Madras High Court
R.Gopinath vs Mrs.Poora Devi (Deceased) on 4 April, 2022
A.S.No.167 of 2012
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 04.04.2022
CORAM:
THE HON'BLE MRS. JUSTICE N.MALA
A.S.No.167 of 2012
and M.P.No.1 of 2012
R.Gopinath ... Appellant
vs.
1.Mrs.Poora Devi (Deceased)
2.Mrs.Malini Sivakumaran
3.Ms.S.Nithya Devi
(Third respondent brought on record as
Lrs of the deceased 1st respondent vide
order of Court dated 06.07.2017 by
RSMJ made in C.M.P.Nos.10076 and
10077 of 2017 in A.S.No.167 of 2012)
... Respondents
Prayer: Appeal Suit filed under Section 96 and Order XL1 Rule 1 of the
Code of Civil Procedure, 1908, against the Judgment and Decree passed in
O.S.No.14056 of 2010 dated 19.04.2011 passed by the learned Additional
District Judge, Fast Track Court – V, Chennai.
For Appellant : M/s.S.Annakkodi
For R2 : M/s.Ravichandran Sundaresan
For R3 : Mr.R.Mukundan
For R1 : Died (Steps taken)
1/12
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A.S.No.167 of 2012
*****
JUDGMENT
This Appeal suit is filed against the Judgment and Decree passed in
O.S.No.14056 of 2010 dated 19.04.2011 by the learned Additional District
Judge, Fast Track Court – V, Chennai.
2.The first defendant is the appellant in the above said appeal. The suit
was filed for the relief of dissolution of partnership for rendition of account,
for appointment of receiver and for costs.
3.The parties will be referred to as per their rank in the suit for
convenience sake.
4.FACTS IN BRIEF:
The plaintiff is the mother and the defendant Nos.1 and 2 are her son
and daughter. The plaintiff 's husband and the first defendant entered into a
partnership agreement on 16.02.1976 and started a firm in the name and style
of M/s.N.S.V.Engineering Work and the firm was to carry the manufacture of
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A.S.No.167 of 2012
fabricated components and machinery parts and other trade as mutually
decided by the partners. Under the partnership deed, the plaintiff's
husband/first defendant's father had 50% share in the partnership firm. The
plaintiff's husband and the first defendant's father died on 23.11.1997 and
thereafter the first defendant was running the business individually. The
plaintiff stated that she had no source of income except the income from the
business and as the first defendant did not pay her any amount, she sought for
dissolution of the partnership, for settlement of accounts and for appointment
of Receiver to take charge of the assets of the business and discharge the
liabilities of the partnership firm from the assets and pay the difference of 1/3
share each to the plaintiff and the defendants.
5.The first defendant filed the written statement, inter alia on the
grounds that the suit was not maintainable as Clause 14 of the Deed of
partnership provided for an arbitration clause. The first defendant stated that
he was paying an amount of Rs.5,000/- to the plaintiff, every month apart
from meeting other expenses such as electricity, milk, dress etc. He further
stated that under the terms of the partnership deed in the event of the death of
the other partner the partnership would come to an end and the surviving
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A.S.No.167 of 2012
partner shall become the sole proprietor of the partnership firm. The
defendant objected to the appointment of the receiver and also to the
rendition of accounts stating that the plaintiff and the third defendant were
not entitled to the same.
6.The second defendant filed a written statement, wherein she
supported the case of the plaintiff.
7.The trial Court, based on the pleadings framed the following six
issues:
i.Whether the suit is maintainable in the light of
the arbitration clause 14 as mentioned in the deed of
partnership dated 16.02.1976?
ii.Whether the suit is maintainable for want of
territorial jurisdiction?
iii.Whether the first defendant become the sole
proprietor of the partnership firm, NSV Engineering
Works as per clause 12 of the Partnership deed?
iv.Whether the first defendant, partner of
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A.S.No.167 of 2012
M/s.N.S.V.Engineering Works is liable to render accounts
of the firm?
v.Whether the plaintiff is entitled to 1/3rd share of
the firm's assets after discharging its liabilities?
vi.To what relief the plaintiff is entitled to?
8.On consideration of the evidence on record both oral and
documentary the trial Court partly decreed the suit and passed the
preliminary decree in favour of the plaintiff directing the first defendant to
render the accounts to the plaintiff with respect to the firm
M/s.N.S.V.Engineering Works. The suit was dismissed with respect to the
other reliefs prayed for.
9.Heard the learned counsel for the appellant and the respondents.
10.POINT FOR DETERMINATION:
i.Whether the plaintiff is entitled to a decree for
dissolution of partnership, rendition of Accounts and for
appointment of receiver?
