N KAMALAMBA Vs. M RAMAIAH

JUDGEMENT

(1.) This appeal is from the judgment and decree in Original Suit No. 18 of 1984, on the file of the Principal Subordinate Judge, Warangal, dismissing the suit of the plaintiffs for a preliminary decree directing partition of plaint schedule estate and allot 0-24 paise share to the plaintiffs, to appoint a Commission to divide the suit estate as per the preliminary decree, to pass a final decree in respect of the shares of the plaintiffs and to put them in separate possession of such shares, for rendition of accounts with effect from May, 1978 by the 1st defendant and for a permanent injunction, restraining the 1st defendant from receiving the rents from the 8th defendant in respect of the suit estate. As plaintiffs 1 and 2 sold away their shares in the partnership subsequent to the institution of the suit, the appeal was preferred by the unsuccessful plaintiffs 3 to 8.

(2.) The 1st defendant was the owner of an extent of Ac.3-07 guntas of land covered by survey numbers 1683, and 1693 within the Municipal limits of Warangal Town. It appears, the Food Corporation of India, Warangal branch, was in need of a godown and with a view to construct the godowns for the purpose of renting them out to the Food Corporation of India, a partnership was constituted by eleven persons under Ex.A-12, partnership agreement, dated 14-9-1977. Defendants 1 to 7, D-10, D-11, first plaintiff and one Lingamurty signed the partnership agreement. The object of the partnership business, as recited in clause (4) of Ex-A-12, was "to acquire the site bearing municipal survey numbers 1683 and 1693 and construction of godowns for leasing purposes to the Food Corporation of India", for which lease agreement was obtained in the name of M. Ramaiah, the first defendant. It was mentioned in clause (5) that the capital required for the business shall be contributed by ''all or any partners and mutually" and the site in the name of the 1st defendant, M. Ramaiah, would belong to the firm, in consideration of which a sum of Rs.40,000/- would be credited to D-1's account in the books of the partnership firm. Clause (6) specified that the site and godowns would belong to the firm consisting of the partners and "their interest in the property is according to shares mentioned in clause (7)". The shares of the plaintiffs and defendants 1 to 4 were 46% and 54% respectively. Defendants 1 to 4 purchased the share of the 6th defendant (6 per cent) and entered into a compromise with plaintiff No.2 and got six more per cent of the shares and likewise, from 7th defendant they obtained five per cent of the shares. The total shares of D-1 to D-4 thus came to 71% as against 29% shares of plaintiffs 3 to 8. The agreement contemplated that Ramaiah, the first defendant and D. Linga Murthy, one of the partners (who died subsequently), should manage the day-to-day business of the partnership. Defendants 1to 4 and D-9 go together. D-1 is the father of D-2 and D-3, D-4 is the mother-in-law of D-1. D-9 is the wife of D-1 and she came on record by impleading herself subsequently. The 8th defendant is the Food Corporation of India, Warangal Branch. By May, 1978, construction of four godowns and an office building was completed and possession was delivered to the Food Corporation of India, on a monthly rental of Rs.28,587-56ps., i.e., at the rate of 0-47 paise per square foot. Seven out of the eleven partners (other than D-1 to D-4), executed an agreement on 6-2-1978, Ex.B-1, in favour of the 1st defendant, stating that they were unable to contribute their share of Rs.3,68,000/- at the time of the formation of the partnership because of financial difficulties and they undertook to secure and deposit the said amount "within six months from this day otherwise we will cease to be partners and have no rights in the partnership deed executed on 14-9-1977 (Ex.A-12 regarding F.C.I, godowns) in which event we will execute a deed of relinquishment as and when you desire". Nooka Vijayalaxmi, one of the signatories to Ex.B-1 subsequently died in January, 1979. The rest of the six partners executed a deed of relinquishment, Ex.B-2, on 26-9-1980, in favour of the 1st defendant, stating that they failed to contribute their share of capital as per the partnership agreement, dt.14-9-1977 (Ex.A-12) and a later agreement, Ex.B-1, dated 6-2-1978, and as such "we do hereby relinquish our total rights obtained by the said partnership deed. We have nothing more to do with the partnership, its assets and liabilities with retrospective effect. Further, we agree to execute any further deed you may desire at any time." On 17-1-1984, the suit was instituted without any prior suit notice averring that as per the partnership deed its duration was 'at will', that profits and losses were to be shared as per the shares of the partners and the firm obtained a loan of Rs. 12,50,000/- from the State Bank of Hyderabad, Warangal branch and thereafter construction was completed and the godowns were let out to the Food Corporation of India, Warangal, the 8th defendant. The partners also constructed a house and office room in the site for the beneficial use and requirement of the godowns. By December 1983, only a sum of Rs.17,609/- was due to the State Bank of Hyderabad, Warangal and the remaining entire loan was cleared. They alleged that the 1st defendant, in whom by virtue of his being the eldest among the partners all the other partners reposed confidence, ceased to evince interest and evaded to render account. The firm was dissolved in the year 1979 and mere was no agreement for continuance. Therefore, the plaintiffs claim 0-25 paise share in the entire suit estate.

(3.) In the written statement filed by D-l to D-4 it was asserted that the venture needed an investment of about Rs .20,00,000/- and out of that Rs. 12,50,000/- was obtained as loan from the State Bank of Hyderabad, Warangal Branch in the name of the partnership firm against security of the properties of the 1st defendant. From out of the balance of Rs.7,50,000/- the parties to the agreement Ex.B-1 agreed to invest Rs.3,68,000/- in proportion to their shares in the partnership and the balance was to be raised by way of loans from private parties. Lingamurthy, who was one of the Managing Partners, failed to invest any amount in the firm although he was operating the accounts of the firm and signing the cheques whenever he was required to do so. After the construction was completed by May 1978, possession of the godowns was handed-over to the Food Corporation of India, which started paying rent from May, 1978 and the amounts were being credited to the loan account in the State Bank of Hyderabad, Warangal branch for adjustment towards the loan. By Ex.B-1 dated 6-2-78 the seven partners who failed to invest Rs.3,68,000/- undertook to relinquish their interest in the partnership if they fail to invest their share of the amount within six months from that date. In the year 1979, Smt. Nooka Vijayalaxmi one of the partners died and on her death the original firm stood dissolved. On 26-9-80 the partners who executed Ex.B-1 whereby they undertook to contribute Rs.3,68,000/- on their failure to do so, executed Ex.B-2 deed of relinquishment as a consequence of which the partnership dt. 14-9-77 (Ex.A-12) became only nominal so far as the parties who are signatories to Ex.B-2 were concerned. Lingamurty one of the two Managing Partners, died in 1980. Afresh firm was constituted by Ex.B-3 on 1-4-81 with six partners comprising D-1, D-2, D-3, D-4 and two others. They also pleaded that the suit was speculative in character and was hopelessly barred by limitation. They also stated that the loan due to the State Bank of Hyderabad Warangal was cleared and the period of lease was extended upto May, 1979. But, the other loans raised by D-1 from private parties were still due and payable.