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2026 Supreme(Online)(Mad) 43903

IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. Mala, J
R. Sundaram – Appellant
Versus
Karur Vysya Bank Limited – Respondent
S.A.(MD).Nos.382/2009 | 348/2014

Advocates:
For the Appellants/Petitioners: A. Sivasubramanian, J. Anandavalli, K. Muraleedharan
For the Respondents: V. Sukumar, K. Muraleedharan, J. Anandavalli, A. Sivasubramanian

A suit for declaration regarding the character of an asset as partnership property is maintainable under Section 34 of the Specific Relief Act before seeking dissolution, and the Court has the power under Order 7 Rule 7 of the CPC to mould reliefs, including decreeing dissolution, when mutual trust has irretrievably broken down.

Headnote:(A) Specific Relief Act, 1963 - Section 34 - Partnership Act, 1932 - Section 48 - Suit for declaration regarding status of savings account as partnership asset - When character of property as partnership asset is disputed, declaratory suit is maintainable even without seeking dissolution of firm - Principle that partner must sue only for dissolution is not an inflexible rule when the foundational status of the asset is the primary issue. (Paras 19, 21, 22)

(B) Appellate Jurisdiction - Second Appeal - Concurrent findings of fact - High Court in second appeal should not interfere with findings of fact unless they are perverse or lack legal evidence. (Paras 23, 24)

(C) Moulding of Relief - Order 7 Rule 7 of CPC - Court has inherent power to mould relief to satisfy justice where the dispute has lead to a permanent breakdown of trust between partners, even if it requires declaring dissolution. (Paras 33, 36, 37)

Facts of the case:
The suit originated from a dispute between brothers (partners of a firm) over a savings bank account standing in the individual name of one partner. The plaintiffs claimed it was a firm asset, while the defendants asserted it was personal property. Lower courts held the account was a partnership asset but refused to grant a mandatory injunction for restoration of funds.

Findings of Court:
The court held that the declaration of the status of the account was a necessary prerequisite for subsequent accounting. Finding the trust between partners irretrievably broken, the court exercised power under O. 7 R. 7 CPC to declare the firm dissolved as of the date of the father's death and directed accounting of assets.

Issues: Whether a suit for declaration of a bank account as a partnership asset is maintainable without seeking dissolution; whether the courts below reached a perverse finding; and whether the appellate court can mould the relief to include dissolution of the firm.

Ratio Decidendi: A suit for declaration under S. 34 of the Specific Relief Act is maintainable when there is a dispute regarding the foundational character of an asset, even if it involves partnership property. Furthermore, where the relationship between partners has broken down, the court may invoke its power to mould relief to dissolve the partnership to provide a quietus to the litigation.

Result: Appeals dismissed; preliminary decree for dissolution of partnership passed.

Table of Content
1. overview of the dispute over partnership asset classification. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10)
2. substantial questions of law raised regarding suit maintainability and perversity. (Para 11 , 12 , 13 , 14 , 15 , 16)
3. maintainability of declaratory suit for partnership assets under specific relief act. (Para 17 , 18 , 19 , 20 , 21 , 22)
4. assessment of evidence and findings of concurrent lower courts. (Para 23 , 24)
5. limitation issues, mandatory injunction request, and admissibility of additional evidence. (Para 25 , 26 , 27 , 28 , 29 , 30 , 31)
6. court's power to mould relief and declare firm dissolution due to irretrievably strained relations. (Para 32 , 33 , 34 , 35 , 36 , 37)

COMMON JUDGMENT

(1)The above second appeals arise out of the common judgment and decree in A.S.Nos.66 and 65 of 2008, dated 06.08.2008. on the file of the learned Additional District and Sessions Judge, Fast Track Court No.1, Madurai, confirming the judgment and decree dated 07.04.2005, made in OS.No.241/1995, by the learned Principal District Munsif, Madurai.

(2)For the sake of brevity, the parties are referred to, as per their ranking before the Trial Court.

(3)Brief facts giving arise to the above Second Appeals, are as follows:-

(4)The 1^st plaintiff and the 1^st defendant, Anantha Subramanian, are brothers and they, with their father, A.S.A.Ramasamy Chettiyar, entered into a Partnership and conducted business in the name and style of ‘’P.S.A.Ramasamy Chetty & Sons’’. The said Firm was registered with the Registrar of Firms as Firm No.293/1971. The aforesaid partners of the Firm opened both current and savings bank accounts in the 2^nd defendant/Bank. The Partnership Firm had two current accounts with the 2^nd defendant and savings bank accounts in the name of the individual partners. According to the plaintiffs, the SB A/c.No.2113 in the name of the 1^st defendant with the 2^nd defendant/Bank, related to the Partnership Firm even though it stood in the name of the 1^st defendant. The plaintiffs therefore claimed that the 1^st defendant had no independent right to the amounts in the said savings account and also no right to operate the same exclusively. The plaintiffs state that after the death of their father, P.S.A.Ramasamy Chettiyar, on 24.10.1994, misunderstandings arose between the 1^st plaintiff and the 1^st defendant. According to the 1^st plaintiff, the 1^st defendant threatened to withdraw the amounts from his savings bank account [SB A/c.No.2113] to the detriment of the Firm. The 1^st plaintiff therefore caused a legal notice to the 2^nd defendant/Bank and thereafter, sent a reminder notice on 30.12.1994. The 1^st plaintiff stated that there was no reply to the legal notice. The 1^st plaintiff further stated that despite knowing that the savings account 2113, related to the Firm, the 2^nd defendant permitted the 1^st defendant to withdraw the amounts and operate the said savings bank account and therefore, the 1^st plaintiff issued a legal notice on 20.01.1995, to the 2^nd defendant, calling upon the 2^nd defendant/Bank to restore the aforesaid account to its original position as on 16.11.1994. The 2^nd defendant/Bank, on 04.02.1995, sent a reply stating that unless a Court order was obtained, the Bank had no authority to refuse operation of the account by the account holder/1st defendant. The plaintiffs, left with no other option, filed the aforesaid suit for a declaration that the Savings Bank Account No.2113, standing in the name of the 1^st defendant with the 2^nd defendant, related to the Firm, the 2^nd plaintiff herein, restraining the 1^st defendant from operating the said account individually, and an injunction restraining the 2^nd defendant from allowing the 1^st defendant to operate the said savings account and for a mandatory injunction directing the 2^nd defendant/Bank to restore the account to its original position as on 16.11.1994.

(5)The 1^st defendant in his written statement, contended that the savings bank accounts standin

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2026 Supreme(Online)(Mad) 43903

IN THE HIGH COURT OF JUDICATURE AT MADRASN. Mala, JR. Sundaram – AppellantVersusKarur Vysya Bank Limited – RespondentS.A.(MD).Nos.382/2009 | 348/2014

Cases Referred (2)

IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. Mala, J
R. Sundaram – Appellant
Versus
Karur Vysya Bank Limited – Respondent
S.A.(MD).Nos.382/2009 | 348/2014