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A.S.No.167 of 2012
11.The plaintiff is the widow of Late K.Raju. The defendant Nos.1 and
2 are the son and daughter of the plaintiff and Late K.Raju. The plaintiff's
husband K.Raju died on 23.11.1997 and during the life time of the plaintiff's
husband, he entered into a partnership agreement with the first defendant on
16.02.1976 and carried a partnership business in the name and style of
N.S.V.Engineering Works. The partnership firm of the plaintiff's husband
and the first defendant was engaged in the manufacture of fabricated
components and machinery parts and other trades as would be decided by the
partners. The partnership deed provided that the profits and losses should be
shared equally by the two partners. The partnership deed did not specify any
profit sharing ratio and therefore, the profits were to be shared equally. The
partnership firm had purchased several assets and substantial income was
derived from the same. The plaintiff's husband died on 23.11.1997 and
thereafter, the first defendant was running the business individually.
12.According to the plaintiff, she had no other income and she is
totally dependent on the amounts from the firm for her survival. As the first
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A.S.No.167 of 2012
defendant was appropriating the income for himself she filed the suit for
dissolution of partnership, rendition of Accounts and settlement of her 1/3rd
share on such account. The first defendant alone contested the suit and the
second defendant conceded for decreeing the suit.
13.MAINTAINABILITY OF THE SUIT:
On the maintainability of the suit, the trial Court held that Clause 14 of
the partnership deed provides for arbitration, but such arbitration clause
could be invoked only by the parties to the partnership deed, as the plaintiff
and the second defendant were not parties to the partnership deed. The suit
as filed was maintainable.
14.DISSOLUTION OF PARTNERSHIP:
The trial Court held that the relief was redundant as Under See 42
Clause (C) of the Partnership Act, the partnership firm is dissolved on the
death of a partner. The trial Court held that the plaintiff was not entitled to
the relief of Dissolution, as on the death of the plaintiff's husband, the
partnership stood automatically dissolved.
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A.S.No.167 of 2012
15.RENDITION OF ACCOUNTS:
The trial Court held that after the death of the plaintiff's husband, the
partnership business was continued as a proprietorship concern by the first
defendant and that as per Clause 13 of the Partnership Deed, Ex.A1 the
accounts of the deceased partner had to be settled within six months from the
date of death and from the net out-standings the deceased legal heirs were to
be paid the deceased's share. Therefore the trial Court held that the first
defendant was bound by the terms of the Partnership Deed and hence he was
bound to render accounts of the firm M/s.N.S.V.Engineering Works regarding
its assets and liabilities.
16.APPOINTMENT OF RECEIVER:
The trial Court held that the plaintiff and the second defendant were
not partners in the firm and further the partnership was already dissolved on
the death of the plaintiff's husband and as there was no partnership in
existence, the plaintiff could not seek for appointment of receiver. As regards
the issue of jurisdiction the Court found favour with plaintiff.
17.The trial Court ultimately passed a preliminary decree directing the
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A.S.No.167 of 2012
first defendant to render accounts to the plaintiff with respect to the firm
M/s.N.S.V. Engineering Works then in existence with respects to its assets
and liabilities.
18.The first defendant aggrieved by the Judgment and Decree of the
trial Court has come by way of appeal.
19.In the grounds of appeal, though several issues are raised, at the
hearing of the appeal, the appellant's counsel confined his arguments to the
findings on issue No.5.
20.Issue No.5 is extracted hereunder for better appreciation:
v.Whether the plaintiff is entitled to 1/3rd share of the
firm's assets after discharging its liabilities?
21.The learned counsel submitted that the trial Court fell into error in
its finding that the plaintiff and the defendants were entitled to 1/3 rd share in
the partnership firm's assets after discharging its liabilities. The learned
counsel submitted that as the deceased partner had only 50% share in the
firm, the trial Court ought to have held that the plaintiff's and the defendants
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A.S.No.167 of 2012
were each entitled to 1/3rd share in the 50% share of the deceased partner.
22.The learned counsel appearing for the respondents in the appeal had
no objection to the modification of the Judgment with respect to the finding
on issue No.5 as prayed by the appellant.
23.The trial Court's finding that the plaintiff and the defendants would
be entitled to 1/3rd share in the partnership assets on issue No.5 is erroneous.
The trial Court overlooked that the deceased had only 50% share in the
partnership firm and as such on his death his 50% share would devolve
equally on his legal heirs. In other words each of the three heirs would be
entitled to 1/3rd share in the deceased partners 50% share. The trial Court's
finding on issue No.5 is therefore modified to the effect that the plaintiff and
the defendants would each be entitled to 1/3rd share in the 50% share of the
deceased partner in the firm assets after discharging the liabilities. The
plaintiff's counsel and the defendant's counsel agreed that the finding on
issue No.5 needs to be modified as above. I therefore confirm the Judgment
and Decree of the trial Court with the above modification on issue No.5. No
other issue was argued before me.
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A.S.No.167 of 2012
24.I therefore find that there is no merit in the appeal and the same
is dismissed, confirming the Judgment and the Decree of the trial Court with
the modification on issue No.5 as stated above. There shall be no order as to
costs. Consequently, the connected miscellaneous petition is closed.
04.04.2022
Index : Yes / No
Internet : Yes / No
ah
To
The Additional District Judge,
Fast Track Court – V,
Chennai.
https://www.mhc.tn.gov.in/judis
A.S.No.167 of 2012
N.MALA, J.
ah
A.S.No.167 of 2012
04.04.2022
https://www.mhc.tn.gov.in/judis
