Y Venkanna Chowdry Died and Another Vs G Lakshmidevamma and Others - Citation 775551 - Court Judgment

Judgment:
ORDER

Mishra, J.

1. The Managing Partner(judgment-debtor) in a proceeding for rendition of accounts, has preferred this appeal against the judgment by Padmanabhan, J. dated 13-6-1979.

2. Originally the plaintiffs and the defendants entered into a partnership on 5-11-1956 under the name and style of Sambhu Films, all partners agreeing to share the profit and loss of the business. The capital of the firm of Rs. 2,20,000/- was divided into 220 shares of Rs. 1,000/- each and the first defendant/appellant was appointed as the Managing Partner under the deed. The Firm produced two motion pictures, one in Telugu and another in Tamil. Particularly relying upon two clauses of the partnership deed clauses (9) and (10) and alleging violation thereof, the plaintiffs stated in the plaint as follows :--

'The partners of the aforesaid firm constituted the 1st defendant Venkanna Chowdary as the Managing Partner and he was entrusted with the Management of the firm and all its affairs. Clauses 9 and 10 of thepartnership deed deal with the manner of maintaining the accounts and rendering of such accounts. They run as follows :--

'9. Proper books of account shall be kept by the Managing Partner and entries made therein of all such matters, transactions and things that are usually entered in the books of account kept by persons engaged in concerns of a similar nature and the same shall be kept posted up to the date under the personal superintendence of the Managing Partner. Such books of account shall be kept at the office of the partnership and each partner shall at all reasonable times have free access to them either by himself or by his agent, to examine and copy the same.

10. On the 31st day of December every year, a general account shall be taken of all assets and liabilities of the partnership and of all dealings and transactions of the partnership during the preceding year and the first of such accounts shall be closed on 31st December, 1957. A profit and loss account and a balance sheet shall be prepared and entered on a separate page and shall be signed by each partner. Such statement when signed shall be binding on them save that if any manifest error shall be found therein and within three months such error will be rectified.'

At the commencement, one or two meetings of the partners were held in which certain policy decisions were taken. The first defendant offered to work without salary and honorarium for his work as Managing Director if the partners agreed to naming the firm in his son's name and style himself as the Nirmatha (Producer) of the picture though in fact the firm collectively was the producer. This was agreed to by all the parties. These decisions were reduced to the form of resolutions and entered in the Minutes Book signed by the partners present at the time including the plaintiffs. Taking advantage of these resolutions, the 1st defendant assumed the role of sole owner, and failed to convene or hold any meetings of partners thereafter, or inform them of the affairs of the partnership or take the partners into his confidence. The 1st defendant acted contrary to clause (9) of the partnership agreement and failed to allowinspection of the accounts to the plaintiffs and some of the other partners. The plaintiffs have not been informed as to the working of the firm, the firm's income and expenditure. In view of the plaintiff's insistence of inspecting the accounts of the firm, the first defendant offered the plaintiffs access to the accounts relating to advances made by them and interest credited in the accounts. The regular accounts of the partnership, its dealings, day books, showing receipts and expenditure, ledgers and other accounts were not shown to the plaintiffs in spite of repeated requests, under various pretexts. The annual accounts of the firm were never passed by the partners at any meeting of that partners convened as required by clause (10) of the Partnership Deed. On two occasions, however, the signatures of some of the partners were obtained in the income-tax returns in blank on the representalion that dire consequences would result if such returns were not filed in time with their signatures and on the assurance that the accounts would be duly prepared and shown to them and their approval obtained at any early date.

The 1st plaintiff herein however refused to sign the so-called returns unless the accounts were shown to him and discussed by the partners. But the 1st defendant never disclosed the real position of the firm or allowed the partners to peruse the accounts of the firm. As already stated, the plaintiffs were allowed inspection of the accounts relating to advances made by them, interest credited and amounts repayable to them. They however were not allowed to peruse the firm's accounts.

The 10th defendant is the brother-in-law of the 1st defendant. The 7th defendant is the mother-in-law of the 10th defendant and the 8th defendant is her son. Defendants 12 to 14 are mere name lenders to the 1st defendant . and are his associates, in all his activities. Their interests are identical with and are centred round the 1st defendant. The aforesaid persons are brought in as partners without their contributing any capital themselves but the contributions were provided only by the 1st defendant to give the 1st defendantpredominant voice in the management of the affairs of the firm.

The plaintiffs learnt that the 1st defendant, with a view to enrich himself, created bogus documents said to be debts payable to certain Multanies of Madras (1) Seth Chandulu Thikam Dass (2) Govindan Chataram (3) Paramanand Kishandass, (4) Lalchand Lakshmandass, (5) Kishandass Sadharam, (6) Aratmul Motilal, (7) Vashumul Thikam-dass, (8) Chetanchand Arjun Das and a host of other Multanies. This was done with a view to swell the liability of the firm while factually there was no need to incur any debts and appropriate the firm's profits under the guise of repayment to the said bogus creditors. Equally bogus are the bundles drawn by the 1st defendant. There was no necessity to borrow from Multanies and even if it was necessary, the 1st defendant could have got the required money from some of the partners. The 1st defendant also used to confer certain pecuniary benefits on some of the vociferous and influential partners to silence them and purchase peace and was misusing the firm's income and appropriating the same to himself. In fact, during this period, some of the partners repaid interests on the advances made by them and the plaintiffs learn that the 1st defendant appeared to have drawn out two lakhs from the firm. A copy of the trial balance of the accounts furnished by the firm's auditor for the year ending 31-3-1962 shows the 1st defendant's drawing and wrongly debiting the firm with the said sum of Rs. 2,06,113.31. The 1st defendant has made drawings subsequent to that date also. It may be seen from the said account that the 1st defendant's brother has been debited with Rs. 21,235.15.

The plaintiffs state that the Telegu version of the pictures taken by the partnership firm, namely, 'Nammina Bantu' was released on 7-11-1960 and the Tamil version of the said picture was also released in or about April, 1960. Subsequently to the release of the pictures as aforesaid, there was no need to incur further expenditure or keep the liabilities undischarged as after the date of the release, the picture began to yield by way ofcollections as result of receiving advances from distributors and of its being screened in a number of places simultaneously. The accounts of the partnership would disclose the advances received from the various distributors and collections made, withdrawals from the partnership funds and liabilities. On a scrutiny of the accounts of the partnership, the plaintiffs find that the 1st defendant had drawn Rs. 2,06,113.31 in 1961, Rupees 3,04,972.98 in 1962 and Rs. 2,62,531.63 in 1963 besides the drawings in the name of his brother Y. Ranganayakulu amounting to Rs. 1,56,000/- in the year 1960.

Assuming that the Hundi liability of the partnership firm is real, the plaintiffs state that white large cash balances were available for repayment during the years 1960 to 1963, the Hundi loan position remained constant and undischarged during all the period.

The plaintiffs learnt that the 1st defendant out of the heavy withdrawals made during the years 1960 to 1963, had made various investments by way of real property purchases and of starting of new businesses in brick kiln in one of the properties purchased, in the name of the 1st defendant, his son, his wife and his nominee. The bulk of the consideration for the aforesaid purchases and commencement of brick kiln business came from the partnership funds and the 1st defendant has been freely using the partnership funds as and when necessary.

The 1st defendant has been purchasing the following properties in the name of himself, his brother, his wife and his nominees such as Guruviah :

(1) Sale deed dated 6-7-1960 in respect of Kodarnbakkam lands for Rs. 75,000/- of the extent of 29 acres;

(2) Sale deed dated 7-11-1960 in respect of 4.68 acres near Saidapet bridge for Rupees 42,800/-;

(3) In connection with the purchase of Gulabi Property from the Maharajah of Pithapuram for Rs. 4,00,000/- under a sale deed dated 12-4-1961, the consideration thereof was made up as under :

(a) Rs. 1,00,000/- paid on 4-6-60 for obtaining an assignment of the 7th mortgage over the said property in favour of J. Guru-vayya, the 1st defendant's nominee.

(b) Assignment of the 6th mortgage over the same property in favour of his brother Y. Ranganayakulu, another nominee by payment of Rs. 1,24,000/- on 4-6-60.

(d) Sale deeds dated 17-3-1961, 19-3-61, 27-4-1961 and 29-4-1961 relating to survey Nos. 116/1 and 116/2 Valasarvakkam Village, Kodarnbakkam, total consideration Rs. 1,08,000/- in which the brick kiln business had been commenced namely 'SAMBHU BRICK KILN', Rajalakshmi Brick Kiln', etc.

(e) Sale deeds dated 17-11-1961 for 59.65 acres known as 'NARASU GARDENS' at Virugambakkam for Rs. 2,00,000/- under two documents.'

