# [1964] 1 S.C.R. 316

- **Citation:** [1964] 1 S.C.R. 316
- **Court:** Supreme Court of India
- **Decided:** 1964
- **Bench:** S. J. lMAll, K. SUBBA RAo, J.a.GOPALA AYYANGAR, J. R. MoDHOLKAR
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1964-1-s-c-r-316-2907
- **Pages:** 16

## Headnote

Limitaaon-Dalt of diuol•A<n. of parllttt'.•liip-Jndian
Limttatian Acl, 1908 (9 of 11108), Ari. 106-lndiOfl Parlnerallip
Acl, 1932 (9 of 1932), a. 43-C* of Ci.;I Proudure, 1908 (Acl
Ii o/ 1908), 0.211, r. 16.
The plaintiff filed a 1uit again1t hil brothers who had formerly con•tituted a joint family for a declaration that the part·
nership which had b«n Conned by them after they cea1ed to be
joint in rc.opect of a •ugar mill 1tood diaolved on May 13, 194+,
on which date one of the brothm had 61ed an earlier 1Uit for
di,,olution of the partnership. The earlier 1Uit had been di•·
mi5'ed for default.
The plaintifl' in the present 1Uit allO prayed for a decree
for accounto from defendanll I and 2 u well u for the appoint·
ment of a Receiver. The trial court decreed the 1Uit, ordered
winding up and appointed a Commi.,ioner. It allo directed
the accounts prayed for.
Before the High Court Kan1hi Ram
who had not filed a wt itten statement and against whom
the proceeding• in the trial court had been a·parte con·
tended that the suit wa• barred by limitation and in any event
he should not be called upon to account. The plaintiff contended
that the •u it was one for distribution of the aaeh of a di•rolved
firm
and
was not barred by limitation. The High Court
while noticing that the plea of limitation taken by one of the
parties was raised before it for the first time, held that by reason
of s. 3 of the Limitation Act it was bound to talr.e notke of the
bar of limitation and diommed the •uit. Having decided
Kanshi Ram's plea the High Court paned conwquential orden
with regard to the v.veral appeal• by the other defendants. On
appeal it was contended in this Court that the question of limi·
tation which was not raised even in the grounds of "ppcal
before the High Court was a mixed question of Caci and law
and it should not have been entertained by the High Court.
/[,Id, that the suit for dissolution filed on May 13, 194+,
had ended in a dismilsal for delault, and as IUch no date
1 S.C.R.
SUPREME COURT REPORTS
317
of dissolution of the partnership as contemplated by 0.20, r. 15,
of the Code of Civil Procedure had been fixed by the Court;
the plaint could not be construed as the notice contemplated by
1. 43 of the Partnership Act, to terminate the partnership.
Even on the assumption that the summons accompanied by the
plaint could be said to be the service of notice !or dissolution
of the partnership, the date of dis•olution could only be the
date on which the last of the
partners wa• served.
With all these questions of fact to be investigated, the High
Court had rommitted an error in treating the question of limita·
tion as purely one of law and allowing it to be raised at the
hearing for the first time before it, at the instance of a party
who had not filed a written statement and rai!Cd an issue on the
question before the trial court.
CIVIL APPELLATE juBISDIOTION : Civil Appeals
Nos. 94 to 97 of 1960.
Appeals from the judgment and order dated
March 15, 1956, of the Allahabad High Court in
First Appeals Nos. 172, 364, and 379 of 1954.
Veda Vyasa, R. K. Garg, D. P. Singh, Shiv
Shastri and K. K. Jain, for the appellant (in C. As.
Nos. 94-96/60) and respondent No. 2 (in C. A. No.
97 of 1960).
Rameshwar Nath, S. N. Andley and P. L.
Vohra, for the appellant (in C. A. No. 97/60) respondent No. 2 (in C. A. No. 94/60) arid respondent No.
l (in C. As. Nos. 95 and 96/60).
K. L. f!ossain and Bohan Lal Paridlii for respondent No. l (m C. As. Nos. 94 and 97/60) respondent
No. 2 (in C. A. No. 115 of 60) and respondent No. 4
(in C. A. No. 96/60).
Harbans Singh, for respondent No. 3 (in C. A.
No. 94/60).
.
J. P. Agarwal, for respondent No. 4 (in C. A.
No. 94/60) respondents Nos. 3 and 4 (in C. A. No.
