PRABH DAYAL Vs. DES RAJ

JUDGEMENT

(1.) THIS is an appeal in a suit for the recovery of Rs. 3,100 brought by the plaintiff in the following circumstances:

(2.) THE plaintiff and the defendant entered into a partnership by virtue of a document dated 11th September, 1959 for constructing the Partap Canal Akhnur. The canal was constructed in 1963 but the accounts between the parties could not be taken. Thereafter a suit was brought in the court of the Sub Judge, Jammu but during the pendency of the suit the parties settled their accounts outside the court and by an oral agreement they agreed that the plaintiff was entitled to a sum of Rs. 3100. On the basis of this oral agreement the plaintiff has now brought the present suit for the recovery of the amount mentioned above,

(3.) ONE , of the objections which was taken by the defendant and on the basis of which a preliminary issue was framed was that the suit was not maintainable since the partnership was not registered under Section 69 of the Partnership Act. The learned Sub Judge (Chief Judicial Magistrate) held that as the Partnership was not registered, therefore, the suit was not maintainable and he accordingly dismissed the suit. The learned Judge relied on a decision of Nagpur High Court reported in AIR 1940 Nag 78. In our opinion the view taken by the learned Judge is legally erroneous. In the present case, the plaintiff has clearly instituted a suit on the basis of an oral agreement arrived at between the parties after the dissolution of the partnership on the basis of the account taken, out of court. To such a case Section 69 of the Partnership Act would have no application. After the dissolution the taking or accounts merged into a separate agreement between the parties which now forms a separate and independent transaction capable of being en -forced by any of the parties to the agreement. We are fortified in this view by a decision of Division Bench of Nagpur High Court reported in AIR 1944 Nag 124 where their Lordships observed as follows: - Having come to the conclusion that the settlement of account between the partners of a dissolved partnership accompanied by a promise to pay the amount found due affords a fresh, cause of action on which a suit can be based the contention of the appellant that the suit is barred by Sect. 69 (1) Partnership Act loses its significance...... As the terms of the partnership do not at all enter into consideration in such a suit, the fact that the partnership was an unregistered firm has no bearing on the suit as laid."