Case: Arjun Kanoji Tankar Vs. Santaram Kanoji Tankar

1. Santaram - hereinafter called the plaintiff - commenced an action in the City Civil Court at Bombay against his younger brother Arjun for an order winding up a partnership in respect of a business carried on by them in the name of "Hindmata Printing Press", Bombay and for account of the business. It was the case of the plaintiff that the business was started by him in 1937 and that the defendant - his brother - joined him some time later and assisted him in carrying on the business; that by agreement, dated March 16, 1953, the defendant was admitted as a partner in the business with equal share in the profits and losses of the business, but without any interest in the machinery, goodwill and the premises which were to be utilised for the purpose of partnership; that under the terms of the partnership the defendant was carrying on the business; and that disputes arose between the parties and the business could not be carried on and accordingly the plaintiff a notice, dated April 19, 1957, terminating the partnership.2. The defendant by his written statement contended that he stared business of the Hindmata Printing Press and admitted the plaintiff as a partner; that the assets of the business and several immovable properties were acquired with the aid of profits arising from that business; that the business was managed jointly by the plaintiff and the defendant and that the plaintiff and the defendant had equal share in the profits, losses and all assets, articles and properties of the business; that by deed, dated March 16, 1953, the terms of the partnership were recorded, and that the account of the profits and goodwill and assets including the tenancy rights in the premises in which the business was carried on should be taken.3. The Trial Judge decreed the plaintiffs suit and made a preliminary decree for accounts of the partnership declaring that the partnership was dissolved on April 16, 1957 and referred the suit to the Commissioner for taking accounts. The learned Trial Judge declared that in the assets of the firm including the goodwill, tenancy rights, machinery and articles described in Ex. A to the plaint and the immovable properties described in Ex. No. 1 to the written statement the partnership had no interest. He further declared that the plaintiff and the defendant had equal shares in the profits and losses of the firm, but not in the assets of the business. In appeal the High Court of Bombay confirmed the decree passed by the City Civil Court. With special leave, the defendant has appealed to this Court.4. The learned Trial Judge relied upon a number of circumstances in holding that the business and its assets belonged to the plaintiff exclusively till March 16, 1953 and the defendant had no interest therein. He held that the plaintiff brought in the initial capital to start the business; that the rent and bills for consumption of electricity in the premises were received in the name of the plaintiff; that the plaintiff opened bank accounts as sole proprietor of the Hindmata Printing Press; that policies of insurance were taken out by the plaintiff in respect of the assets of the business as the sole proprietor of the business; that invitation cards for the opening of new branch of the business were issued in the name of the plaintiff alone, that in the muster rolls the plaintiff was described in entries made in the handwriting of the defendant as the owner, and the defendant as the "brother of the owner"; and that the income-tax assessments of the business for 1951-52, 1952-53 and 1953-54 were made in the name of the Hindmata Printing Press and the plaintiff was shown as the proprietor. The learned Judge found that in an entry in the Roznamcha, dated September 2, 1949, the word "Malkanchi" used in posting the entries for withdrawals made for household expenses referred to the plaintiff when he withdrew the money for his household expenses, or sent it to his wife or spent for his own when he was away from Bombay. He observed that in the books styled "Ramniya Sansar" and "Kangar Kayede" the two brothers were described as proprietors, and there was evidence to show that there were negotiations between the two brothers for putting an end to the disputes some time in the year 1953 and apparently the plaintiff agreed to partition certain properties, but those circumstances did not support the defendants claim. He also found that on February 17, 1948, the two brothers executed a promissory note in favour of one Wagh for Rs. 5, 000/-, but the amount was borrowed not for the purpose of the business but for the personal use of the defendant, and that the plaintiff had joined the defendant in executing the promissory note "to buy peace".Santaram - hereinafter called the plaintiff - commenced an action in the City Civil Court at Bombay against his younger brother Arjun for an order winding up a partnership in respect of a business carried on by them in the name of "Hindmata Printing Press", Bombay and for account of the business. It was the case of the plaintiff that the business was started by him in 1937 and that the defendant - his brother - joined him some time later and assisted him in carrying on the business; that by agreement, dated March 16, 1953, the defendant was admitted as a partner in the business with equal share in the profits and losses of the business, but without any interest in the machinery, goodwill and the premises which were to be utilised for the purpose of partnership; that under the terms of the partnership the defendant was carrying on the business; and that disputes arose between the parties and the business could not be carried on and accordingly the plaintiff a notice, dated April 19, 1957, terminating the partnership.2. The defendant by his written statement contended that he stared business of the Hindmata Printing Press and admitted the plaintiff as a partner; that the assets of the business and several immovable properties were acquired with the aid of profits arising from that business; that the business was managed jointly by the plaintiff and the defendant and that the plaintiff and the defendant had equal share in the profits, losses and all assets, articles and properties of the business; that by deed, dated March 16, 1953, the terms of the partnership were recorded, and that the account of the profits and goodwill and assets including the tenancy rights in the premises in which the business was carried on should be taken.3. The Trial Judge decreed the plaintiffs suit and made a preliminary decree for accounts of the partnership declaring that the partnership was dissolved on April 16, 1957 and referred the suit to the Commissioner for taking accounts. The learned Trial Judge declared that in the assets of the firm including the goodwill, tenancy rights, machinery and articles described in Ex. A to the plaint and the immovable properties described in Ex. No. 1 to the written statement the partnership had no interest. He further declared that the plaintiff and the defendant had equal shares in the profits and losses of the firm, but not in the assets of the business. In appeal the High Court of Bombay confirmed the decree passed by the City