VASANT SHESHRAO Vs. DEVIPRASAD MAHADEO

JUDGEMENT

(1.) This is an appeal by the heirs of the original defendant against a decree for dissolution of partnership and for accounts in favour of the original plaintiff Mahadeo, who is now represented by his heirs the respondents. Sheshrao, the original defendant, who shall hereafter be referred to as the defendant, and Mahadeo, the original plaintiff, who will hereafter be referred to as the plaintiff, entered into an agreement on December 5, 1949, which is styled as an agreement of partnership for running a cloth shop at Yeotmal in a building owned by the plaintiff. The plaintiff and the defendant had their own cloth business. The plaintiff was dealing in handloom cloth for which no licence who necessary, while the defendant was dealing in mill made cloth for which business a licence was required under the Cotton Cloth Trade Regulation Order, 1948, which was issued by the then Government of Central Provinces and Berar in exercise of the powers conferred by Sec. 3 of the Essential Supplies (Temporary Powers) Act. 1946. According to the agreement dated December 5, 1949, the plaintiff was to contribute Us, 6,000 on account of capital and the defendant was to contribute Rs. 3,000 as capital. It was agreed that the business was to be run in the name of "Sheshrao Marotirao Dhole", which was the name of the defendant, who was a licence holder. It was also agreed that if possible an attempt should be made to get the name of the plaintiff included in the licence. It appears from the record that this was not done and the licence continued in the name of Sheshrao Marotirao Dhole and business was also carried on after the date of the agreement of partnership in the same name as it was originally carried on by the defendant. Under the terms of the agreement, the entire business was to be looked after by the defendant as the managing partner and each of the parties were to have 8 annas share in the profits of the partnership, subject to a minimum of Ks. 900 to be paid to the plaintiff on account of profits. One of the terms of the partnership was that even if there was loss in the business Rs. 900 were to be paid to the plaintiff on account of profits and the entire responsibility of keeping accounts was of the defendant. The amount of Rs. 6,000 which was the contribution of the plaintiff towards the capital of the partnership consisted of hand-loom cloth worth about Rs, 3,000 and a cash amount of Ks. 3,000. This business which the defendant was to carry on was not only in mill made cloth, but also in hand-loom cloth. Another important term of the agreement was that the defendant was not to get any remuneration for the management of the business which has to be carried on in the house owned by the plaintiff.

(2.) According to the plaintiff, sometime in May 1955 the defendant removed the cloth shop from the plaintiff's building and carried on business till about Diwali 1956 in his own premises when the business was closed. As disputes arose between the plaintiff and the defendant regarding the settlement of accounts the plaintiff filed a suit out of which this appeal arises on October 27, 1959, for dissolution of partnership, for winding up its affairs and also for taking accounts.

(3.) The plaintiff's claim was resisted by the defendant on several grounds. The first ground was that the plaintiff's suit for accounts was barred under Section 69 of the Partnership Act because the partnership was not registered and the second ground was that the agreement of partnership had the effect of transferring the licence held in the name of the defendant to the partnership and that this transfer was illegal as being contrary to Clause 8 of the Central Provinces and Berar Cotton Cloth Trade Regulation Order, 1948, hereafter called the Order, and therefore, the partnership itself was illegal. According to the defendant, the plaintiff being in pari delicto with the defendant he could not maintain a suit for accounts of this illegal partnership. The defendant had raised a further plea that the plaintiff's claim was barred by limitation, because the partnership was already dissolved by mutual consent on August 17, 1955, and therefore, the suit filed by the plaintiff on October 27, 1959, after 3 years of dissolution was barred under Article 106 of the Indian Limitation Act, 1908.