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1960 Supreme(All) 42

IN THE HIGH COURT OF ALLAHABAD
R. N. Gurtu, J.
MATHURA DATT BHATT - Appellant
Versus
PREM BALLABH KHULBA - Respondents
Ex. First Appeal 332 Of 1956
Decided On : 03/03/1960

Advocates Appeared:
A.P.Pandey, N.D.Pant

A partner is not necessarily in a fiduciary relationship with the other partners in regard to every transaction and his acts. Whether a partner is or is not so acting at any given moment must depend upon the facts.

Headnote:

PARTNERSHIP - FIDUCIARY RELATIONSHIP - ACCOUNTING - EXECUTION OF DECREE - ARREST AND DETENTION - SECTION 51 C. P. C. - INTERPRETATION - MAIN LEGAL POINT - A partner is not necessarily in a fiduciary relationship with the other partners in regard to every transaction and his acts. Whether a partner is or is not so acting at any given moment must depend upon the facts.

Fact of the Case:

A decree-holder applied for execution of a decree by arrest and detention of the judgment debtor, a partner in a dissolved partnership, under Section 51 C. P. C., alleging that the decree was for a sum for which the judgment debtor was bound, in a fiduciary capacity, to account. The court below directed a warrant of arrest to be issued against the judgment debtor.

Finding of the Court:

The court below held that the judgment debtor was an accounting party and that the decree was for a sum for which the judgment debtor was bound, in a fiduciary capacity, to account, and therefore fulfilled the condition laid down in Sub-clause (c) of the proviso to Section 51 C. P. C.

Issues: Whether a partner stands in a fiduciary capacity to the other partner or not.

Ratio Decidendi: The court examined the relevant provisions of the Indian Partnership Act, the Indian Trusts Act, and various case laws to determine the nature of the relationship between partners and whether it is fiduciary in character. The court noted that the relationship of partners arises from contract and may be varied by agreement between the parties. The court also referred to the definition of a fiduciary relationship in Corpus Juris Secundum and the nature of obligations between partners as implied and enforced by law.

Final Decision: The court held that it cannot be said that there is no fiduciary relationship between the partners, but whether a partner is or is not so acting at any given moment must depend upon the facts. The court found that the respondent failed to show that the appellant was liable in a fiduciary capacity to account to him and allowed the appeal, setting aside the order of the court below.

R. N. GURTU, J.

( 1 ) THIS is an appeal by the judgment debtor.

( 2 ) AN application for execution of the decree by arrest and detention, in the civil prison, of the judgment debtor appellant was made by the decree-holder respondent. The decree was for a little over Rs. 20,000/ -. It was passed in a suit for accounts of a dissolved partnership which had existed between the parties to the decree. The decree-holder invoked Section 51 C. P. C. and alleged that the decree was for a sum for which the judgment debtor was bound, in a fiduciary capacity, to account and that, therefore, he could be detained in the civil prison under Sub-clause (c) of the proviso to that section.

( 3 ) THE court below directed a warrant of arrest to be issued against the judgment debtor as prayed for by the decreeholder. It held that the finding of the court which had passed the decree was that more money was due from the judgment debtor, the accounting partner, than the latter was prepared to admit and that even after the date of dissolution of partnership the judgment debtor, (accounting partner) had not kept a cash balance safe for payment to the decreeholder partner. The court below also held that the partnership was dissolved on 10-12-1952 and on that date Rs. 8,810/13/3 were held by the judgment debtor as cash balance. Taking the view that the judgment debtor was an accounting party and that the decree was for a sum for which the judgment debtor was bound, in a fiduciary capacity, to account, the said court held that the condition laid down in Sub-clause (c) of the proviso to Section 51 C. P. C. was fulfilled.

( 4 ) NO oral evidence was led by the parties in this execution case and they merely relied upon the affidavits filed in the case. The judgment of the court, whose decree was under execution is not on the record of this execution appeal. Para 2 of the affidavit of the decreeholder runs as follows:-

"ki madyun ek phust wa chalak admi hai aur rough degreedar ko barabar pareshan karne ki gharaz se muqadma men mujhse abtak talmatol karte araha hai aur farm se jo munafa hua hai uske madyun ne chhipa diya hai aur farm ki jaedad tractor wa jeep car waghaira mlam men dusron ke nam par khud apne liye kharidwa kar apnehi istemal men la raha ha. Dusron ke nam usne jaedad is niyat se kharidwai hai ki main degree ijra us kharid shuda mal men na karsakun. "

The affidavit also swears that the father of the judgment debtor is in a position to pay off the amount of the decree.

( 5 ) IN reply, the affidavit, filed on behalf of the judgment debtor, denies the allegations made in the decreeholders affidavit and, in particular, states as follows vide paragraph 3 thereof:-

"ki Pandit Jwala Dutt madyun ke walid hain aur madyun apne baap ke ghar rahta hai lekin unke sath samjain karwabar nahin ha. Madyun ke pas koi jaedad nahim hai aur na uski koi faedad pan- dit Jwala Dutt ke nam men ha. Pandit Jwala Dutt ke nam jb jaedad hai uske Pandit Jwala dutt tanha malik qabiz hain. "

The order of the court below does not seem to rest on the allegations made in the affidavit of the decree holder and denied in the judgment debtors affidavit, which we have quoted above, but rests upon the findings recorded by the court which passed the decree under execution.


( 6 ) BEFORE us, the contention, on behalf of the defendant appellant, has been that the judgment debtor, who was a partner of the dissolved firm, did not stand in any fiduciary capacity to account to the decree-holder partner and that, therefore, Sub-clause (c) to the proviso of Section 51, C. P. C. was not attracted. We have, therefore, to examine whether a partner stands in a fiduciary capacity to the other partner or not.

( 7 ) IN this connection, we will first examine the relevant provisions of the Indian Partnership Act (Act IX) of 1932. The nature of partnership there is defined by Section 4 as being the relationship between persons who have agreed to share the profits of a business carried on by all or any of them act






































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