3. Alleging further that as a result of the investigation and enquiry, the plaintiffs were able to obtain the aforesaid particulars and they reserved their right to amend the plaint by including further transactions entered into by the first defendant with partnership funds in case such details came to their knowledge, and stating in particular that the first defendant was acting in a fiduciary capacity to other partners and was bound in such fiduciary capacity to protect the interest of all the partners of the Firm, the plaintiffs maintained that the first defendant had gained for himself a pecuniary advantage by withdrawing partnership funds and utilising the same in purchase of property and of commencing of business such as 'brick kiln' in one of the items of properties purchased in the name of himself, his wife, son, and his nominee. There has been a further allegation in the plaint, which however, only added to the allegations of misconduct on the part of the first defendant as the Managing Partner of the Firm for the purpose of the suit for accounting.

4. The first defendant in the written statement, however, admitted the partnership between him and others, but said in the written statement,

'The said firm produced only one pieturc called 'Nammina Banttu' in Telngu and its Tamil Version is 'pattaliyin Vettri'. There was high class starring and nearly 50% of shooting was done out-door and the production took nearly four years for competition. The heroine became pregnant in the course of the production and some of the bulls which participated in the production died and the firm had to procure new and similar bulls at a great cost and expense and train them for the picture. There were 19 partners and the plaintiffs contribution is only Rs. 20,000/-out of the total capital of Rs. 2,20,000/-. At the stage of negative, the picture costed about ten lakh of rupees. This defendant and his friends advanced Rs. 4 lakhs and so far as this defendant was concerned he charged only 9% interest on his advances, while the other partners and creditors were paid 15% interest on their advances. This was the first picture of its kind produced without obtaining any financial assistance from the distributors. After the production, the picture was released at various centres and the exploitation is now practically over. The picture is now running in lean houses in Andhra Pradesh, some centres in Tamil Nadu, Mysore and Kerala. It is true that the picture was selected for participation in the International Film Festival at San Fransisco and in Spain. This defendant led the delegation and all the travelling expenses for the said trip was met by this defendant out of his pocket'.

4A. The main allegation in the first defendant's return, however, has been ihat several meetings of the partners were held and the correctness or mistake could have been verified if the plaintiff who had taken away the minute books, chose to produce the same, which were even on the date of the written statement in their custody.

5. Besides denying other allegations in the plaint and stating particularly his own version of the case, the first defendant stated as follows :--

'The allegations in paragraph 8 are all false. In respect of the needs of the partnership, the first defendant as the Managing partner of the firm had to borrow moneys onhundies and those sums have been utilised for the purposes of the business of the firm. They are all genuine borrowing and they have also been duly repaid, on the due dates. As already submitted, the capital contribution is only Rs. 2,20,000/- while the cost of the production came to nearly 10 lakhs. Apart from the advances made by the partners it was necessary for completing the picture to borrow moneys from outside sources and every one of the partner is aware of the same. All the borrowings are genuine and it is false to state that these debts have been created to falsify the liabilities of the firm and for the personal benefits of the first defendant. It is absolutely false to state that the first defendant was conferring pecuniary benefits on any of the partners. 'To silence them and purchase peace' and was misuing the firm's income and appropriating the same to himself. The first defendant had no doubt borrowed certain funds from the fifm and they have also been repaid. Not only the first defendant, the other partners had also drawn funds from the firm and this has happened subsequent to the completion of the picture.

The averments in paragraph 9 deal with the death of one of the partners Smt. Daggu Patti Ananthamma on 29-6-1963. The legal position on the death of one of the partners is as stated by the plaintiffs that the firm stood dissolved, but the Managing Partner of the firm, this defendant was duty bound to safeguard the interests and rights of all the partners and the just amounts due are realised and necessary expenditure in that connection are incurred. As there is no provision for the automatic continuance of the partnership on the death of one partner in the document, this defendant took steps to find out the intention and desire of the existing partners and the legal representatives of the deceased partner for reconstitution of the firm and its continuance. For this purpose, this defendant was holding consultative meetings amongst the obter partners and others for arriving at an agreed decision so that effective steps could be taken for the reconstitution of the partnership. Actually a meeting of the partners was called on 29-11-1964 and the meeting of the partners was called on 29-11-1964 and the meeting could not be held in view of the non co-operation of plaintiffs herein. The first plaintiff wrote to say 'That the meeting is invalid'. This defendant therefore submits that whatever he did after 29-6-1964 was only to realise the just dues of the firm and incurring the necessary expenditure in relation thereto. It is not correct to state that the first defendants was carrying on any business contrary to the interests of other partners. The other allegations that this defendant was misusing the firm's funds for his own purposes and committing breaches of trust and misappropriating the partnership funds by meddling the affairs of the firm are all absolutely false and incorrect.

The averments made in paragraph 11 of the plaint are untrue. This defendant states that there is no case of misappropriation in non-crediting cheques or drafts received for sometime from the distributors. This defendant stated that after the death of Daggu Pathi Ananthamma, one of the partners, J. Ghowdaramma sent a letter to this defendant that till all the matters relating to the rcconsti-tution of the firm are finalised this defendant should not deposit the cheques into the firm's bank excepting to incur and discharge all the existing liabilities. In the circumstances, this defendant was keeping all the cheques with him. But subsequently on the directions of this Hon'ble court in Application Nos. 929/ 65 and 1044/65 dated 27-4-1965 all the cheques have been duly banked and the current cheques also being duly banked from time to time as and when they are received. The allegation that this defendant was attempting to draw and obtain personal cheques in his favour in lieu of the partnership firm's cheques are absolutely false and untenable. At no time this defendant misappropriated any funds of the partnership for his personal benefits to the detriment of the firm. The production of the picture was completed sometime in 1960 and after that no petrol bills were debited to the firm's accounts. All the petrol bills and other charges were incurred by this defendant alone debited to this defendants' own accounts and they did not pass through the firm's accounts. All the petrol bills and other charges were incurredby this defendant alone debited to this defendant's own accounts and they did not pass through the firm's accounts. There is therefore absolutely no relevance to the other businesses carried on by this defendant in which neither the plaintiffs nor the other partners have any interest or claim. This defendant also stated that out of his own personal funds be spent over Rs. 8,000/- for going abroad to San Sabastian for participating in the International Film Festival for which the firm's picture was selected. The picture also received the president's Award and for receiving this award also the defendant spent his own funds. The fiat car referred to in para 11 was purchased by this defendant out of his own funds and it belongs to him only and the firm has no concern in this.

All the advances have been duly repaid and there is no question of return of any advances to any parties at this stage. All the account books are duly and properly maintained by him in usual course of business and there is no neeci or occasion for tampering with the account books. Further all the account books and other vourchers and documents maintained by this defendant in relation to the firm's business have been duly filed into Court as per the directions of this Hon'ble court. There is no justification whatever either for the appointment of a Commissioner or for a Receiver for managing the affairs of the firm. There is now no new production of any picture of incurring any major item of expenditure. It is only the exploitation of the picture and as already stated the picture is having the lean days. There are the distribution accounts and the picture is being exploited by well known persons in the field. All the moneys realised are being deposited into Bank and there is therefore no question of loss or damage to any person in the present stage of management continuing.

This defendant has no objection for Commissioner being appointed in the final decree to go into the account period subsequent to the periods for income-tax assessments are over in respect of the earlier period for which the income-tax assessments are over, all the partners have accepted and actedon the book results and they have also shown their income disclosed in the partnership book in their individual returns. It is not open to the plaintiffs or any other partners to go back on accepted figures and proceed to reopen everything on the basis of the death of one or two partners.

This defendant also states that there are 19 partners in the firm, and in view of the plaintiffs refusing to sign the regular application for registration of the firm will not be continued from the assessment year 1963-64 and the firm will be proceeded with and assessed as an unregistered firm. This defendant states that the plaintiffs are solely and personally responsible in relation to the loss that the individual partners may suffer on account of the attitude of the plaintiffs and in the final accounting they will have to make good this amount.

This defendant states that there are no merits in the various allegations in the suit and submits that the suit itself had been laid only as a counter blast to the other suit C.S. No. 162 of 1964 filed by this defendant against the first plaintiff in respect of certain moneys due and payable on a pronote by the first plaintiff. This defendant states that the suit itself was filed long after the other suit itself was filed and the learned Master refused to give unconditional leave to defend that suit and the learned Master directed that the first plaintiff should deposit a principal amount due on the pronote into Court.

This defendant also states that the plaintiffs are not entitled to ask for this defendant to render accounts of the partnership or for taking an account from 5-11-1956. The accounts till 31-12-1962 have been accepted and acted upon by all the partners and accounts from 1-1-1963 will be the starting point of time from which alone the accounts were to be taken.

