Sri. K. J. George Vs Sri. P. G. Raju

MRS. MARY KUTTY GEORGE AGED ABOUT 53 YEARS, W/O. SRI. K. J. GEORGE, SL. NOS 1 &2 ARE RESIDING AT NO. 87, 1^ST AVENUE TEACHERS COLONY, KORAMANGALA 1^ST BLOCK, BANGALORE - 560 034.

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Digitally signed by RAMYA D Location: HIGH COURT OF KARNATAKA

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SMT. SALAMMA RAJU AGED ABOUT 54 YEARS, W/O. SRI. P. G. RAJU, NO.311/55, 6^TH CROSS, VENKATAPURA, KORAMANGALA 1^ST BLOCK, BANGALORE - 560 034.

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…APPELLANTS

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(BY SRI. SIDDHARTH SUMAN, ADVOCATE)

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AND:

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SRI. P. G. RAJU AGED ABOUT 59 YEARS, S/O. LATE P. T. GEORGE, RESIDING AT NO. 311/55,

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UPSTAIRS 6^TH CROSS, VENKATAPURA, KORAMANGALA, 1^ST BLOCK, BANGALORE - 560 034.

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…RESPONDENT

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(BY SRI. R.A. DEV. ANAND, ADVOCATE)

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THIS RFA FILED UNDER ORDER XLI RULE 1 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 30.10.2018 PASSED IN OS.NO.8160/2014 ON THE FILE OF THE XXXI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BANGALORE CITY PARTLY DECREEING THE SUIT FOR DISSOLUTION OF PARTNERSHIP.

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THIS APPEAL, COMING ON FOR ARGUMENTS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR

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ORAL JUDGMENT

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The appeal is filed by the defendants challenging the judgment and decree dated 30.10.2018 passed by the XXXI Addl. City Civil and Sessions Judge, Bengaluru City (CCH-14) in O.S.No.8160/2014, thereby, the suit filed for dissolution of partnership firm and for rendition of accounts is decreed.

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Rank of the parties is referred to as per their rankings before the trial court.

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It is the case of plaintiff that the plaintiff and

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defendants have established a partnership firm with an objective to do real estate business under the name and style as “Purple Developers” and the said firm is a registered partnership firm. It is pleaded in the plaint that the firm had purchased two lands from one Venkateshappa to the extent of 2-00 acres for consideration of 1.7 crore and another land from one Venkataswamy Reddy to the extent of 1 acre for consideration of Rs.1 crore. The plaintiff and defendants being partners in the said partnership firm have developed the said lands and formed layout and sites and in Venkateshappa’s land to the extent of 2-00 acre 45 sites were formed and in Venkataswamy Reddy’s land 22 sites were formed. It is stated that by the sale of 45 sites formed in the project of Venkateshappa’s land, the total income derived by the partnership firm was Rs.2,48,00,000/- and out of which Rs.1,70,00,000/- has been spent to meet the cost towards purchase of land and Rs.40,00,000/- was spent towards development of the

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land. The balance of Rs.38,00,000/- has gone into the firm’s account, which is divisible between the partners at 1/4^th share each.

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3.1 It is stated that by the sale of 21 sites from out

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of the project in Venkateswamy Reddy’s land, a part of income from it realized was Rs.55,00,000/- and out of which the plaintiff has received Rs.29,00,000/- only. It is

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stated that the plaintiff was maintaining the books of accounts till he fell ill due to heart attack on 12.07.2011. It is stated that the plaintiff was hospitalized on 12.07.2011 and has not attended the office of the firm for

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a period of 3 months as he was advised to take bed rest.

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3.2 It is stated that 50% of the amount was settled between all the partners at the time of plaintiff’s hospitalization and balance 50% is remaining for disbursement.

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3.3 It is pleaded that when the plaintiff was hospitalized for the period, the defendant Nos.1 and 3

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were jointly maintaining the books of accounts of firm in a separate account book and the plaintiff was under the impression that the same may be in the custody of either defendant No.1 or defendant No.3. Whatever transactions and maintaining accounts by the defendant Nos.1 and 3, the plaintiff has not been made known about it and therefore, the plaintiff was kept under darkness.

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3.4 It is pleaded that defendant No.3 is the wife of plaintiff and their marital relationship was strained resulting in various litigations, which are pending before the various Courts. It is alleged that the defendant No.3 has not briefed the plaintiff regarding the accounts and business transactions after 12.07.2011, on which date the plaintiff suffered a heart attack and hospitalized. According to the plaintiff the defendants are still due of Rs.26,00,000 being his 1/4^th share. Therefore, with an allegation that defendants have not accounted the business transactions after 12.07.2011, the plaintiff filed a

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suit for dissolution of partnership firm and rendition of accounts.

