1971 Supreme(Cal) 248

HIGH COURT OF CALCUTTA
B. C. MITRA, A. K. BASU
MURLIDHAR HASPURIA - Appellant
Versus
BANSIDHAR HALWAI - Respondent
Appeal From Original Decree 123  Of  1971
Decided On : DECEMBER 01, 1971

An agreement that does not provide for sharing of profits, agency, or liability for losses does not constitute a partnership agreement.

Headnote:

PARTNERSHIP - AGREEMENT - INTERPRETATION - DISSOLUTION - TRESPASS - DAMAGES - SPECIFIC PERFORMANCE - ORAL AGREEMENT - PLEADING - PROOF - EVIDENCE - ADMISSIBILITY - CUSTOM OF TRADE - AGENCY - INCOME-TAX ACT, SECTION 26-A - INDIAN PARTNERSHIP ACT, SECTIONS 4, 6.

Fact of the Case:

The respondent filed a suit claiming specific performance of a verbal agreement, possession of various articles of the business carried on under the name and style of "murlkihar Apnrwalla," alternatively a decree for Rs. 20,500/- declaration that the sole owner of the business, alternatively decree for dissolution of the partnership business, and for various other reliefs. In this suit a judgment and preliminary decree was passed on February 3, 1971. for dissolur-tion of the partnership, a receiver of the partnership assets was appointed and a decree for a sum of Rs. 1000/- as damages was also passed in favour of the respondent for wrongful trespass by the appellant. This appeal is directed against this judgment and decree.

Finding of the Court:

1. The agreement dated December 1, 1961, is of great importance in this appeal. There is nothing in this agreement which provides for sharing of profits between the parties. There is not even any indication as to the share of the parties in the profits of the business. 2. The terms of the agreement show that the respondent was to be in exclusive charge of the business for a period of 7 years, that he alone was to provide the funds for carrying on the business, that he alone was to be liable for the loss during this period, and that he would be entitled to appropriate the entire profits of the business subject to payment of Rupees 125/- per month to the appellant. 3. The respondent has claimed and has obtained a decree for dissolution of a partnership in which he had a one-third share and the appellant had a two-third share. But there is nothing either in the pleading or in evidence that after the agreement came to an end, a fresh agreement was entered into between the parties by which the appellant was to get a two-third share in the business, and the respondent was entitled to the remaining one-third. 4. The position, therefore, is that the relationship between the parties so far as the business was concerned remained altogether undefined except to the extent it was controlled and governed by the terms of the agreement itself. In this view of the matter, we do not see how the respondent can obtain a decree for dissolution of partnership, in Which the appellant and the respondent had a two-third and one-third share respectively. 5. The business carried on at the shop at No. 33, Princess Street was a proprietary business of the appellant. There is not the least evidence in the agreement itself that the business was a partnership business or that such a partnership business was to continue during the period covered by the agreement. 6. Thirdly, there is not the slightest evidence to show that upon termination of the agreement the alleged partnership between the parties was to revive, with a 2/3rd -share to the appellant and 1/3rd share to the respondent. 7. The respondent did not become a partner of the appellant merely because he was paid 1/3rd share of the profits. The real intention of the parties does not appear to us to have been to constitute an agency between the appellant and respondent. 8. On the other hand, the evidence is overwhelming in support of the appellant's contention that he was a sole proprietor of the business. 9. The plaint suffers from another very serious deficiency. It has not made out a case that the oral partnership agreement between the parties was kept in abeyance for the duration of the agreement, and that this partnership was revived or came into existence upon termination of the agreement or upon expiry of the period covered by the agreement. 10. The trial Court failed to consider the importance of the written agreement between the parties of December 1, 1961. The case of partnership attempted to be proved by the respondent should have been closely examined in the light of the provisions in the agreement which is an admitted document. 11. The terms and stipulations in the agreement plainly negative any partnership between the parties. 12. Furthermore, there is absolutely no pleading or proof that upon termination of the agreement and upon expiry of the period covered by the same, the alleged oral partnership stood revived. Nor is there any evidence to prove that the intention of the parties was that the partnership should remain in abeyance during the period covered by the agreement. 13. Even if there was a partnership agreement between the parties before the written agreement, and in our view there is no evidence of such, it came to an end upon execution of the agreement. 14. On the materials on record and on the plaint as framed, there was no partnership between the parties at the time of institution of the suit and a decree for dissolution of partnership could not, therefore, be passed.

Issues: 1. Whether the agreement dated December 1, 1961, constituted a partnership agreement between the parties? 2. Whether the respondent was a partner in the appellant's business? 3. Whether the oral partnership agreement between the parties was kept in abeyance for the duration of the written agreement and revived upon termination of the same? 4. Whether the trial Court erred in passing a decree for dissolution of partnership? 5. Whether the trial Court erred in awarding damages for wrongful trespass?

Ratio Decidendi: 1. The agreement dated December 1, 1961, did not provide for sharing of profits between the parties, nor did it indicate their respective shares in the profits of the business. The respondent was to be in exclusive charge of the business for 7 years, provide the funds, be liable for losses, and appropriate the entire profits subject to payment of Rs. 125/- per month to the appellant. These terms are not indicative of a partnership agreement. 2. After the agreement came to an end, there was no fresh agreement entered into between the parties by which the appellant would get a two-third share in the business and the respondent would be entitled to the remaining one-third. The relationship between the parties remained undefined, except as controlled by the terms of the agreement itself. 3. The business carried on at the shop was a proprietary business of the appellant. There was no evidence that it was a partnership business or that it was to continue as such during the period covered by the agreement. 4. There was no evidence that upon termination of the agreement, the alleged partnership between the parties was to revive, with a 2/3rd -share to the appellant and 1/3rd share to the respondent. 5. The respondent did not become a partner of the appellant merely because he was paid 1/3rd share of the profits. The real intention of the parties was not to constitute an agency between the appellant and respondent. 6. The evidence overwhelmingly supported the appellant's contention that he was a sole proprietor of the business. 7. The plaint did not make out a case that the oral partnership agreement between the parties was kept in abeyance for the duration of the agreement and revived upon termination of the same. 8. The trial Court failed to consider the importance of the written agreement between the parties of December 1, 1961, and closely examine the case of partnership attempted to be proved by the respondent in light of the provisions in the agreement. 9. The terms and stipulations in the agreement plainly negated any partnership between the parties. 10. There was absolutely no pleading or proof that upon termination of the agreement and upon expiry of the period covered by the same, the alleged oral partnership stood revived. Nor was there any evidence to prove that the intention of the parties was that the partnership should remain in abeyance during the period covered by the agreement. 11. Even if there was a partnership agreement between the parties before the written agreement, it came to an end upon execution of the agreement. 12. On the materials on record and on the plaint as framed, there was no partnership between the parties at the time of institution of the suit and a decree for dissolution of partnership could not, therefore, be passed.

Final Decision: The appeal is allowed. The cross-objection is dismissed. The judgment and decree of the trial Court are set aside. The suit is dismissed. The respondent to pay to the appellant the costs of the appeal and also of the trial Court.