This defendant also states that the plaintiffs will not be entitled to the reliefs 5, 6 and 7 claimed in the plaint either for Receiver or a Commissioner or Injunction.

This defendant has already submitted no objection for a Commissioner being appoint-ed for taking final accounts and determine the rights of all partners interse from 1-1-1963. This defendant also states that so far as the further exploitation of the picture is concerned that right may be given to highest bidder, amongst all the partners and the legal representatives of the deceased partners on his depositing the amount, for which he is willing to take the distribution rights into this Honourable Court.'

5-A. The pleadings in the plaint, more particularly, paras 8-A to 8-F which were introduced by amendment by the plaintiffs were denied on various grounds including bar of limitation and change in the cause of action, etc. A preliminary decree, it appears, was passed almost without contest and the objections in the plaint thus enured in the final decree proceedings. Defendants 7, 8, 10 and 19 filed their statement adopting all objections raised in the plaint and reiterating that the first defendant had drawn large sums of money, created bogus hundis and purchased properties out of the partnership funds and making a specific allegation as follows :--

'In the ledger page a sum of Rs. 7.935.00 was shown to the credit of defendants 19 as on December 31, 1962. As per accounts, a debit was made and the said amount is transferred to the credit of Nayudamma. The transfer entry is not true, even if true it is not binding on these defendants. The amount was loaned by the 19th defendant to the firm in the year 1956 and no interest was paid after 1962 and the principal not returned.

To demonstrate that the accounts now produced in Court is only a cooked up one, the following are some of the samples of the falsity of the accounts -

(A) numerous loans, hundi or otherwise were taken on occasions where there are heavy cash balances as per the books. For three consecutive years the hundi loan position stood at Rs. 2,65,000/- despite the fact that there were sufficiently heavy cash balance to pay off the hundies.

The partners' personal accounts viz., Y. Venkanna Chowdary and Y. Ranganayakalu Naidu are heavily over drawn.

The realisation from distribution of the firm have been drawn personally by both the above parties and the bundles were kept renewed at a heavy rate of interest paid by the firm.....'

6. We shall refer to the details as and when necessary as to the objectionable entries according to these defendants in the books of accounts except three statements, which we think, will figure most often in the discussion of the objections; there being that a heavy cash balance was maintained, but despite the heavy balance, fresh loans were raised so much that further loans were shown to have been raised before the funds realised from the previous loans were expended, thus creating an inflated cash balance in the book; the accounts shown as cost of production for the two versions of the motion pictures were erroneous inasmuch as, in another simultaneous production taken by another producer, 'Annapoorna Pictures' with the same cast and director, the cost of production for the two versions was only about Rs. 7,00.000/-.

7. The first defendant/appellant filed a reply statement denying the allegations in the objection statement of defendants 7, 8, 10, and 19 reiterating that the allegations that there had been large drawings or bogus hundies created or properties purchased with the aid of such funds or any benefits derived as the partner of Sambu Films by him were not true and specifically alleging :

'all the accounts have already been looked into and all the parties have satisfied themselves about the correctness of the amounts till December 31st 1962 and the partners have filed their income-tax returns accepting the correctness of the amounts and it is not now open to them or to any persons claiming under them to question all the transactions or any particular entries made in the amounts which were maintained in the regular course of business and in respect of which all the partners had at all materials had access and inspection' and

the cost of production for each picture cannot be compared with any other picture produced by another director or even by thesame director. The expenses vary and there is a wide margin in the cost of production. Further there is more than 50% out-door picture Nammina Bantu and Pattatiyin Vertri produced by Sambhu Films. Considering the then position and the market value and the cost of production in the production cost of two pictures as disclosed in the Banks was very fair and normal.'

8. What, however, stood concluded by the preliminary decree was that the partnership firm called Sambhu Films stood dissolved as on 29-6-1963 and that the first defendant/appellant was/is required to render accounts of the suit partnership firm on and from the date determined on the evidence on the question whether he had rendered accounts in respect of the partnership business upto 31-12-1962. The preliminary decree appointed a Commissioner to record evidence and to take accounts of the business that is to say from 5-11-1956 leaving the question open whether the first defendant had rendered accounts upto 31-12-1962.

9. Before the Commissioner could submit his report, however, the first defendant on the one hand and the defendants 2 to 6, 9 and 11 to 17, 20 and 28 on the other hand, entered into a compromise and that was recorded. The plaintiffs and the first defendant also entered into a compromise. Thus, the contest after this remained between the first defendant on the one hand and defendants 7, 8, 10 and 19 on the other.

10. These defendants, it appears, who had remained ex-parte in the earlier part of the proceedings filed their objections as above and applied for transposition as plaintiffs in the suit. No order, however, was passed in the said application for, the Court found that any compromise between the plaintiffs and the first defendant or the 1st defendant anti some other defendants could not affect their rights. The 19th defendant now filed a written statement particularly alleging that the first defendant had not been maintaining proper accounts and the accounts which he submitted to the Court could not be relied upon for any purpose. A direction was issued to the Commissioner by N.S. Ramaswamy, J. as hethen was by order dated 30-7-1971 in the proceedings to find out the true and correct position of the parties till the date on which the first defendant continued to receive the money from the partnership properties and determine whether the partnership funds had been utilised by the first defendant for the purchase of immovable properties and if so the extent to which the contesting defendants would be entitled to in the properties and business or in the profits made therefrom and the extent to which the contesting defendants had been damnified by the acts of omission of the first defendant. Evidence was taken by the Advocate/Commissioner both oral and documentary. Five witnesses were examined on behalf of the contesting defendants. The first defendant examined himself as a witness on his behalf and produced Exhibits A-1 to A-671 and the contesting defendants produced Exhibits C-1 to C-102. In the proceedings, more and more documents have been marked which have been referred to in the impugned judgment as well as in the course of the hearing by the learned counsel for the parties Exhibits D-l to D-36. The Commissioner recorded his opinion and on objections on his report, the suit came up before Mohan, J. as he then was for passing of a final decree. He, on the basis of the evidence collected by the Commissioner, ordered as follows :--

'(1)Therc has been no settlement of account of the partnership as pleaded by the first defendant and that the contesting defendants would be entitled to have the account of the partnership taken from 5-11-1956.

(2) The first defendant is not entitled to any remuneration for services.

(3) There is no evidence to hold that that the plaintiff has taken away the Minutes Book excepting the oral evidence of the defendants.

(4) The first defendant utilised his position as managing partner for the purchases of properties and for making investments between 1960 to 1964.

(5) The contesting defendants would be entitled to their respective shares not only over the amount available for division butalso on the corpus of the properties which were purchased with the funds of the partnership.

(6) The 7th defendant was held entitled to 1/22 share, the 8th defendant to 1/22 share, the 9th defendant to 1/88 share and the 10th defendant to 3/22 share.'

Some clarifications were also sought for and Mohan, J. as he then was, made some modification, but his judgment failed in the scrutiny of a Bench of this Court in O.S. A. Nos. 17 and 66 of 1974 and 16 of 1976.

11. We may refer to the judgment in these appeals with particular reference to certain observations therein for, the learned counsel for the appellant has heavily relied upon them and contended with all seriousness that the impugned judgment has not been passed in accordance with the directions of the Bench, which disposed of the said appeals. The bench has observed at one place,

We have carefully looked into the records to which our attention was drawn at the Bar and also the judgment. Learned counsel on both sides feel unhappy about the judgment and decree and we feel that they do so, quite rightly and reasonably. This is because the learned Judge at one place of his judgment makes the following observations :--

'It is stated by the Commissioner that defendants has incurred a net loss of Rs. 30,234.16 in this venture and this is based upon a statement prepared from the account books filed by the first defendant. 1 am inclined to accept this statement and hence this net loss has to be deducted i.e. Rs. 4,61,822-25 minus Rs. 30,254.16 = 4,31,568.09).....'

If the firm ended in a loss, we are unable to see now still any share can be decreed as outstanding to the credit of any of the estwhile partners. The sum of Rs. 4,61,822.25 related to amounts covered by alleged himdi loans said to have been borrowed by the first defendant for the purpose of the film business.

Mr. Subramaniam. the counsel for the Respondent in one of the appeals and the appellant in his own appeal states thatthese loans were spurious loans incurred or supposed to have been incurred by the first defendant Managing Partner in order to magnify or inflate the business expenditure. But no attempt has been made to check up where precisely the items of expenditure are false. The question whether, if the hundi loans were spurious, they were reflected at all in the expenditure or in some other way in the course of the business has not been precisely found. But straightway the learned Judge thought that the sum of Rs. 30,234,16 should be deducted. But still in the context of the learned Judge's acceptance that the firm incurred a loss, it is difficult to appreciate how by deduction of Rs. 30,234.16 out of the sum of Rs. 4,61,822-25 p would make the firm's business a proficatble one, so that a decree can be given in favour of the erstwhile partners for a proportionate share thereof. All that we see from the concluding part of the judgment of the learned Judge is that without going into the records, accounts and other documents, statements from the Bar on either side seem to have taken the place of evidence and formed the basis of conclusions drawn by him. This, in our opinion, has vitiated the entire judgment.'