95/60) respondents Nos. l and 3 (in C. A. No. 96/60)
and respondents NOi. 3 and 4 (in C. A. No. 97/60).
81111/Jrsi Da.i
••
Sith K anshi Ram
-~\
1962.
~.,.'\
Banarsi,Das
Vot
.\
,\1'
.-
318
SUPREME COURT REPORTS [1964) vor..
1902. December 17.
The Judgment of t

## Text

1962
DtUm6,,, 17.
316 SUPREME COURT REPORTS[l964JVOL.
BANARSI DAS
"·
SETH KANSHI RAM &: OTHERS
(and Connected Appeals)
(S. J. lMAll, K. SUBBA RAo, N. R.&J.a.GOPALA
AYYANGAR and J. R. MoDHOLKAR,jj.)
Limitaaon-Dalt of diuol•A<n. of parllttt'.•liip-Jndian
Limttatian Acl, 1908 (9 of 11108), Ari. 106-lndiOfl Parlnerallip
Acl, 1932 (9 of 1932), a. 43-C* of Ci.;I Proudure, 1908 (Acl
Ii o/ 1908), 0.211, r. 16.
The plaintiff filed a 1uit again1t hil brothers who had formerly con•tituted a joint family for a declaration that the part·
nership which had b«n Conned by them after they cea1ed to be
joint in rc.opect of a •ugar mill 1tood diaolved on May 13, 194+,
on which date one of the brothm had 61ed an earlier 1Uit for
di,,olution of the partnership. The earlier 1Uit had been di•·
mi5'ed for default.
The plaintifl' in the present 1Uit allO prayed for a decree
for accounto from defendanll I and 2 u well u for the appoint·
ment of a Receiver. The trial court decreed the 1Uit, ordered
winding up and appointed a Commi.,ioner. It allo directed
the accounts prayed for.
Before the High Court Kan1hi Ram
who had not filed a wt itten statement and against whom
the proceeding• in the trial court had been a·parte con·
tended that the suit wa• barred by limitation and in any event
he should not be called upon to account. The plaintiff contended
that the •u it was one for distribution of the aaeh of a di•rolved
firm
and
was not barred by limitation. The High Court
while noticing that the plea of limitation taken by one of the
parties was raised before it for the first time, held that by reason
of s. 3 of the Limitation Act it was bound to talr.e notke of the
bar of limitation and diommed the •uit. Having decided
Kanshi Ram's plea the High Court paned conwquential orden
with regard to the v.veral appeal• by the other defendants. On
appeal it was contended in this Court that the question of limi·
tation which was not raised even in the grounds of "ppcal
before the High Court was a mixed question of Caci and law
and it should not have been entertained by the High Court.
/[,Id, that the suit for dissolution filed on May 13, 194+,
had ended in a dismilsal for delault, and as IUch no date
1 S.C.R.
SUPREME COURT REPORTS
317
of dissolution of the partnership as contemplated by 0.20, r. 15,
of the Code of Civil Procedure had been fixed by the Court;
the plaint could not be construed as the notice contemplated by
1. 43 of the Partnership Act, to terminate the partnership.
Even on the assumption that the summons accompanied by the
plaint could be said to be the service of notice !or dissolution
of the partnership, the date of dis•olution could only be the
date on which the last of the
partners wa• served.
With all these questions of fact to be investigated, the High
Court had rommitted an error in treating the question of limita·
tion as purely one of law and allowing it to be raised at the
hearing for the first time before it, at the instance of a party
who had not filed a written statement and rai!Cd an issue on the
question before the trial court.
CIVIL APPELLATE juBISDIOTION : Civil Appeals
Nos. 94 to 97 of 1960.
Appeals from the judgment and order dated
March 15, 1956, of the Allahabad High Court in
First Appeals Nos. 172, 364, and 379 of 1954.
Veda Vyasa, R. K. Garg, D. P. Singh, Shiv
Shastri and K. K. Jain, for the appellant (in C. As.
Nos. 94-96/60) and respondent No. 2 (in C. A. No.
97 of 1960).
Rameshwar Nath, S. N. Andley and P. L.
Vohra, for the appellant (in C. A. No. 97/60) respondent No. 2 (in C. A. No. 94/60) arid respondent No.
l (in C. As. Nos. 95 and 96/60).
