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SUPREME COURT OF INDIA
K.K. MATHEW, M.H. BEG AND A.K. MUKHERJEA, JJ.
L. Ishwar Dass and others, Appellants
Versus
The Haryana and General Woollen Mills Ltd., Respondent.
Civil Appeal No. 1754 (N) of 1967, D/- 17-10-1973.
Partnership Act, 1932 - Section 13 and 13-C - Partnership - Contract - Supply of Blankets - Dissolution of Partnership - Breach of Contract - Whether defendant is not bound by terms Nos. of partnership agreement - Whether there had been any breach previous to March 6, 1951, there was no finding by trial Court - Whether there had been any breach before March 6, 1951 - Whether paid to creditors or due to partners, net loss turned out to be Rs. 33,749/9as/6ps - Whether 3 mds. 24 srs. and 2 chs. supplied after 6th of March was in accordance with terms of contract - Whether balance of 21 mds was properly accounted for in terms of agreement, had to be determined by trial Court - Whether in returning balance wool defendant mill had committed any breach of terms of partnership or not - Whether this finding of learned trial Court had been challenged at any stage – Held, Defendant mill in meantime went on appeal against aforesaid order of trial Court to Senior Subordinate Judge who treated order dated May 11, 1963 as a supplementary preliminary decree and observed that final decree to be passed in suit was to be controlled by that order - On merits learned Senior Subordinate Judge dismissed appeal of defendant and confirmed finding of trial Court that under condition No. 21 defendants had undertaken to become responsible for all losses if yarn of proper count was not manufactured - Main contention of appellants before Court was that Division Bench of High Court misunderstood real issue between parties - Appellants make out their case in following manner - In order dated May 11, 1963 of trial Court there had been a finding that since defendant mill had committed a breach of contract it alone was responsible for loss suffered by partnership - Significance of this finding which in effect is based on condition No. 21 of partnership deed is that a single breach of condition No. 21 will make defendant mill responsible for entire loss during whole period of partnership - Plaintiffs have, of course, objected to two findings of Local Commissioner viz. one as to spinning charges and other as to question of interest - But these questions are still to determined by learned Subordinate Judge at time of giving final decree - Plaintiffs urged that Division Bench of High Court had made an obvious error in holding that accounting was to be done only with regard to period before March 6, 1951 - There is no doubt that this particular finding is being challenged for first time before this Court - Court, therefore, accept plaintiff s contention that finding of trial court on this point is final and conclusive - Learned Single Judge of High Court in so far as he sustained order of trial Court is correct - Learned Single Judge was wrong in directing trial Court to send case again to Local Commissioner to report on breach committed after March 6, 1951 - Plaintiffs cross-objection was quite correct that in view of condition No. 21 no fresh report was called for to ascertain loss suffered by firm on account of breach committed before and after March 6, 1951 separately - This case has taken an extraordinarily long time and it is desirable to put a finale to it as quickly as possible - Local Commissioner has already submitted his report to learned trial Court – Court direct that matter should now go down to learned trial Court through usual channels as early as possible so that learned trial Judge can after hearing objections if any of parties to report of Local Commissioner pass a final decree - Appeal allowed.
Judgment
MUKHERJEA, J.:- This appeal by certificate from a judgment and order of the Punjab and Haryana High Court raises a very simple point which has unfortunately been laid over with a thick cloud of confusion caused by the long and cheque red history of the litigation. The facts and circumstances out of which this appeal arises may be set out in the beginning.
2. On December 1, 1950 the appellants entered into a partnership agreement with the respondent for the purpose of carrying on the business of supply of blankets to the Army. The formal deed of partnership was executed on March 6, 1951. The partnership deed recites that the appellants (who were parties Nos. 2 and 3 to the deed) were weaving experts while the respondent (who was party No. 1 to the deed) used to do the work of spinning woollen yarn. It further recites that the three parties had formed a partnership for the purpose of supplying 5000 blankets to the Government of India in conformity with Specification No. I. N. 2689. The deed of partnership indicates the proportion of shares held by the three parties in the venture in the following manner:
Haryana Woollen and General Mills Ltd. Party No. 1, .... 2/16 shares
Young & Co., Party No. 2 .... 7/16 shares
Ishwar Das, Party, No. 3 and Appellant No. 1 in this case. .... 7/16 shares
The partners were to be responsible for profit and loss in the ratio of their shares. The respondent, Haryana Woollen and General Mills Ltd. (hereinafter briefly described as the defendant or the defendant mill) was to spin the yarn and the appellants were to manufacture the blankets and produce the finished products according to the aforesaid specification. We are not concerned with all the terms of the partnership deed and it is not necessary to set them out here. We shall, however, be concerned with three terms which are set out below.
"20. That the parties Nos. 2 and 3 will purchase and supply wool to party No. 1 for spinning. If parties Nos. 2 and 3 could not supply wool, party No. 1 will not at all be responsible, but in that event, the said firm will be responsible for all the losses.
21. That the party No. 1 will have to spin yarn of 35-40 counts for the contract. Party No. 2 and Party No. 3 will continue to enter in a register the verification of correctness of count at the time of receiving yarn. If party No. 1 could not prepare yarn of this count, then the parties Nos. 2 and 3 will not at all be responsible for the supply of the material, blankets and losses. If the yarn of the specified count is continually received, then the said firm will be liable for any loss that may take place.
22. That, if the Party No. 1 had to dispose of any yarn or wool of the said firm, then the Party No. 1 would endorse in favour of Parties Nos. 2 and 3 the payment of the bill of sale and would not himself receive any payment.
3. It appears that though the supply of blankets was to be made by April 30, 1961, no supply in fact was made. Indeed, no supply was ever made. It further appears that neither party to the contract sued the other party for breach of contract. In October 1951, the appellants filed a suit against the defendant mill for dissolution of partnership and for rendition of accounts. We shall, for the sake of convenience refer to the appellants as "plaintiffs hereinafter.
4. The plaintiffs case in the plaint was mainly on the following lines. Though the plaintiff No. 1 had invested Rs. 21,411/12as./9ps. and plaintiffs Nos. 2 and 3 had invested Rs. 21,450/10as/ops. the defendant mill had not invested its share of the capital. Further, though the defendant mill was required under the agreement of partnership to spin yarn of 35-40 counts, the defendant mill did not do so and the yarns prepared by the defendant mill were of a much lower count from which blankets could not be manufactured according to the specification. The defendant mill had also, it is alleged, prepared yarn much below the normal yield and misappropriated a part of the wo
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