Shri Bhagwan Singh vs Shri Amrik Singh
2011 Latest Caselaw 1265 Del

      IN THE HIGH COURT OF DELHI AT NEW DELHI


                   Judgment delivered on: March 03, 2011


                        RFA No. 705/2003

Shri Bhagwan Singh                 ........Appellant.

                   Through: Mr. Rajinder Aggarwal, Advocate.

                             Vs.

Shri Amrik Singh               ......Respondent.
               Through: Mr. Vinod Sharma, Advocate.

CORAM:

HON'BLE MR. JUSTICE KAILASH GAMBHIR

1. Whether the Reporters of local papers may            yes
     be allowed to see the judgment?
2. To be referred to Reporter or not?                   yes
3. Whether the judgment should be reported              yes
     in the Digest?


KAILASH GAMBHIR, J.

*

1. By this appeal filed under section 96 of the Civil

Procedure Code, 1908 the appellant seeks to challenge the

judgment and decree dated 4.2.2003 passed by the learned

trial court whereby the suit filed by the appellant for

dissolution of partnership and rendition of accounts was

dismissed.

2. Brief facts of the case relevant for deciding the

present appeal are that the appellant has claimed to be a

partner in a firm M/s. Sohi Goods (India) and as per the

appellant the said partnership firm comprised of two partners

i.e. the appellant himself and the respondent and the firm

was carrying on the business of transport at premises

No.75/3, Roshanara Road, Gulabi Bagh, Delhi. The appellant

also submitted that no formal partnership deed was executed

between the parties. It was also the case of the appellant

that in the year 1976 the said firm got itself registered for

allotment of a plot with the MCD and a sum of Rs. 5,500/-

was deposited by the firm vide receipt No. 520012 dated

25.9.76. It was further claimed that the MCD in fact had

allotted a plot bearing No. BG-335, Sanjay Gandhi Transport

Nagar, Delhi vide allotment letter No. RPC/SGTN/313 dated

22.1.87 in the name of the said firm. It was claimed that the

appellant had filed a suit for declaration, permanent and

mandatory injunction against the MCD after having learnt the

fact that the respondent was playing a fraud upon the

plaintiff/appellant to get the lease deed of the said plot

executed in his favour by concealing the correct status of the

said partnership firm. It was further claimed that the

appellant had withdrawn the said suit after the MCD in its

written statement took a stand that the said plot stands in the

name of the partnership firm. It was further stated by the

appellant that since the respondent had turned dishonest to

usurp the share of the appellant in the said plot and hence

the appellant approached the civil court to claim decree for

dissolution of the partnership firm and for rendition of

accounts. It was also the case of the appellant that the

respondent had raised unauthorized construction over the

said plot and he was trying to transfer and alienate the said

plot without the consent and permission of the appellant.

3. On the other hand, the respondent in his written

statement denied the existence of any such partnership to

carry on the said business of transport with the appellant,

however, he had admitted the fact that in the year 1976 the

said firm M/s. Sohi Goods (India) got itself registered for

allotment of plot of land measuring 220 sq. meters with the

MCD by depositing a sum of Rs. 5,500/- and in the said firm

the appellant was shown as a partner of the firm. The

respondent took a stand that the said registration for the

allotment of the plot on 25.9.1976 was cancelled by the MCD

and the said amount of Rs.5, 500/- was withdrawn by the

appellant. The respondent further submitted that later on the

said firm was again considered for allotment of the plot by

the MCD and in terms of the demands raised by the MCD the

firm had deposited the amount of Rs.93,500/- in various

break ups. It was further claimed that the respondent was

given possession of the said plot on 26.10.1988 and after

getting the building plans sanctioned the respondent had

raised the construction on the said plot. The respondent also

submitted that he had been carrying on the business of the

transport under the same name and style with his son

Harjeet Singh. In the replication the appellant reiterated the

averments made by him in the plaint.

4. Based on the pleadings of the parties, learned

trial court framed the following issues:

"1. Whether the suit is barred under the provisions of Section 41 of Specific Relief Act as alleged in para No.6 of W/S? OPD.

2. Whether the plaintiff has no cause of action and suit is liable to be dismissed as alleged in preliminary objections ? OPD.

