B RAMULU Vs. E N SETTY

JUDGEMENT

(1.) The appeal is brought by the defendant is O.S.724 of 1983 on the file of the I Addl.Judge, City Civil Court, Hyderabad. The suit filed by the Plaintiff- respondent was for dissolution of the partnership firm "Prakash Paints" and for rendition of accounts from 5-5-1965 till date and for a decree for the amounts found due towards the share of the respondent. The Court below decreed the suit and a preliminary decree was passed with costs for dissolution of the firm and for rendition of accounts from 1-4-1982.

(2.) The relevant facts necessary for the disposal of the appeal are, briefly, as follows: Originally, the appellant, respondent, Smt. K.Sitaratnamma and RP.Markanday constituted a partnership firm in the name and style of "Prakash Paints and Varnish Works" under a partnership deed dt.5-5-1965. On 14-8-1971 Markanday retired from the partnership and the remaining three partners continued the business by reconstituting the firm under the name and style of "Prakash Paints" and a fresh partnership deed was also executed on 1-9-1971. In 1982, Smt. Sitaratnamma wanted to retire. Accordingly an agreement was entered into on 5-7-1982 and the amounts payable to her were settled through arbitrators and also paid to her. Thereafter, the respondent and the appellant continued the firm in the same name. The appellant was the Managing Partner of the firm. It was alleged that he was behaving as a sole proprietor of the firm and neglecting the respondent. When Smt. Sitaratnamma retired from the firm, the appellant and the respondent got equal shares in the profits and assets. It was also alleged that the appellant has been mismanaging the business and manipulating the accounts with a view to show loss to the respondent. Hence, the appellant was liable to render the accounts of the firm. The respondent valued his share at Rs.40,000/- tentatively and filed the suit for dissolution of the firm and for rendition of accounts.

(3.) The appellant, while admitting the original partnership and also theretirement of Markandey in 1971, however, pleaded that a new partnership was constituted among the respondent, appellant and Smt. Sitaratnamma on 1-7-1971 and the respondent suppressed the facts that followed the retirement of Smt. Sitaratnamma and subsequent events that took place immediately thereafter. It was averred that Smt. Sitaratnamma wanted to retire from the partnership firm and all the partners agreed to arbitration on the dispute, referring the dispute to 3 arbitrators, who gave an award on 4-8-1982. As per the award the total amount payable to SmtSitaratnamma was Rs.1,65,657/-. The said amount was directed to be paid within six months from the date of award. Since it was found difficult to mobilise funds for payment of the said amount, the respondent and the appellant met on 5-8-1982 at the house of Dr.Rajalingam, one of the arbitrators, where the respondent pleaded his inability to contribute the necessary amount. Hence, he agreed to retire from the firm as per the same terms in the award. On such agreement the respondent executed a letter on the same date in the house of the said arbitrator and the amount was to be paid within six months from that date. Therefore, it was averred that the firm stood dissolved from 5-8-1982, in view of the agreement executed between the parties. In furtherance of the award, the appellant paid the amount to Smt. Sitaratnamma and he also obtained a Demand Draft on the same day from State Bank of India, Balanagar Branch, Hyderabad, in favour of the respondent, for Rs.91,609/- being the amount payable to the respondent and kept the same with Dr.Rajalingam, as requested by the respondent. However, the respondent with a mala fide intention declined to accept the D.D. Hence it was pleaded that in view of the settlement between the respondent and the appellant, the respondent stood retired from the partnership and the firm consequently dissolved. Thereafter, the appellant constituted a new partnership with the same name. Hence, the question of dissolution of partnership did not arise, and the respondent was not entitled for the relief claimed.