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The defendants appeared through their counsel and filed the written statement by denying all the averments made in the plaint. Upon considering the written statement the defendants have simply denied the averments made in the plaint as incorrect except wherever admitted. It is the defence of defendants that more money was shared with the plaintiff due to his illness and the entire hospital expenses was borne by the defendant No.3. During illness of the plaintiff when he was in the hospital, the transactions and accounts maintained were being briefed to the plaintiff. Therefore, contention of the plaintiff that he was kept in dark is not correct. It is pleaded that the plaintiff after discharged from the hospital and completion of bed rest, started actually participating in the business and maintaining the accounts by himself till the entire business is wound up.

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4.1 It is further pleaded that defendant No.3 has

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not handled any financial transactions of the firm, but participated in the business with the defendant Nos.1 and 2. It is further stated that the partnership firm business was discontinued following the illness of the plaintiff from 12.07.2011 and no business was done by the firm thereafter, which is to the knowledge of the plaintiff. It is stated that after establishment of the firm the business was carried for about one year and thereafter the business was discontinued. The entire business was looked after and maintained by the plaintiff and the defendants. Even after the plaintiff fell ill, the accounts were verified by the plaintiff and the entire account books were in the custody of the plaintiff and never returned the account books to the firm. The bank account was jointly operated by the plaintiff and the defendant No.1 and all financial transactions were done with the knowledge of the plaintiff. Therefore, the plaintiff knew all the financial transactions of the firm and the books of accounts. Thus, denied that

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the plaintiff was not apprised of the financial transactions

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as false. Therefore, with the counter averments in the written statement, the defendants pray for dismissal of the suit.

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Based on the pleadings the trial court has

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framed the following issues on 11.04.2016:

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(1) Whether the plaintiff proves that himself and defendants are the partners of a partnership firm viz., Purple developers which was constituted on 6-9-2008 and the same is at will?

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(2) Whether the plaintiff proves that he got 1/4^th share pertaining to the accounts of the firm?

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(3) Whether the plaintiff proves that defendants in collusion with each other adversely working against him pertaining to the affairs of the partnership firm?

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(4) Whether the defendants prove that the partnership firm was dissolved which is within the knowledge of the plaintiff?

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(5) Whether the suit is barred by limitation?

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(6) Whether the plaintiff is entitle for the decree of dissolution of partnership, for the rendition

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of accounts and for the realization of Rs.26,00,000/- as prayed for?

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(7) What order or decree?

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6. Further the trial court reconstituted and framed

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the additional issue at the time of delivering the judgment, which is as follows:

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(1) Whether the plaintiff is entitle for the interest as prayed for?

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The trial court has passed the preliminary

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decree directing the defendants to produce the books of accounts in respect of the partnership firm from 12.07.2011 and onwards before the Court for perusal and verification. Further had decreed that after verifying the accounts if any profit is not disbursed then the plaintiff is entitled to receive his share of the property. The trial court assigned the reasons that the establishment of partnership firm is admitted fact and defendants are partners. Also it is observed the admitted facts regarding

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the various transactions of developing the land and formation of layout and selling out of sites.

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The trial court assigned the reason for granting preliminary decree that in the second project of forming layout on the 1 acre land 21 sites were formed, but as per Ex.P-9 accounts were given only in respect of 15 sites. Further assigned reason that the defendant No.3 had purchased 2 sites, but there is no account whether the said sites were purchased from the personal earning of the defendant No.3 or from the accounts of the firm. Further in Ex.P-9 the amount of calculation is wrongly shown. Thus, the judgment and decree is passed.

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Being aggrieved by the judgment and decree passed by the trial court, the defendants have preferred the appeal by raising various grounds and the learned counsel for the appellants/defendants in consonance with the grounds raised has submitted that the defendants are not liable to pay any amount to the plaintiff and in fact,

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the plaintiff has received excess amount than what he is entitled for. Further submitted that the plaintiff was maintaining and managing the firm and was maintaining the books of accounts himself and has produced the books of accounts - Ex.P-1 himself and the defendants are not in custody of any accounts of books and therefore, the defendants are not in any way due of any amount payable to the plaintiff.

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The learned counsel for appellants/defendants further argued with reference to the amount received by the plaintiff is admitted in the plaint. Hence, submitted that as per books of account Exs.P-1 and P-9 the defendants are not liable or having any due of amount payable to the plaintiff. Therefore, there was no necessity of passing the preliminary decree directing the defendants to produce the books of accounts, as the entire books of accounts are with the plaintiff and same was produced before the Court. Therefore submitted that the defendants are not in custody of any books of accounts so as to

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produce before the trial court. Hence, prays to allow the appeal.

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Further submitted that trial court while reframing issue No.3 at the time of delivering the judgment the defendants did not have opportunity to lead evidence on reframed issue No.3. Therefore, the defendants are deprived of opportunity to lead the evidence on issue No.3. Therefore, finding on issue No.3 is behind back of the defendants and thus, the case is liable to be remanded to the trial court for fresh consideration even atleast upon the issue No.3 is concerned. Therefore, on all these grounds prays to allow the appeal and remand the suit to the trial court.