K. L. f!ossain and Bohan Lal Paridlii for respondent No. l (m C. As. Nos. 94 and 97/60) respondent
No. 2 (in C. A. No. 115 of 60) and respondent No. 4
(in C. A. No. 96/60).
Harbans Singh, for respondent No. 3 (in C. A.
No. 94/60).
.
J. P. Agarwal, for respondent No. 4 (in C. A.
No. 94/60) respondents Nos. 3 and 4 (in C. A. No.
95/60) respondents Nos. l and 3 (in C. A. No. 96/60)
and respondents NOi. 3 and 4 (in C. A. No. 97/60).
81111/Jrsi Da.i
••
Sith K anshi Ram
-~\
1962.
~.,.'\
Banarsi,Das
Vot
.\
,\1'
.-
318
SUPREME COURT REPORTS [1964) vor..
1902. December 17.
The Judgment of tlie,
Court was delivered by
teth Kanshi Ram
•
Mumi:oLKAR, J.~These are appeals by certi·
Mudholkar1 J.
" '
ficates granted by the High Court of Allahabad under
Art. 133 ( 1) (c) of tne. Constitution from its judgments dated March 1\),1956. !he relevari~ facts a~e
briefly as follows :
,
The plaintiff Kundanlal-and the defendants. 1
to 5 Banarsi
Da's, 'Kanshi Ram, Kundan Lal,
Munnalal, Devi CQ<t'nd and Sh:eo Prasad· are brothers
and formed a Joint Hindu_Family till the year 1936.
Amongst other properties the family owned
~ sugar
mill at Bijnor in Uttar Pradesh called "Sheo Brasad
Banarsi Das Sngar Mills".
After .the disruptim1 of
the family the brothers decided to carry on the bu~i:.
ness. of the said sugar mill as pattners instead of as
m.embers of a Joint Hindu Family. The partnership
was to be at will and each of the brothers was to
share all the profits and losses ·equally.
The mill
was to be managed by one of ,the brothers who was
to be designated as the managing partner and the
agreement arrived at 'amongst the brothers provided
that for the year l!J30-37,. whi~h began on September
1, 1930, the first defcn<lanl: Banarsi• Das, who is" the'
·~
appellant in Civil Appeals'!J4 to !J(j of l!JCO, was td
be the managing pal'tncr.
The agreement provided'
that for subscq'uent ysars the person unanimously
-
nominated by the brothers was to be the managing
partner and till such unani.mous nomi:p.ation w,as
made, the person functioning as managing, partner 1'1:1·
the previous yca1' must continue.
For the years'
1941--14, Kumlanlal was the managing partner. On
:l',fay 13, l!J~4, Shco Prasad defendant No. 5: ·now·
deceased, instituted a suit in the court of the :Subofdinate Judge, First Class, Lahore, for dissolution of
par~nership and rendition qf accounts
agains(
Kundanlal
and joined the other
brothers' ·as
rkfcndants
to
the suit,
In tlic course '6f that
1 S.C.R.
SUPREME COURT REPORTS
319
suit the court, by its order dated August 3,1944,
appointed one Mr. P. C,
Mahajan, Pleader, as
Receiver but as the parties were dissatisfied with the
order the matter was taken up to the High Court in
revision where they came to ·terms.
In pursuance of
the agreement between the parties the High Court
appointed Kanshiram as Receiver in place of Mr.
Mahajan as. from April 5,1945. In the meanwhile,
the District Magistrate, Bijnor took over the' mill
under the Defence of India Rules and appointed
Kundanlal and his son to work the mill as agents of
the U. P. Government for the year 1944-45.
This
lease was renewed by the Government for the year
1945 46. On August 28,1956, the parties, except Devi
Chand, made an application to the Court at Lahore
praying that the Receiver be ordered to execute a
lease in favour of Banarsidas for a period of five
years.
It may be mentioned that this application
was made at the suggestion of the District Magistrate; Bijnor. The Subordinate Judge made an order
in terms of the application.
In September 1946,
Banarsidas obtained possession of the mill.
It may
be mentioned that Shea Prasad had in the meanwhile
applied to the court for distribution amongst the
erstwhile partners of an amount of Rs. 8,10,000/-
(out of the total of Rs. 8,30,000/-) which was lying
with the Receiver and suggested that the amount
which fell due to Kundanlal and Banarsidas should
be withheld because they had to render accounts.
