Case: Shantiranjan Das Gupta Vs. M/s. Dasuram Murzamull

per maund of paddy, rice, khudi, gura, husks etc., will also go to M/s. Dasuram Murzamull.4. That this milling arrangement will continue till 31st Chaitra 1364 B.S."According to Shri Nag this agreement According to Shri Nag this agreement is merely a paper transaction designed to defeat the plaintiffs creditors because he was in a bad financial position. Reliance in support of the plaintiff-appellants version was placed on the evidence of the plaintiff himself as P.W. 1. According to his testimony he had in Baisakh 1363 B. S. entered into a partnership with Bijali Das Gupta. Renubora Das Gupta, Mihir Das Gupta and that the partnership was registered as such. The business, according to him, was being run even on the date of his evidence (December 9, 1957) under the same name and style. In 1948 the defendant firm entered into a partnership business with the plaintiff when he was the sole proprietor of his mill. Murzamull Babu in his capacity as managing partner of the defendant firm having entered into the partnership on behalf of that firm. There was, however, no written document executed for this partnership. Information regarding this partnership was sent to the bank concerned and to the Deputy Director of Procurement, Nowgong, orally. This witness had to admit that there was no written proof of the partnership nor was there any written record with respect to such partnership. The partnership was dissolved because the defendants men had left the mill with their stock when the plaintiff was out of Assam between August and October, 1948. Reference was also made to the testimony of Nirmal Chandra Basu (P.W. 2) who claims to have been an employee of the Assam Bank in 1948. According to him in the middle of January, 1948 he learnt that the plaintiff and the defendant had entered into a partnership. According to his evidence also the factum of the partnership was never reduced to writing. The other circumstances on which Shri Nag mainly placed reliance in support of the existence of the partnership are that the rates charged for milling by the plaintiff were much lower than the prevailing market rates and that the loading and unloading charges were also undertaken by the plaintiff. These circumstances, according to the learned counsel suggest that the milling agreement was merely a device or a paper transaction and that the real arrangement between the parties was that they were to do their business in partnership.6. In our opinion, the evidence to which our attention was drawn by Shri Nag is wholly inadequate for coming to the conclusion that the plaintiff-appellant and the defendant firm had entered into a contract of partnership as suggested on behalf of the plaintiff. It is inconceivable that the parties should have entered into an oral agreement of partnership without retaining any record of its terms and conditions. This is not the normal course of business. It is equally inconceivable that the partnership business should have maintained no accounts of its own, which would be open to inspection by both parties even though kept secret from the rest of the world. Absence of such accounts is conceded by the appellant before us. Maintenance of separate accounts by the plaintiff and the defendant firm as suggested by the appellant is no substitute for the maintenance of the accounts of the partnership business as such, accessible to both parties and, indeed, keeping only separate accounts by the parties would tend to negative rather than support the plea of partnership. Some of the other features which go against the appellants plea are: (1) no account of the partnership was opened with any bank and mere oral information with respect to the newly created partnership was sent to the bank and (2) no written intimation was conveyed to the Deputy Director of Procurement with respect to the newly created partnership, only oral information having been sent to him. The circumstances further render the story of the partnership more doubtful.7. Shri Nag submitted that the trial Court had on a consideration of the entire material come to a positive finding on issue no. 1 and that the High Court was, therefore, not justified in reversing it. The trial court, in our view, was influenced by considerations which are wholly inadequate for supporting the conclusion that the parties had entered into a partnership. According to the trial court the terms of partnership as reproduced in the plaint are reasonable whereas the terms contained in Ex. B suggest that the plaintiff had agreed to charge very low rates for milling the defendants paddy and he had also undertaken expenses for loading and unloading, which unfairly increased the financial burden on him without any corresponding remuneration. The trial court has also more than once made a reference to the likelihood of the parties making concealed profits from the partnership business and this in its view accounted for the absence of written deed of partnership. This reasoning is, in our view, too thin to satisfactorily explain or justify the extraordinary circumstance of complete absence of accounts even for the private use