BHARAT SURYODAYA MILLS CO LTD Vs. MOHATTA BROS

JUDGEMENT

(1.) These two cross appeals raise an interesting question as to the interpretation of the two mandatory conditions laid down in sec. 69(2) of the Indian Partnership Act 1932 hereinafter referred to as the Act in the context of a reconstituted firm by addition of a now partner and when the cause of action had accrued after such reconstitution. First Appeal No. 769/1960 is filed by the original defendant-company while First Appeal No. 1029/60 is filed by the original plaintifl-firm.

(2.) The short facts which have given rise to these two appeals are as under :

(3.) It was the plaintiffs case that the liability of the Punjab National Bank was fully discharged and as no bonus was held to be payable by the Industrial Court for the year 1949 to the employees and as there was surplus left after discharging the liability of the Punjab National Bank from earmarked assets consisting of excess profit tax deposits income-tax advance amount and the amounts realised from the sale of the stores etc. it was entitled by reason of clause 7 to a repayment of half the surplus towards the deposit amounts which were credited in pursuance to the scheme Ex. 168 to the plaintiffs account. The plaintiff therefore claimed a decree against the defendant-company for accounts of the surplus and for a decree for the amount due as per the said terms after talking accounts with 9% interest under the same scheme and under general law. The plaintiff-firm also claimed that it was entitled to a deduction while taking accounts for the various expenses which it had incurred on behalf of the defendant-company for realisation of those three earmarked assets by keeping staff by fighting litigation and which we inextricably connected with those three earmarked assets. A suit was filed on 16th December 1954 in the firm name of Messrs Mohatta Brothers carrying on business at Shri Phirojshah Mehta Road Fort Bombay and the plaint was signed and verified by one partner Shri Shiv Ratan G. Mohatta. The defendant company in its written statement at Ex. 12 contended that the plaintiff-firm could not maintain this suit as the constitution of the old firm of Mohatta Brothers Ahmedabad which acted as the managing agents of the company had been changed on or about 24th October 1949 and from the date the said firm of Mohatta Brothers which acted as Managing agents of the company consisted of six persons including No. 6 Satyavatidevi Mohatta. The said newly constituted firm of Messrs Mohatta Brothers having not been registered and as the cause of action had accrued in favour of that firm the present suit was not maintainable. The defendant also contended that the suit was bad for non-joinder of the necessary parties namely the relations and friends of M/s. Mohatta Brothers to whom the alleged deposits belonged. It was also contended that the suit was barred by limitation and also was in any event premature. The defendant also denied the liability to pay any amount to the plaintiff or that the aforesaid deductions claimed by the plaintiff-firm could be legally claimed. On the other hand the defendant company claimed deductions of various items mentioned in para 13 of the written statement as those liabilities had not been discharged by the old managing agents. It was the case of the defendant that on a true and proper interpretation of the scheme Ex. 168 these were conditions precedent and unless the plaintiff-firm discharged all its liabilities which had accrued due they could not make any such claim for accounts as provided in clause 7 of the scheme. In fact the accountability was even disputed. The trial Court held that the plaintiff firm was entitled to file a suit. The trial Court came to the conclusion that the new partnership deed Ex. 116 by which Satyavatidevi Mohatta was added as a partner was not acted upon and therefore there was no bar to the present suit under sec. 69(2) of the Act. The trial Court also held that there was no bar of non-joinder or limitation and such a suit for accounts could be filed as it was for an unascertained amount which could only be determined after taking accounts of the earmarked assets and liabilities mentioned in clause 7 of Ex. 168. The trial Court also held that the suit was not premature as the liability had accrued. The trial Court also held that the plaintiff firm was not entitled to the deductions claimed under sec. 70 of the Contract Act as it was bound to spend such amount even in its own interests. As regards the deductions claimed by the defendant-company the trial Court held that it was entitled to deduct the amounts shown in sub-clause (S) of para 13 of the written statement as these amounts were wrongly withdrawn by the plaintiff-firm. Even though it had been agreed that no amount would be withdrawn from the aforesaid deposited amount the trial Court found that the amount of Rs. 13 59 was wrongly withdrawn from the total actual deposit of Rs. 4 57 723 13.9 on the basis of the surplus arrived it decreed the plaintiffs suit against the defendant for a sum of Rs. 77 286 with future interest at 6 from 1st January 1956 The defendant company has therefore filed First Appeal No. 769/1960 against the said decree while the plaintiff-firm has filed cross-appeal No. 1029/60 for the amounts disallowed and has restricted the plaintiffs claim only to the amount of Rs. 51 764 as mentioned in the explanatory statement annexed to the memo of appeal. As both these appeals arise out of the same order and raise common questions of law and facts they are disposed of by this common order.