The majority of partners have the power to withdraw or stay a suit filed by one partner in the name of the firm under Section 12(c) of the Partnership Act, 1932, which provides that any difference arising as to the ordinary matters connected with the business may be decided by the majority of the partners.

Headnote:
PARTNERSHIP - SUIT BY FIRM - WITHDRAWAL OR STAY OF SUIT - MAJORITY OF PARTNERS - POWER TO WITHDRAW OR STAY SUIT - PARTNERSHIP ACT, 1932, SECTIONS 12(C), 18, 19(2)(C), (D).
Fact of the Case:

A suit was filed by a registered firm as the plaintiff. The verification in the plaint was by one of the partners, Makhan Lal Samaddar, who also signed the plaint. The other partners of the firm filed an application to take the plaint off the file or alternatively to withdraw the suit with liberty to institute a fresh suit or in the further alternative to stay the suit. The main ground for the application was that the majority of the partners considered that the suit was bound to fail and was instituted by Makhan Lal Samaddar without any justification or authority and without consulting the other partners.
Finding of the Court:

The court held that the majority of partners had the power to withdraw or stay the suit under Section 12(c) of the Partnership Act, 1932, which provides that any difference arising as to the ordinary matters connected with the business may be decided by the majority of the partners. The court also held that the implied authority of a partner under Section 19(2)(c) and (d) of the Partnership Act, 1932, to compromise or relinquish any claim or portion of a claim by the firm or to withdraw a suit or proceeding filed on behalf of the firm, does not apply to the majority of partners acting under an express contract of partnership providing that in case of any difference their opinion shall prevail.
Issues: 1. Whether the majority of partners have the power to withdraw or stay a suit filed by one partner in the name of the firm? 2. Whether the implied authority of a partner under Section 19(2)(c) and (d) of the Partnership Act, 1932, to compromise or relinquish any claim or portion of a claim by the firm or to withdraw a suit or proceeding filed on behalf of the firm, applies to the majority of partners acting under an express contract of partnership providing that in case of any difference their opinion shall prevail?
Ratio Decidendi: 1. The majority of partners have the power to withdraw or stay a suit filed by one partner in the name of the firm under Section 12(c) of the Partnership Act, 1932, which provides that any difference arising as to the ordinary matters connected with the business may be decided by the majority of the partners. 2. The implied authority of a partner under Section 19(2)(c) and (d) of the Partnership Act, 1932, to compromise or relinquish any claim or portion of a claim by the firm or to withdraw a suit or proceeding filed on behalf of the firm, does not apply to the majority of partners acting under an express contract of partnership providing that in case of any difference their opinion shall prevail.
Final Decision: The court ordered that the plaint be taken off the file and that Makhan Lal Samaddar pay the costs of the application and the costs incurred up to date in the suit to the defendant company.

P. B. MUKHARJI, J.

( 1 ) THIS is plaintiff's application on a Chamber summons to take the plaint off the file or alternatively to withdraw the suit with liberty to institute a fresh suit or in the further alternative to stay the suit.

( 2 ) THE application is from many points of view a peculiar one.

( 3 ) THE suit was filed by the House Limited Agency described as a registered firm as the plaintiff. The verification in the plaint is by Makhan Lal Samaddar a partner of the plaintiff firm. The plaint is also signed by the said part-ner Makhan Lal Samaddar. Makhan Lal Samaddar is admittedly a partner.

( 4 ) THE present applicants calling themselves also as plaintiffs are the other partners of the same plaintiff firm. The partners of the plaintiff firm are Makhan Lal Samaddar, Sm. Ramala Sarkar, Birendra. Kumar Mitra, Sm. Karmarani Bose and Hari Sankar Dutt. The Articles of Partnership are contained in a Deed dated 8-12-1948. The suit was instituted on or about 10-7-1952. The claim in this suit is against a defendant Company by the name Paints Lecquers Ltd. for the recovery of different sums of money like Rs. 26,621-11-0 and other smaller sums like Rs. 2,025/-, Rs. 6,178-12-0, Rs. 15,000/- and Rs. 1,599-4-9. The smaller sums are said to be due by way of allowance to the plaintiff firm as Managing Agents of the defendant Company and for commission.

( 5 ) THE present application is signed and verified by Birendra Kumar Mitra one of the partners of the plaintiff firm.

( 6 ) IN the petition the main case is made on the ground that the majority of the partners consider that the suit is bound to fail and was instituted by Makhan Lal Samaddar without any justification or authority and without consulting the other partners. This is supported by a Reso- lution of the plaintiff firm in a meeting held on 28-7-1952 and attended by all the partners except Makhan Lal Samaddar who did not attend the meeting in spite of notice. The Minutes of the meeting reveal that Makhan Lal Samaddar voluntarily resigned on 9-1-1951 from the duties of the plaintiff's day to day administration of the agency business as from 12-1-1951. This in fact is corroborated by a letter written by Makhan Lal Samaddar dated 9-1-1951 and set out in paragraph 6 of the petition. This letter is not disputed. The Resolution proceeds to state that the partner Birendra Kumar Mitra was thereafter entrusted with the day to day administration in place of Makhan Lal Samaddar and that in spite of this Makhan Lal Samaddar has now chosen to use the name of the firm to launch this litigation. The Resolution further states the fact that the plaintiff firm never demanded payment of the alleged dues on which the suit has now been filed by Samaddar. In fact it was resolved in that meeting that in the best interest of the plaintiff firm and the defendant company the outstanding dues of the firm as settled and worked out by Birendra Kumar Mitra and the Company would be realised in instalments and the defendant Company would be at liberty to pay the agreed sum within a period of three years from that date in equal annual instalments the first of such instalments being payable on or before the 30th June next and the two subse- queht payments within 30-6-1954 and 1955.

( 7 ) BOTH in the Minutes of this meeting as well as in the petition there are serious allegations against Makhan Lal Samaddar and it is alleged that he has been instrumental in launch-ing different suits and proceedings in different Courts and in the name of others.

( 8 ) THE question now before the Court is whether a suit instituted in the name of the plaintiff firm by one partner can be taken off the file or stayed by a majority of other partners in the plaintiff firm.

( 9 ) BEFORE proceeding to discuss the law attention to one more fact is necessary and that is to the specific Clause 24 of the Articles of Partnership which provides :"in case of difference of opinion at any time during the continuance of the partnership t

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Judicial Analysis

1953 Supreme(Cal) 64

HIGH COURT OF CALCUTTAP. B. MukharjiHOUSE LTD. AGENCY - AppellantVersusPAINTS AND LECQUERS LTD. - RespondentSuit 2765 Of 1952Decided On : APRIL 01, 1953

Judicial Analysis

HIGH COURT OF CALCUTTA
P. B. Mukharji
HOUSE LTD. AGENCY - Appellant
Versus
PAINTS AND LECQUERS LTD. - Respondent
Suit 2765 Of 1952
Decided On : APRIL 01, 1953