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IN THE HIGH COURT OF JUDICATURE AT MADRAS
G.K. ILANTHIRAIYAN, J.
K. Murali (Died) & Others - Appellant
Versus
K. Karunanithi & Another - Respondent
S.A. No. 1554 of 2003 & C.M.P. Nos. 10302, 24134 & 24136 of 2019
Decided On : 02-06-2020
Partnership Act – Section 37 - Civil Procedure Code ,1908 - Section 100 - Permanent injunction - Deed of partnership unless - Whether the Courts below were right in refusing decree for injunction in favor of the plaintiff when admittedly the plaintiff was holding a valid license on the date of institution of the suit - plaintiff and the defendant are brothers - Their father had been running a wine shop in the premises situated at - Thereafter their father entered into a partnership with the plaintiff to run the liquor shop under the name and style of Reagan Wines and got it registered with Registrar of Firm in - According to partnership deed plaintiff would be entitled toof the profit and his father would entitle of the profit - Their trade license stands in the name of the plaintiff - While being so on his father met with a road accident and died on - He died leaving behind his two sons viz. plaintiff and the defendant and his wife and four daughters - Held, In case on hand, admittedly the license was issued in favour of one of the partner viz., the plaintiff’s father - Therefore plaintiff cannot run business in the firm name and it is illegal. Therefore, the judgments cited by the learned counsel appearing for the plaintiff are not helpful to the case of the plaintiff - Admittedly, the plaintiff and his father entered into the partnership deed under Ex.A.2. Thereafter his father died and therefore, his legal heirs are entitled to become the partner of the firm as per the clause 11 of the partnership deed. The clause 11 of the partnership deed - Second appeal stands dismissed
Certainly. Based on the provided legal document, here are the key points:
The case concerns a dispute over the continuation and legal status of a partnership firm named "Reagan Wines," which was initially registered with the involvement of the plaintiff's father, who was a partner (!) (!) .
The partnership deed stipulated that upon the death of a partner, their legal heirs could become partners under the same terms, but there was no evidence of reconstitution or formal re-entry of the heirs into the partnership (!) (!) .
The license for the liquor shop was issued solely in the name of the deceased partner’s father, and there was no record of the license being transferred or obtained in the name of the partnership after his death, rendering the continuation of the business in the firm's name illegal (!) (!) (!) .
The plaintiff, who is the son of the deceased partner, contended that he was entitled to run the business and seek an injunction based on the partnership deed and the license held in his father's name. However, the courts found that the partnership was not properly reconstituted after the death, and the business was not legally carried on as a partnership (!) (!) (!) .
The courts below dismissed the suit for injunction, reasoning that the partnership had effectively dissolved upon the death of the partner and that the legal heirs had not taken steps to re-enter the partnership or to be recognized as partners (!) (!) .
The appellant’s argument that the suit was maintainable on the basis of the provisions related to the rights of legal heirs and the continuation of profits was rejected, as the legal formalities for reconstitution were not fulfilled, and the business was being run without proper legal authority (!) (!) (!) .
The courts emphasized that dealing in liquor without proper license in the name of the partnership or with the consent of licensing authorities was illegal, and thus, the continuation of the business under the partnership was unlawful (!) (!) (!) .
The courts also noted that on the death of a partner in a firm with only two partners, the firm is deemed to be dissolved unless there is a valid agreement to continue, and the legal heirs do not automatically become partners unless they formally reconstitute the firm (!) (!) (!) .
The appeal was dismissed, and the judgments of the lower courts were upheld, confirming that the suit for injunction was not maintainable given the circumstances, and that the legal heirs’ rights were limited to claims for profits or settlement rather than ongoing partnership rights (!) (!) .
The court clarified that amendments to the pleadings or prayers, such as deleting references to the firm or changing the business location, were not permitted at the late stage of proceedings, especially when the suit was filed in a personal capacity and the partnership was not legally reconstituted (!) (!) (!) (!) .