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Learned counsel for the appellants/defendants

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has placed reliance on the judgment of this Court and Hon’ble Supreme Court as follows:

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(1) (2006) 2 SCC 285: K.C.SKARIA V. GOVT. OF STATE OF KERALA AND ANOTHER

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(2) 1980 SCC ONLINE KAR 302: SESHAMMA V. CHANNAKESHAVIAH M.K.

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(3) AIR 2003 SC 160: GULABRAO BALWANTRAO SHINDE AND OTHERS V. CHHABUBAI BALWANTRAI SHINDE AND OTHERS

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On the other hand, learned counsel for the plaintiff/respondent submitted that the plaintiff is one of the partners along with defendants and defendant No.3 is the wife of the plaintiff and since their marital relationship was strained, therefore the defendants have started siphoning of the amounts of the firm and kept the plaintiff in dark. Though the plaintiff was maintaining the books of accounts till 12.07.2011 on which date the plaintiff fell ill, but thereafterwards the defendants have maintained the books of accounts but have not furnished accounts to the plaintiff. Further they have submitted that the trial court has passed only a preliminary decree of rendition of accounts. Therefore, justified the judgment and decree passed by the trial court and prays to dismiss the appeal.

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Upon considering the pleadings, evidence and submissions made by the learned counsel appearing for the parties on both sides, the following points would arise for consideration:

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(1) Whether, under the facts and circumstances involved in the case, the plaintiff proves that after 12.07.2011 on which day the plaintiff fell ill due to heart attack, the defendants have not maintained proper books of accounts and kept the plaintiff in dark and thus, plaintiff is entitled for preliminary decree of rendition of accounts?

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(2) Whether, under the facts and circumstances involved in the case, the defendants prove that as per the books of accounts all the shares and profits were completely disbursed and even the plaintiff has received excess amount and hence, there is no question of furnishing books of accounts?

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(3) Whether, under the facts and circumstances involved in the case, the judgment and decree passed by the trial court requires any interference of this Court?

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Upon considering the evidence on record and

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the submissions made by the learned counsel for the both parties, establishment of the partnership firm by the name “Purple Developers” is admitted and the plaintiff and defendant No.3 are partners. These are the admitted facts. Also both parties have admitted that the said firm was carrying out the business activities of developing the lands and formation of layout and sites and sold the sites to various purchasers. These facts are not disputed by the other side.

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As per the learned counsel for the appellants/defendants the books of accounts were maintained by the plaintiff and at the time of admitting the plaintiff to the hospital, the plaintiff was paid excess amount and all the hospital expenses were borne out by the amount of the partnership firm. Even thereafter, from the dated 12.07.2011 after recovering from the illness and after completion of bed rest the plaintiff continued to maintain the books of accounts were with the plaintiff, but

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contra submission by the plaintiff is that from the evidence of DW1 and DW2 still there are some discrepancies found in the accounts maintained by the defendant Nos.1 and 3 after the plaintiff fell ill and hospitalized and for which satisfactory accounts were not furnished by the defendants. Hence, denied the defence of the defendants. When this being the fact, the oral and documentary evidence are to be appreciated.

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Ex.P-1 is the books of accounts. Ex.P-9 is the accounts maintained with respect to project of formation of 21 sites. It is admitted in the evidence that Ex.P-1 - books of accounts is completely in the hand writing of the defendant No.1 and till page No.34 in the said Ex.P-1 - books of accounts, the plaintiff has put his signature. Thereafterwards, the plaintiff's signature is not found. Ex.P-9 is the accounts written down by the defendant No.3 as admitted in her evidence, which is pertaining to second project of having formed 21 sites, but there is account of only 15 sites. Upon perusing Ex.P-1 - books of accounts

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and evidence of defendant No.3, who is examined as DW1 it reveals that the accounts maintained in Ex.P-9 written down by defendant No.3 is not reflected in Ex.P-1 books of accounts. This is one of the reasons assigned by the trial court that the accounts produced before the Court for verification and perusal and this reason assigned by the trial court is not found to be illegal and perverse.

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When in second project 21 sites were formed but accounts was showed only in respect of 15 sites, for remaining 6 sites there is no accounts furnished by the defendant No.3. For which also there is no pleadings or evidence by the defendants for not producing accounts for remaining 6 sites. Further the defendant No.3 has admitted in her cross examination that she has purchased 2 sites from one Vinod Kumar, for which the explanation offered by the learned counsel for the appellants/defendants that defendant No.3 had purchased those two sites out of her self earnings, but not by the amount of the firm. For which there is no evidence by the

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defendants. Therefore, it remains under vacuum. For purchase of two sites from Vinod Kumar, what was the amount utilized by defendant No.3 whether are from self earnings or from the amounts of the partnership firm is not forthcoming in evidence. This is also one of the reasons for passing preliminary decree, which also needs no interference of this Court as there is no perversity found in the finding.

