Supreme Court Of India
BANARASI DAS
Versus
Kanshi Ram
Decided On : December 17, 1962
PARTNERSHIP - DISSOLUTION - LIMITATION - SUIT FOR DISSOLUTION AND ACCOUNTS - WHETHER BARRED BY LIMITATION - PARTNERSHIP AT WILL - NOTICE OF DISSOLUTION - DATE OF DISSOLUTION - PARTNERSHIP ACT, 1932, S. 43(1), (2) - LIMITATION ACT, 1908, ART. 106.
Fact of the Case:
The plaintiff, Kundan Lal, and the defendants, Banarsi Das, Kanshi Ram, Kundan Lal, Munna Lal, Devi Chand, and Sheo Prasad, were brothers who formed a joint Hindu family until 1936. They owned a sugar mill called "Sheo Prasad Banarsi Das Sugar Mills" in Bijnor, Uttar Pradesh. After the disruption of the family, the brothers decided to carry on the business of the mill as partners instead of as members of a joint Hindu family. The partnership was to be at will, and each brother was to share all profits and losses equally. The mill was to be managed by one of the brothers, who was to be designated as the managing partner. The agreement provided that for the year 1936-37, Banarsi Das would be the managing partner, and for subsequent years, the person unanimously nominated by the brothers would be the managing partner. For the years 1941-44, Kundan Lal was the managing partner.
Finding of the Court:
The High Court erred in holding that the suit was barred by limitation. The mere filing of a suit for dissolution of a partnership at will does not amount to a notice of dissolution. The date of dissolution of a partnership at will is the date mentioned in the notice of dissolution or, if no date is mentioned, the date of communication of the notice. In this case, the date of dissolution of the partnership was not known or could have been known by the High Court. Therefore, the High Court was in error in holding that the suit was barred by time.
Issues: 1. Whether a suit for dissolution of partnership and accounts is barred by limitation under Art. 106 of the Limitation Act, 1908? 2. Whether the mere filing of a suit for dissolution of a partnership at will amounts to a notice of dissolution? 3. Whether the date of dissolution of a partnership at will is the date mentioned in the notice of dissolution or, if no date is mentioned, the date of communication of the notice?
Ratio Decidendi: 1. A suit for dissolution of partnership and accounts is not barred by limitation under Art. 106 of the Limitation Act, 1908, if the partnership is at will and the date of dissolution is not known or could have been known by the court. 2. The mere filing of a suit for dissolution of a partnership at will does not amount to a notice of dissolution. 3. The date of dissolution of a partnership at will is the date mentioned in the notice of dissolution or, if no date is mentioned, the date of communication of the notice.
Final Decision: The appeals of Banarsi Das and Kundan Lal were allowed, and the decree of the trial court was restored. The Civil Miscellaneous Petitions were dismissed.
Judgment
MUDHOLKAR
( 1 ) THESE are appeals by certificates granted by the High Court of Allahabad under Art. 133 (1) (c) of the Constitution form its judgments dated 15/03/1956. The relevant facts are briefly as follows :
( 2 ) THE plaintiff Kundanlal and the defendants 1 to 5 Banarsi Das, Kanshi Ram, Kundan Lal, Munna Lal, Devi Chand and Sheo Prasad are brothers and formed a joint Hindu family till the year 1936. Amongst other properties the family owned a sugar mill at Bijnor in Uttar Pradesh called "sheo Prasad banarsi Das Sugar Mills". After the disruption of the family the brother decided to carry on the business of the said sugar mill as partners instead of as members of a joint Hindu Family. The partnership was to be at will and each of the brothers was to share all the profits and losses equally. The mill was to be managed by one of the brothers who was to be designated as the managing partner and the agreement arrived at amongst the brothers provided that for the year 1936-37, which began on 1/09/1936, the first defendant Banarsi Das, who is the appellant in Civil Appeals 94 to 96 of 1960, was to be the managing partner. The agreement provided that for subsequent years the person unanimously nominated by the brothers was to be the managing partner and till such unanimous nomination was made, the person functioning as managing partner in the previous year must continue. For the years 1941-44, Kundan Lal was the managing partner. On 13/05/1944, Sheo Prasad defendant No. 5, now deceased, instituted a suit in the court of the Subordinate Judge, First Class, Lahore, for dissolution of partnership and rendition of accounts against Kundan legal and joined the other brothers as defendants to the suit. In the course of that suit, the court, by its order dated 3/08/1944 appointed one Mr. P. C. Mahajan, Pleader, as receiver but as the parties were dissatisfied with the order the matter was taken up to the High Court in revision where they came to terms. In pursuance of the agreement between the parties the High Court appointed Kanshiram as Receiver in place of Mr. Mahajan as from 5/04/1945. In the meanwhile, The District Magistrate, Bijnor took over the mill under the Defence of India Rules and appointed Kundan Lal and his son to work the mill as agents of the U. P Government for the year 1944-45. This lease was renewed by the Government for the year 1945-46. On 28/08/1946, the parties, except Devi Chand, made an application to the Court at Lahore praying that the Receiver be ordered to execute a lease in favour of Banarsi Das for a period of five years. It may be mentioned that this application was made at the suggestion of the District Magistrate, Bijnor. The Subordinate Judge made an order in terms of the application. In September 1946, Banarsi Das obtained possession of the mill. It may be mentioned that Sheo Prasad had in the meanwhile applied to the court for distribution amongst the erstwhile partners of an amount of Rs. 8,10,000. 00 (out of the total of Rs. 8,30,000. 00) which was lying with the Receiver and suggested that the amount which fell due to Kundan Lal and Banarsi Das should be withheld because they had to render accounts. However, the aforesaid amount lying with the Receiver was distributed amongst all the brothers and Devi Chand acknowledged receipt on 14/11/1946. On 11/10/1947, the Lahore suit was dismissed for default, the parties having migrated to India consequent on the partition of the country.
( 3 ) ON 8/11/1947, Sheo Prasad instituted a suit before the court of the Civil Judge, Bijnor against his brothers for a permanent injunction restraining Banarsi Das from acting as Receiver. The suit, however, was dismissed on 3/03/1948. On 16/07/1948, Sheo Prasad transferred his 1/6th share to Banarsi Das and since then Banarsi Das has been getting the profits both in respect of his own share as well as in respect of that of Sheo Prasad.
( 4 ) ON 7/10/1948, the suit out of which this appeal arises was instituted by
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