However, the
aforesaid
amount lying with the
receiver was di1tributed amongst all the brothers and
Devichand acknowledged receipt on November 14,
1946. On October 11, 194 7, the· Lahore suit was
dismissed for default, the parties having migrated to
India consequent on the partition of the country.
On November 8,1947, Shea Prasad instituted a
snit before the court of Civil Judge, Bijnor against
his brothers for a permanent injunction restraining
Banarsidas from acting as Receiver. The suit, how·
'·1962
Bonarsi DtJJ
v •.
Sith Kanshi Ram
Mudholkar, /.
IHI
Bamsi Dtu
••
. \t1h !(..,hi R""'
JfudAoihu, J.
320 SUPREME COURT REPORTS[I964J VOL.
ever, was dismissed on March 3, 1948.
On July 16,
1948, Sheo Prasad transferred his I /6th share to
Banarsidas and since then Banarsidas has been getting the profits both in respect of his own share as
well as in respect of that of Sheo Prasad.
On October 7, 1948, the suit out of which these
appeals arise was instituted by Kundanlal against all
his brothers claiming the reliefs set out in para 29 of
the plaint. The reliefs arc as follows :
"(a) That it may be declared that the partnership of the Shiv Prasad Banarsi Das
Sugar Mills, Bijnor between the parties was
dissolved on 13th May, 1944 and if in
opinion of the court the partnership is
still in existence, the court may be pleased
to dissolve it. Valued at Rs. 5000.
(b) That an account be taken from defendants
I and 2 or any of them and decree be
passrd in favour of the plaintiff for the
amount that may be found to be due to
the plaintiff on account of his share in the
assets and profits and sums of money in
their possession. Valued at Rs. 500.
(c) That a pendcte lite interim Receiver may
be appointed for the Seth Shiva Prasad
Banarsi Das Sugar Mills, Bijnor.
(d) Any other relief which the plaintiff may
be entitled against any or either of the
defendants as the court may deem fit to
grant.
(e) Costs may be awarded to the plaintiff."
On July 30, 1949, Banarsidas filed his written
statement but none of the other defendents put in an
• •
I
~
1 S.C.R.
SUPREME COURT REPORTS
3:11
appearance. On December l S, 1950, an application
which bad been made for the appointment of a
Receiver was dismissed on the ground that Kanshi
Ram who had been appointed as Receiver by the
Lahore High Court continued to be the Receiver.
It may be mentioned that during the pendency of
this suit the apf:ellant llanarsidas ·entered into an
agreement with )cvichand and Kanshi Ram whereunder he took over all their rights and interests in
the said mill for a period of five years commencing
from .July l, 1951. On February 19, I!J51, he made
an application to 1he court for directing Kanshi Ram
to give a lease of the mill to him for a period of five
years commencing from July I, 1!151.
It may be
mentioned that under an
earlier arrangement
Banarsidas had obtained a lease for a similar term
which was due to expire on June 30, 1951.
On
April
~ti, UJ,il, one Mr. Mathur was appointed
Receiver by the court and in July 1!)51, he granted
a lease for five vears to Kundanlal on certain terms
which would be settled by the court. It may be
appropriate to mention here that issues in the suit
instituted bv Kundanlal were framed on December 7,
J \J;il, and ~nc of the important issues wiμ; whether
the leas•: dated ·September 12, 1946, granted to
Banarsidas was void ab initio or was voidable and in
either case what was its effect.
On April 2, 1954,
the advocate appearing for Kundanlal stated that he
did not wish to press this issue and that the only
question left was\ of taking accounts. In view of
this concession by the plaintiff, the Court decreed the
suit in the following terms :
"l. The snit is decreed for declaration that the
S. B. Sugar Mills, Bijnor, stood dissolved
with effect from 13th May, 1944. The
plaintiff's share is declared io be l/6th; of
defendant No. 1 Seth Banarsi Das as l/3rd
an.cl of defendants 2 to 4 I/6th each.
l!J62
BamtrJi lJcs
v.
Stih K11n.1hi R.,m
MudholkM 1 J,
1662
Ban111si Do.s
••
\:ti, -'" nJhi Roni
32:! SUPREME COURT REPORTS. [1964) VOL.
2.
Seth Kanshi Ram is held liable to render
accounts to the plaintiff and other defen·
dants
in
respect of JOint store! and
lubricants in Exhibits 1 and i. ,
3.
Shri P. N; Math'ur shall . continue to be
the receiver till. further ordeni.