3. Whether there was any partnership between the parties and plaintiff is entitled to dissolution thereof ? OPP.

4. In case issue no.3 is proved in affirmative to what extent the plaintiff is entitled to the suit property? OPP."

In evidence the appellant produced himself in the

witness box as PW2 and also the Shri Puran Chand Saini,

head clerk from the MCD as PW1. The respondent on the

other hand, besides producing his own evidence also

produced two witnesses DW 1 Shri Prem Singh and DW2 Shri

Balwant Singh to disprove any kind of partnership business

with the appellant. Based on the pleadings of the parties and

the evidence led by both the parties the learned trial court

came to the conclusion that the case set up by the appellant

was meritless and consequently dismissed the suit filed by

the appellant.

5. Assailing the findings of the learned trial court

Mr. Rajinder Aggarwal, learned counsel for the appellant

submitted that the appellant had sufficiently proved on

record that the said plot with the MCD was booked by the

partnership firm comprising of the appellant and the

respondent and there was no denial of the same from the

side of the respondent and therefore this admission on the

part of the respondent was sufficient enough to prove the

partnership of the appellant with the respondent in the said

firm. Counsel further submitted that even the subsequent

allotment which was made by the MCD in the year 1978

was not in favour of the respondent in his individual capacity

but the same was in the name of the partnership firm and

therefore also the appellant could not have been denied his

share in the said plot. Counsel also submitted that any

payment made by the respondent towards the demands

raised by the MCD was on behalf of the partnership firm and

therefore the respondent could not have derived the benefit

of the said plot in his individual capacity. Counsel also

submitted that the learned trial court also did not appreciate

the fact that the appellant was not in possession of any

documentary evidence or books of accounts through which

he could prove the business of transport being carried on

under the partnership of the appellant with the respondent

as every such document was in the possession and dominion

of the respondent and due to that fact the appellant sought

rendition of accounts from the respondent. The appellant

further submitted that through two witnesses i.e. DW1 and

DW2 the respondent tried to negative the existence of the

partnership firm and such unreliable evidence should not

have been given any weightage by the learned trial court.

Counsel for the appellant also submitted that the said

partnership firm was got registered by the respondent in

much later time i.e. 1994 by taking his own son Mr. Harjeet

Singh as a partner and this fact would also show that prior

to that the appellant alone was a partner in the said firm

with the respondent. Counsel also submitted that Harjeet

Singh was a minor at the time of allotment of the plot in the

name of the firm in the year 1987. Counsel for the appellant

also submitted that the plea of Benami was not available to

the respondent as the appellant claimed his right being a

partner in the said partnership firm and which right he had

never relinquished. In support of his arguments counsel has

placed reliance on the judgment of the Apex Court in

Gangadhar Madhavrao Bidwai Vs. Hanmantrao Vyankatrao

Mungale JT 1995 (1) SC 118 and the judgment of the Bombay

High court in Shankar Bandu Vs. Shankar Babaji & Ors., AIR

1956 Bom 165.

6. Mr. Vinod Sharma, learned counsel for the

respondent on the other hand supports the judgment and

decree passed by the leaned trial court. He submits that the

appellant could not, either with the help of any oral or

documentary evidence; prove to substantiate the fact that he

was ever a partner in the said firm. Counsel also submitted

that the mere fact that the appellant was taken as a

partner for the limited purpose of seeking allotment of plot

in the name of the said partnership firm would not establish

that the appellant became a partner in the transport

business being carried on by the respondent under the same

firm name and style. The contention of the counsel for the

respondent is that the said limited purpose came to an end

once the appellant had withdrawn the said amount of

Rs.5,500/- which was deposited by him as a security towards

the allotment of the plot. Counsel also submitted that the

entire money towards the allotment price of the plot was

paid by the respondent although under the same firm name

and the respondent alone had obtained the possession of the

said plot and got the building plan sanctioned from the

MCD. The counsel further submitted that the construction on

the said plot was raised by the respondent with his own funds

and carried on with the business of transport under the name

and style of the same firm from the same premises without

any objection or interference from the side of the appellant.

Counsel submitted that all these circumstances were taken

into consideration by the learned trial court to dismiss the

false suit filed by the appellant. Counsel thus submitted that

the learned trial court has passed a reasoned judgment which

needs to be upheld by this court.

