2001 Supreme(P&H) 1165
ANDHRA PRADESH HIGH COURT
C.Y. Somayajulu, J.
M/s. Shivraj Reddy and Brothers, Hyderabad and another - Petitioners
Versus
S. Raghu Raj Reddy and others - Respondents
C.C.C. Appeal Nos. 35 and 40 of 1999.
Decided On : 19 October, 2001
For the Appellants :Mr. Mahmood Ali, Advocate.
For the Respondents:M/s. Prakash, Addl. Advocate General and P. Rajender Reddy, Advocate.
Headnote:
Partnership - Dissolution of Firms - Partnership Act, Income Tax Act - Sections 18, 25, 42, 68 of Partnership Act - Plaintiff filed suits for dissolution of two partnership firms and rendition of accounts - Plaintiff's share capital invested by his eldest brother from joint family income - Defendants contended that joint family had no income fetching property and plaintiff not entitled to claim any right as a partner - Defendants also contended that suits for partition and dissolution not maintainable - Court held in favor of plaintiff - Appeal by defendants - Court found plaintiff to be a partner in both firms - Plaintiff entitled to seek dissolution and rendition of accounts - No evidence of reconstitution of firm after death of partner - Suit for dissolution barred by time - Plaintiff not entitled to relief in one suit - Plaintiff entitled to relief in other suit
Fact of the Case:
Plaintiff filed suits for dissolution of two partnership firms and rendition of accounts. Plaintiff's share capital in the firms was invested by his eldest brother from joint family income. Defendants contended that joint family had no income fetching property and plaintiff not entitled to claim any right as a partner. Defendants also contended that suits for partition and dissolution not maintainable.
Finding of the Court:
Court held in favor of plaintiff. Court found plaintiff to be a partner in both firms and entitled to seek dissolution and rendition of accounts. Court found no evidence of reconstitution of firm after death of partner. Court held suit for dissolution barred by time. Plaintiff not entitled to relief in one suit but entitled to relief in other suit.
Issues: Plaintiff's entitlement as a partner, maintainability of suits for partition and dissolution, evidence of reconstitution of firm after death of partner, limitation of suit for dissolution
Ratio Decidendi: Plaintiff's entitlement as a partner established by evidence of partnership agreement and registration. Suit for dissolution barred by time as no evidence of reconstitution of firm after death of partner. Plaintiff entitled to relief in one suit but not in other suit.
Final Decision: Appeal allowed in one suit and dismissed in other suit.
C.Y. Somayajulu, J. - These appeals are being disposed of by a common Judgment because common questions of law and fact arise for consideration, though some parties only are common in both the suits.
2. 1st respondent in both these appeals is the plaintiff in both the suits. He filed two suits for dissolution of two partnership firms and rendition of accounts. In C.C.C.A. No. 35 of 1999 the case of the plaintiff is that he, Shiva Raj Reddy (his eldest brother), Balraj Reddy and others had formed themselves into a partnership firm in the name and style of Shiv Raj Reddy and Brothers for carrying on business by undertaking construction work contracts. In C.C.C.A. No. 40 of 1999 his case is that he, Shiva Reddy his eldest brother and others formed a firm Shiva Raj Reddy & Brothers, B. Arjun Reddy & Co., to carry on business in film production, distribution, exhibition etc., and constructed Aradhana Theatre. His case in both the suits is that his share capital in the two firms was invested by his eldest brother Shiva Raj Reddy, the Karta of their joint family, from out of the share of his income from the joint family property and that those two firms have been submitting income tax returns and his share of profits were being given to him till 1991 and thereafter Shiva Raj Reddy stopped paying his share of profits and hence the suits.
3. Shiva Raj Reddy, who is the 2nd Defendant in O.S. No. 67 of 1997 out of which C.C.C.A. No. 35 of 1999 arises and 1st defendant in O.S. No. 121 of 1997 out of which C.C.C.A. No. 40 of 1999 arises filed written statements on his behalf and on behalf of two firms which are shown as 1st defendant in O.S. No. 67 of 1997 and 9th defendant in O.S. No. 121 of 1997, that he undertook contract works with his own money in his name and that the joint family of himself and plaintiff had no property or income, and since the name Shiva Raj Reddy and Brothers brought him good luck he is carrying on business in that name only showing the plaintiff and some of his relatives nominally as partners in his business.
4. Defendants 3 and 4 in O.S. No. 67 of 1997 and defendants 2 to 4 in O.S. No. 121 of 1997 adopted the written statement filed by Shiva Raj Reddy for himself and on behalf of the firms. Defendants 5 to 8 in O.S. No. 121 of 1997 chose to remain ex parte.
5. In both the suits plaintiff besides examining himself as P.W.1 examined his auditor as P.W.2 and marked Exs.A-1 to A-20 in O.S. No. 67 of 1997 and Exs.A-1 to A-13 in O.S. No. 121 of 1997. Only Shiva Raj Reddy was examined on behalf of the defendants in both the suits as D.W.1. No documentary evidence was adduced in O.S. No. 67 of 1997 by defendants but they got marked Ex.B1 in O.S. No. 121 of 1997.
6. By the decrees under appeal, the trial Court, negativing the contention of Shiva Raj Reddy held in favour of the plaintiff in both the suits. Hence these appeals by Shiva Raj Reddy on behalf of himself and the firms, hereinafter called the appellants.
7. The contention of Mr. Mahmood Ali, learned counsel for the appellants, is that since the averments in the plaint and the evidence of plaintiff as PW1 in both the suits is that his share of capital contribution in the firms came from out of the income of the joint family, and since the contention of Shiva Raj Reddy is that the joint family had no property much less income fetching property, and since there is no presumption that a joint family possesses property, the burden of proof to establish that the joint family has property and was deriving income therefrom is on the plaintiff and since the plaintiff failed to adduce any such evidence, the contention that plaintiff invested some amounts in the two firms cannot be believed or accepted. It is his contention that since the evidence of Shiva Raj Reddy, as D.W.1, shows that the firms were brought into existence for income tax purpose and to elevate the status of his brothers, plaintiff is not entitled to claim any right as a partner in the firms. He r