'
.
' ·.
4.
And it is ordered that· Shri K~shi Nath
who is appointed Commissioner 'for the
purpose of winding up the affairs of the
:Mills, in this case, shall prepare accounts
of the credits, properties and effects anc!
stocks now belonging to the said 'mills anc
thee submit the report to the court. Afte1
the report has been submitted and objcc·
tions heard and decided, the court would
fix a date for the sale of the assets of the
Mills.
The Commissioner shall rrceive
instructions from the court from 'time to
time.
"
...
···'
Three appeals were preferred before the High "court
against this decision.
One was by Kanshi Ram,
another by Banarsidas and the . third was by
Munnalal. It may be mentioned here that the suit
has been decreed e.c.parte against both Kanshi Ram
and Munna Lal. It may also be mentioned that
even in the appeals the winding up of the partnership business and the appointment of Mr. Kashi
Nath as Commissioner for this
purpose was not
challenged by any party to the appeals.
These
appeals were heard together and were disposed of by
a common
judgment by
the
High Court on
March 15, I 058.
The High Court, in effect,
dismissed the appeals of Banarsidas and Munnalal
but granted partially the' appeal Of Kanshi Ram.
As a result of the High Court's decision, Kundanlal's
suit stood decreed for declaration that the partnership
1 S.O.R.
SUPREME COURT REPORTS
323
should be dissolved with effect from May 13, 1944,
and that the six bro.thers had shares in the partnership as found by the trial court. But the suit stood
dismissed with regard to other reliefs.
As there were
three appeals before the High Court, the appellant
Banarsidas has preferred three separate appeals for
complying with the requirements of the law.
Before the High Court the stand taken by the
partie~ was this : Devichand and Munnala\ wanted
that the winding up order should be set aside while
Kundanlal wanted that it should be upheld but that
he should not be asked to render any accounts.
Kanshi Ram contended that the suit was barred by
time and that at any rate he should not be called
upon to account.
The appellant Banarsidas wanted
that the winding up order should be maintained and
also wanted that accounts should be rendered both
by Kundanlal and K.anshi Ram. The ground on
which the High Court dismissed the suit was that the
suit for accounts was barred by Art. 106 of the
Limitation Act.
It was, however, contended before
the
High Court on behalf of the plaintiff that
although a suit for accounts and share of profits may
be barred by time, the suit in so far .as it related to
the distribution of the assets of the dissolved firm was
not barred by limitation as such a suit falls outside
Art. 106 of the Limitation Act. This contention was
also rejected by the High Court and it held that not
only the claim for accounts and share for profits was
time-barred but also the claim for distribution of the
assets
of
the
dissolved .firm was
time-barred.
The High Court was alive to the fact that the plea
of limitation was not taken by any of the defendants
in the trial court but was of the opinion that the
plaint itself disclosed that the suit was barred by time
and, therefore, it was the duty of the court under
s. 3 of the Limitation Act to dismiss it.
It was then
contented before the High Court on ·behalf of the
plaintiff that as in none of the appeals preferred
1962
Banarsi Das
v.
Seth Ktmski Rnm
Mudholla1r, J,
. . . -
'
1952
BattarJi Das
v.-
Stth A"anshi Ram
Afudholkar, J.
-~
...... '
~-·- -...
324 SUPRE11E COURT REPORTS [l!JG4] \Tot.
before it the appellants had questioned that portion
of the decree which granted the plaintiff the relief of
a share in the assets of the partnership and therefore
it ought not to be in_terfered with: The High Court,
however, resorted to 0; 41, r. 33 of the Code of Civil
Procedure and held that under this provision, it was
competent to it to disallow the claim decreed by the
---· trial court. Upon this view, the High Court allowed
Kanshi Ram's appeal, but lost sight of the fact that -
same order had tobe made witllregard to the moneys
lying in the. court.
·
In his appeal, it was contended by Banarsidas
that that portion of the 'decree which declared the
.. partnership to have been dissolved on !\lay 13, 1944,
_should be set aside. But the High Courtrefused to
permit him to urge this point . inasmuch. as he had
admitted in his written statement that the partnership
was dissolved on .May 13, 1944~ The High Court
also said that the decree which had been passed
against Banarsidas in so far as this relief is concerned
was a consent decree and that an appeal therefrdm is
barred by s. 96, sub·s. (3), of the Code of yivil
Procedure. , Upon this view, the High Court dismissed his appeal. ·
-
_ Dealing with 1fonnalal's case, the High Court
observed that the only relief sought by him was that
Banarsidas ·should be asked to render accounts for
the year 19!4-1945, and that as it had already held,
while dealing with Kanshi Ram's appeal that this
claim was barred by time, his appeal should also be
dismissed.
