HIGH COURT OF CALCUTTA
Mahitosh Majumdar, J.
Gobardhan Chakraborty
Vs
Abani Mohan Chakraborty
Second Appeal No. 86 of 1975
Jaharlal Mukherjee
Vs
Abani Mohan Chakraborty
Second Appeal No. 1788 of 1972
Decided on : February 21, 1990
PARTNERSHIP - Agreement - Legality - Cinema business - Licence - Transfer - Prohibition - Partnership agreement entered into for carrying on cinema business - Licence granted to one of the partners - Agreement providing for sharing of profits and losses between partners - Whether agreement legal - Whether partnership valid.
Fact of the Case:
The plaintiff and the defendants entered into a partnership agreement for carrying on cinema business. The defendant no. 1 obtained a temporary licence for three months for running a cinema hall. The partnership agreement provided for sharing of profits and losses between the partners. The defendant no. 1 claimed that the partnership agreement was illegal as it involved a transfer of the licence, which was prohibited by the West Bengal Cinema Regulations Act, 1954 and the rules framed thereunder. The plaintiff filed a suit for dissolution of partnership and for accounts.
Finding of the Court:
The trial court held that the partnership agreement was legal and valid and decreed the suit. The first appellate court upheld the decision of the trial court. The defendants appealed to the High Court.
Issues: 1. Whether the partnership agreement was void on the ground of infringement of the terms of licence? 2. Whether the partnership agreement was opposed to Public policy in terms of s. 23 of the Indian Contract Act and the agreement itself is a partnership agreement? 3. Whether the Limitation Clause applies and the suit is barred by limitation?
Ratio Decidendi: 1. The High Court held that the partnership agreement was illegal and void as it involved a transfer of the licence, which was prohibited by the West Bengal Cinema Regulations Act, 1954 and the rules framed thereunder. The court held that the partnership was formed in contravention of the statutory provisions and was, therefore, illegal. The court further held that the partnership being illegal, no suit for settlement of account or other reliefs would lie. 2. The High Court held that the partnership agreement was opposed to public policy in terms of s. 23 of the Indian Contract Act as it involved a contravention of the statutory provisions. The court held that the partnership was illegal and void. 3. The High Court held that the suit was barred by limitation as it was filed more than three years after the closure of the partnership firm.
Final Decision: The High Court allowed the appeal, set aside the judgment and decree of the courts below, and dismissed the suit.
These appeals are directed against the judgment and decree dated June 10, 1972 passed by the Additional District Judge, 10th Court, Alipore, in Title Appeal Nos. 593 of 1971 and 553 of 1971 affirming those dated April 30, 1971 passed by the Munsif, 3rd Court of Baruipur 24-Parganas in Title Suit No. 290 of 1969.
2. The defendant no. 1 has preferred S. A. No. 86 of 1973 while defendant no. 2 has preferred S. A. 1788 of 1972 and plaintiff is the respondent no. 1 in both the appeals. These two appeals are taken up for hearing together.
3. The plaintiff instituted the suit for dissolution of partnership and for accounts or in the alternative, for accounts of the dissolved firm and for final decree of accounting and also for appointment of a Receiver and also for injunction.
The plaintiff's case, in brief, is as follows :-
4. That the plaintiff and the defendants no. 1 and 2 are the partners of a Cinema business run under the name and style of Mahamaya Talkies at Dakshin Barasat; that the plaintiff has experience in the cinema line business, the defendant no. 1 had land suitable for installation of cinema hall and the defendant no. 2 owned a projector machine; those three persons entered into a partnership for carrying on the said cinema business and partnership agreement was thus entered into by and between the parties. The Deed of Partnership was drawn up on June 5, 1963 duly executed by the said three partners; that the terms of the said deed, inter alia, provides that the defendant no. 1 Gobardhan Chakraborty, was to get every day 7.1/2 of the net sale on that particular date irrespective of profit and loss, the plaintiff Abani Mohan Chakraborty, was to get after deduction as stated above, 10% of the net profits of the said partnership business and the balance was to be taken by the defendant no. 2, Jahar Lal Mukherjee. At the close of the year, the first part, i.e. the defendant no. 1 was to get 29.1/2% of the net profits, the second part i.e. the defendant no. 2 was to get 58% of the net profits and the remaining 12.1/2% was to go to the third party, viz., the plaintiff. The plaintiff raised a grievance that he did not receive his share of profits and so he made a formal demand for accounts. The cinema shows continued till about 17th February, 1967. Further claim of the plaintiff is that he put in his labour and also supplied a few furniture and fittings for the said business. On such allegations, the plaintiff claims for reliefs as mentioned hereinbefore.
5. The defendants filed separate written statements. The defendant no. 1 first took the plea of limitation and also pleaded that as he was not a sharer in the net profits of the business, he cannot be treated as a partner and since he is not a partner, he is not liable to render accounts, as demanded by the plaintiff. The defendant no. 1 next contended that even if there was any partnership agreement that could only be treated as partnership at will and the same was dissolved on May 8, 1966 by a Notice. The defendant no. 1 further asserted that on September 15, 1966 he purchased the material and furnitures from the defendant no. 2 and also referred to the arbitration clauses in the partnership agreement and claimed that the suit does not lie.
6. The defendant no. 2 in his written statement while denying the plaint assertion pleaded limitation. His next contention is that the agreement dated June 5, 1963 did not constitute a legal partnership agreement as the same was opposed to statute and public policy. The said agreement, according to the defendant no. 2 should be treated as void on the ground that the licence was personal and not transferable and the licensee had no right to enter into any valid and legal partnership under the terms and conditions of the licence. His further case is that the plaintiff was more an employee and not a partner. Whatever agreed to be given to the plaintiff was in lieu of remuneration. The defendant no. 1 had only a temporary licence for thr
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