Karnataka High Court
Bhimashankar @ Sanjay S/O Dr. ... vs M/S Hatti And Company Ors on 30 July, 2024
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NC: 2024:KHC-K:5538
RSA No. 7050 of 2012
IN THE HIGH COURT OF KARNATAKA,
KALABURAGI BENCH
DATED THIS THE 30TH DAY OF JULY, 2024
BEFORE
THE HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE
REGULAR SECOND APPEAL NO.7050 OF 2012 (RES)
BETWEEN:
BHIMASHANKAR @ SANJAY
S/O DR. GURUBASAPPA HATTI,
AGED ABOUT 37 YEARS, OCC: STUDENT,
R/O BIDAR PROPER.
...APPELLANT
(BY SRI RAVI B. PATIL, ADVOCATE)
AND:
1. M/S. HATTI AND COMPANY
Digitally signed COMMISSION AGENT,
by RENUKA GANDHI GUNJ, BIDAR-585 401,
Location: HIGH THROUGH ITS MANAGING PARTNER.
COURT OF
KARNATAKA
2. MALLIKARJUNAPPA S/O SHARNAPPA HATTI,
AGE: 55 YEARS, OCC: BUSINESS,
R/O DEVI COLONY, BIDAR-585 401.
3. UGRAPPA S/O SHARNAPPA HATTI,
AGED ABOUT 44 YEARS, OCC: BUSINESS,
R/O AT POSTAL ALMAL,
TQ. SINDGI, DIST. BIJAPUR-586 101.
4. SHARANAPPA S/O UGRAPPA,
SINCE DECEASED BY L.RS.
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NC: 2024:KHC-K:5538
RSA No. 7050 of 2012
A) GURUBASAWWA
W/O LATE SHARNAPPA
DIED ISSUELESS.
5. PRAKASH S/O VEERSANGAPPA,
AGED ABOUT 42 YEARS,
OCC: BUSINESS,
R/O GANDHIGUNJ, BIDAR,
NOW AT HATTIL ON AGENCIER,
INDI ROAD, BIJAPUR-586 101.
6. ANNEPPA S/O KARBASAPPA
AGED ABOUT 77 YEARS,
OCC: BUSINESS,
R/O GANDHI GUNJ,
BIDAR-585 401.
...RESPONDENTS
(SRI SHESHADRI JAISHANKAR, ADVOCATE,
FOR R2 AND R3;
VIDE ORDER DATED 31.03.2017, NOTICE TO R1 IS
HELD SUFFICIENT;
R4 DEAD AND HIS LR'S ALSO DEAD;
R5 AND R6 ARE SERVED
THIS RSA IS FILED UNDER SECTION 100 OF CPC,
PRAYING TO ALLOW THE APPEAL AND SET ASIDE THE
JUDGMENT AND DECREE DATED 02.11.2011 PASSED IN
R.A.NO.124/2007 BY THE PRINCIPAL DISTRICT AND SESSIONS
JUDGE AT BIDAR, CONFIRMING THE JUDGMENT AND DECREE
DATED 25.10.2007 PASSED IN O.S.NO.134/1993 BY THE
PRINCIPAL CIVIL JDUGE (SR.DN.) BIDAR AND TO GRANT ANY
OTHER APPROPRIATE RELIEF.
THIS APPEAL COMING ON FOR FURTHER HEARING, THIS
DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
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NC: 2024:KHC-K:5538
RSA No. 7050 of 2012
CORAM: HON'BLE MR. JUSTICE ANANT RAMANATH
HEGDE
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE) Vide order dated 26.11.2012, this second appeal is admitted to answer the following substantial question of law:
"Whether the Courts below are justified in dismissing the suit as barred by limitation ignoring the orders passed by this Court in CRP No.2400/1995 and CRP No.2149/2000?"
2. This second appeal is by the plaintiff, challenging the decree dismissing his suit for rendition of accounts. The appeal filed by the appellant before the First Appellate Court challenging the judgment and decree passed in the suit is also dismissed, confirming the judgment and decree passed by the Trial Court. Both the Courts have concurrently held that the suit of the plaintiff is barred by limitation. Aggrieved by the aforementioned -4- NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 dismissal of the suit as well as the appeal, the plaintiff is in this second appeal.