·
, - .. -- -,---
Banarsidas has come up in appeal against the
judgments and decrees of the High Court in all the
three appeals and his appeals are Civil Appeals
Nos. 9! to 9Ci of 1960.
Kundanlal- has preferred an
appeal from _the judgment and decree of the High
-Court in Kanshi
1~ am's appeal, which is numbered
I S.C.R;
SUPREME COURT REPORTS
325
~--~·-··---
·civil Appeal l'fo. 97 of 1960. This judgm~nt governs
all these appeal.
_
.
·_ _
·-
- . -·
The points raised by :Mr. Veda Vyasa on behalf
of Banarsidas are these : ·
(l) Under the Partnership Act, the partners are
entitled to have the business of the partnership wound
up even though a suit for accounts is barred· under
Art. 106 of the Limitation Act.·
(2)
Kanshi Ram - having been appointed a·
Receiver by the Court stood in a fiduciary relationship to the other partners and the assets which were in
his possession must be deemed to have been held by
him for the benefit of all the partners. Therefore,
independently of any other consideration, · he was
bound to render accounts.
·
. -_
- ·
-•
(3) The question of limitation was not raised -
in the plaint or the grounds of appeal before the High
Court and as it is a mixed question of fact and law,
it should not have been made the foundation of the
decision of the High Court. If it was thought necessary to allow the point to_ be raised in view of the
provisions of s: 3 of the Limitation Act, the courts·
should at least have followed the provisions of 0. 41,
r. 25, Code of Civil Procedure, and framed an issue
on the point and remitted it for a find_ing to the trial
court.
·
·
(4) The Court was
wrong in holding that
limitation for the suit commenced on l\fay 13, 1944.
( 5) The High Court was wrong in resorting to
the provisions of 0. 41, r. 33, of the Code of Civil
Procedure.
Before we consider the points
raised
by
;Mr. Veda Vyasa, we wotdd like to ?oint out that <H
IY62
Banarsi Das
v.
Seth Kanshi Ram
Afudko/kar, J.
1962
8, riarJi /)as
v.
Seth l(arul,i Ram
326 ·sUPRE.ME COURT REPORTS [1964] VOL.
the commencement of the argument, Mr. Veda Vyasa
made an offer that if all the
parties agreed,
Banarsidas was prepared to waive his claim for
accounts against Kundanlal and Kanshi Ram provided that the decree of the trial court was restored in
other respects.
While the learned collnsel appearing
for those two Parties were willing to accept the offer,
two others were not, and, therefore, we must proceed
to decide the appeals on their merits. The most
important point to be considered is whether the suit
was barred by limitation. If the appellants in these
appeals succeed on this point, the first, second and
fifth po in ls will really not arisr for consideration .
•
In the plaint in the present suit, the plaintiff
Kundanlal alleged in para 10 that the partnership
being al will it stood dissolved on May 13, 1944,
when Sheo Prasad filed suit No. I 05 of 1!)4.i in the
court of the SubJudge, Lahore.
No doubt, as
pointed ont by the High Court, Banarsidas has
admitted this fact in his written statement at no less
than three places. The admission, however, would
bind him only in so far as facts are concerned but
not in so far as it relates to a question of law. It is an
admitted fact that the partnership was at will. Even
so, lvfr. Veda Vyasa points out, the mere filing of a
suit for dissolution of such a partnership does not
amount to a notice for dissolution of the partnership.
In this connection, he relies upon 68, Corpus Juris
Secundum, p. 92!).
There the law i3 stated thus :
The mere fact that a party goes to court asking for
dissolution docs not operate as notice of dissolution;
He then points out that under 0.20, r. 15, of the Code
of Civil Procedure, a partnership would stand dissolved as from the date stated in the decree, and that as
the Lahore suit w.is dismissed in default and no
decree was ever passed therein it would be incorrect
even to say that the partnership at all stood dissolved because of the institution of the suit. On
the 0thcr hand, It was contended on behalf of some
1 S.C.R.
SUPREME COURT REPORTS
327
of the respondents
that the partnership
being
one at will, it must be deemed to have been dissolved
from the date on which the suit for dissolution was
instituted and in this connection reference was made
to the provisions of sub-s. ( 1) of s. 43 of the Partnership Act which reads thus :
"(l) Where the partnership is at will, the firm
may be dissolved by any partner giving notice
in writing to all the other partners of his intention to dissolve the firm."
