K VIMALA DEVI Vs. KASTHURI

JUDGEMENT

(1.) O. S. Appeals under Clause 15 of the Letters Patent against the order of Arumugam, J. , dated 13. 8. 1990, 6. 8. 1990 and 9. 4. 1992 and made in the exercise of the Ordinary Original Civil Jurisdiction of the High Court in c. S. Nos. 14,186 and 112 of 1984 and Application No. . 5768 of 1991 in C. S. No. 186 of 1984 respectively. The Judgment of the Court was delivered by Mishra, J: Two suits C. S. Nos. 112 and 186 of 1984 relating to dissolution of partnership and accounting between the partners as well as partition of the properties and c. S. No. 14 of 1984 based on a claim arising out of a settlement of accounts between the parties, have given rise to the instant appeals, viz. , O. S. A. Nos. 65 and 68 of 1992, 33 of 1993 and 111 of 1991. The first three appeals are invoking Clause 15 of the Letters Patent against a common judgment in C. S. Nos. 112 and 186 of 1984 by a learned single Judge of this Court, who has granted the relief of declaration that the suit partnership business firm of M/s. L. K. Ayyavoo Naidu and Sons, created by the partnership deed, dated 1. 4. 1974, stood dissolved on 5. 8. 1983 on the death of one of its two partners, viz. A. Kannappan and thus decreed C. S. No. 112 or 1984, but has dismissed C-S. No. 186 of 1984 in all respects except to render true and proper accounts, stating infer alia, as follows:' I am inclined to hold that the plaintiffs in c. S. No. 186 of 1984 arc entitled to ask for partition of the suit properties by metes and bounds by the appointment of a commissioner through separate appropriate proceedings in respect of their 45% share as against 55% share due to the defendants in the said suit and for separate possession of the properties to the extent of their respective share. To appreciate, however, who the plaintiffs and the defendants are and to know their relationship and why and in what circumstances they became parties and finally clashed with each other, leading to the suits and the appeals, we may refer to a gene- alogy, which is not in dispute. L. K. Ayyavoo Naidu, who died on 8. 5. 1981, had two sons, A. Kannappan who died on 5. 8. 1983 and L. A. Parthasarathy, who died on 7. 5. 1988. Vimala Devi, Kannappans wife, Sridhar, Kannappans son and his three daughters Vijayashree, jayashree and Bindhushree are the plaintiffs in C. S. No. 186 of 1984. Kasturi, wife of Parthasarathy, Srikanth and Jagadish Bharath, his sons and Kiranmayi, his daughter are the defendants in the suit. Parthasarathy was originally a defendant in the suit, but has since died and he has accordingly been expunged. Parthasarathy alone instituted, however, C. S. No. 112 of 1984, after the death of A. Kannappan, seeking accounts from Sridhar later, however, his wife kasturi, sons Sreekanth and Jagadish. . . . . . . . Bharath and daughter Kiranmayi were brought on record as legal heirs of the deceased Parthasarathy, and besides Sridhar, Vimala Devi, the wife Vijayashree, Jayashree and Bindhushree, the daughters were added as defendants. In C. S. No. 186 of 1984 the trial Court ordered for the appointment of Parthasa-rathy as a receiver on condition that he must deposit a sum of Rs. 7,500 per mensem to the credit of the suit in c. S. No. 186 of 1984. Against the preliminary decree in C. S. No. 186 of 1984, however, O. S. A. No. 65 of 1992 has been preferred and against the decree in c. S. No. 112 of 1984, O. S. A. No. 68 of 1992 has been preferred by Kannappans branch. In the course of final decree proceedings, Sreekanth and others were permitted to continue the business of the firm*, but the sum per mensem earlier ordered to be deposited, was increased to Rs. 15,000. It appears, however, that sridhar filed an application first to the effect that after the preliminary decree, the partnership business could not be earned on, as the Firm got dissolved on 5. 8. 1983, which application the Court disallowed. He then took out another application stating that he was ready to deposit a sum of Rs. 35,000 per mensem as the rates in the theatre have bean revised on three occasions commencing from the year 1984. The trial Court, ordered for the change of the receiver on conditions that Sridhar would pay Rs. 35,000 per mensem to the credit of the firm. Srikanth and others have filed appeal O. S. A. No. 110 of 1992 against the said order. Since these appeals are directly connected with each other and the facts as well as the laws traversed by the parties are common, we propose to deal with these appeals together. We, however, find that O. S. A. No. 33 of 1993 is in the nature of a cross-objection only: the same, although filed as a separate appeal, is taken up by us as a cross-objection.