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Further upon perusal of Ex.P-9 admittedly which is books of accounts prepared by the defendant No.3, the total income shown is Rs.1,79,59,200/- and expenses is shown as Rs.44,02,500/- as expenditure and if this expenditure is deducted from the total income, then the amount would be Rs.1,55,56,700/-, but it is wrongly shown as Rs.1,10,17,500/-. Then for the remaining balance amount, what is the explanation there is no evidence by the defendants. Hence, this is also correctly appreciated by the trial court in passing the preliminary decree.

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Further in Ex.P-1 books of accounts the

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signature of plaintiff is found till the page No.34, but thereafter from page Nos.35 and 36 some amounts were mentioned in the pencil and what are the amounts mentioned in pencil, there is no satisfactory answer by the defendant No.1, who is examined as DW1 and the answer given by the DW2 is that the amount stated under pencil at page Nos.35 and 36 in the books of accounts, were kept in suspension account. What is meant by suspension accounts is not explained by the defendants. Therefore, on all these reasons the trial court has correctly come to conclusion decreeing the suit by passing preliminary decree. Hence, there is no perversity found in the judgment for passing preliminary decree of rendition of accounts.

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Upon considering the judgments relied on by the learned counsel for the appellants/defendants, in

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K.C.SKARIA’s¹ case supra the principle of law laid down is, in a suit for rendition of accounts the suit is maintainable only when a person suing as a right to receive an account from the defendants, otherwise not. But upon considering the present case, the plaintiff has made out a case for passing preliminary decree. For the reasons above stated, the plaintiff is found to be entitled to know about the accounts and financial transactions and entitled to profit. Under the difference on factual difference in the cited case and the case on hand, the said judgment is not helpful to the defendants.

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Further to meet with the contention raised by the learned counsel for the appellants/defendants that the issue No.3 was reconstituted and reframed at the time of delivering the judgment and hence, no opportunity was given to the defendants to lead evidence on reconstitution of issue No.3 is concerned, no doubt the said issue No.3 is reconstituted at the time of delivering judgment but upon

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1 (2006) 2 SCC 285

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considering the original issue No.3 framed and reconstituted issue No.3, both are conveying more or less similar meaning for consideration before the Court. Hence, when more or less a similar issue is involved upon comparing the said two issues, there is no necessity to once again to receive the evidence. Therefore, the trial court at its wisdom has reconstituted and reframed the issue No.3 and had found that on this issue the defendants have already adduced evidence, therefore there is no perversity found in the approach of the trial court in this regard. Hence, the judgment in SESHAMMA’s² case supra is not helpful to the defendants.

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Having difference in the factual matrix in GULABRAO BALWANTRAO SHINDE’s³ case supra and in this case, the said judgment is not applicable in the present case.

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2 1980 scc Online Kar 302

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3 AIR 2003 SCC 160

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Therefore the trial court at the most what the

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decree passed is preliminary decree directing the defendants to produce accounts to the court and not more than that. It is admitted that Ex.P-1 - books of accounts was being prepared by the defendant No.1 in his handwriting till 2011 the plaintiff was active in participating in business transactions, but thereafter due to illness the plaintiff did not participate in the business transactions. Therefore, appreciating this, the trial court has correctly passed the judgment and decree of rendition of accounts prima facie finding that plaintiff is entitled to receive the amount of share of profit and thus, passed the preliminary decree. The trial court further observed that if anything found profit or surplus amount, the same shall be disbursed and the plaintiff is entitled to same and that would be only after verifying of accounts in the final decree proceedings. Therefore, at any angle the reasons assigned by the trial court are not found to be illegal or perverse. Therefore, the judgment and decree passed by

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the trial court is found to be correct, which needs no interference. Hence, I answer Point No.(1) in the affirmative, Point Nos.(2) and (3) in the negative. Thus, the appeal is liable to be dismissed.

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For the reasons aforestated, I proceed to pass the following:

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ORDER

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(i) The appeal is dismissed . (ii) The judgment and decree dated 30.10.2018 passed by the XXXI Addl. City Civil and Sessions Judge, Bengaluru City (CCH-14) in O.S.No.8160/2014 is affirmed.

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(iii) The FDP Court is directed to expedite the final decree proceedings and dispose of the case as expeditiously as possible without giving unnecessary adjournments.

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Sd/(HANCHATE SANJEEVKUMAR) JUDGE

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DR

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List No.: 1 Sl No.: 18

Sri. K. J. George v. Sri. P. G. Raju

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Sri. K. J. George v. Sri. P. G. Raju

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