Rajasthan High Court - Jodhpur

Lrs Of Chiranjilal vs Chandanmal on 29 June, 2022

Bench: Rameshwar Vyas

(1 of 11) [CSA-56/2022]

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR S. B. Civil Second Appeal No. 56/2022

LR's of Chiranjilal :-

1/1. Smt. Vidhya Devi W/o Late Shri Chiranjilal Jaisansariya Agrawal (Since Deceased) 1/2. Smt. Manju Devi D/o Late Shri Chiranjilal Jaisansariya Agrawal, aged about 62 years, R/o Chandmal Matadin Munka, Khandela, Sikar.

1/3. Late Smt. Anjana Kediya D/o Late Shri Chiranjilal Jaisansariya Agrawal (Since Deceased) 1/4. Smt. Ritu Ajitsariya D/o Late Shri Chiranjilal Jaisansariya Agrawal, aged about 50 years, R/o Gorishankar Ajitsariya, 101-102 Ambaji Tower, Bibig Pehla Talla, Ambaji Mandir Marg, Behind Ajay Nagar, Post Bhiwandi (Maharashtra) Presently R/o Near Ramchandra Park, Ratangarh, District Churu.

1/5. Sanju D/o Late Shri Chiranjilal Jaisansariya Agrawal, aged about 48 years, R/o Manakchand Sushil Kumar Nagori, Bada Bazar, Post Bikaner.

1/6. Kavita Gupta D/o Late Shri Chiranjilal Jaisansariya Agarwal, aged about 46 years, R/o Ratanlal Gupta, 35/122, Rajatpath, Mansarovar, Jaipur.

2 Ashok Kumar S/o Late Shri Chiranjilal Jaisansariya Agarwal, aged about 56 years, 3 Basant Kumar S/o Late Shri Chiranjilal Jaisansariya, aged about 50 years, Both are R/o Mohalla Dugado Ka, Sardarshahar, District Churu.

----Appellants Versus

1. Chandanmal S/o Late Shri Gangajal, B/c Jaisansariya Agrawal, R/o Mohalla Luniya Ka Bas, Sardarshahar, District Churu.

2. Bhagwati Prasad S/o Late Indrachand Jaisansariya, R/o Mohalla Dugado Ka, Sardarshahar, District Churu. Presently Near Digamber Jain Mandir, Sujangarh, District Churu.

                                                                    ----Respondents



                                            (2 of 11)            [CSA-56/2022]



For Appellant(s)         :     Mr. Sajjan Singh
For Respondent(s)        :     Mr. J.L. Purohit, Sr. Advocate assisted
                               by Mr. Shashank Joshi



          HON'BLE MR. JUSTICE RAMESHWAR VYAS

                                Judgment

June 29, 2022

The instant civil second appeal has been preferred under

Section 100 of the Code of Civil Procedure, 1908 by the

defendants-appellants against the Judgment and Decree dated

26.11.2021 (Amended Decree vide Order dated 08.12.2021)

passed by the Additional District Judge, Sardarshahar, District

Churu in Civil Regular Appeal No. 07/2021 (13/2021) titled as

"Chandanmal Vs. LR's of Chiranjilal & Ors." vide which while

allowing first appeal preferred by the plaintiff-respondent No. 1,

Judgment & Decree dated 11.04.2011 passed by the Civil Judge

(Senior Division), Churu in Civil Suit No. 115/1995 titled as

"Chandanmal Vs. LR's of Chiranjilal & Ors." dismissing the suit for

dissolution of partnership, rendition of accounts and permanent

injunction filed by the plaintiff-respondent No. 1, was set aside

and the suit was decreed.

Brief facts of the case are that plaintiff Chandanmal

(respondent No. 1 herein), a partner in the registered partnership

firm M/s Navdeep Gum Mills, filed a civil suit for dissolution of

partnership, rendition of accounts and permanent injunction

against legal heirs of co-partner Chiranjilal and other partners with

the averments that M/s Navdeep Gum Mills was registered firm,

for which partnership deed was executed on 26.08.1987. The firm

was dealing in production and sale of Gwar Gum. The dispute

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arose between the partners, after that, a compromise between

them was arrived at on 21.01.1992 and business of the firm

remained smooth till 31.07.1992. Afterwards, dispute again arose

between the partners. As per allegations made by the plaintiff,

defendants started to act for personal benefits and against the

interest of the firm. The registered firm borrowed a sum of Rs. 50

lacs on interest @ 18% per annum. From 01.08.1992, defendants

controlled entire business under them and plaintiff was deprived of

his rights and duties towards the firm. The plaintiff narrated

alleged acts of the defendants detrimental to the interest of the

firm. The income shown by defendants was not sufficient even to

repay interest amount. The plaintiff was having 32% share in the

profit and loss of the firm. The plaintiff, therefore, sought relief of

dissolution of the partnership, appointment of receiver and

rendition of accounts. He also sought injunction to the effect that

defendants be restrained from doing business against interest of

the firm. In the written statement, defendants (appellants herein)