(2.) THERE is no dispute to the fact that L. K. Ayyavoo naidu constituted a partnership business with his sons, Kannappan and parthasarathy in running a cinema theatre and exhibition of films under the partnership name of L. K. Ayyavoo Naidu and sons, constituted by deed of partnership, dated 1. 4. 1968. It is also not in dispute that L. K. Ayyavoo Naidu expressed his willingness to retire from the firm from 1. 4. 1974 and the partnership was reconsti-tuled between the two brothers viz. , Parthasarathy and kannappan, under a deed of partnership dated 1. 4. 1974, in which, however, the then minor sons of Parthasarathy, Srikanth and Jagadish Bharath were admitted to the benefits of the partnership. Controversy herein, however, is in respect of the interest that Parthasarathy and his sons Srikanth and Jagadish got as against the interest of Kannappan in the reconstituted partnership. While admitting Srikanth and Jagadish to the benefits of the partnership the deed recited as follows: ' The nett profit or loss after allowing for and deducting all expenses and usual business outgoings of the Firm shall be divided between the parties hereto as below: Profit Loss First party 45% 45% Second party 33% 55% Third party 11% Nil Fourth party 11% Nil The minors arc not entitled to share the loss. The first party Kannappan was given 45% interest in the profit and the same in the loss, but the second party Parthasarathy was given only 33% in profit, since his minor sons Srikanth and Jagadish were given 11% each as third party and fourth party respectively in the profit. Parthasarathy was burdened with 55% loss. In the earler deed, the three partners Ayyavoo Naidu, Kannappan and parthasarathy, which is not in dispute, were given equal shares, making thereby, that Kannappan had 33%, Parthasarathy had 33% and Ayyavoo Naidu had 33%. Ayyavoo Naidus share on his relinquishment has gone under this arrangement 11% each to Srikanth and Jagadish, Parthasarathys sons and remaining share of his been given, according to Srikanth and others, to Kannappan, in lieu of that which would have been given by the grand father to his (Kannappan s) sons. The bone of contention, however, is not with respect to the profit sharing or the loss sharing, but with respect to the division of the assets of the partnership, for which the clause in the deed reads as follows: ' The land, building and other assets in 346, poonamallee High Road, Madras-600 029. (more popularly known as Lakshmi talkies) in which the business is carried on, shall belong to the parties in their profit sharing proportions The main contention on behalf of Sridhar and others has been that the minors, who are admitted to the benefits of the partnership, are not partners until the statutory requirements are complied with, and since it is said in this clause of the deed that the land, building and other assets in which the business is carried on, it shall belong to the partners in their profit sharing proportion those who were merely admitted to the benefits of the partnership, cannot get any share in the building and other assets and the profit sharing between Kannappan and Parthasarathys being 45:33, Pathasarathys heirs and legal representatives shall get 33% share only: the rest going to the first party in the deed, viz. , Kannappan.

