1. Suit for dissolution of partnership and rendition of accounts — Automatic dissolution upon death of a partner under Section 42(c), Partnership Act, 1932 — Issue of limitation. (Para 4 , 5 , 17 , 20 , 28 , 29 )
Back
Next 
2024 Supreme(SC) 478
SUPREME COURT OF INDIA
B.R. GAVAI, SANDEEP MEHTA, JJ.
S. Shivraj Reddy (Died) through his LRs. and Another – Appellants
Versus
S. Raghuraj Reddy and Others – Respondents
Civil Appeal No. 6459 of 2024, Arising Out of SLP (Civil) No. 4237 of 2015, Arising Out of SLP (Civil) Nos. 23143-23144 of 2016
Decided On : 16-05-2024
Advocates:
Advocate Appeared:
For the Appellants : Sridhar Potaraju, Srinivas Kotni, Rohan Garg, Gaichangpou Gangmei, Chahat Raghav, Nisha Pandey, Aayush, Rajat Srivastava, Rajat Shrivastava, Maitreya Mahalay, Maitreya Mahaley, Yimyanger Longkumer.
For the Respondents: T.V. Ratnam, Bela Maheshwari.
Advocate Appeared:
For the Appellants : Sridhar Potaraju, Srinivas Kotni, Rohan Garg, Gaichangpou Gangmei, Chahat Raghav, Nisha Pandey, Aayush, Rajat Srivastava, Rajat Shrivastava, Maitreya Mahalay, Maitreya Mahaley, Yimyanger Longkumer.
For the Respondents: T.V. Ratnam, Bela Maheshwari.
IMPORTANT POINT
Even if plea of limitation is not set up as a defence, Court has to dismiss suit if it is barred by limitation.
Headnote:
Civil Appeal @ SLP (Civil) No. 4237 of 2015
Partnership Act, 1932 – Section 42 – Suit for dissolution of Partnership Firm and for rendition of accounts – Even if plea of limitation is not set up as a defence, Court has to dismiss suit if it is barred by limitation – Question of limitation in admitted facts of present case is pure question of law and not mixed question of fact and law because fact regarding death of one of Partners is not disputed – Period of limitation for filing suit for rendition of account is three years from date of dissolution – In present case, firm dissolved in year 1984 by virtue of death of a Partner and suit could only have been instituted within a period of three years from that event – Suit came to be filed in year 1996 and was clearly time-barred – Impugned Judgment set aside – Appeal allowed. (Paras 16, 18, 20, 21 and 22)
Civil Appeals @ SLP (Civil) Nos. 23143-23144 of 2016
Partnership Act, 1932 – Section 42 – Constitution of India – Article 136 – Suit for dissolution of Partnership Firm and for rendition of accounts – Three Courts of competent jurisdiction have recorded concurrent findings on facts in decreeing suit in favour of respondent No. 1- plaintiff – This is not a fit case warranting interference in such a concurrent finding of facts in exercise of extraordinary jurisdiction of Supreme Court under Article 136 of Constitution of India – Appeals dismissed. (Paras 33, 34 and 35)
Facts of the case:
Present appeal is preferred for assailing Judgment dated 27th March, 2014 passed by Division Bench of High Court of Judicature of Andhra Pradesh at Hyderabad, whereby Division Bench allowed LPA No. 47 of 2002 preferred by respondent No. 1-plaintiff.
Findings of Court:
Impugned judgment dated 27th March, 2014 passed by Division Bench in LPA No. 47 of 2002 does not stand to scrutiny and is hereby reversed and set aside.
Result : Appeal allowed in Civil Appeal @ SLP (Civil) No. 4237 of 2015. Appeals dismissed in Civil Appeals @ SLP (Civil) Nos. 23143-23144 of 2016.
Legal Category Hierarchy
Table of Contents
2. Whether death of a partner causes automatic dissolution and if courts must dismiss time-barred suits even when the plea of limitation is not raised as a defense. (Para 8 , 9 , 10 , 12 , 13 )
3. Courts must dismiss suits barred by limitation regardless of pleadings; partnership dissolves automatically on a partner's death unless a contract provides otherwise. (Para 15 , 16 , 17 , 18 , 19 )
4. Under Section 3, Limitation Act, courts must dismiss time-barred suits regardless of pleadings; under Section 42(c), Partnership Act, death of a partner automatically dissolves the firm. (Para 15 , 16 , 17 , 19 )
5. Appeal allowed and impugned judgment reversed regarding the time-barred suit; separate appeals dismissed where concurrent findings of fact existed. (Para 21 , 22 , 34 , 35 )
6. Is a court obligated to dismiss a suit barred by limitation even if the defendant does not raise it as a defense?
Yes. Under Section 3 of the Limitation Act, it is the duty of the court to dismiss any suit instituted after the prescribed period of limitation, regardless of whether the plea of limitation was set up as a defense. (Para 15 , 16 )