12. After holding as above that the judgment of Mohan, J as he then was, was vitiated, there are certain observations in the Bench judgment in the appeals to the effect that the suit being one for dissolution and for accounts, a proper and accurate picture of the entire capital structure, borrowings, expenditure and receipts from all sources alone can be a safe basis for arriving at the net result of the firm's business and to take some entries here and there from the accounts and connect them with purchases made by the Managing Partner would not give the Court an exact position and such truncated consideration might possibly lead to a distorted result and in fact when the matter reached the stage, of disposal, learned counsel on both sides frankly conceded that on either side, the judgment required reconsideration, that the suit being one for dissolution and for taking of accounts, and as large sums of money were involved, it was necessary that account taking was referred to the Master of the Court and hebe directed to consider such documents and other evidence including oral and submit his report on the iussue to be referred to him by the learned trial Judge. The Master would have to not merely consider the truth or otherwise of the disputed entries in the account books, but in doing so, would have regard to the other evidence which will throw light on the matter.

13. As a result of the above observations of the Bench in the aforementioned appeals, the records of the case went to the Master of the Court, who started and enquiry on 3-11-1976, but for one reason or the other, it remained pending for about one year in Master's Court and on a representation by learned counsel for the first defendant as well as for the defendants 7, 8 and 10 (appellant and respondents herein), the learned single Judge passed the following order :

'In O.S.A. Nos. 66/74, and 10 and 17/76 Chief Justice Veeraswami, J. speaking for the Bench set aside the judgment of Mohan, J and remitted back the matter to the Court, In doing so the learned Chief Justice directed that fresh accounting should be taken by the Master on all the matters to be referred to by the parties.

It is now submitted by Mr. V. S. Subra-manyam for defendants 7, 8 and 19 and the estate of the 10th defendant and by Mr. Raghavan, for the first defendant, the accounting party, that the entire evidence has been taken before the Master. The matter has now come before me to settle the points for determination by the Master for submission of his report. A reference has been made by the Master himself at the instance of the parties. It is now submitted by the learned counsel for both sides that since the entire evidence has been taken by the Master and what remains is only a formal hearing and submission of the report by the Master. It may not be necessary that it should be done by the Master himself. Both the parties represented by the counsel request that the matter may be straightway argued before the court so that the time taken for one round of argument before the Master and the preparation of the report by the Master may be avoided. In view of the consent and request expressed by both the counsel, I direct the matter may be posted for arguments on 18-9-78.'

The matter thus came before the learned Judge who proceeded to hear the parties on various issues.

14. In sum, one can say thus that a proceeding that would have ended with the judgment of Mohan, J as he then was, got revived for a rehearing for the reason of the aforementioned order in the appeal and since a need of further evidence was emphasised for which the Master of the Court was found to be the appropriate Court, it remained before the master for about one year to have the evidence of one witness that is to say the first defendant (P.W. 1) and thus to bring on the record of the proceedings besides the pleadings of the first defendant and the evidence on which Mohan, J. as he then was, had passed the judgment, nothing but elaboration of the pleadings of the first defendant by way of oral evidence. On a detailed analysis of the case of the parties, the learned single Judge has found that 'there has been no settlement of partnership account among the various partners as on 31-12-1962 as pleaded by the first defendant', that there is no reliable evidence that the first defendant handed over the minutes book to the first plaintiff and that the same had been lost or destroyed, that the accounts submitted by the first defendant in Court was not true, that there were heavy withdrawals by the first defendant, that borrowings shown to have been from multhanies or from defendants 1 and 11 were untrue and these withdrawals in the name of payments to them were appropriations for which the first defendant has been accountable and on capital structure that is before the release of the films, a sum of Rs. 1,56,234/-, Rs.45,000/-, Rs.50,000/-, Rs.49,500/- and Rs. 12,500/- i.e. a total sum of Rs. 3,13,334/-was received as advance from the distributors and the share capital from the partners was Rs.2,20,000/- and thus the total capital structure of the partnership at the relevant time was Rs. 7,28,662/- including the borrowings admitted by the contesting defendants viz., Rs. 1,95,328/-. The learned Single Judge has also found that the cost of the production of the two suit pictures as presented by the first defendants/appellant is not correct and since capital available for expenses was Rs. 7,28,662/- and that was more or less the cost of another picture by another producer with the same cast and the same director, etc., he has fixed the cost of production at Rs.7,28,662/-.

15. He has after taking notice of the law on the subject found in favour of the respondents that the first defendant was accountable for the acquisition of properties viz.,

'(1) Caidapet Abdul Razack Property : Rs. 1,63,000

(2) Valarasaravakkam Panthulu's Property : 4,14,477

(3) Ganesan's lands : Rs. 1,97,400

(4) Richardson Property : Rs. 5,60,000

(5) Gulabi Property : Rs. 14, 08,876

(6) Pithapuram Kodambakkam property : Rs. 4,35,900

(7) Marasu's lands : Rs. ........

_________________

Total Rs. 31,79,653'

He has accordingly found that the 7th, 8th, 10th and 19th defendants are entitled to their respective shares of 1/22, 3/22, and 1/88.

16. In spite of the above efforts, on specific findings as above recorded by the learned single Judge, it remained to be ascertained as to what may be the total amount realised from the two pictures by the first defendant and what would be the rate of interest that the Court should allow on the outstanding amount due to the contesting defendants/ respondents. The learned trial Judge has accepted the statement given on behalf of the contesting defendants on the total realisationof the pictures as reflected in Exhibits C-62 and C-63 and on the interest permitted a statement on outstanding amounts due with effect from 29-6-1963 at the rate of 12% with yearly rests till the date of the judgment and thereafter at the rate of 6% per annum till the date of realisation.

17. It is this part of the judgment that has given to the learned counsel for the respondents a preliminary objection as to the maintainability of the appeal, which objection, we propose to dispose of first.

18. We have seen from the facts and of the adjudications that have been made in the process of preparation of the final decree including the impugned order under which all issues as to the obections of defendants 7, 8, 10 and 19 in particular have been disposed of except that the total amount realised from the two pictures by the first defendant and the rate of interest are left to be determined, for which purpose, the learned trial Judge has accounted the statement given on behalf of the contending defendants on the total realisation of the pictures as reflected in Exhibits C-62 and C-63 and on the interest permitted a statement on the outstanding amount due with effect from 29-6-1963 at the rate of 12% with yearly rests till the date of the judgment by the contesting defendants. If the statement to the said effect is received and accordingly if formal order is made, the preliminary decree shall become final. There can be no manner of doubt that a decree on becoming final shall be appealable under S. 96 of the Code of Civil Procedure and so under clause 15 of the Letters Patent of this Court. A 'judgment', however, for the purpose of clause ! 5 of the Letters Patent has no limitation of the order being a decree. Under the code of Civil Procedure, a 'judgment' consists of the reasons and grounds for a decree passed by a Court. As judgment constitutes reasons for the decree it follows as a matter of course, that the judgment must be a formal adjudication, which conclusively determines the right of the parties with regard to all orany of the matters in controversy. But the Supreme Court has said in the case of Shah Babulal Khimji v. Jayaben : [1982]1SCR187 ,

'The concept of a judgment as defined by the Code of Civil Procedure seems to be rather narrow and the limitations engrafted' by sub-sec. (2) of S. 2 cannot be physically imported into the definition of the word 'judgement' as used in cl. 15 of the Letters patent because the Letters Patent he advisedly not used the term 'order' or decree anywhere. The intention, therefore, of the givers of the Letters Patent was that the word 'judgment' should receive a much wider and more liberal interpretation than the word 'judgment' used in the Code of Civil Procedure.'

That, however, does not mean, the Supreme Court cautions,

'At the same, it cannot be said that any order passed by a trial Judge would amount to a judgment; otherwise there will be no end to the number of orders which would be appealable under the Letters Patent. It seems to us that the word 'Judgment' undoubtedly a concept of finality in a broader and not a narrower sense.'

Thereafter, the court has stated that there can be judgments of three kinds; a final judgment, a preliminary judgment and an intermediary or Interlocutory judgment, the later being such orders which contain the quality of finality such as orders specified in clauses (1) to (w) of Order 43 Rule 1 of the Code of Civil Procedure, which are judgments within the meaning of the Letters Patent as well, and therefore appelable and added,

'There may also be interlocutory orders which are not covered by Order 43. Rule 1 but which also possess the characteristics and trappings of finality in that, the orders may adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding. Before such an order can be a judgment the adverse effect on the parly concerned must be direct and immediate rather than indirect or remote.'