3. The suit is filed by the plaintiff, claming to be the partner of a partnership firm M/s. Hutti and Company, Commission Agent-defendant No.1 in the suit. Defendants No.2 to 6 are alleged to be the partners of the partnership firm. The plaintiff claims that when the first defendant - partnership firm was constituted on 12.12.1974, he was minor and he was represented by his father. The plaintiff further claims that he had 15% share in the partnership firm. The said partnership firm is duly registered before the Registrar of Firms on 20.01.1975. The plaintiff has further stated that defendants No.2 to 6 have come out with one more partnership firm under the same name in the same premises, wherein the plaintiff is not shown as the partner. According to the plaintiff, the second partnership firm constituted by the defendant is nothing but the reconstitution of the partnership firm in which the plaintiff was a 15% partner. The plaintiff claims that the -5- NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 said reconstitution is behind the back of the plaintiff or his father, who was the plaintiff's guardian when the partnership firm was initially constituted in the year 1975. The suit is filed in the year 1993 when the plaintiff was aged 19 years.
4. The defendants resisted the suit on the premise that the plaintiff is not the partner of the first defendant - partnership firm. It is also contended by the defendants that the suit is not maintainable for want of registration of the partnership firm and that the suit is time barred.
5. The Trial Court accepted the contention that the suit is time barred and dismissed the suit on the premise that the suit is not filed within three years from the date of plaintiff attaining the age of majority. The First Appellate Court concurred with the finding of the Trial Court. Hence, the present second appeal.
6. Sri Ravi B. Patil, learned counsel appearing for the appellant would contend that the finding that the suit is barred by limitation is contrary to the finding of this -6- NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 Court in CRP No.2400/1995 and CRP No.2149/2000. It is his contention that the preliminary issue was raised before the Trial Court to consider the question whether the suit is maintainable for want of registration and whether the suit is barred by limitation. While giving finding on the issue relating to maintainability of the suit for want of registration and on the issue relating to the limitation, the Trial Court had held that the suit is maintainable, as the partnership deed is registered and the Trial Court held that the suit is in time. Against the findings on these two issues, the aforementioned civil revision petitions were filed by the defendants and civil revision petitions have been dismissed. Thus, he would contend that the Trial Court could not have given a finding that the suit is barred by limitation.
7. It is also his contention that the suit for rendition of accounts cannot be held to be barred by limitation, as the plaintiff is still a partner and the partnership is not yet dissolved. He would also contend -7- NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 that the plaintiff's 15% share is reflected in the Income Tax Returns submitted by the partnership firm, in which the plaintiff was a partner. According to him, the statement submitted to the Registrar of Firms dated 21.01.1975 along with the balance sheet submitted to the Income Tax Department on 29.06.1995 is marked at Ex.P15.
8. This Court has perused the records and considered the submissions raised at the Bar.
9. The fact that the plaintiff was the partner of defendant No.1 in terms of the partnership deed dated 12.12.1974 is very much established. There cannot be much dispute about the existence of the partnership firm as on 1974, as defendants have taken a defence that the partnership of 1974 is dissolved and reconstituted in the year 1976 and the plaintiff has exited from the partnership. Exhibit P11 is the audited balance sheet of the firm, where plaintiff is shown to be a partner and is having share in the liability and Ex.P12 is the Income Tax -8- NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 returns in the name of the partnership firm. Ex.P16 is the Income Tax returns for the year ending 31.03.1993 and some income is reflected. Since the defendants have admitted the existence of the partnership firm in the year 1974, it is incumbent on the defendants to establish that the plaintiff has exited from the partnership in the manner known to law.
10. There is no dispute that the partnership being a contract, the partners can exit and the partnership deed can be reconstituted by admitting new members or by remaining existing partners. However, it must be established that such change in the constitution of the partnership has taken place in accordance with law. The partnership being a contract, the defendants must establish that the plaintiff has exited from the partnership firm and partnership firm is reconstituted with the consent of the plaintiff.
11. Admittedly, in the year 1976 the defendants alleged that the new partnership firm came into existence -9- NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 and the plaintiff was minor and there is nothing on record to show that anybody represented the plaintiff while reconstituting the partnership firm which came into existence in the year 1974. This being the position, this Court is of the view that the plaintiff has very much established the existence of the partnership firm and the defendants have failed to establish that the partnership firm is illegally reconstituted by removing the plaintiff as partner.