The argument seems to he based on the analogy of
suits for partition of,ioint Hindu family property,
with regard to which it is settled law that if all the
parties are majors, the institution of a suit for partition will result in the severance of the joint status of
the members of the family.
The analogy however
cannot apply, because, the rights of the partners of a
firm to the property of the firm are of a different
character from those of the members of a joint Hindu
family. While the members of a joint Hindu
family hold an undivided interest in the family
property, the partners of a 'irm hold interest only as
tenants-in.common.
Now as a result of the institution of a suit for partition, normally the joint status
is deemed to be severed, but then, from that time
onwards they hold the property as tenants-in-common
i.e., their rights would thenceforth be somewhat
similar to those of partners of a firm.
In a partnership at will, if one of the partners seeks its dissolution, what he wants is that the firm should be wound
up, that he should be given his individual share in
the assets of the firm (or may be that he should be
discharged from any liability with respect to the
business of the firm apart from what may be found
to be due from him after taking accounts) and that
the firm should no longer exist.
He can call for the
dissolution of the firm by giving a notice as provided
.in sub·s. (J) of s, ,i3 i.f!., wit.hout the intervention of
---"'<
1962
Banarsi Das
v.
Seth Kanshi Ram
Mudholkar, J.
1962
Banar.si Das
v.
Sith Kanshi Rilm
A!uiholkar, J.
•
r
--
....
.,
328 SUPREME COURT REPORTS [1964] VOL.
the court, but if he does. not choose to do that and
wants to go to the court for effecting the dissolution
of the firm, he will, no doubt; be bound by the procedure laid down in 0.20, r. Iii, of the Code of Civil
Procedure, which reads thus : -
"\Vhere a suit is for the dissolution of a partnership or the taking of partnership accounts, the
Court, before passing a final decree, may pass
a preliminary decree declaring the proportionate share of the parties, fixing the day on
which the partnership shall stand dissolved or
be deemed to have been dissolved, and directing such accounts to be taken, and other acts
to be done, as it thinks fit."
This rule makes the position clear. No doubt, . this
. rule is of general application, that is, to_ partnerships
at will as well as those other than at will; but there
are no limitations in this provision confining its
operation only to partnerships other than those at will.
Sub-s. (I) of s. 43 of the Partnership Act does not
say what will be the date from which the firm will
be deemed to be dissolved. For ascertaining tbat,
we have to go to sub-s. (2) which reads thus :
·"The firm is dissolved as -from the da-te men-
. -tioned in the notice as the date of dissolution or,
if no date is so mentioned, as from the date of
· the communication of the notice."
Now, it -will be clear that this provision
contemplates the mentioning of a date from which
the firm would stand dissolved.
i\1entioning of such
a date would be entirely foreign to a plaint in a suit
for dissolution of partnership and therefore such a
plaint cannot fall within the expression "notice"
used in the sub-section. It would follow therefore
that the date of service of a summons accompanied
-by a copy of a plaint iμ t!ie sμit for qissolutjon of
I S.C.R.
SUPRE1'1E COURT REPORTS
320
partnership cannot ·be. regarded ·as ··the date of
dissolution of partnership and s. 43 is of no. assistance.
Everi
assuming,
however, that the term
"notice" in the provision is wide enough to include
within it a plaint filed , in a suit for dissolution of
partnership, the ·sub-section itself provides that the
firm will be deemed to be dissolved as from the date of
communication - of the, notice. It would ·· follow,
therefore, that a partnership would be deemed to be
dissolved when the summons accompanied by a copy
of the plaint is served on the defendant, where
there is only one defendant, and on all defendants,
when
there
are
several
defendants.
Since
a partnership will be deemed to be dissolved_ only
from one date, the date of dissolution would have
to be regarded .. to be the one on which the last
summons was served. Now, if the High Court wanted .
to give the benefit of the provisions of s. 43 to
any of the parties-defendants before -it, it should
have borne in mind the full implications of those
provisions. \Ve have no matt>rial on record for ascertaining the date on which the last summons was
served in this case. Since that date is not known or
could have been known by · the High Court, it was
in error in holding that the suit was barred by time.