denied allegations levelled against them. As per averments made

in the written statement, plaintiff refused to sign on the

application seeking renewal of license issued in favour of the firm

from Krishi Upaj Mandi, on account of which, license of the firm

was cancelled. The plaintiff also wrote to the bank seeking

restriction on financial transaction of the firm. The money was

borrowed by the firm for the benefit of the business. The firm was

having right to do job work. It was not wrong to do job work for

the defendants. Job work was being done for the benefit of the

firm. On account of job work, firm could reduce its liability. The

defendants with their efforts succeeded in reducing electricity bills

to the tune of Rs. 58 lacs through Settlement Committee. The

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defendants were acting for the benefit of the firm. The job work

was in the interest of the firm. On these premises, defendants

prayed to dismiss the suit filed by the plaintiff.

After framing issues and adducing the evidence, the trial

court dismissed the suit filed by the plaintiff-respondent No. 1.

Aggrieved with the judgment and decree of the trial court,

plaintiff-respondent No. 1 - Chandanmal preferred first appeal,

which was allowed by the Additional District Judge, Sardarshahar,

District Churu vide Judgment dated 26.11.2021 passed in Civil

Regular Appeal No. 07/2021 (13/2021), which has been impugned

in this second appeal.

Heard learned counsel for the parties and perused the

record.

Learned counsel for the defendants-appellants submitted

that plaintiff (respondent No. 1 herein) himself was guilty for his

conduct. The plaintiff was not expelled by the defendants; he

himself choose to be an outgoing partner. As per partnership

deed, in case of death or retirement of a partner, firm will not

stand dissolved. He further submitted that plaintiff was having no

right to seek dissolution of the partnership except to seek

rendition of accounts and take value of his share in the

partnership either by mutual agreement or at law. The

defendants were not guilty of any misconduct. The firm is working

as on date and substantial liability has been discharged, though,

purchase and sale work could not be performed in view of

cancellation of license of the firm at the instance of the plaintiff

himself. He further submitted that as on date, firm is carrying

financial liability against it and as per partnership deed, the

partnership cannot be dissolved at the will of the plaintiff. No

(5 of 11) [CSA-56/2022]

partner can leave partnership till financial outstanding was

payable. He further submitted that partnership was not at will and

it could not be dissolved at the instance of the plaintiff. There was

no just and equitable grounds before the first appellate court for

allowing dissolution of the firm. He further submitted that first

appellate court erred in reversing the judgment of the trial court

dismissing the suit for dissolution of partnership. The first

appellate court committed error while passing judgment

impugned. While suggesting substantial questions of law, learned

counsel for the defendants-appellants prayed to allow this second

appeal and set aside judgment and decree passed by the first

appellate court dissolving partnership from 26.11.2021 and

directing for rendition of accounts.

Learned counsel for the defendants-appellants has relied

upon the judgment rendered by the Hon'ble Supreme Court in the

case of M.O.H. Uduman and Others vs. M.O.H. Aslum reported

in 1991 A.I.R. (Supreme Court) 1020, wherein it was held

that :-

"...the essence of a partnership at will is that it is open to either partner to dissolve the partnership by giving notice. Relinquishment of one partner's interest in favour of other, which is provided in the contract, is a very different matter".

He has also relied upon the judgment rendered by the

Hon'ble Supreme Court in the case of Pamuru Vishnu Vinodh

Reddy Vs. Chillakuru Chandrashekhara Reddy and Ors.

reported in 2003 A.I.R. (Supreme Court) 1614, wherein it was

held as under

(6 of 11) [CSA-56/2022]

".... relevant date for the purpose of ascertaining the value of the share of the plaintiff was the date on which he ceased to be a partner as it is a case where there was an express agreement between the parties to sell the share of the plaintiff in favour of Sri M.Subbareddy and with effect from that date, he became a secured creditor ....."

Learned counsel has also relied upon the judgment rendered

by the Hon'ble Andhra Pradesh High Court in the case of N.

Satyanarayana Murthy and Others vs. M. Venkata Bala

Krishnamurthy reported in 1989 A.I.R. (Andhra Pradesh)

167, wherein it was held in Para 20 of the judgment as under :-

"20. In the light of the above discussion it must be held that the width of the words "just and equitable" in Section 44(g) of the Act is of wide import, with unfettered discretion on the exercise of the power by the Court and it is incapable of precise definition. But itself is a limitation upon the court to exercise the discretion wisely taking into account not only the true intent and meaning of the articles of the partnership but also general interest of all the partners; the essential purpose for which the partnership has been formed and the detriment the partnership suffers from, while at the same time assuasing the rights of the aggrieved partners. The court would induct into all relevant consideration eschewing irrelevant or its inclination to dissolve the firm keeping in mind that it operates harshly annihilating the on going business on profitable lines, it must find whether it is no longer reasonably possible to carry the business according to true interest and

(7 of 11) [CSA-56/2022]

meaning of the articles of the partnership. Each case furnishes its own peculiar facts calling for applicable or non-applicable of Clause (g). The court also must endeavor to see whether any alternative just relief without dissolving the firm could be granted to the plaintiff. On considering all the pros and cons if the court is of opinion that equity and justice demands dissolution, it is perfectly open to the Court to exercise the power under Section44(g) of the Act. The cases dealt by the Privy Council, House of Lords and the Supreme Court are cases relate to the Company, but the meaning and purport is the same shedding illumination in its application to varied situations, though the partnership is founded on contract and not on status."