Civil Court. With special leave, the defendant has appealed to this Court.4. The learned Trial Judge relied upon a number of circumstances in holding that the business and its assets belonged to the plaintiff exclusively till March 16, 1953 and the defendant had no interest therein. He held that the plaintiff brought in the initial capital to start the business; that the rent and bills for consumption of electricity in the premises were received in the name of the plaintiff; that the plaintiff opened bank accounts as sole proprietor of the Hindmata Printing Press; that policies of insurance were taken out by the plaintiff in respect of the assets of the business as the sole proprietor of the business; that invitation cards for the opening of new branch of the business were issued in the name of the plaintiff alone, that in the muster rolls the plaintiff was described in entries made in the handwriting of the defendant as the owner, and the defendant as the "brother of the owner"; and that the income-tax assessments of the business for 1951-52, 1952-53 and 1953-54 were made in the name of the Hindmata Printing Press and the plaintiff was shown as the proprietor. The learned Judge found that in an entry in the Roznamcha, dated September 2, 1949, the word "Malkanchi" used in posting the entries for withdrawals made for household expenses referred to the plaintiff when he withdrew the money for his household expenses, or sent it to his wife or spent for his own when he was away from Bombay. He observed that in the books styled "Ramniya Sansar" and "Kangar Kayede" the two brothers were described as proprietors, and there was evidence to show that there were negotiations between the two brothers for putting an end to the disputes some time in the year 1953 and apparently the plaintiff agreed to partition certain properties, but those circumstances did not support the defendants claim. He also found that on February 17, 1948, the two brothers executed a promissory note in favour of one Wagh for Rs. 5, 000/-, but the amount was borrowed not for the purpose of the business but for the personal use of the defendant, and that the plaintiff had joined the defendant in executing the promissory note "to buy peace".The High Court agreed with all the findings recorded by the City Civil Court, prima facie, the finding of the Trial Court on the question whether the parties qua the business of the Hindmata Printing Press stood in the relation of partners with equal shares in the profits and losses, was a finding on a question of fact and the decision of the Trial Court confirmed by the High Court is not open to question in this Court.

Court's reasoning:
There is, in our judgment, no substance in this contention either. After 1949 the defendant was apparently taking an active interest in the management of the business and under the deed of partnership, dated March 16, 1953, he was given the sole management of the partnership business. Disputes had started between the plaintiff and the defendant and there were negotiations between them for settlement. It appears that certain close relatives of the parties also lent their good offices in the negotiations, but nothing concrete resulted. There is no warrant for the contention that the Courts below ignored the so-called admission of the plaintiff that the defendant was taking an active part in the management of the affairs of the business for some time before 1953. It cannot be said, merely because of the plaintiffs willingness to negotiate, that the defendant was admitted as a partner in the business since the yearin our judgment, the use of these expressions does not justify an inference that by some inadvertence the name of the defendant was omitted from the recitals in thethere is nothing in the recitals in those paragraphs which supports the case of the defendant that he was a partner in the business before March 16, 1953. Paragraph 3 only recites that the defendant was put in sole charge and management of the business; Paragraph 8 recites that out of net profits from the business a fourth share shall be set apart for the improvement of the press and repayment of the debts of the business and the remainining profit shall be equally shared by the partners. Paragraph 12 authorises the managing partner to operate all accounts and withdraw from the Banks such amounts as he shall need for the conduct and management of the business and by Paragraph 15 certain publications brought out in the name and style of Hindmata Prakashan up to December 31, 1952, shall be owned by the partnership. Paragraph 17 incorporates an arbitration clause under which all disputes and differences and questions whatsoever were to be referred to arbitration. But none of these clauses assist the defendant in upsetting the inference arising from the overwhelming evidence led by the plaintiff, on which reliance has been placed by the Trial Court and the High Court, that the defendant had no right of ownership in the business prior to 1953.It was the case of the plaintiff that defendant worked with him only on condition that he and his wife and children were maintained by the plaintiff was highly improbable.Counsel for the defendant contends that in any event by virtue of Section 14 of the Partnership Act, 1932, all the assets with aid of which the business was carried on by the plaintiff must be deemed in law to have become partnership assets, under the deed of partnership, dated March 16,are unable to agree with counsel for the defendant that whenever there is a partnership and the assets which originally belonged to one of the partners are used for the purposes of the partnership, they must be presumed to have become partnership assets. InMiles v. Clarkethe defendant started the business of a photographer and then admitted the plaintiff - a successful free lance photographer - as a partner. The leasehold premises, furniture and studio equipment belonged to the defendant. It was intended to record the terms of partnership into a formal agreement, but not terms were ever settle, except that the partners were to share the profits equally. On dissolution of the partnership it was held that no terms ought to be implied except such as were essential to business efficacy and that only the consumable items of stock-in-trade were to be regarded as assets of the partnership, and the lease of the property, equipment and personal goodwill were to be treated as being the property of the partners who brought them into the business.14. There is no evidence in the present case that the plaintiff had, when entering into a partnership with the defendant, surrendered his individual interest in the assets brought by him into business, or had admitted that the defendant was to be the owner in equal share with him in all the assets brought into the partnership. The right of the defendant to a share in the assets brought into the business depended upon the terms of the agreement ofthe plaintiff had created any expectations in the mind of the defendant that he would be given some remuneration is wholly irrelevant in determining whether the plaintiff had agreed to treat the business. The defendants claim that he was the partner prior to the year 1953 must fail.