A suit by a partner for the recovery of share capital invested in a partnership firm is not maintainable as a simple money suit; it must be framed as a suit for dissolution and settlement of partnership accounts, and any such claim is subject to the limitation period.

JUDGMENT

The plaintiffs, who filed a suit for recovery of money, which was dismissed by judgment and decree dated 29.08.2003, are the appellants.

2. The plaintiffs contended that a partnership deed was entered into between the plaintiffs and defendants 1 to 4, and the father of the defendants 5 to 7. On 01.04.1995, the date of execution of the partnership deed, the first plaintiff paid Rs. 74,000/- and the second plaintiff paid Rs. 60,000/- to the first defendant, who was stated to be the Managing Partner, as per the deed. It is the plaintiffs' case that at the time of execution of the deed and receiving the amount, the first defendant undertook to register the firm in the name and style of M/S C.K.Vijayan and T.S Vasudevan and Company.

3. The firm was registered in anticipation of the abkari auction, and the plaintiffs contended that the first defendant did not register the firm and no business was done in the name of the firm for the financial year 1996-1997 as promised, and when the plaintiffs insisted on the return of the amount, the same was refused. The plaintiffs contended that the first defendant was holding the amount of the plaintiffs as Managing Partner of the firm in a fiduciary capacity, and the amount was misused for the personal business of defendants 1 to 3.

4. The defendants, on the other hand, denied the case of the plaintiffs and contended that the suit was not maintainable, as the plaintiffs cannot file a suit for the realisation of the amount without instituting a suit for dissolution of partnership and settlement of accounts. They contended that the defendants were not holding any amount of the plaintiffs in a fiduciary capacity. They also urged that the suit was barred by limitation, besides the bar under Section

69(2) of the Indian Partnership Act.

5. The plaintiffs rely on the evidence of PWs 1 and 2 and Exts.A1 to A10 to contend that the money was paid to the first defendant as the Managing Partner of the firm and that the firm did not do any business, and therefore the plaintiffs are entitled to get back the amount.

6. Heard the learned counsel appearing on both sides and perused the records.

7. The case of the plaintiffs, as seen from the pleadings, is that the plaintiffs had invested Rs.74,000/- and Rs.60,000/- respectively towards their share of capital and later an amount of Rs.1,00,000/-. The suit is framed as a suit for money. Ext.A2 deed is a partnership deed, which is admitted by the plaintiffs, though it was not registered. The defendants also contended that the firm had started doing business. Ext.B2 order passed by the Abkari Welfare Fund Inspector was produced to show that the firm had actually commenced business. The said case of the defendants was accepted by the court below, and thus it was found that the relationship between the parties arose from a contract, and if the plaintiffs had invested money, as their share of the capital, they should have, in fact, brought a suit for dissolution and settlement of accounts. 8. As regards the question of limitation, the court below found that the amount was paid on 01.04.1995, whereas the suit was instituted on 02.03.1999, beyond a period of three years from the date of payment of the amount mentioned above. Thus, finding that the amount claimed by the plaintiffs against the defendants was under a partnership agreement, as evidenced from Exts.A2 and B9, as the share of the capital amount of the firm, the suit was barred by limitation.

9. The learned counsel for the appellants argues that the amount was paid in a fiduciary capacity and that the alleged partnership was not registered, and accordingly, a suit for dissolution or settlement of accounts will not lie. It is also