In summary, the legal findings revolve around the invalidity of continuing the partnership business without proper reconstitution after the death of a partner, the illegality of operating a liquor business without appropriate licensing in the partnership's name, and the limited rights of legal heirs in such scenarios. The courts’ decisions affirm that the business was not legally sustained as a partnership post the partner’s demise, leading to the dismissal of the suit and the appeal.
JUDGMENT
(Prayer: This Second Appeal is filed under Section 100 of Civil Procedure Code against the judgment and decree dated 26.06.2003 made in A.S.No.11 of 2003 on the file of the Additional District Court, Pondicherry, confirming the judgment and decree dated 30.01.2003 made in O.S.No.121 of 2001 on the file of the Principal Subordinate Court, Pondicherry.)
1. This second appeal is directed as against the judgment and decree dated 26.06.2003 passed in A.S.No.11 of 2003 by the learned Additional District Judge, Pondicherry, confirming the judgment and decree dated 30.01.2003 passed in O.S.No.121 of 2001 by the learned Principal Subordinate Judge, Pondicherry.
2. For the sake of convenience, the parties are referred to as per their ranking in the trial Court.
3. The case of the plaintiff in brief is as follows:-
3.1. The suit is filed for permanent injunction. The plaintiff and the defendant are brothers. Their father had been running a wine shop in the premises situated at R.S.No.2/1, Villupuram Main Road, Hadagadipet, Pondicherry. Thereafter, their father entered into a partnership with the plaintiff to run the liquor shop under the name and style of “Reagan Wines” and got it registered with Registrar of Firm in No. 187/97 dated 08.07.1997. According to the partnership deed, the plaintiff would be entitled to 75% of the profit and his father would entitle to 25% of the profit. Their trade license stands in the name of the plaintiff. While being so, on 03.02.2001, his father met with a road accident and died on 07.02.2001. He died leaving behind his two sons viz., the plaintiff and the defendant and his wife and four daughters. On the demise any one of the partner, their respective legal heirs would step into the shoes of the partners. Accordingly, the defendant is entitled to have 1/7 share out of 1/4 share of their father, in the partnership firm. However, the plaintiff alone had been running the said business by raising loan from the third parties and purchased stock on credit to improve the business. While being so, on 11.03.2001, the defendant along with henchmen attempted to trespass into suit property and threatened to thrown out the plaintiff from the business premises. Hence the suit.
4. Per contra, the defendant by resisting the same filed written statement by stating that his father never entered into partnership with the plaintiff. The entire businesses are joint family property conducted in the name and style of “Reagan Wines” as such all the legal heirs of the deceased father have their respective equal share. During his life time, the business was run with the help of the plaintiff and the defendant. Therefore, no point of time, the plaintiff was alone operated the business that too with the 75% share of the wine shop. Further stated that one co-sharer cannot restrain another co-sharer from interfering with the joint business by way of injunction and prayed for dismissal of the suit.
5. On the side of the plaintiff, he examined P.W.1 to P.W.4 and were marked Ex.A.1 to Ex.A.20. On the side of the defendant, he examined D.W.1 & D.W.2 and were marked Ex.B.1 to Ex.B.17. The witness document was marked as Ex.X.1. On perusal of the material produced on record and on considering both the oral and documentary evidence adduced by the respective parties and also the submissions made, the trial Court dismissed the suit filed by the plaintiff. Aggrieved by the same, the plaintiff preferred an appeal suit in A.S.No.11 of 2003 before the III Additional District Judge, Pondicherry, and the first appellate Court also dismissed the appeal by confirming the judgment and decree passed by the trial Court. Aggrieved by the same the plaintiff filed this present second appeal.
6. At the time of admission of this second appeal on 15.09.2003, the following substantial questions of law were formulated for consideration:-
“1. Whether the Courts below were right in refusing the decree for injunction in favour of the plaintiff when admittedly the
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