The second of the types of judgment enlisted in the judgment of the Supreme Court are of two forms : (1) Where the trial judge by an order dismisses the suit without going into the merits of the suit but only on a preliminary objection raised by the defendant or the partyopposing on the ground that the suit is not maintainable, and (2) where the trial judge passes an order after hearing the preliminary objections raised by the defendant relataing to maintainability of the suit, etc. in the latter category, the Supreme Court has pointed out.

'such an order even though it keeps the suit alive, undoubtedly decides an important aspect of the trial which affects a vital right of the defendant and must, therefore, be construed to be a judgment so as to be appealable to a larger bench.'

19. The court has given instances on the one hand of the orders, which are not judgments because the grievance on such a score can be corrected by the appellate court in appeal against the final judgment and also instances of the orders, which appear not to decide a suit or a proceeding in any aspect finally, are judgments for the purpose of the Letters Patent.

20. The test to, however, left for the appellate court to see whether the order is a judgment for, it decides matters of moment or affects valuable rights of the parties and which works a serious injustice to the party concerned.

21. The test indeed as to when a certain order of the court is a judgment although variously referred to, has always been the same after the above judgment of the Supreme Court. A Bench of this Court has taken all these principles in one of its recent judgments in the case of Radhika Konel Parekh v. Konel Parekh : AIR1993Mad90 , in a Full Bench judgment of this court in Loyal Textile Mills Ltd. v. Allcnberg Cotton Co. Ltd. (1993) 1 Mad LW 132 and in an unreported judmenl of a bench of this court in O.S.A. Nos. 8 and 25 of !987 (judgment dated 19-11-1992) in which the judgment of the Supreme Court in Jugal Kishorc Paliwal v. Sat Jit Singh, (19X4) 1 SCC 358 has also been noticed to say that every interlocutory order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affeet vital and valuable rights of the parties and which work serious injustice to the party concerned andthat similarly, orders passed by the trial Judge deciding question of admissibility or relevancy of a document also cannot be treated' as judgments because the grievance on this score can be corrected by the appellate court in appeal against the final judgment.

22. we are satisfied that the impugned judgment is almost a final judgment, which has decided every objection, leaving certain clerical calculations to be done later. Apart from certain ancillary contentions, the main contentions on behalf of the appellants are that a serious mistake of law has been committed by the trial court in treating all the entries in the account books submitted by the first defendant/appellant/disputed for the reason of objections to one or two entries only and in the proceedings after remand, no care has been bestowed to the directions of the court in appeal in which it was categorically said that the suit being one for dissolution and for accounts, a proper and accurate picture of the entire capital structure, borrowings, expenditure and receipts from all sources alone can be a safe basis for arriving at the net result of the firm's business and to take some entries here and there from the accounts and connect them with purchases made by the Managing Partner would not give the court an exact position and such truncated consideration might possibly lead to distorted result that is to say the trial court by not proceeding in the manner directed by the Division Bench, has committed error in appreciating the accounts and the reasons of the borrowings, expenditure and receipts, which alone were entered in the account books by the first defendant/appellant.

23. The inter se relationship of the partners and their rights are spelt out in the Indian Partnership Act, 1932. Section 4 of the Act defines 'partnerhip' as the relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all and persons who have entered into partnership with one another as partners individually a partner and collectively as a firm. Section 12 of the Act say,

'Subject to contract between partners :--

(a) every partner has a right to take part in the conduct of the business;

(b) every partner is bound to attend diligently to his duties in the conduct of the business;

(c) any difference arising as to ordinary matters connected with the business may be decided by a majority of the partners and every partner shall have the right to express his opinion before the matter is decided, but no change may be made in business without the consent of all partners; and

(d) every partner has a right to have access to and to inspect and copy any of the books of the firm'.

24. Reliance has been placed by the learned counsel for the appellant on the expression 'right of every partner to take part in the conduct of the business and it being the duty of every partner to attend diligently to his duties in the conduct of the business and the right to have access and to inspect and copy any of the books of the firm', to contend with great benumb the truth of the case of the appellant that all partners had fully accepted the accounts of the firm until 31-12-1962.

25. Mutual rights and liabilities of the partners are stated in Section 12 of the Act. What constitutes the property of the firm is stated in Section 14 of the Act and what personal profits earned by partners are stated in Section 16 of the Act,

'Mutual rights and liabilities of the partners:

Subject to contract between the partners:--

(a) a partner is not entitled to receive remuneration for taking part in the conduct of the business;

(b) the partners are entitled to share equally in the profits earned and shall contribute equally to the losses sustained by the firm;

(c) where a partner is entitled to interest on the capital subscribed by him, such interest shall be payable only out of profits;

(d) a partner making, for the purposes of the business, any payment or advance beyond' the amount of capital he has agreed to subscribe, is entitled to intefet thereon at the rate of six per cent per annum;

(e) the firm shall indemnify a partner in respect of payments made and liabilities incurred by him:--

(i) in the ordinary and proper conduct of the business; and

(ii) in doing such act, in an emergency, for the purpose of protecting the firm from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances; and

(f) a partner shall indemnify the firm for any loss caused to it by his wilful neglect in the conduct of the business of the firm.'

The property of the firm subject to contract between the partners, the property of the firm includes all property originally brought into the stock of the firm, or acquired by purchase or otherwise, by or for the firm, or for the purpose and in the course of the business of the firm, and includes also the goodwill of the busines.

Unless the contrary intention appears, property and rights and interest in property acquired with money belonging to the firm are deemed to have been acquired for the firm'.

26. Personal profits earned by partners are such properties subject to contract between the partners which any partner receives from the firm after accounting for every profit from any transaction of the firm or from the use of the property or business connection of the firm or the firms name. Section 16 leave no ambiguity in this behaif when it says,

'If a partner derives any profit for himself from any transaction of the firm or from the use of the property or business connection of the firm or the firm name, he shall account for that profit and pay it to the firm;

If a partner carries on any business of the same nature as and competing with that of the firm, he shall account for and pay to the firm all profits made by him in that business'.

27. Since a consideration as to accounts and the value the court is required to attach to the account hooks submitted by the first defendant/ appellant is involved in the instant proceeding, it will be proper if we refer to the provisions in Section 34 of Evidence Act, which says,

'Entries in books of account, regularly kept in the course of business, are relvant whenever they refer to a matter into which court has to inquire, but such statement shall not alone be sufficient evidence to charge any person with liability.'

28. A rule is stated in respect of partnership action in.the case of Gething v. Kcighley, (1878) 9 Ch D 547 that where an account is impeached, if a single important error is established, the court will not, except in the case of fraud, order the whole account to be opened, but will make a decree that the plaintiff may be at liberty to surcharge and falsify.

29. A learned single Judge in a Calcutta High Court's judgment in the case of Sarat Kumar v. Sudhir Kumar : AIR1960Cal231 has staled, (para 12)

'..... A distinction should always bemade between faked books and books with irregularities and mistakes. A genuine book may be imporperly or irregulary kept, but nevertheless it is genuine. After effecting the necessary corrections, it is possible to effect a valuation of business of the books as corrected ..... The books might have beendefective but these books alone contained the materials on the basis of which valuation of the business could be made. I therefore do not agree with Mr. Mukherji that because the valuer has recorded that the books contained certain irregularities and certain mistakes, therefore, the valuation effected on the basis of the same books is bound to be wrong'.

30. We have, however, the indications of the law which this Court has always followed and which we are convinced, is the correct approach that the court shall not reopen the settled account, but when account hooks are shown to be erroneous to a considerable extent both amount and in the number ofitems or where a fiduciary relation exists and a less considerable extent of error is shown or where a fiduciary relation exists and one or more fraudulent errors or omissions are shown, the Court will reopen even a settled account.

31. In the case of Ramaswami lyer v. Ghanamani Nachtar 31 MLJ 851 : (AIR 1917 Mad 14 a Bench of this Court considered a case in which a claim of the power of attorney based on accounts was impeached as false and fraudulent. The plaintiff stated that he rendered the accounts to the Zamindar/ defendant, but the defendant contended that the plaintiff never rendered accounls and the defendant never looked into any accounts; that the accounts relied on contained fraudulent omissions and false debits amounting to a considerable sum as set out in the schedule attached to the written statement. The then Officiating Chief Justice speaking for the Court stated.