(3.) THE cross-objection O. S. A. No. 33 of 1993, it appears, has been filed, for in the impugned judgment, the learned single Judge has said, a decree is passed to render true and proper accounts of the suit partnership from 1. 4. 1974, the date of its commencement till the date on which the second defendant was appointed by the Court as Interim Receiver. We cannot see anything wrong in asking for accounts from 1. 4. 1974, for according to the defendants as well as plaintiffs, no accounts were ever settled from the very date of the inception of the partnership to the benefit of which the minors were admitted. THE ground raised on behalf of the defendants/appellants, however, is that since in the plaint in C. S. No. 186 of 1984 accounts are claimed from 5. 8. 1983, the Court should not have allowed accounting from 1. 4. 1974. It is well-settled that in a suit for dissolution of a partnership, plaintiffs and defendants have equal status, and the proceedings after preliminary decree are proceedings to consider objections of the plaintiffs as well as the defendants. Whomsoever has been in possession of the accounts, it is Obvious, is accountable to the firm and accordingly to the partners. THEre is sortie period, it is said, kannappan had acted as the Managing Partner. THEre is some period, when it is said Parthasarathy had acted as the Managing Partner. THE final dissolution of the partnership is said on the death of Kannappan on 5. 8. 1983 because the sole surviving partner was Parthasarathy alone (besides him were minors, who were only admitted to the benefits of the partnership ). Parthasarathy also has died. Now before the Court are legal representatives of Kannappan on the one side and legal representatives of parthasarathy on the other side. It is only fair and equitable that all accounts are disclosed to them, all assets are made known to each one of them and all disputes in respect of their shares etc. , are settled strictly in accordance with the terms of the agreement. THE learned single Judge has committed, therefore, no wrong in ordering for accounts as above. This disposes of O. S. A. No. 33 of 1993. 8 O. S. A. No. 110 of 1992, if we may say so with respect, has come up only because the true and proper scope of the control of the Court upon the receiver was not appreciated by the parties. We have the information that the Court appointed Parthasarathy, the sole surviving partner, as the receiver on the condition that he will deposit each month Rs. 7,500. This was raised to Rs. 15,000 on 11. 4. 1984. After the death of Parthasarathy, however, srikanth one of the two minors admitted to the benefits of the partnership, who had since attained majority), was appointed as Receiver. He continued to comply with the condition of depositing the said amount until in Application No. 5768of 1991 in the suit, the appellant L. K. Sridhar alleged that Srikanth has not been accounting properly and that considering the escalation of prices and the fares of the tickets to various categories (entry fees), it was necessary to revise the rate and since Srikanth was hot giving the actual benefit to the branch of Sridhar, he should be removed and his offer of depositing Rs. 35,000 per month should be accepted. Sridhar deposited a sum of Rs. 1,05,000 (equal to three months income) and sought his appointment as the receiver. Srikanth filed a counter-statement, denying all allegations of irregularities and suggested that the entire story of higher income and offer of the rate of Rs. 35,000 per month was concocted only to dispossess him from the administration of the suit theatre. In the course of the hearing of the application, however, he expressed his willingness and readiness to pay a higher rate of income at Rs. 25,000. THE trial Court, after a discussion of this aspect of the case, however, has said as follows: "though several contentions were raised in the affidavit and the same have been countered and denied in the counter-affidavit, in so far as the point involved in this application is concerned, there is no need for me to traverse each and every one of the same in this order for the purpose of discussion and giving a finding. Suffice it for me at this juncture to note that when this position was put forth and the coun- sel were confronted with the same the applicant has come forward with an offer of Rs. 35,000 net payable every month to the credit of the suit provided that he is entrusted with the administration of the suit theatre in the name Of suit partnership business firm in the place of the present interim administrator, namely, the second respondent herein. Per contra, Thiru Gurumurthy, the learned counsel appearing for the respondent negatives the same with the offer of Rs. 25,000 net per month, which