# PREM BALLABH KHULBE v. MATHURA DATT BHATT December 16. 1966

- **Citation:** [1967] 2 S.C.R. 298
- **Court:** Supreme Court of India
- **Decided:** 1967
- **Case number:** Civil Appeal No. 615 of 1964
- **Bench:** K. N. Wanchoo, R. S. Bac'Hawat, J.M. Shelat
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/prem-ballabh-khulbe-v-mathura-datt-bhatt-december-16-1966-3944
- **Pages:** 3

## Headnote

Code of Ci1·i/ Procedure (Act 5 of 1908). cl. (c) of the pro'l'L<o to
s. 5 l-Partners-lf in fiduciary r1..>lationship.
The partnership business carried on by the appellant, respon"ent and
t>\.ll others \\:as dissolved.
The appellant obtained a final
decree
for
.. 1.'.'Ilain sums against the rcspc._1dcnt, who was the ntanaging partner of thi:
partnership assets. The appellant applied for the execution of the decree by
arrest and detention of the respondent in prison.
The executing court
held that the provisions of cl. (c) of the proviso to s. 51 of the Code of
Civil Procedure were satisfied and issued a warrant for the arrest of
the ·respondent.
The Hi,gh Court set aside this order.
On appeal, this
('ourt.
HELD : The appeal must be dismissed.
In the absence of special circumstances a partner cannot be regarded
as a kind of trustee for the other partners or liable to render accounts lo
them in a fiduciary capacity, [300 DJ
In the present case, the conditions of cl. ( c) of the proviso to s. 51
were not satisfied. No fraud or clandestine dealing was alleged o·r proved.
The fac!s did not disclose that the-. decree was for a sun1 for which the
r~spondent v.·as bound to account in a fiduciary capacity. (300 El
Piddock,• v.Burt, Cliittv, [ 1894] I Ch. 343, Rodriquez v. Speyer IJrotha.<, [1919) A.C. 59, Bli11hm1 Moha11 Rana v. Sure11da Moha11 .D<u.
l.L.R. [1952] :'.Cal. 123 and Vdji Ra11/1a1·j/ Paid v. Stak of Maharashtra
[ 1965] 2 S.C.R. 429, approved,
'

