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1955 Supreme(HP) 12
HIGH COURT OF HIMACHAL PRADESH
RAMABHADRAN, J.
Bijai Ram Kanshi Ram
Versus
Jai Ram Ganga Ram
First Appeals Nos.37 and 34 of 1951
Decided On : 10-08-1955
D.K. Mahajan, D.N. Awasthy and D.R. Alluwalia, for Appellant (Bijai Ram Kanshi Ram), Tek Chand and H.C. Anand, for Respondent (Jai Ram Ganga Ram).
A suit in the name of a dissolved firm is maintainable with respect to transactions entered into before the date of dissolution. The firm continues to exist for all purposes necessary for its winding up, one of these being the recovery of moneys due to it.
Headnote:
PARTNERSHIP - SUIT FOR RECOVERY OF MONEY - DISSOLUTION OF FIRM - WHETHER SUIT MAINTAINABLE - NECESSARY PARTIES - RENDITION OF ACCOUNTS - INTEREST - WHETHER ALLOWABLE.
Fact of the Case:
Jai Ram and Ganga Ram filed a suit against Bijai Ram Kanshi Ram for the recovery of Rs.30,534/10/-. The plaintiffs' case was that they were carrying on business as "Firm Jai Ram Ganga Ram", while the defendants carried on business in the name of "Firm Bijai Ram and Co.". On 31-3-1936, the latter took over the assets and liabilities of the former firm for a sum of Rs.26,054/13/3. They also took over the business of a third firm styled as "Firm Daya Ram Jai Ram." In place of the three firms, a new firm styled "M/s Bhandari Bijai Ram Kanshi Ram and Co." came into existence with a capital of Rs.16,000/-. Bijai Ram Kanshi Ram had eight-anna share in the firm, while Jai Ram Ganga Ram and Daya Ram had four-anna share each. The plaintiffs' case was that the sum of Rs.26,054/13/3, plus interest thereupon, was due to them from the defendants less a sum of Rs.2,420/8/3, for which they had been given credit by the defendants.
Finding of the Court:
The Court found that the suit, as framed, was competent, that Ram Lal, Daya Ram and Ved Vrat were not necessary parties and further that Bijai Ram and Kanshi Ram constituted a joint Hindu family. It also found that Bijai Ram Kanshi Ram took over the assets of the three firms, i.e (1) Bijai Ram and Co. (2) Daya Ram Jai Ram and (3) Jai Ram Ganga Ram, for a sum of Rs.1,04,000/- and invested the same as their personal capital in the new firm, "Bhandari Bijai Ram Kanshi Ram and Co." It also came to the conclusion that Bijai Ram Kanshi Ram undertook to pay the sum of Rs.26,054/13/3 to Jai Ram Ganga Ram. This figure was arrived at after adjusting a sum of Rs.9,760/- due to Bijai Ram Kanshi Ram from Jai Ram Ganga Ram. After allowing for the sum of Rs.2,420/8/3, credit admittedly afforded to the plaintiffs, the learned District Judge granted the plaintiffs a decree for Rs.23,634/5/-. Interest was disallowed.
Issues: 1. Whether the suit was maintainable after the dissolution of the firm? 2. Whether Ram Lal, Daya Ram and Ved Vrat were necessary parties to the suit? 3. Whether the proper course for the plaintiffs was to sue for the rendition of accounts? 4. Whether the plaintiffs succeeded in establishing that the defendants took upon themselves the liability to pay them the sum of Rs.26,054/13/3? 5. Whether the plaintiffs were entitled to interest?
Ratio Decidendi: 1. A suit in the name of a dissolved firm is maintainable with respect to transactions entered into before the date of dissolution. The firm continues to exist for all purposes necessary for its winding up, one of these being the recovery of moneys due to it. 2. The partners of the dissolved firm are not necessary parties to a suit for the recovery of a debt due to the firm, unless the debt is an item in the partnership accounts of the new firm. 3. Where the assets and liabilities of a dissolved firm are taken over by a new firm, the proper course for the plaintiffs is to sue for the specific amount due to them, and not for the rendition of accounts. 4. The plaintiffs succeeded in establishing that the defendants took upon themselves the liability to pay them the sum of Rs.26,054/13/3, as the sum represented the balance of a settled account and had nothing to do with the business transactions of the new firm. 5. The plaintiffs were entitled to interest on the sum of Rs.26,054/13/3 from the date of the taking over of the assets and liabilities of the dissolved firm till the date of the institution of the suit.