is manifestly less than the quantum offered by the applicant. It has to be noted that it was the consistent offer of the applicant to take the responsibility of administering the firm and running the theatre for some time at least, and perhaps with this object in mind he has come forward with the depositing of three months income totalling to Rs. 1,05,000 into this Court in the pretext of proving his bona fides. In the light of the above position, if a chance is given to the applicant to run the suit partnership by name L. K. Ayyavoo Naidu and sons, which is torun the suit theatre to the applicant herein, in the capacity of being one of the major sharers for sometime in the place of the second respondent herein at the highest offer of Rs. 35,000 net payable by him every month apart from the deposit made by himreferred to above already to the credit of the suit pending passing of final decree. In my firm view the second respondent herein will not be prejudiced in any manner nor put to any loss or serious damages. But, on the other hand, the best and the highest income is being derived and made available to the credit of the suit to which both the sharers, namely the applicant and the respondent are entitled to get it in proportion to their due shares". He has accordingly ordered as follows: ". . . I feel totally satisfied in holding that the applicant has made out a strong case in his favour against the respondent, which warrants my mind to put him incharge of the administration of the partnership firm by name L. K. Ayyavoo Naidu and Sons for the purpose of running the suit theatre namely M/s. Lakshmi Talkies situated in Aminjikarai, Madras city, on the payment of Rs. 35,000 per month on the 10th of every succeeding month very regularly by depositing the same into Court to the credit of the suit theatre giving notice to the respondent or his counsel and that the deposit made by the applicant of Rs. 1,05,000 is to remain by way of security in the Court deposit and that with the useful clauses or directions given already in the earlier appointment passed on 11. 4. 1984 the applicant is directed to run the suit theatre till passing of the final decree or until further orders. . . ". It was never been the case of Sridhar that he has been a partner. His case has been that his father was a partner with the father of srikanth. Srikanths father was the sole surviving partner after the death of Sridhars father. As heirs and legal representatives of a deceased partner, Sridhar s remedies lay in seeking dissolution, which he did, and seek from the surviving partnership accounts, which he demanded. As one of the modes of settlement of accounts in the case of a dissolution, by an event which was beyond the control of any partner, it appears the Court appointed Parthasa-rathyas the Receiver. After parthasarathys death, Srikanth has been the Receiver. It is nobodys case that he has mismanaged the properties or that there has been appropriations by him or that he has not. properly and fully accounted for the business after the alleged dissolution. In such a situation, however, why action is taken to remove when in course of accounting if there has been anything more than the amount deposited by the receiver in Court as income of the business, persons, claiming through the partners are entitled to share, attempt was made to remove him from the receivership, (sic.) He has been depositing such money each month as a condition for his appointment as the receiver, since the Court has so ordered. THEre has been no ground, therefore, in our view, to remove him, without asking him to abide by any other condition that the Court thought was proper and reasonable. THE dispute, however, has no meaning before us. Srikanth has agreed to deposit Rs. 35,000 and has been making deposits regularly pursuant to the Courts order. In our opinion, there is no jeopardy to the cause, of justice if the arrangement, vide: Division Bench order dated 24. 4. 92 in C. M. P. No. 5549 of 1992-is continued until accounts are completely settled between the parties and the adjudication is accordingly made final. 9. We have one more appeal to dispose of O. S. A. No. 111 of 1991. In this appeal, we are faced with two deeds of settlement, Exs. P-1 and d-2. Ex. P-1 is a document, dated 25. 8. 1978 executed by L. K. Ayyavoo, Naidu, his son A. Kannappan, Kannappans wife Vimala Devi, ayyavu Naidus another son L. A. Parthasarathy and his wife kast-huri. Ex. D-2 is an earlier document, dated 15. 7. 1974 between Kannappan, his wife Vimala Devi, Parthasarathy and his wife Kasthuri. 15. 7. 