such statements 17 and avoid decree for settlement of accounts and interest. 18. Before I part with this appeal, I may refer to one more argument advanced by Advocate Shri S.D. Kulkarni for the Respondents that for possession of the house bearing municipal No.726 separate special civil suit No.179 of 1982 was filed by present Respondents. That suit was decreed. First Appeal No. 500 of 1989 filed against the same was also dismissed. Even the review application No. 4273 of 2005 against judgment in said appeal was also dismissed. S.L.P. bearing No. 14699 of 2005 against the judgments in the said first appeal and review application were also dismissed. Learned Advocate Shri S.D.Kulkarni placed on record copies of the judgments in the first appeal, review application, so also copies of the orders of the Supreme Court dismissing the S.L.P. Advocate Shri S.D.Kulkarni for Respondents also referred to paragraph 9 of the written statement filed by defendant No.1-present appellant No.1 Hukumchand in Special Civil Suit No.21 of 1982 and pointed out that there is reference to the filing of Special Civil Suit No.179 of 1982 filed by present Respondents. 18 19. It is also argued that partnership is not registered and so there is bar of section 69 of the Partnership Act. But, this point was not raised in trial court and in District Court, nor this second appeal is admitted on such question of law. Moreover, Section 69(3)(a) of the Partnership Act makes it clear that there is no bar to file suit for dissolution of a firm or for accounts of a dissolved firm. So, said point has no merits. 20. In the result, this second appeal deserves to be and is accordingly dismissed. The judgment and decree passed by the learned Civil Judge, Senior Division, Ahmednagar, in Special Civil Suit No.21 of 1982 decided on 4.11.1987, which judgment and decree is further confirmed by the learned Additional District Judge, Ahmednagar in Regular Civil Appeal No. 533 of 1987 decided on 16.12.1988, are hereby confirmed. Appellants to pay costs of the Respondents and bear their own. 21. At this stage, Advocate Shri V.S. Gadakh, holding for Shri V.J. Dixit, learned Senior Counsel for the appellants, seeks stay of this order for eight 19 week. Already there are concurrent findings of fact by the two courts below. This court is in agreement with the same. In view thereof, prayer for stay rejected. pnd/sa112.89 (P.R.BORKAR, J.) 20