12. It is noticed that the defendants had moved an application under Order VII Rule 11 of CPC to reject the plaint on the premise that the suit is barred by limitation. The Trial Court rejected the application holding that the contention relating to limitation is a mixed question of law and fact. Said order was called in question by filing civil revision petition. The civil revision petition is dismissed.
13. As long as the plaintiff is the partner of the firm, the suit is maintainable for rendition of the accounts provided, the plaintiff is able to establish that the
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NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 partnership firm is not rendering the accounts of the firm, which is the requirement under the partnership deed. It is also relevant to note that the plaintiff was minor when the partnership firm was established and he was represented by his father. In the cause title it is shown that the plaintiff was aged 19 years when the suit was filed.
14. Article 5 of the Limitation Act, which deals with the period of limitation in a suit for accounts reads as under:
Description of suit Period of limitation Time from which period begins to run For an account and Three years The date of the a share or the dissolution profits of a dissolved partnership
15. Under the said Article, the limitation starts from the date of dissolution of the partnership firm. This Court is of the view that the partnership firm in which the plaintiff is a partner is not dissolved. The finding of the Trial Court that the suit is barred by time by applying
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NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 Article 60 of the Limitation Act is wholly untenable. Thus, the finding that the suit is barred by limitation is set aside.
16. The Trial Court has held that the suit is not filed within three years after the plaintiff attaining majority though the plaintiff has shown his age as 19 years in the cause title of the suit. From the Birth Certificate, it is seen that the plaintiff had attained majority three years prior to the filing of the suit. However, that does not come in the way of the plaintiff filing rendition of accounts, as the plaintiff has established that he is the partner and the defendants have to establish that the plaintiff has exited from the partnership firm in the manner known to law.
17. Though the partnership deed would reveal that the tenure of the partnership firm is five years from its constitution i.e. 12.12.1974 and thereafter the firm would continue subject to mutual agreement among the partners, nothing is brought on record to show that the plaintiff, who was minor is kept out of the partnership firm after mutual consent with his guardian and nothing is
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NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 brought on record to show that accounts were settled. However, the partnership firm under the same name continued the same business in the same premises. Hence, this Court is of the view that the partnership firm constituted on 12.12.1974 has continued. The said firm is not dissolved.
18. The plaintiff on attaining age of majority has sought for dissolution of the partnership firm. The learned counsel for the plaintiff, on instructions would submit that the plaintiff would be content with a decree for rendition of accounts and he shall not be treated as partner from the date of this judgment. It is to be noticed that the plaintiff was minor when he was admitted to the partnership firm. Thus, on attaining majority, within six months he was required to be noticed as to whether he will elect to be a partner or opt out to be a partner. Nothing is placed on record as to whether the plaintiff has elected or opted out to become a partner. Now, the plaintiff/appellant submits that he is electing to opt out of the partnership firm.
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NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 Hence, the plaintiff is not entitled to exercise his option as contemplated under Section 30(5) of the Indian Partnership Act, 1932. However, the plaintiff has prayed for dissolution of the partnership firm. Instead of granting a decree for dissolution of the partnership firm, the plaintiff shall cease to be the partner of the first defendant-partnership firm with effect from this date.
19. Under these circumstances, this Court is of the view that the substantial question of law framed above has to be answered in favour of the plaintiff and against the defendants. Hence, the following:
ORDER a. The appeal is allowed.
b. The judgment and decree passed by the Trial Court are set-aside.
c. The suit of the plaintiff for rendition of accounts is decreed by granting a preliminary decree in favour of the plaintiff and actual amount payable to the plaintiff shall be determined in final decree proceedings.
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NC: 2024:KHC-K:5538 RSA No. 7050 of 2012 d. It is further made clear that the plaintiff is entitled to true accounts of the partnership firm that was constituted on 12.12.1974, also the accounts of the partnership firm said to be established on 28.10.1976 till the date of this judgment.
e. No order as to costs.
Sd/-
(ANANT RAMANATH HEGDE)
JUDGE
LG,CHS
List No.: 1 Sl No.: 59