1974 agreement is a deed of settlement in favour of the parties and their children. This document says "whereas the parties wanted to pay the liabilities in equal shares from and out of the sale proceeds of the properties consisting of vacant piece of land situate in Arumabakkam village and Ayyavoo Naidu Colony, aminjikarai, Madras-29, and described in Schedule A hereunder". THEre is no substantial dispute, however, in respect of this document, for it is nobodys case that any part of it has not been carried out. THE main document, however, is 1978 agreement to which L. A. Ayavoo Naidu is the party of the first partA. Kannappan is the party of the second parthis wife Vimala Devi is the party of the Third part l. A. Parthasarathy is the party of the Fourth Part, and his wife Kasthuri is the party of the fifth part. This has been executed it appears, because all that was required to be carried cut by the agreement, dated 15. 7. 1974 was yet to be completed, and liabilities of the parties were required to be settled. THE relevant portion of this agreement reads as follows: "whereas by an agreement dated 15. 7. 1974, the parties of the second to fifth parts have agreed to discharge the liabilities of Rs. 3,24,423 due and payable to various persons, the particulars of which are mentioned in the annexure, whereas according to the said agreement they have discharged Rs. 1,82,423, whereas a sum of Rs. 1,42,000 is still due and payable in respect of the said amounts, besides a sum of Rs. 24,105 towards accrued interest over the said amount as set out in Schedule A hereto: Whereas subsequent to the said Agreement the parties of the first, second and fourth parts have borrowed a sum of Rs. 69,500 and the said amount is also payable now, whereas a sum of Rs. 1,13,492 is also payable by the parties hereto to the various persons, that is Rs. 73,492 to mr. Kannappan, Rs. 20,000 to Sridhar, Rs. 20,000 to L. A. Parthasarathy, whereas in all a sum Of Rs. 3,49,097 is still due and payable by the parties hereto the particulars of which are set out in Schedule A hereto: . . . . . . . . . . . . That in pursuance of the said agreement the parties hereby agree to sell the properties, viz. , the plots, belonging to the party of the first part, third part and fifth part in Ayyavoo Naidu Colony, in Layout no. 96 of 1958, Madras-29, besides other vacant land, measuring 4 acres 10 cents comprised in R. S. No. 2. As and when the said plots are sold from and out of the sale proceeds from each ground, a sum of Rs. 2,000 should be paid towards the debt of Krishnamoorthy Reddy, Rs. 2,000 to Sri Kannappan, the party of the second part and the remaining amount towards the discharge of other liabilities, and the said mode of payment shall be as per transaction entered in their account. . . . It appears that parties recognised borrowings including from kannappan Rs. 73,492 and agreed to sell the properties belonging to the parties on term that a sum of Rs. 2,000 should be paid to Kannappan, on sale of each ground and the remaining amount towards the discharge of other liabilities. THEre is no controversy, however, about other things before us, except that parties have sold land in Ayyavoo Naidu Colony in Layout No. 96 of 1958, except the vacant land, measuring 4 acres 10 cents. It is conceded that thirty grounds of land have been sold. Thus, Kannappan s branch must get a total sum of Rs. 60,000 (Rs. 2,000 x 30 ). Learned counsel for the respondents in this appeal has not been able to dispute this factual position. This amount of money belonging to Kannappan s branch is in their hand. That amount they must pay to the appellants. We have no information as to when which part of the Lay-out was sold and what period lapsed between the receipt of the consideration money and the suit. THErefore, it is not possible to work out any interest for the period before the suit. Interest from the date of plaint and decree, however, can be granted and accordingly we required the learned counsel for the parties to work out and they have indicated that a sum of rupees one lakh in all towards principal due and interest together may meet the ends of justice. Mr. S. Govind Swaminathan, learned senior counsel appearing for the appellants, left calculation of the interest entirely in the hands of the Court. We see no reason to accept any contention on behalf of the respondents to deny any interest on the principal sum to the appellants. Accordingly, we find it fair, as we have said earlier, to order in this appeal that the respondents are liable to pay in all a sum of rupees one lakh inclusive of the principal due and interest up to the date of the decree. If the said amount is not paid by depositing into Court by the respondents within two months from today (20. 4. 1993), the decree shall carry an interest of 9% per annum, until paid. On the facts and in the circumstances of the case, however, we make no order as to costs. .