'Now regarding the law as to when settled accounts will be opened there is no room for doubt. It is perhaps best stated in the words of Jessel M.R. in Williamson v. Harbour, (1877) 9 Ch D 529 where the accounts have been shown to be erroneous to a considerable extent both in amount and in the number of items, or where, fiduciary relations exist and a less considerable number of errors are shown, or where the fiduciary relation exists and one or more fraudulent omissions or insertions in the account arc shown, then the Court opens the account and does not merely surcharge or falsify.' Nor would the fact of a release following upon a settled account otherwise liable to be opened make any difference. In re Webb Lambert v. Still, (1894) 1 Ch 73 Lindley LJ says 'what is necessary in order to set aside a settled account or a release, or both together when the release proceeds upons the footing of an account? It is essential to show that there has been some in justice done -- to show that there has been some fraud, some pressure, some overcharge, something wrong to cloak up which the release has been obtained. Prove that, and the release cannot stand.' In the same case Davey LJ states the law in this way: 'I take it that a release in the eye of a Court of Equity is nothing more than record by deed of a settled account, and unless the settledaccount is unimpeachable, the fact of the parties having signed a release will not assist those who depend upon it for a defence.'

32. The same view is found stated by the Allahabad High Court in one of its earlier judgments in the case of Bhagwan Bakshi Singh v. Joshi Damodarji, : AIR1919All1 . That wasacase in whichthe learned Subordinate Judge had found lhat settled accounts could be reopened only where a fiduciary relation existed. The Allahabad Court quoted with approval the law stated in Wiliamson v. Barbour, (1877)9 Ch D 529 and reiterated by the Privy Council in the case of Mckellar v. Wallage, (1853) 5 Moo Ind App 372 as follows:

'This was held in Williamson v. Barbour, (1877) 9 Ch D 529 where the law on the subject was thus laid down ..... If they (theerrors) are sufficient in number and importance, whether the errors are caused by mistake or errors caused by fraud, the court has a right to open the accounts. But when the account is between persons in a fiduciary relation and the person who occupies the position of accounting party that is, the trustee or agent, is the defendant, it is easier to open accounts that it is in cases where persons do not occupy that position, that is to say, that a less amount of error will justify the court in opening the account ..... 'everycase must depend on its own circumstances.' The same view was held by the Privy Council in Mckellar v. Wallace, (1853) 5 Moo Ind App 372.'

33. We have, however, a judgment of the Privy Council reported in Moung Tha Huyin v. Mah Thein Myah, ILR(1901) Cal 53. It was a case where pursuant to a dissolution decree, a direction was given to the managing partner to furnish accounts. Although we do not have any statement, as we have noticed in the cases cited above as to the principles of law, it is possible to deduce the ratio from the facts and the procedure of accounting approved by the Privy Council in the case. Upon the issue of dissolution by mutual consent, the Privy Council found that the lower Courts had decided the issue of dissolution by mutual consent correctly and itproceeded to examine the accounts. The Managing Partner filed two accounts (1) a Schedule showing the number and proceeds of timber logs and forming part of the partnership business, and (2) an account of the total expenditure in connection with the business. The plaintiff, who had obtained dissolution, filed objections to both the credit and debit sides of the accounts. Accounts were referred by consent to the Registrar of the first Court, who reported as follows:

'The Commissioner's principle, among others in taking the account appeared as follows: The plaintiff refused to admit, and the Commissioner disallowed, all payments by the appellant, which were neither supported by voucher, nor stated in this account book to have been made on behalf of the partnership. Nor did he allow the advances said to have been made to the agents, and the disbursements made by Moung Galay, the defendant's brother and agent on the forest, who died about two years before this suit. The Commissioner's reasons were that 'the appellant did not keep any proper, or any partnership, accounts and was unable to state how much of the advances had been made on account of the partnership. 'Moung Galay Kept no separate accounts of the business transacted by him for the partnership. The appellant 'very candidly admitted that he treated the partnership business as his own, as though it were his own private business, and therefore, made no distinction between the two businesses in his accounts,' according to the Commissioner.'

34. Approving the above, the Privy Council said in its judgment.

It be true, as is earnestly alleged on his behalf, that expenses honestly incurred for the partnership have been dissallowed to him, the answer is that by his own acts in mixing up his private affairs with those of the partnership and his omission to keep clear accounts of any kind, he has made it impossible even to conjecture what those, expenses are. Their Lordships will humbly advise Her Majesty to dismiss this appeal, and the appellant must pay the costs.'

35. The ratio decidendi is thus that if the accounting parnter has not maintained accounts properly and has mixed up his private affairs with those of the partnership and when accounts submitted by him do not reflect truely the income and expenditure of the partnership, the Court must order to reopen and/or reject the accounts submitted by such accounting partner.

36. In a later judgment of this Court, when a learned single Judge hs stated in the case of Krishnamurthy Ayyar v. Vijaya-raghavachariar (1961) 1 MLJ 358 that books of accounts of the suit partnership produced in the Court constitufe prima facie evidence amongst the partners for them all and against them all and that there is a presumption in favour of the genuineness of the account books of the firm, and added.

'The presumption in favour of the genuineness of the account books of the firm is certainly a rebuttable presumption as it will be always open to the person challenging the account-books to show that they are not genuine or to show that particular entries in the account-books are fictitious and not genuine or to show that particular entries in the account-books are fictitious and not genuine and thus destroy the prima facie evidentiary value afforded by the books of accounts.'

he has not stated anything different from what we have gathered as the principles to be pleaded in the case of a book of accounts.

37. The relationship of a partner qua another partner in a given case may be fiduciary. In another case, it may not be. It is presumed as has been rightly argued by the learned counsel for the appellant that when a partner transacts a business for and on behalf of the partnership, he does so for himself as well as for other partners and all benefits of any such transaction enure for all the partners.

38. In Chen nuru Gavaraju Chetty v. Chen nuru Sitaramamurthy Chetty : AIR1959SC190 , the Supreme Court considered a question whether the renewal of a lease by one partner necessarily enured for the benefit of all the partners and said that there is a presumption of fact, as distinguished from a presumption of law that there is an equity in favour of the renewal of the lease enuring for the benefit of all the partners, but such a presumption being one of fact is rebullable and must therefore depend upon the facts and circumstances of each case. It was held by the Supreme Court that the facts and circumstances of that case amply rebutted the presumption of fact that the lease should enure to the benefit of all the partners. In this however, the Supreme Court also said, (para 15 of AIR).

'..... The fiduciary Character as between the partners had ceased on the termination of the original lease and of the partnership business. On such a termination, there was no interest of the partners which the contesting defendants were bound to protect.'

39. A learned single Judge of the Allahabad High Court however, has made efforts to discover the rule when a partner can be said to act in a fiduciary capacity to another partner in the case of Mathura Datt v. Prem Ballabh : AIR1961All19 wherein it is said as follows (at p 24):

'From the examination of the Partnership Act, the Trustee Act and English, Indian and American authorities cited hereinbefore, it would appear that it cannot be said that there is no fiduciary relationship between the partners, although on the basis of the decision in (1894) 1 Ch 343, one partner receiving assets of the partnership on account of himself and his co-partners is not liable as a person acting in a fiduciary capacity. Whether a partner is or is not so acting at any given moment must we think, depend upon the facts.'

Merely because he is an accounting party would not straightaway establish a fiduciaryrelationship between himself and all other partners in regard to every transaction and to his acts. The accounting partner receives money on behalf of not only his partner but on his own behalf both constituting the firm and partners are joint tenants of debts due to the partnership under the English Common Law and in equity they are as between themselves treated as tenants in common of such debts. If a partner, however, is made the Managing Partner, because of some special trust which is reposed in him by the other partners, then he may come to hold a position of fiduciary relationship and if he betrays that trust he may be held accountable as a fiduciary; if the other partners have acted upon his advice because of his special qualifications, and disinterested advice is not given and the advising partner gains thereby a personal advantage, then althogh as a partner, he is also a co-owner he would be liable on the basis of fiduciary relationship and must given to the partnership such gain.

Likewise, if such a partner made a secret profit utilising his position then also his profit would be the profit of the partnership because in such a case he would be clearly in a fiduciary relationship. In our view it would have to be shown in each case in regard to the claim made against a partner whether the claim in fact arises out of a partner's fiduciary relationship or is a mere claim arising out of the ordinary course of the management of the partnership business, in the course of which management no question of special trust being imposed or any special faith being put on the disinterestedness of advice was involved. We do not think that the Supreme Court case goes to the extent of saying that in every case where a partner is sued for accounts of the partnership, his liability must be considered to be determined on the basis that he is in fiduciary relationship with the other partners.'

40. The Allahabad Judge's view is one to which no exception can be taken. His opinion has the support of authorities that find a mention in his judgment and the provisions ofthe Partnership Act. What is stated in Sections 4 to 16 of the Partnership Act show,

'It as much as the relationship of partner arises under a contract, the rights and liabilities arising under the Partnership Act may, in cases where indicated in the Act itself, by varied agreement between the parties.' There is no such agreement, then the relationship of the parlies should be deemed to be governed by what is stated in Section 9 of the Act. That states,

'Partners are bound to carry on the business of the firm in the greatest common advantage to be just and faithful to each other, and to render true account and full information of all times affecting the firm to any partner or his legal representatives.'