of the parties. Whenever the parties try to conceal the real nature of an agreement of partnership between them they almost invariably, in their own self-interest, take good care to have in their respective possession written records of their rights and liabilities as also of their partnership business dealings. They further try to keep full record of the accounts of the business. This conduct is guided by the ordinary rules of prudence which govern normal human behaviour. Those accounts no doubt may not be described or treated as official accounts of the partnership maintained in the ordinary course of business. They are intended to be kept strictly and exclusively for the personal and private use of the parties themselves. In the present case it is admitted on both sides that there is no such written record nor were any such accounts ever maintained by the parties for their own exclusive use.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]5. Before us Shri Nag, the learned counsel for the appellant, has very fairly and frankly conceded that there is no written instrument of partnership. According to him the partnership was oral and was entered into some time on or about January 10,1948. We have on the record a written agreement between the parties Ex. B dated January 11, 1948. This agreement purports to be a milling hire arrangement between Santi Ranjan Das Gupta, proprietor of Das Gupta Rice Mills, Nojai Nowgongin this litigation) and Messrs Dasuram Murzamull of GauhatiAccording to this agreement, the plaintiff who was not able to run the mill business for himself entered into a milling hire arrangement with theIn our opinion, the evidence to which our attention was drawn by Shri Nag is wholly inadequate for coming to the conclusion that theand the defendant firm had entered into a contract of partnership as suggested on behalf of the plaintiff. It is inconceivable that the parties should have entered into an oral agreement of partnership without retaining any record of its terms and conditions. This is not the normal course of business. It is equally inconceivable that the partnership business should have maintained no accounts of its own, which would be open to inspection by both parties even though kept secret from the rest of the world. Absence of such accounts is conceded by the appellant before us. Maintenance of separate accounts by the plaintiff and the defendant firm as suggested by the appellant is no substitute for the maintenance of the accounts of the partnership business as such, accessible to both parties and, indeed, keeping only separate accounts by the parties would tend to negative rather than support the plea of partnership. Some of the other features which go against the appellants plea are: (1) no account of the partnership was opened with any bank and mere oral information with respect to the newly created partnership was sent to the bank and (2) no written intimation was conveyed to the Deputy Director of Procurement with respect to the newly created partnership, only oral information having been sent to him. The circumstances further render the story of the partnership more doubtful.7.Shri Nag submitted that the trial Court had on a consideration of the entire material come to a positive finding on issue no. 1 and that the High Court was, therefore, not justified in reversing it.The trial court, in our view, was influenced by considerations which are wholly inadequate for supporting the conclusion that the parties had entered into a partnership. According to the trial court the terms of partnership as reproduced in the plaint are reasonable whereas the terms contained in Ex. B suggest that the plaintiff had agreed to charge very low rates for milling the defendants paddy and he had also undertaken expenses for loading and unloading, which unfairly increased the financial burden on him without any corresponding remuneration. The trial court has also more than once made a reference to the likelihood of the parties making concealed profits from the partnership business and this in its view accounted for the absence of written deed of partnership. This reasoning is, in our view, too thin to satisfactorily explain or justify the extraordinary circumstance of complete absence of accounts even for the private use of the parties. Whenever the parties try to conceal the real nature of an agreement of partnership between them they almost invariably, in their owntake good care to have in their respective possession written records of their rights and liabilities as also of their partnership business dealings. They further try to keep full record of the accounts of the business. This conduct is guided by the ordinary rules of prudence which govern normal human behaviour. Those accounts no doubt may not be described or treated as official accounts of the partnership maintained in the ordinary course of business. They are intended to be kept strictly and exclusively for the personal and private use of the parties themselves. In the present case it is admitted on both sides that there is no such written record nor were any such accounts ever maintained by the parties for their own exclusive use.