The High Court has overhoked the fact that
even upon the argument addressed before it on behalf
of Kanshi Ram, the question of limitation. was not
one purely of law but was a mixed question of fact
and law and, therefore, it was not proper for it to
allow it to. be raised for the first time in argument.
\Ve are satisfied that what the High Court has done
has caused prejudice to some of the parties to the
suit and on that ground alone, we would be justified
in setting aside its decision. If the High Court felt
overwhelmed . by
the . provisions of s. 3 of the
Limitation Act, it should at least have given an
opportunity to
the parties which supported th!!
19&2
Banarsi Das
v.
Seth Kanshi Ram
Mu.t!holl.ar~ J.
1962
Ronarri D•t
v.
Stth KanJhi Ram
Af11Jllo/kar, J,
330 SUPREME COURT REPORTS [1964] VOL.
decrre of the trial court to meet the plea of limitation by amending their pleadings. After allowing
the pleadings to b.., amcnckd, the lligh Court should
have framed an issue and remitted it for a finding to
the trial Court.
I nstcad of doing so, it has chosen
to treat the pleading of one of the defendants as
conclusive not only on the question of fact but also
on the question of law and dismissed the suit. It
is quite possible that had an opportunity been given
to the defendants, they could have established, in
addition to proving the dates on which the summonses were served, that the suit was not barred by time
becai:sc of acknowledgment in the course of the
discussion, the High Court had said that it was not
sue:g~sted before it by anyone that the daim was not
harrrcl by reason of acknowlcd~rncnts. Apparently,
no s1ich :irgurncnt was advance'.! before it on behalf
of the plaintiff and
the
defendant Banarsidas
because
the counsel
were apparently taken by
surprise and harl no opportunity to obtain instructions
on this aspect of the case. \Ve arc clearly of opinion
that the High Court was in error in allowing the plea
of limitation to be raised before it particularly by
defenrlants who had not even filed a written statement in the case.
We do not think that this was a
fit case for permitting an entirely new point to be
raised by a non-contesting party to the suit.
In view of our decision on this point, it would
follow that the High Court's decision must be set
aside and that of the trial court restored.
\Ve may,
howe,·cr, mention that some of the parties including
the appellant Banarsidas and the plaintiff-respon·
dent, Kundenlal as well as the defendant-respondent
Kanshi Ram were agreeable to certain variations in
the decree. But as there were other parties besides them
to whom these variations arc not acceptable, we arc
bound to decide the appeals on merits.
For the
aforesaid reasons, we allow the appeals ofBanarsidas
and Kundanlal and re.~tore the dccrr,e of the tri:JI
•
1 S.C.R.
SUPREME COURT REPORTS
331
court, but make no order as to costs.
Along with the appeals, we heard two Civil
Miscellaneom Petitions, Nos. 1482 of 1~62 and 1534
of 1062. The first is to the effect that the lease
granted by this Court during the pendency of these
appeals should be termin:ited early.
It is said that
the reason why the term of five years was fixed was
that this Court was seized with the litigation and
it was expected to last for five years.
But as it
happens, it has terminated within about a year and a
half and therefore there is no reason for the lease to
continue.
Apart from the fact that it would not be
in the interest of the parties to determine the lease
before its expiry we doubt whether we can legally do
so.
We,
therefore,
reject this application.
As
regards the other application, it is agreed between
parties that it should be considered by the Receiver
when the assets are distributed.
'We may also mention that during arguments it
was stated before us on behalf of Banarsidas that
he had installed some ntw machinery for the efficient
running of the mill and that before the mill is sold he
should be allowed to remove "the machinery. It was
suggested that perhaps it would be in the interest of
all the parties if the mill is sold along with the new
machinery at the date of sale. The other parties,
however said that it would be best if Banarsidas
removes the machinery before the expiry of the lease.
In the circumstances, we can give no direction in the
matter. It will be open to the parties, however, to
agree upon the course to be adopted when the Receiver sets about selling the machinery, or if they do
not agree, to obtain directions from the High Court.
While
we
dismiss
the Civil Miscellaneous
Petitions, we make no order as to costs.
Appeals rilloineii,
1962
Rar1.1 n-i na1
v.
Seth l1"'an~lii Ram
Afudholkar, /,