This provision in the partnership Act and Section 88 of the Trusts Act which run as follows:

'Where a trustee, executor, partner, agent, director of a company, legal adviser, or other person bound in a fiduciary character to protect the interests of another person by availing himself of his character, gains for himself any pecuniary advantage, or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other persons and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained.'

give us the same idea as has been propounded by the learned Allahabad Court Judge.

41. The Partnership Act provisions and Section 88 of the Trust Act which have been referred to by us thus show that by entrust-ment to one partner by the other partners such functions as that of the Managing Director or Managing Partner by which he alone acts for and on behalf of the other partners, a bond of a fiduciary character is created, the Managing Director/Managing Partner is bound in a fiduciary character to protect the interest of other partners and in such a fiduciary relationship, he is obliged torender account to other partners. He will be accountable for what he has received on his own behalf as well as on behalf of other partners and what he has spent on his own behalf as well as on behalf of other partners. The other partners will be entitled to challgne the account book as in such a case, they shall not be joint tenants of debts due to the partnership as under the English common law and in equity. In a case like this, the Court may order reopening of the whole account and reject the accounts submitted by the Managing/Accounting partner instead of disallowing one or the other entry in the books of account. The presumption as to the genuineness of the account books of the firm will certainly not be available to the accounting partner and he cannot deny to the other partners the right to ask for a full and correct disclosure of the accounts on the basis of the presumption of genuineness of the books of account of the firm or the partners being not in fiduciary relationship with each other.

42. Entries in books of account, regularly kept in the course of business, are relevant, as we have already noticed under Section 34 of the Evidence Act, but they alone are not sufficient to charge any person with liability.

43. In Firm Hagami Lal v. Bhuralal , a Division Bench of the Rajas-than High Court has said (at pp 55-56):

'The transactions can be proved independently of the writer of the entries in the account books, as it has been done in this case by the plaintiff Shankerlal himself who had knowledge of the transactions. The transactions were carried on according to the rules to the Gulabpura Chamber of Commerce and he was the person who effected those transactions. He also says that all the entries were made in due course and has proved these entries. In many cases, the scribes may be unaware of the transactions themselves, having taken no part in them and yet they may have been directed to make the entries in the books of accounts in due course. The transactions therefore could be competently proved by the plaintiff Shankerlal himself whose evidence has been found reliable by the learned Judge in other respects. It is wellknown that entries in books of account cannot be themselves be sufficient evidence to charge any person with liability but if found to have been kept in regular course of business these entries are relevant and as such admissible in evidence when they refer to a matter into which the court is called upon to inquire.

These books of account therefore having been proved to have been kept regularly in ordinary course of business, the entries of the transactions made therein were admissible in corroboration of the evidence of the plaintiff in proof of these transactions. The evidence of the of the Munims, in our opinion, would not have very much added to or subtracted from the value of the evidence already on record.

A mere look at the books of account would show that they were maintained in regular course and could not have been fabricated for the purpose of this case. They contain entries of numerous other transactions entered into by the plaintiff's firm. In deciding against the admissibility of the account books, the learned Judge relied upon the decision in Gajendra Shah v. Shanker Bux AIR 1935 Oudh 16, where the learned Judges are reported to have observed:

'The account books seem no doubt genuine and have been made use of by both parties as it suited their convenience but as they have not been duly proved as required by law, we have thought it proper to rule them out as inadmissible.'

This the learned Judges did, because the person who wrote the accounts were alive and had not been examined by the plaintiff. The passage occurs in the penultimate part of the judgment and appears to be more or less an obiter because in spite of their decision to exclude the accounts from consideration, the lerned Judges upheld that decision of the court below in favour of the plaintiff. As a matter of experience, the above observations may be justified on the facts of the case before them, but we are unable to subscribe to the view that in every case where the scribe of the entries though alive is not examined, the books of account must be held inadmissible, even though there is other reliable evidenceto show that the entries were made in due course of business by the scribes whose writing could be duly identified.

It depends entirely upon the competnce and credibility of the other evidence which fulfils the requirements of proof and that of S. 34 of the Evidence Act and the value to be attached to the account books themselves. To lay down by hard and fast rule on the point would be to deprive the Court of a most valuable piece of evidence which may otherwise enable the Court to make up its mind in determining the questions involved in a case. In Hingu Miah v. Heramba Chandra, (1911) 13 Cal LJ 139 Mookerjee, J. formulated the law thus:

'The proper procedure to follow, therefore, is, as Said down by their Lordships of the Judicial Committee in Dwarka Doss v. Janki Doss, (1855) 6 Moo Ind App 88 to call the clerk who has kept the accounts or some person competent to speak to their genuineness, to prove that the books have been regularly kept and that they are generally accurate. But this is not all lhat is necessary Section 34 makes the entries relevant if they are entries in a book of account regularly kept in the course of business. It is, therefore, not sufficient merely to prove the correctness of the book, the entries themselves have to be proved unless indeed the necessity for such proof is removed by the admission of the opposite party.'

44. There has been, however, some dispute that the first defendant, who is the accounting partners has not proved that the books of account were regularly kept in the course of business, and (2) has not spoken about their genuineness and occuracy, but, it appears, that they have been marked without objection. Our attention has been drawn to a judgment of the Supreme Court in the case of P.C. Purushotham v. S. Perumal : [1972]2SCR646 wherein it has been observed that it is not open to a party to object to the admissibility of the documents which are marked as exhibits without any objection from such party and that once documents are also admitted in evidence though those contents may not be conclusive evidence.

45. It is indeed not in conflict with the view that has been expressed in the Bench decision of the Rajasthan High Court (see , Firm Hagami Lal v. Bhuralal). Admitting a document for consideration including the contents does not mean acceptance of its genuineness. There has been a serious argument before us on behalf of the appellants that in their pleadings defendants 7, 8, 10 and 19 and the plaintiffs whose objections, the former adopt, did not question the genuineness of the books of account or contend that they were not kept in the regular course of business, but questioned the individual entries only. We have given our anxious consideration to this argument only to find that the instances that are cited in the objections are illustrations of such entries which demonstrated that the books of account were not valid and genuine documents. In any case, as we have already noticed, when contents of the books are not conclusive evidence and as required by Section 34 of the Evidence Act, when defendants 7, 8, 10 and 19 objected to it, it was necessary for the first defendant/appellant to produce such evidence which was available to substantiate the entries and thus show that the entries were genuine. There is an interesting story revealed in the pleadings as to the vouchers supporting expenditure. It is said, that they were brought in three bags full and produced in the Court. They are later reported to have been lost and these vouchers according to the first defendant/appellant were relevant to corroborate the entries of expenditure in the books of accounts. Such vital document produced in the Court, has been lost; who has been responsible, the Court has ignored so easily? Out of the concern, one may think which is proper in such a situation, is not shown to by the first defendant/appellant because (1) the so called bags containing vouchers were not verified by any person; (2) no list of documents was ever filed showing these vouchers as documents filed on behalf of the first defendant/appellant and (3) no demand was made to bring in any secondary evidence to prove the contents or the facts disclosed in the vouchers and evidence takenbefore the Commissioner in this behalf in which it was said' that these vouchers were available with the 1st defendant/appellant at that time is/was insufficient since even at that stage no efforts were made to adduce vouchers as evidence. While there is such state of evidence as to the proof or corroboration by the vouchers of entries in the books of account, there is a definite admission duly noticed by the learned single Judgc in the impugned judgment that the contesting defendants pleaded that multanies transactions were not true and that, none of the hundies standing in the name of multanies had been believed by the Income-tax Officer. The 1st defendant/appellant himself stated that these borrowings were from certain friends which were shown as loans from multanies and,

'If I remember their names I do not want to tell their names ..... Morally I have got acommitment not to reveal their names since I promised them not to reveal their names'.