## Text

PREM BALLABH KHULBE
r.
MATHURA DATT BHATT
December 16. 1966.
(K. N. WANCHOO, R. S. BAC'HAWAT AND .J.M. SHELAT JJ.)
Code of Ci1·i/ Procedure (Act 5 of 1908). cl. (c) of the pro'l'L<o to
s. 5 l-Partners-lf in fiduciary r1..>lationship.
The partnership business carried on by the appellant, respon"ent and
t>\.ll others \\:as dissolved.
The appellant obtained a final
decree
for
.. 1.'.'Ilain sums against the rcspc._1dcnt, who was the ntanaging partner of thi:
partnership assets. The appellant applied for the execution of the decree by
arrest and detention of the respondent in prison.
The executing court
held that the provisions of cl. (c) of the proviso to s. 51 of the Code of
Civil Procedure were satisfied and issued a warrant for the arrest of
the ·respondent.
The Hi,gh Court set aside this order.
On appeal, this
('ourt.
HELD : The appeal must be dismissed.
In the absence of special circumstances a partner cannot be regarded
as a kind of trustee for the other partners or liable to render accounts lo
them in a fiduciary capacity, [300 DJ
In the present case, the conditions of cl. ( c) of the proviso to s. 51
were not satisfied. No fraud or clandestine dealing was alleged o·r proved.
The fac!s did not disclose that the-. decree was for a sun1 for which the
r~spondent v.·as bound to account in a fiduciary capacity. (300 El
Piddock,• v.Burt, Cliittv, [ 1894] I Ch. 343, Rodriquez v. Speyer IJrotha.<, [1919) A.C. 59, Bli11hm1 Moha11 Rana v. Sure11da Moha11 .D<u.
l.L.R. [1952] :'.Cal. 123 and Vdji Ra11/1a1·j/ Paid v. Stak of Maharashtra
[ 1965] 2 S.C.R. 429, approved,
'
CIVIL APPELLATE JURISDICTION
: Civil Appeal No. 615 of
1964.
Appeal from the judgment and decree dated March 3, 1960
of the Allahabad High Courl in Execution First Appeal No. 332
of 1956.
C. B. Agarwala and A'. P. Gupta for the appellant.
S. G. Palll'ardhan. Yashpal Singh and M. S. G11pfa for the
respondent.
The Judgment of the Court was delivered by
Bacbawa:, J. The appellant, the respondent and two other
persons carried on business in partnership under the name and style
of Nayagaon Farm. The respondent was the managing partner
and was incharge of the partnership assets. The firm was dissolved and a suit was instituted by the appellant for the taking
of the accounts of the dissolved firm.
Eventually a final decree
A
c
D
E
G
H
A
B
c
D
E
PREM BALLABH \'. MATHURA DATT (Bachawat, J.)
299'
was passed in the suit in favour of the appellant against the respondent for Rs. 17, 143/ 11 /0 and Rs. 3.171 !6 as on account of costs.'
The appellant applied for execution of the decree by arrest and detention of the respondent in prison.
In this affidavit in support
of the application, the appellant relied upon the grounds mentioned
in clauses (a) and (b) of the pro1·iso to s. 51 of the Code of Civil
Procedure 1908. At the hearing of the application those grounds
were not pressed but his counsel relied upon the ground mentioned
in cl. (c) of the proviso.
By cl. (c) of the pro1·iso to s. 51, the court
is empowered to order execution of a money decree by detention
of the judgment debtor in prison if it is satisfied "that the decree
is for a sum for which the judgment debtor was bound in a
fiduciary capacity to account". The executing court held that the
provisions of cl. (c) were satisfied and issued a warrant for the arrest
of the respondent.
On appeal, the High Court of Allahabad
set aside this order. The decree holder now appeals to this court
under a certificate granted by the High Court.
·
On behalf of the appellant our attention
w~s drawn to
ss. 9, 15, 18, 46 and 48 of the Indian Partnership Act 1932 and ss. 88,
94 and 95 of the Indian Trusts Act 1882, and it was urged that the
respondent as the managing partner of the firm was bound in a
fiduciary capacity to account for tbe assets of the partnership in
his hands and the decree against him must be regarded as a decree
for a sum for which he was bound in .a fiduciary capacity to
account.
On the question whether a fiduciary relation exists between
the partners, the law is stated thus in Halsbury's Laws of England
Jrd Edition, Vol. 38, art. 1363, p. 820 :
"Partnership itself does Mt create a fiduciary rel<ttion between the partners or make one of therr. a truste(.
1
1
'
for the
other or for his representatives. The relation
may, however, arise on the death of one of them or be
created by other special circumstances."
This statement of law is consistent with the provisions of the Indian
Partnership Act 1932 and the Indian Trusts Act 1882.
G
In Piddo<"ke v. Burt. (1) Chitty, J. held that a partner failing to
pay moneys in his hands anr\ received by him on account of the
partnership was not liable to be imprisoned under s. 4(3) of the
Debtors Act 1869 as a person "acting in a fiduciary capacity"
within the meaning of that statute. He said :
"I should be straining the law if I were to hold that
H
a partner receiving money on account of the partnership-·-
that is,
on behalf of himself and his co-partners-
( I) I th941 I Ch. 343.
:100
SUPREME CO\!RT REPORTS
(1967] 2 S.C.R.
received it in a fiduciary capacity towards the other partners.
The law allows one partner-one of several joint
creditors-to receive the whole debt on account of the firm
lo whom it is due, and I am unable to recognise any s~ch
distinction, as was endeavoured to be made by Mr. Church,
between the case of a partner receiving money of the firm
and not accounting for it, and that of a partna over-drawing
the
partnership account;
because if this uistinction
were true, it would apply to every case where one partner
wrongly over draws the partnership account."
This decesion was approved of by Lord Atkinson in Rodrigue:
v. Speyer Brothers,(') and by Harries, C. J. in Bl111ban Mohan Rana
v. Surmder Mohan Das.(2)
The last case received the approval
of this Court in VeljiRaghaiji Patelv. Stateo.fMalwrashtra.('! A
nartner must observe the utmost good faith in his dealing~ with
the othe~ partners.
He is bound to render accounts of the partnership assets in his hands.
But in the absence of special circumstances he cannot he regarded as a kind of trustee for the other
partners or liable to render accounts to them in a fiduciary cap:1city.
In the present case the respondent as t~e managing partner
was liable to render accounts of the partnership assets in his hands.
On the taking of the accounts it was found that he overdrew the
partnership account and a decree for the sum due was passed
against him.
No fraud or clandestine dealing is alleged or proved.
On these facts it is not possible to say that the decree was for a
sum for which he was bound to account in a fiduciary capacity.
The High Court rightly held that the conditions of cl. (c) of the
proviso to s. 51 of the Code of Civil Procedure were not satisfied.
The appe;tl
is dismissed. There will be no order as to
costs.
Y.P.
-(f)il919j A:c. 59~ ~:
(2) I.LR. 1952 (2) Cal. ~3.
(3) 11965! 2 S.C.R. 429.
Appecl dismissed.
A
B
c
D
f,