Final Decision: The appeal of Kanshi Ram (First Appeal No.37 of 1951) was dismissed with costs. The appeal of Jai Ram Ganga Ram (First Appeal No.34 of 1951) was allowed and the plaintiffs were awarded a sum of Rs.6,900/- as interest, over and above the sum decreed by the District Judge.
On 31-3-1936, the latter took over the assets and liabilities of the former firm for a sum of Rs.26,054/13/3. They also took over the business of a third firm styled as "Firm Daya Ram Jai Ram."
In place of the three firms, a new firm styled "M/s Bhandari Bijai Ram Kanshi Ram and Co." came into existence with a capital of Rs.16,000/-. Bijai Ram Kanshi Ram had eight-anna share in the firm, while Jai Ram Ganga Ram and Daya Ram had four-anna share each. The plaintiffs case was that the sum of Rs.26,054/13/3, plus interest thereupon, was due to them from the defendants less a sum of Rs.2,420/8/3, for which they had been given credit by the defendants.
2. The suit was resisted by Kanshi Ram on various grounds. In the first place, he contended that the suit, as filed, was defective, since it purported to have been instituted on behalf of Firm Jai Bam Ganga Ram, which had already been dissolved. He maintained that Ganga Ram was a necessary party to the suit.
In the second place, he pointed out that his father, Bijai Ram, had died long before the institution of the suit and, consequently, he (Bijai Ram) could not be sued. He urged that his brother, Ram Lal, who was joint with him, should have been impleaded as a defendant. Another objection, taken by him, was that all the partners of the former firm Bijai Ram and Co. should have been made parties to the suit.
He further pleaded that since the Firm Bijai Ram Kanshi Ram and Co. had been dissolved, according to the plaintiffs, on 4-12-1994B., the proper course for the plaintiffs would have been to sue for the rendition of accounts. Kanshi Ram further categorically denied that he had purchased the plaintiffs firm, or agreed to pay them any amount.
According to him, the business of the firm Bijai Ram Kanshi Ram and Co. was being run by the plaintiffs, who had all the account books in their possession. The plaintiffs did not contribute the sum of Rs.4,000/-, their share of the capital of the new firm, as alleged by them. Consequently, Kanshi Ram contended that the plaintiffs were not entitled to any relief.
3. The learned District Judge, who tried the suit, found that the suit, as framed, was competent, that Ram Lal, Daya Ram and Ved Vrat were not necessary parties and further that Bijai Ram and Kanshi Ram constituted a joint Hindu family. He also found that Bijai Ram Kanshi Ram took over the assets of the three firms, i.e (1) Bijai Ram and Co. (2) Daya Ram Jai Ram and (3) Jai Ram Ganga Ram, for a sum of Rs.1,04,000/- and invested the same as their personal capital in the new firm, "Bhandari Bijai Ram Kanshi Ram and Co."
He also came to the conclusion that Bijai Ram Kanshi Ram undertook to pay the sum of Rs.26,054/13/3 to Jai Ram Ganga Ram. This figure was arrived at after adjusting a sum of Rs.9,760/- due to Bijai Ram Kanshi Ram from Jai Ram Ganga Ram. After allowing for the sum of Rs.2,420/8/3, credit admittedly afforded to the plaintiffs, the learned District Judge granted the plaintiffs a decree for Rs.23,634/5/-. Interest was disallowed.
4. Aggrieved by this decision, both the parties have come up in appeal. First Appeal No.34 of 1951 has been filed by Jai Ram Ganga Ram and the relief sought for therein is that the plaintiffs be awarded interest as claimed by them. First Appeal No.37 of 1951 has been filed by Kanshi Ram and the prayer made therein is that the decision of the trial Court be set aside and the suit be dismissed.
5. These appeals were heard at Bilaspur in the March circuit, but judgment could not be delivered earlier, since there was one other connected appeal (First Appeal No.12 of 1950), which could be taken up at Simla
