BINJRAJ Vs. KISANLAL

JUDGEMENT

(1.) 1. This appeal arises out of a suit instituted by the respondents against the appellants for rendition of accounts and dividing profits of partnership business earned during the six years from 1923-24 to 1928-29. The lower Court decreed the claim and the defendants have preferred this appeal. The parties to this suit carry on business of a ginning factory styled: "Narasingh Jagannath Factory," situate at Malkapur, under an agreement of partnership. The plaintiffs own three annas share in the partnership factory, while the defendants own the remaining 18 annas. The defendants are the managing partners of the factory. The suit was contested on the grounds that relief of an account of profits of partnership could not be claimed without a prayer for dissolution of partnership, that the suit was barred by res judicata and Order 2, Rule

(2.) , Civil P. C., that the claim for profits for the period exceeding three years before the suit was barred by limitation and that the plaintiffs failed to perform their part of the contract to supply their quota of cotton for ginning purposes. The lower Court held that a suit for accounts without a prayer for dissolution of partnership was maintainable, that it was not barred by res judicata, that the suit was governed by either Article 116 or Article 120, Schedule 1, Lim. Act, and that the whole claim was enforceable. It reserved the issue relating to the failure of the plaintiffs to perform their part of contract by supplying cotton for ginning purposes for investigation in proceedings following on the preliminary decree. The defendants have filed the appeal on a stamp of Rs. 10-8-0, declaring the provisional value of the subject-matter of the claim in appeal to be Rs. 140. An objection is raised by the plaintiffs as to the valuation of the claim in appeal for purposes of court-fees. There is indeed divergence of judicial opinion on the question but I prefer to follow the view taken in Chunni Lal v. Sheo Charan Lal Lalman , where the question is exhaustively discussed, and hold that it is open to the appellants in such cases to fix their own value provisionally for the purpose of court-fees, and reject the respondents' objection. 2. The question of real importance which has been argued at great length is whether the suit as framed for rendition of accounts of the profits of the partnership without asking for dissolution is tenable? In Kassa, Mal v. Gopi (1887) 9 All 120 it was held that a suit brought by one partner against another which involves the taking of partnership accounts prior to dissolution is maintainable only in exceptional cases. In that case the widow of one partner sued the surviving partner in respect of certain losses of a partnership concern and to recover a moiety of moneys expended in advances made to certain persons by her husband on behalf of the partnership. On a review of some English authorities their Lordships held that in case of breach by a partner of a specific covenant in the articles of partnership suit can lie prior to dissolution; and as their Lordships did not find any such specific agreement in the case they were dealing with, they declined to entertain the suit. This case was referred to in Krishnaswami Naidu v. Jayalakshmi Ammal AIR 1931 Mad 300 where also the rule was enunciated that if a partner asks for an account without asking for a dissolution, the Court must be satisfied that there are special grounds for granting the prayer, which grounds must be alleged by the plaintiff, and the defendant must have an opportunity of showing cause against. In Santhanakrishna Naidu v. Chellappa Aiyar, A. I. R. 1921 Mad. 650, the suit as framed was regarded as relating to one item of the partnership account and a prayer for converting the suit into one for dissolution and general account was refused. The aforesaid authorities relied on by the appellants do not lay down any absolute rule debarring the suit by a partner for accounts of profits of partnership-prior to dissolution. On the other hand,.. they declare that in special circumstances-the suits of such a nature as the present one are permissible. In Raghubar Dayal v. Sheoram Das (1904) 1 ALJ 94 the suit by a partner against his co-partners alleging that an account of the partnership has not been furnished according to an express stipulation in the agreement of partnership and asking for rendition of accounts was held to be unexceptionable. The condition in the articles of agreement was as follows : The account of profit and loss for ton years will be adjudicated at the end of each year, and in respect of the 11th year after one and half years. The amount of profit or loss shall be credited or debited to each partner. And the plaintiffs' cause of action was stated in these terms : The factory was carried on from 26th May 1899 to 1st August 1900, but the defendants did not render account to the plaintiffs according to the conditions of the deed of agreement and did not carry on the factory after that date, nor do they agree to anything in spite of the plaintiffs' insistence and readiness. And the relief claimed was : That the defendants may be called upon to formally render account for one year to the plaintiffs according to the agreement.

(3.) IN the note appended at p. 684 on the law as it stood before the Judicature Acts it is stated that even under the old law an action might be maintained for not rendering accounts and dividing profits (p. 665). The suits for accounts among the partners may be of two kinds, one for a general account of the dealings and transactions of the firm, with a view to the winding up of the partnership, and another, a more limited account, directed to some particular transaction as to which a dispute has arisen : Lindley at p. 601. Singhal in his Law of Partnership in British India, Edn. 2, at p. 359, after reviewing various English and Indian authorities, summarizes the law in these words : It is clear that where a partner withholds the annual profits of a concern from a member of the firm, the partner excluded from the profits may bring a suit for an account and for his share of the profits and such a suit should "not be dismissed for the reason that the plaintiff does not, claim a dissolution. To hold differently would be contrary to the principles of justice, equity and good conscience: it is the duty of the Courts to bring about the fulfilment of the expectations of the parties, and where a (sic) or a fixed term, the Courts should not permit a partner to drive the others to a dissolution. Every partnership is formed for the acquisition of gain, and if a partner were allowed to exclude his copartners from the profits of the business, the very object of the partnership would be frustrated and it would come to a premature end.