MARIAMMA Vs. VARKEY MATHAI

JUDGEMENT

(1.) Two suits, namely, O.S. No. 63 of 1968 and 77 of 1970, were heard together and by a common judgment the lower court dismissed both the suits. Plaintiffs in O.S. 63 of 1968 have filed A.S. No. 140 of 1975. As per the plaint valuation an appeal from the decision in O.S. 77 of 1970 lies to the district court only. The plaintiffs therein therefore filed an appeal before the district court as A.S. No. 104 of 1975. As that appeal was filed beyond time an application to excuse the delay had also been filed. The District Court did not find sufficient reasons to excuse the delay. So, the application and the appeal were dismissed. S.A. No. 1034 of 1976 is filed against the decision of the district court dismissing the appeal. C.R.P. No. 4255 of 1976 is filed against the order refusing to excuse the delay.

(2.) We shall first state the facts in O.S. 63 of 1968. This is a suit for an account and for recovery of the plaintiffs' share of profits and assets of a dissolved partnership. The privilege of vending toddy in four shops in Kothamangalam, Muvattupuzha taluk, namely, Ramaloor, Kuthukuzhy, Kavalangad and Puthupady for the year 1967-68 was bid in auction jointly by defendants 1, 2 and 6 together for a total amount of Rs.2,60,100..00 According to the plaintiff, the initial capital to run the business was contributed by the plaintiff and the defendants, defendants 1 and 2 investing half and the other defendants and the plaintiff together investing the other half. An agreement was executed by the plaintiff and defendants on 29/3/1967, marked Ext. B4 under which the said toddy shops were to be conducted and managed by defendants 2 and 6; they were to keep true and correct accounts of the business and to deposit the net proceeds daily in a joint account to be opened in their name, in the Union Bank of India. It was also agreed between the parties that they will share the profit or loss in the business in proportion to the share in the initial investment. A jeep K.L.Q. 1637 purchased for Rs.13,000.00 was to be the joint property of the parties. According to the original plaintiff the business conducted by the firm ended with the financial year 1967-68. Alleging that the defendants have not rendered accounts and paid his share in spite of demand, the suit was filed for an account.

(3.) Second defendant was the main contesting defendant. He admitted that the four toddy shops were bid in auction by defendants 1, 2 and 6. But this was did only for the benefit of defendants 1, 2 and 6 and they have executed an agreement with the Kerala Government for depositing the bid amount in instalments as per the rules under the Abkari Act. The licence for the conduct of the business was issued to defendants 1, 2 and 6 only. After the shops were bid plaintiff and defendants 3 to 5 approached defendants 1,2 and 6 and requested that they may be included as additional partners in the business of conducting the toddy shops. This was agreed to and all of them together executed an agreement on 29/3/1967. Thereafter plaintiff and defendants and one Nirappel varkey Joseph jointly decided to bid in auction 8 more shops in Kozhikode District. The arrangement there was that the partnership of plaintiff and defendants will share one half of the profit and loss in the above 8 shops and the remaining half share should go to Nirappel varkey Joseph. Large amounts belonging to the first partnership were diverted and spent for the conduct of the Kozhikode shops. The accounts of the Kothamangalam shops (for brevity the first four shops will be so described) were written by one Kalayil Yacob and that of the Kozhikode shops by one Raghavan. The conduct of the 8 shops at Kozhikode was an utter failure and the partners were not able to pay the amount due to the Government, Rs.90,000.00 being the arrears of instalments due to the Government. Steps were taken by the Government under the Revenue Recovery Act against the licencees, namely, the first defendant in this case and Nirappel varkey Joseph. After the death of the first defendant the legal representatives are paying the arrears. The accounts of the shops of the Kozhikode District and that at Kothamangalam were for convenience separately maintained. The accountants, who maintained the accounts, entrusted them for checking to one Madhavan and to prepare a balance sheet. He prepared a kurippu showing the amount spent for the Kozhikode shops from the Kothamangalam shop, but without showing the loss incurred by the Kozhikode shops. A copy of this account was given to the 2nd defendant. Copies of the balance sheet prepared by the two accountants were also given to the second defendant. From the accounts thus prepared plaintiff and defendants 3to6 realised that the profits earned from the conduct of the shops at Kothamangalam are not enough to pay off the heavy loss incurred by the conduct of the shops at Kozhikode. They fraudulently took into their custody the accounts of the Kothamangalam shops from O. G. Madhavan and have filed this suit without owning the liability for the loss incurred for the Kozhikode shops. The jeep referred to has been purchased by defendants 2 and 3 from the partnership to run their toddy business for the next year, namely, 1968-69. The plaintiff is responsible to pay the loss incurred in the conduct of the toddy shops at Kozhikode. The suit is not maintainable. The original licensees of the toddy shop have transferred part of their rights to plaintiff and defendants 3 to5 without the knowledge and approval of the Excise Authorities. The terms of Ext. B4 agreement amounts to a sub lease or a transfer which is void in law. Such a transfer is against the provisions of the Abkari Act. The suit is not maintainable for another reason namely that Nirappel varkey Joseph is not made a party to the suit. Defendants 3, 4, 5 and 6 supported the plaintiff and they claimed their share also settled and paid. Defendants 7 to 12 who are the legal heirs of the deceased first defendant supported the second defendant. They admitted both the agreements and the averments of the second defendant that the Kozhikode shops ended in a loss. They further alleged that the jeep which belonged to the partnership has been converted to the use of defendants 2 and 3. About Rs.20,000.00 the balance in the Union Bank belonging to the partnership has been withdrawn by defendants 2 and 6. In the accounting they claimed an adjustment of the amounts paid by them to avert revenue recovery steps for the dues of the Calicut shops.