Case: Laxmidas Dahyabhai Kabarwala Vs. Nanabhai Chunilal Kabarwala And Ors

2. The facts necessary to appreciate the points raised before us are briefly as follows: The plaintiff, who is the appellant before us and one Jamnadas Ghelabhai were partners in a business commenced in October 1913 and carried on under the name and style of Bharat Medical Stores at Broach, the two partners having equal shares. During the subsistence of the partnership and from and out of the assets thereof an immovable property-a house was purchased at Broach in July 1932. Jamnadas Ghelabhai died on August 12, 1943 but the partnership business was continued thereafter by the plaintiff-appellant taking in Bai Itcha-the widow of the deceased partner-in his place. A change was, however, made in the shares of the two partners, in that Bai Itcha was given only a 1/4th share as against the 1/2 share enjoyed by her husband. With this alteration the same business was carried on between the two partners. In the early part of 1950 Bai Itcha fell ill. It was the case of the plaintiff that there were negotiations between the two partners as regards the winding up of the firm and it was his further case that on July, 9, 1950 two matters were the subject of a concluded agreement with her. These were: (1) that the partnership would stand dissolved from July 15, 1950 and that Bai Itcha would receive from the plaintiff a sum of Rs. 13,689/- in full satisfaction in respect of the capital contributed by her as well as for the share of the profits of the firm, (2) that the plaintiff was to take over the immovable property in Broach purchased by the firm in July 1932 for its book value and that he should on that account pay over to Bai Itcha Rs. 2,200/9/ being a moiety of the book value. The agreement was stated to be wholly oral and was admittedly not reduced to writing. Before, however, anything was done in pursuance of the alleged arrangement, Bai Itcha died on July 31, 1950 leaving as her heirs the respondents who were the sons of a brother of Jamnadas Ghelabai-Bai Itchas husband. It was the further case of the appellant that after the death of Bai Itcha respondents 1 and 2 examined the accounts of the partnership and after satisfying themselves that Rs. 13,689/- was the proper figure of the sum due to the deceased partner, agreed to receive the same in full satisfaction of the amount to which they were entitled in respect of that item. All these allegations about the agreement with Bai Itcha and the confirmation by them of the said agreement after her death were, however, denied by the respondents who insisted upon their rights under the law as legal representatives of the deceased partner.3. The appellant consequently filed a suit in the Court of the Civil Judge at Broach for enforcing the agreement which he alleged and for relief on that basis. It would be necessary to set out and discuss in detail the reliefs claimed in this suit as the same have a material bearing on some of the arguments addressed to us. We shall, however, revert to this after completing the narrative of the proceedings up to the stage of the appeal before us. To this suit the respondents who had been impleaded as defendants filed a Written Statement which was mainly concerned with denying the truth of the agreement with Bai Itcha and the story regarding the subsequent confirmation by themselves and they wound up the statement by a counter-claim which might usefully be extracted even at this stage. In paragraph 25 of the Written Statement theyIn view of the above facts the plaintiff suit may please be dismissed and the defendants costs may be awarded. The defendants further pray that if the Honourable Court holds that the said partnership was dissolved upon the death of Bai Itcha on date 31-7-50, the same may be legally wound up under the supervision and directions of the Honourable Court. And necessary instructions for the purpose may please be given, the accounts upto the date of complete winding up may be lawfully taken, the claims of the parties against one another may be ascertained and the costs of the defendants may also be awarded. The defendants have filed this counter-claim for thisconcluding paragraph-paragraph 26, contained details of the valuation of the counter-claim and of the court-fee they paid for the relief which they sought in the preceding paragraph.4. The plaintiff thereafter filed a reply to the counter-claim and of the contentions raised in this reply it is sufficient if at this stage we notice the plea that a counter-claim was not legally maintainable and they prayed for the dismissal of the counter-claim with costs. The Civil Judge framed the necessary issues but most of them related to the claim made in the plaint on the basis of the alleged agreement and Issue No. 15 relating to the counter-claim and the plaintiffs objection to the maintainability thereofAre defendants entitled to the counter-claim made bythese pleadings and the issues as framed the parties went to trial. By judgment dated November 30, 1954 the Civil Judge recorded findings on the several issues relating to the plaintiffs claim and dismissed the plaintiffs suit on the ground that he had failed to prove the agreement. Coming to Issue No. 15 relating to the counter-clam the learned Judge considered, in the first place, a contention urged by the defendants-the respondents before us-that the suit was virtually one for dissolution and the taking of accounts on a particular basis, viz., on the basis of a settled account and that when the plea of settled accounts failed the suit got reduced into a plain one for the taking of the accounts of a dissolved partnership and on that footing the defendants had a legal right to have the relief of accounting. The learned Judge negatived this contention basing himself on the allegations in the plaint and holding the real nature of the suit to be one for the specific enforcement of the agreement set up. He next considered the question whether the counter-claim was admissible in law and after an examination of the decisions on the point reached the conclusion that in the absence of any specific provision therefor in the Civil Procedure Code and in the light of certain decisions of the Privy Council and of the High Courts a counter-claim was not admissible in the Muffasil. A prayer by the defendants to treat the counter-claim as a plaint in a cross suit by them was rejected. The learned Judge therefore dismissed the counter-claim but he added that the defendants could bring a separate suit for accounts and for a share of the profits of the dissolved partnership if so advised.5. The plaintiff was content with the judgment which he obtained on his claim but the defendants preferred an appeal to the District Judge, Broach questioning the correctness of the order dismissing the counter-claim as not maintainable. The learned District Judge examined the authorities and reaching the same conclusion as the trial Judge, dismissed the appeal. Thereafter the defendants brought the matter before the High Court by way of a second appeal and before the learned Single Judge who heard it an oral application was made to treat the counter-claim made in paragraph 25 of the Written Statement as the plaint in a cross-suit and that same should be tried and disposed of as if it were such a suit. An objection was raised by the plaintiff-respondent before that Court to the granting of this prayer on various grounds, the main one being that on the date when the matter was before the High Court and when such an order was being prayed for-in August 1961, the claim for accounts was hopelessly barred by limitation. The learned Judge, however, following an unreported decision rendered by a Division Bench of the Bombay High Court in September, 1956 allowed the application and passed an order setting aside the dismissal of the counter-claim remanding it to the triala direction that the counter-claim be treated as a plaint in the cross-suit and that the reply of the plaintiffs to the counter-claim be treated as a written statement to the cross-suit and that the cross-suit be tried and disposed of in accordance withthat the issues arising in the cross-suit which also arose in the suit and which had been disposed of already should not be tried over again and the final decisions on those issues reached in the suit and the appeal therefrom shall be binding on the parties in the cross-suit. It is the correctness of this order by the learned Single Judge that is challenged in this appeal.