7. Does the death of a partner automatically dissolve a partnership firm?
Yes. Pursuant to Section 42(c) of the Partnership Act, 1932, a partnership firm stands dissolved automatically upon the death of a partner, unless there is a contract between the partners to the contrary. (Para 17 , 19 )
8. When must a court decide the issue of limitation at the outset even in the absence of a plea?
When limitation is a pure question of law and the pleadings make it apparent that the suit is barred, the court must decide it at the outset. If it is a mixed question of fact and law, it must be pleaded and proved. (Para 18 )
9. Will the Supreme Court interfere with concurrent findings of fact under Article 136 of the Constitution?
Generally, the Court will not interfere with concurrent findings of fact recorded by three competent courts in the exercise of its extraordinary jurisdiction under Article 136 of the Constitution of India. (Para 34 )
1. Leave granted.
2. The present appeal is preferred for assailing the judgment dated 27th March, 2014 passed by the Division Bench of High Court of Judicature of Andhra Pradesh at Hyderabad, whereby the learned Division Bench allowed LPA No. 47 of 2002 preferred by respondent No. 1-plaintiff.
3. The status and rank of the parties to the lis is as below:
Party Name | Position before this Court | Position in O.S. No. 67 of 1999 |
S. Raghuraj Reddy | Respondent No. 1 | Plaintiff |
M/s Shivraj Reddy and Brothers | Appellant No. 6 | Defendant No. 1 |
Late S. Shivraj Reddy | Through his LRs (Appellant No. 1-5) | Defendant No. 2 |
Dhanraj Reddy | Respondent No. 2 | Defendant No. 3 |
B. Narayan Reddy | Respondent No. 3 | Defendant No. 4 |
4. Respondent No. 1-plaintiff, along with defendant Nos. 2, 3, 4 and deceased M. Balraj Reddy1 [Died in 1984] had constituted a partnership firm-defendant No. 1 namely “M/s Shivraj Reddy and Brothers” (hereinafter being referred to as ‘firm’) on 15th August, 1978 with its primary business being the construction of buildings on a contract basis with respect to the works of the Government and Municipalities.
5. Respondent No. 1-plaintiff instituted O.S. No. 67 of 19972 [Initially filed as O.S. No. 3 of 1996 but later renumbered as (O.S. No. 67 of 1997)] seeking relief of dissolution of the firm and rendition of accounts. The learned II Additional Chief Judge, City Civil Court, Hyderabad (hereinafter being referred to as ‘trial Court’), allowed the original suit filed by respondent No. 1-plaintiff and passed a decree dated 26th October, 1998 declaring the firm-defendant No. 1 to be dissolved and directed defendant Nos. 2 to 4 to tender accounts of the firm from the year 1979 onwards till October, 1998 and further, granted liberty to respondent No. 1-plaintiff to file a separate application seeking appointment of an Advocate Commissioner for taking accounts of the firm and for other appropriate reliefs.
6. Being aggrieved, the firm-defendant No. 1 and defendant No. 2 preferred C.C.C. Appeal No. 35 of 1999 before the High Court of Judicature of Andhra Pradesh at Hyderabad. Learned Single Judge of the High Court vide judgment dated 19th October, 2001 allowed C.C.C. Appeal No. 35 of 1999 on the ground that O.S. No. 67 of 1997 was barred by limitation as one of the partners in subsisting partnership firm, Shri M. Balraj Reddy expired in 1984, therefore the firm stood dissolved immediately on the death of the partner. Since the original suit was filed in 1996, it was barred by limitation.
7. Aggrieved by the decision of learned Single Judge, respondent No. 1-plaintiff preferred LPA No. 47 of 2002 before the learned Division Bench of the High Court, which allowed the appeal and set aside the judgment dated 19th October, 2001 passed by the learned Single Judge in C.C.C. Appeal No. 35 of 1999, observing that the plea of limitation was never raised during the pleadings in the trial Court and learned Single Judge ought not to have dealt with that issue at all. Being aggrieved, appellants have preferred the present appeal by special leave.
Submissions of behalf of the appellants:
8. Learned counsel representing the appellants urged that the suit was filed by respondent No. 1-plaintiff for dissolution of the defendant No. 1-firm and for the rendition of accounts in the year 1996. He referred to the partnership deed dated 25th April, 1978, whereby the firm-defendant No. 1 was constituted and urged that the partnership was a partnership at will. He drew the attention of the Court to Section 42 of the Partnership Act, 1932 (hereinafter being referred to as ‘the Act’) which reads as below:
“42. Dissolution on the happening of certain contingencies
- Subject to contract between the partners a firm is dissolved:
(a) if constituted for a fixed term, by the expiry of the term.
(b) if constituted to carry out one or more adventures or undertakings, by the completion thereof.
(c) by the death of a partner.
(d) by the adjudication of a partner as an insolvent.”
