Karnataka High Court
Bhimashankar @ Sanjay S/O Dr. ... vs M/S Hatti And Company Ors on 30 July, 2024
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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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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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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
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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
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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
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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
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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
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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
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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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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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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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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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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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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