7. I have heard learned counsel for the parties at

considerable length and given my thoughtful consideration to

the pleas advanced by both the counsel for the parties.

8. „Partnership‟ as defined under Section 4 of the

Partnership Act, 1932 is the relationship between persons

who have agreed to share the profits of a business carried on

by all or any of them acting for all. There is no requirement

of law that the partnership can be only formed through a

written document. An oral partnership is as legal as a

written partnership but even for oral partnership there must

be an agreement between the parties as to how and in what

manner and based on what terms and conditions they will run

their oral partnership. Section 4 and 6 of the Partnership

Act, 1932 lay down the method to determine the existence

of a partnership. It would be relevant to reproduce the said

process as in The Partnership Act, 1932 as under:

"4. DEFINITION OF "PARTNERSHIP", "PARTNER", "FIRM" AND "FIRM-NAME".

"Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

Persons who have entered into partnership with one another are called individually, "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm-name".

       6.  MODE     OF         DETERMINING          EXISTENCE        OF
       PARTNERSHIP.

In determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together.

Explanation I : The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does not of itself make such persons partners.

Explanation II : The receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business, does not itself make him a partner with the persons carrying on the business;

and, in particular, the receipt of such share or payment -

(a) by a lender of money to persons engaged or about to engage in any business

(b) by a servant or agent as remuneration,

(c) by the widow or child of a deceased partner, as annuity, or

(d) by a previous owner or part-owner of the business, as consideration for the sale of the goodwill or share thereof, does not of itself make the receiver a partner with the persons carrying on the business."

9. As would be seen from the aforesaid two

provisions, to determine whether a person is a partner in a

particular firm or not regard shall be had to the real relation

between the parties. In a case of an oral partnership, it can

be determined by the conduct of the parties and by various

surrounding circumstances which can clearly throw enough

light on the true nature of the relationship between the

parties. The profit sharing and share of losses is an

important incidence of any partnership concern. Any

isolated act by itself would not give rise to the presumption

that there is a partnership between the two persons or

group of persons unless the partnership between the

persons is entered into for carrying out any isolated

transaction itself. Here it would relevant to refer to the

judgment of the Apex Court in the case of Santiranjan Das

Gupta vs. Messers Dasuram Murzamull (1973) 3 SCC

463 where it was held that :

"7. 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 that 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 appellant's 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. These circumstances further render the story of the partnership more doubtful."

(emphasis supplied)

Therefore, it is evident from above that the appellant could

have produced the books of account, some information or

proof about some bank account opened in the name of the

partnership firm or any record regarding terms and

conditions of partnership agreed to between the parties. But

in the case in hand, the appellant has miserably failed to

place on record any material, what to speak of sufficient

material, to prove on record that there ever existed any oral

partnership between the appellant and the respondent to

carry on the transport business under the name and style of

M/s. Sohi Goods (India). The appellant did not disclose as to

when the partnership business had commenced, what was

the investment made by him, how much profit and losses he

had shared or distributed, why and when the disputes in

the partnership firm between two partners arose. The

appellant also failed to produce any witness from the trade of

transport to prove his partnership with the respondent,

although the appellant has claimed his partnership with the

respondent right from the year 1975 till the year 1997, when

he had filed the said suit for dissolution and rendition of

accounts. The appellant also has not given any reasons,

much less any justifiable reasons, to explain his total inaction

when in front of him the respondent took possession of the

said plot in question, raised the construction thereon, got the

building plan sanctioned and even started running the

business therefrom by taking his own son as a partner in the

firm. It would be useful to refer to the following para from

the impugned judgment which would clearly show that the

appellant failed to produce on record any evidence to prove

his being a partner with the respondent in the said

partnership firm:

"11. Admittedly, there was no deed of partnership, written between the parties; nevertheless there could be oral partnership between the two or more persons. The question for consideration is whether there was really any partnership for running the business of M/s Sohi Goods (India) between the parties. In the absence of any written document between the parties, the court has to draw an inference of the partnership only on the basis of business conducted by the parties and the conduct of the parties. Since the plaintiff was pleading partnership in respect of the firm M/s Sohi Goods (India), which was denied by the defendant, the onus was heavy on the plaintiff to have proved by leading some evidence that the business was being carried by M/s Sohi Goods (India) as a partnership firm of the plaintiff and the defendant. Unfortunately not an iota of evidence has been produced by the plaintiff, which could suggest that the parties were carrying on the business in the name of the said firm under any partnership. On the other hand the evidence produced by the parties, run counter to the same. As stated by me herein-above the plaintiff has not stated either in the plaint or even in his examination-in-chief as to when the actual partnership came into being. Of course, it was stated by the plaintiff as PW2 that the firm carried on the business of transport since 1975. Again the plaintiff is totally silent as to how much money was invested by each of the partner: whether any share of profit or for that matter any loss was ever given to the plaintiff and upto which date the plaintiff was actively involved in the affairs of the partnership. The plaintiff had not stated a word in the plaint that he was not being permitted to work as a partner or to do partnership business, but a contradictory stand was taken by the plaintiff during the course of his statement, recorded as PW2. In the last paragraph of his examination-in-chief, recorded on 24.4.99, the plaintiff stated that the firm was not working now and therefore, the same may be dissolved by an order of the court. The plaintiff, however, had not given the date as to since when the firm was not working. When he

was cross-examined on 8.9.99 he stated that the firm Sohi Goods (India) was still functioning with S. Amrik Singh and Bhagwan Singh (the parties herein) as partners of the said firm. During his further cross-examination, recorded on 11.9.2000, the plaintiff stated that he had wrongly stated in his earlier statement that M/s Sohi Goods (India) was not working. He then added that he had contributed funds towards working capital of the firm and had paid approximately R. 20,000/- in the year 1975. He stated that this amount had been given in cash but no writing was ever executed with regards to this payment. The plaintiff was unable to give any authentic source of said sum of Rs. 20,000/- which was definitely a handsome amount in the year, 1975. The plaintiff stated that the said amount was lying in his house and had been collected by him from his brothers and sisters. He went to the extent of stating that he had told his advocate that he had contributed a sum ofRs.20,000/- towards working capital of the firm M/s Sohi Goods (India). The plaintiff again made a somersault by stating that he did not know if his advocate had written about the said contribution in the firm, in the plaint or not."

10. It is a settled legal position that the plaintiff has to

stand on his own legs to prove his case and he cannot draw

his strength from the weaknesses in the case set up by the

defendant or in the evidence adduced by him. It was for the

appellant to adduce some positive evidence to establish his

oral partnership with the respondent and having failed to do

so this court does not find any reason to upset the findings

arrived at by the learned trial court. The evidence led by the

appellant was wholly inadequate to come to the conclusion

that the appellant had entered into a contract of partnership

with the respondent to carry on the transport business under

the name and style of M/s Sohi Goods (India). The appellant

cannot succeed to seek dissolution of the said firm and

rendition of accounts merely on account of the fact that in the

application form submitted by the firm to seek allotment of

the plot, the name of the appellant was mentioned as a

partner. The appellant has not denied the fact that the

amount of Rs. 5,500/- which was deposited in the name of the

firm was taken back by the appellant and thereafter no

contribution was made by the appellant towards the

allotment price of the said plot and therefore with the said

isolated act of the appellant being mentioned as a partner

in the application form would not result into believing that

there existed a partnership firm of the appellant and the

respondent which could entitle the appellant to seek

dissolution of the said firm and rendition of accounts. The

judgment cited by the counsel for the appellant in the case of

Gangadhar Madhavrao (supra) would not be of any help to

the case of the appellant as there the question for

consideration was whether a recital relating to the

partnership property in the deed of dissolution of partnership

was inadmissible in evidence for want of registration whereas

it is not such a case as the existence of partnership here is

itself in dispute. The other judgment of the Bombay High

Court in the case of Shankar Bandu (supra) cited by the

counsel for the appellant relates to the plea of benami and

would not be applicable to the facts of the case at hand as the

said plea of benami would only come into play once the

factum of partnership was established by the appellant.

11. In the light of the above discussion, this court does

not find any merit in the present appeal and the same is

hereby dismissed.

March 03, 2011                           KAILASH GAMBHIR, J
mg