Reasoning:
18. These were the only three matters which were taken into account by the learned trial Judge in refusing the defendants prayer for treating the counter-claim as a plaint in a cross suit.19. The way in which the matter was dealt with by the learned District Judge on appeal was this. He first expressed doubts about the correctness of the decision of the Rangoon High Court in ILR 2 Rang 276: (Air 1924 Rang 346). But on the assumption that the Court had jurisdiction to effect the conversion, his reasons for rejecting the prayer of the defendants were: (1) The suit of the plaintiff and the counter-claim of the defendants were totally dissimilar i.e., the evidence needed to prove the facts in each would be different. (2) In the counter-claim a question about the goodwill of the firm and the right to use the premises of the firm would arise. (3) No issues had been raised in regard to the matters alleged in the counter-claim. (4) That the defendants would not be prejudiced if they were asked to file a fresh suit. We consider it unnecessary to canvass the relevancy or correctness of these reasons as what we have stated already as regards the judgment of the trial Judge would suffice to show that they are untenable. In this view we do not consider that the appellant derives any advantage by the criticism regarding the absence of any reference to the grounds on which the discretion was exercised by the trial and appellate courts in the judgment of the learned Single Judge.consider that in the circumstances of this case this particular aspect loses all significance because, as already indicated, we are satisfied that even if the Courts below exercised their discretion they did so on grounds not legally tenable and the learned Judge was justified in ignoring the exercise of theiris, no doubt, true that the learned Judge has not adverted to or assigned any reason why he was allowing the conversion and contended himself with referring to the unreported decision of the Division Bench of the Bombay High Court as justifying the course that he took. We are, however, not persuaded that considering that this appeal is by special leave under. Art. 136 any interference is called for with the order passed by the learned Judge. We are satisfied that there has been no miscarriage of justice by reason of the order and that even if he had properly applied his mind to it and considered the matter from the point of view of his having a discretion, the same conclusion would have been arrived at. We are not therefore disposed to interfere with the order directing the treatment of the counter-claim as a plaint in a"terms could obviously not be terms as to costs, because in this case the counter-claim was dismissed with costs by the trial Judge and the appeal therefrom was also dismissed with costs. So far as the costs in the High Court were concerned, they were directed to be the costs in theare unable to agree that it would have been proper for the Court to have imposed such terms. The whole basis of the order of the High Court was that the defendants had by their counter-claim filed partically a plaint duly valued and court-fee payable thereon paid, though in a defectivetherefore consider that no legitimate objection could be taken to the unconditional order passed by the learnedinto account the circumstances in which the plaintiffs pleas in regard to the counter-claim were filed, we are clearly of the opinion that justice requires that he should be afforded an opportunity to raise his defences on the footing that the counter-claim, even when originally made, should be treated as a plaint in a cross suit, and this he should be permitted to do in a Written Statement which he should be permitted to file and there will be a direction to that effect in the decree to be drawn up by this Court. As the trial of the claim by the defendants has already been delayed the plaintiff should file this fresh Written Statement within 8 weeks from the date of the receipt of this order by the trial Court.25. A question has also been raised as to whether the defendants should not be likewise permitted to file a fresh pleading more in accordance with the form indicated by O. VII of the Civil Procedure Code-as was permitted to be done in the Bombay case above referred to. Mr. Desai indicated that he would not object to any such liberty being given. They will be a direction that the defendants are at liberty to file a fresh pleading in the place and stead of their counter-claim contained in paragraphs 25 and 26 of the Written Statement dated October 17, 1951,provided however that there shall be no substantial variation in the allegations to be made or the reliefs to be claimed by them in such fresh pleading. This they might file within 4 weeks of the receipt of this order by the trial Court. In the event of the defendants exercising the option hereby given, the plaintiff shall file the Written Statement within 4 weeks thereafter. We ought to make it clear that by the directions we have given above we do not intend to preclude the parties from seeking any other or further amendment of the pleadings or to fetter, in any manner, the power of the Court to permit such amendment under O. VI, R. 17, Civil Procedure Code at any subsequent stage of the proceedings.