A partnership can be dissolved and accounts directed even without prior notice if the plaintiffs establish their partnership status and the managing partner's misconduct.

JUDGMENT

Appeal is directed against the preliminary decree and judgment in O.S.311/1995 passed by the learned First Additional Sub Judge, Ernakulam. Defendants 1 and 6 in the suit are the appellants.

2. Suit was one for dissolution of a partnership firm, settlement of accounts and other reliefs. After trial a preliminary decree was passed dissolving the partnership and directing the defendants to render accounts. Defendants were also restrained from alienating or encumbering the assets of the firm. That decree is assailed by appellants RFA No.355/2005 2 filing this appeal.

3. Short facts necessary for disposal of the appeal can be summed up thus:- A firm by name Lotus Constructions, dissolution of which was sought for by plaintiffs, was constituted under the original of Ext.A1 deed and it consisted of plaintiffs, two in number, and defendants 1 to 5 as partners. That partnership is one at will and it was constituted for doing business in real estate and construction. First defendant was managing partner of the firm and he was empowered to open and operate bank accounts on behalf of the firm. He was liable to maintain accounts of the firm, but, he mismanaged the affairs and misappropriated the funds of the firm was the case of plaintiffs. He had executed sale deeds over the properties of firm without authority and sanction from the other partners, and, such alienations made are not binding on plaintiffs, was their further case. The first defendant has constituted a rival firm, 6th defendant, with him as its managing partner to do RFA No.355/2005 3 the same business was the case of plaintiffs to seek a decree of injunction against him from continuing as a partner of 6th defendant. After issuing a notice for dissolution of firm demanding defendants to render accounts, which was not responded to, the suit was laid for dissolution of the firm, rendition of accounts and also for an injunction to restrain the defendants from alienating and encumbering the assets of the firm.

4. Among the defendants first and fourth defendants and also additional defendants 7, 9 and 10, who were brought in as legal heirs of deceased second defendant, entered appearance, and the others remained ex parte. Suit was resisted by first defendant alone contending that plaintiffs did not contribute their share to the capital of firm, and, therefore, they have no right to share profit or loss and claim anything based as partners of the firm. Allegations made over the mismanagement of firm and misappropriation of its funds by first defendant were denied. As managing RFA No.355/2005 4 partner of the firm he has been managing its affairs properly, the accounts of the firm are properly audited and communicated to all partners and the firm has availed financial loan from banks, for which the firm and partners are liable, according to this defendant. Disputing the allegations imputed against him it was contended that no notice was sent for dissolution of firm and the suit was barred for want of such notice. This defendant also contended that the assignments made over the assets of firm are valid and binding on all partners. Maintainability of the suit was also challenged setting forth a contention that partnership deed provided for reference to arbitration and that having not been invoked plaintiffs are liable to be nonsuited.

5. On the issues cast over the pleadings of parties, which among others included whether plaintiffs are partners of the firm, whether first defendant maintained its account properly,and, is he liable to render the accounts, and, also whether RFA No.355/2005 5 plaintiffs are entitled to question the assignment deeds executed by defendants, trial proceeded. Plaintiffs examined one of them as PW1 and exhibited Ext.A1 to A25. No evidence was tendered by defendants either oral or documentary. Appreciating the pleadings and evidence learned Sub Judge upheld the claim of plaintiffs for dissolution of the firm and rendition of accounts by defendants passin