On the contrary, learned counsel for the plaintiff-respondent

No. 1 submitted that defendants turned hostile to the plaintiff.

The plaintiff was not doing business in the partnership firm since

1992. The defendants (appellants herein) were acting against the

purpose of the partnership firm. The license to do business was

already cancelled since long back. No account was being

maintained by any partner of the firm since long back. In view of

the above situation, there was no reason to deny dissolution of the

firm. It was just and equitable that firm should be dissolved. The

first appellate court while allowing first appeal, has rightly

dissolved the firm and issued certain directions. There is no

substantial question of law involved in this second appeal for

consideration of this Court. He, therefore, prayed that instant

second appeal be dismissed at the admission stage.

Learned counsel for the plaintiff-respondent No. 1 has relied

upon the judgment rendered by the Hon'ble Andhra Pradesh High

(8 of 11) [CSA-56/2022]

Court in the case of P.N. Shanmugam and Another vs. Rama

P.D. Vadivelu and Another reported in (2006) 4 ALT 485,

wherein it was held in Para 24 & 25 of the judgment as under :-

"24. Section 44 (d) of the Act is an enabling section, which authorizes the court to dissolve the firm at the suit of the partner, if the court comes to the conclusion that meeting of the partnership was never held after execution of the partnership deed in spite of repeated requests by the plaintiff, managing partner did not show him the accounts; confidence between the partners i.e., plaintiff on the one hand and the defendant on the other found lost.

25. It is specifically pleaded by the plaintiff in para-6 of the plaint that since three years defendants 1 and 2 who are managing partners have turned hostile to the plaintiff and successfully evading in rendering accounts to the plaintiff and they are misappropriating the entire income derived from the partnership business. In para 7 it was asserted that the business is now fetching Rs. 30,000/- per month and major portion of the income being adjusted towards debts till 1991 and since from 1993 onwards defendants have colluded together and misappropriated the entire income. The said fact has been totally denied by the defendants. Defendants also denied about execution of partnership deed dated 1-4-1992. In the reply notice dated 21-12-1994 it was stated that under the new partnership deed-Ex. A-3 plaintiff and others are only name lenders and plaintiff has no right in the partnership business. In view of the said hostile attitude taken by the

(9 of 11) [CSA-56/2022]

defendants the court in exercise of residuary power under section 44 (g) of the Act can dissolve the firm subject to compliance under order xx Rule 15 CPC from the future date."

Having regard to the submissions made by learned counsel

for the parties and principles of law enunciated by the Courts in

the judgments cited by learned counsel for the parties, this Court

is of the opinion that there is no substantial question of law

involved in this case for consideration by this Court. It is not in

dispute that partnership was not at will, therefore, plaintiff was

having no right to get dissolved the firm at his will. However, the

above principle of law is not applicable in the present case. The

present case does not come under the purview of Section 43 of

the Partnership Act, 1932 (afterwards referred to as "the Act of

1932") which relates to dissolution of partnership by notice. The

plaintiff has prayed to dissolve the firm under the provisions of

Section 44 of the Act of 1932. Section 44 ibid reads as under :-

"44. Dissolution by the Court :- At the suit of a partner, the Court may dissolve a firm on any of the following grounds, namely :-

(a) that a partner has become of unsound mind, in which case the suit may be brought as well by the next friend of the partner who has become of unsound mind as by any other partner;

(b) that a partner, other than the partner suing, has become in any way permanently incapable of performing his duties as partner;

(c) that a partner, other than the partner suing, is guilty of conduct which is likely to

(10 of 11) [CSA-56/2022]

affect prejudicially the carrying on of the business regard being had to the nature of the business;

(d) that a partner, other than the partner suing, wilfully or persistently commits breach of agreements relating to the management of the affairs of the firm of the conduct of its business; or otherwise so conducts himself in matters relating to the business that it is not reasonably practicable for the other partners to carry on the business in partnership with him;

(e) that a partner, other than the partner suing, has in any way transferred the whole of his interest in the firm to a third party, or has allowed his share to be charged under the provisions of rule 49 of Order XXI of the First Schedule to the Code of Civil Procedure, 1908, or has allowed it to be sold in the recovery of arrears of land revenue or of any dues recoverable as arrears of land revenue due by the partner;