46, There is another interesting story of withholding of evidence (on the plea that there was a settlement of account as on 31-12-1962) in not producing in the court the minutes book in which it is said, such entries were made. The appellant's case in this behalf has been that he has been maintaining the minutes book and that all proceedings and decisions taken by the partners were entered in the book but the book was not available. According to his evidence, one Venkatcswara Rao, took the minutes book from him for obtaining the signatures of all the partners and that he gave it to Radhakrishnamurthi, Mallikarjuna Rao told him that the minutes book had been burnt. Neither Venkateswara Rao nor Mallikarjuna Rao had been examined as a witness. His evidence that Mallikarjuna Rao had told him that the minutes book had been burnt or that Venkateswara Rao gave the minutes book to Radhakrishnamurthy, the 1st plaintiff is hearsay and inadmissible in evidence. His case is that there was a settlement of account and the details of the settlement were minuted in the minutes book. His case that there has been a settlement of account as on 31-12-1962 would have been easily proved by the production of the minutes book and if that book available, by proving its existence as well as its contents by secondary evidence. He has instead relied upon the so-called settlement of account and the return submitted on behalf of the firm to the Income-tax Department about which we have two orders, one is a penally proceeding under Section 271(1)(e) of the 1963-64 on a reference from the VIII Income-tax Officer, Madras and another is the assessment order of the year 1962-63. In the first, Ex. C-5, it is said,

'The sum and substance of the contentions of the above partners concerning the penalty issue is that Shri Venkanna Chowdry, the Managing Partner alone was in charge of the accounts and the business of the firm, thatthey were kept by him in the dark, that theyhad no knowledge of either the accounts or the hundi appearing therein that as they could see there was overflow of collections and hence no need for any borrowals at all that the Managing Partner should have obviously engineered these entries with a view to create evidence of the availability of funds for his personal investments and that this theory is corroborated by the huge withdrawals in his account. It was also contended that the Income-tax Officer should have gone deep into the matter and considered these credits in the hands of the managing partner instead of the firm's assessment. Eventually, they pleaded that the penalty proceedings against them be dropped'.

46A. After taking notice of the case of the partners 1 to 9, which is the same before this court on behalf of the contesting defendants/ respondents, the Assistant Commissioner of Income-tax has ordered as follows :--

'I have carefully considered the above submissions. In the absence of books and other evidence, I am unable to verify the correctness of their statement that the hundi credits did not belong to the firm. Admittedly, the hundi loans appeared in the books of the firm and if they are found to be not genuine, they should be considered in the hands of the firm in the absence of any other evidence two the contrary and the Income-tax Officer had,therefore, rightly assessed the hundi loans in the assessment of the firm'.

Thus, the hundi loans as shown in the books of account are evidently not found genuine. The evidence of the first defendant/appellant in this behalf has already been noticed by us.

47. Before the Assistant Commissioner of Income-tax, the 1st defendant/appellant argued that the hundi loans were ail genuine and that he would secure the records and other papers, which were in some court proceedings and wanted some short adjournment. Though an adjournment was granted, he failed to produce any records to show that the hundi loans were genuine. The Assistant Commissioner then ordered.

'Shri Chowdary frankly expressed his inability to produce any evidence to indicate that the loans in question were genuine. The hundi bankers were men of very little means and could not be credited with having advanced large amounts attributed to them. Most of the bankers admitted that they merely lent their names and not monies. All things considered, I have no hesitation in holding that what has brought in the shape of hundi loans represented but the income of the assessee firms, that the interest debits were all false and that the assessee concealed the particulars of their income and furnished inaccurate particulars of their income and furnished inaccurate particulars thereof.'

48. The Assistant Commissioner's order concluded the penalty proceedings but not the dispute as to the genuineness of the entries in the account books that is to say the hundies, which continued to be repeated in all subsequent years of the book and the dispute between the contesting defendants/respondents and the 1st defendant/appellant as to the accuracy and genuineness of the accounts furnished by the 1st defendant/appellant remained undecided.

49. The second is the assessment order of the II Income-tax Officer, City Circle V, Madras on a total cost of the picture of Rs. 13,30,616/-. The computation of the total cost of the picture, however, has been on the basis of so-called trial balance as on 31-12-1962, which contains debit entries in the name of the 1st defendant/apppellant as well as several other persons. They, it is said, had advanced monies which formed the basis for a revised computation. This document, however, gives a list of names of persons who, it is said advanced monies and included names of persons, who admittedly had stated that they had given no money to the firm and that they had only lent their names. Learned counsel for the appellant has relied upon these orders for his contention that the accounts up to 31-12-1962 had been settled and that there has been no dispute as to the expenditure in the production of the film. It is thus a case where the 1st defendant/appellant has produced account books which are found to contain vague and false entries and for which there is no supporting legal evidence at aii. On a detailed discussion of all aspects of the case, the learned single Judge has recorded specific findings to reject the books of account and proceeded strictly in accordance with law and thereafter traced out the assets of the firm in the hands of the 1st defendant/appellant. Apart from the books of account and the entries therein as to the expenditure in the production of the film and the Income-tax assessment order aforementioned of the computation of tax on a sum of Rs. 13,30,616/-, there has been no legal evidence to support the existence of such capital in the hands of the firm, which it spent upon the production of the film and/or the actual expenditure that the firm incurred and for which monies were made available by either the 1st defendant/appellant himself and/or any other partner. The books of account, as we have already noticed stand condemned and the oral testimony of the 1st defendant/ appellant is not at all reliable in this behalf. As has been his case with reference to the loans from his friends (entries in the names fo multanies) so has been his case of advances made by him and another viz., 11th defendant, the brother of the 1st defendant. The 11th defendant has not examined himself as a witness. The 1st defendant has spoken about the loans by him and by his brother. These loans are given at a time when the very books of accounts show such loans having beenadvanced to the firm. There were monies in the hands of the firm and such loans were not needed at all. The trial court has rejected this story as well. There is no other view possible.

50. From what has thus been seen from the facts of the case, it can safely be concluded that the 1st defendant/appellant was the managing partner and had in that capacity created fiduciary relationship with other partners when he stated for and on behalf of the firm. Thus, he has to account for the business of the firm to other partners including the contesting defendants. The books of account that the 1st defendant has produced in court are vitiated by entries which are not genuine. This has destroyed even the prima facie evidentiary value of the books of accounts. He has not been able to give any credible supporting evidence of his claim of receiving loans from others as well as loans advanced by him and his brothers, the 11st defendant. He has also failed to give any satisfactory evidence of the accounts of expenditure on the production of the film.

51. It is on record in the form of oral evidence as well as documentary evidence, which have the support of circumstances that the 1st defendant had withdrawn monies on several dates from the account of the firm and besides such withdrawal, he had shown as withdrawn from the account of the firm amounts allegedly paid to the friends, who had advanced monies allegedly on some occasions, but entries were made in the names of Multanies or advances to the firm by him as well as his brother, the 11th defendant. These withdrawals, are not justifiable and must therefore be found in the hands of the 1st defendant/appellant but belonging to the firm. It is also on record that the 1st defendant has been acquiring properties during the period the firm according to him, had been receiving advances from him as well as the 11th defendant and the unknown friends whose loans were shown as loans from Multanies. Before we refer to the law on the subject, we may extract from the judgment of the trial Court, the discussions on the items of properties that the 1st defendant acquired when he had been keeping within such monieswhich belonged to the firm either alone or as tenants-in-common with other persons.

52. The discussion in the trial court's judgment in this behalf is as follows :--

'The first item is Saidapet Abdui Razack Street property which has been purchased in the name of Y. Venkanna Chowdry and Y. Renganayakalu. The total area purchased is an extent of 4.68 acres. The total purchase price is Rs. 42,500/-. According to Mr. Raghavan the stamp and registration duty for the sale deed Ex. D-6 came to Rs. 3,572/-. Therefore, the total amount spent by the 1st defendant for acquiring this property is Rs. 46,072. Out of this, Rs. 22,500/- has been admittedly paid to the vendor by the 1st defendant by withdrawing from films account debiting his personal account. Mr. Raghavan would contend that in so far as only a sum of Rs. 22,500 has gone out of the partnership funds for the acquisition of this property the entire 4.68 acres cannot be declared to be partnership property. In this submission only the proportionate area out of 4.68 acres which will correspond with the consideration of Rs. 22,500/- should be declared as the partnership property. I do not agree. Mr. Raghavan has not been able to controvert the submission of Mr. V. S. Subramaniam that prior to the date of Ex. D6 there have been withdrawals in the account book to the extent of Rs. 3,86,000/- in the names of defendants I and 11. In his evidence D.W. 1 has stated that excepting Rs. 22,500/- the balance was made from his own resources viz., from his own personal account. There is absolutely no evidence regarding the same. Certainly, therefore, the defendants had moneys of the partnership with them. There is no evidence to show with whose moneys the balance of consideration was paid. Admittedly there has been a mixing of funds of the partnership firm with the funds of the first defendant, if any, money was available with him. That being the position, in the absence of any evidence to the contrary and in the light of the evidence that a sum of Rs. 3,86,000/- of the partnership funds were available with the first defendant the only conclusion trial is possible is that the entire money for the acquisition came from the partnership. I therefore hold that the entire property forms part of the partnership.

It is admitted by the first defendant that a major porlion of this property was sold for Rs. 2 lakhs. The profit that has accrued by the sale of this property will be Rs. 1,54,000,/-. Mr. Raghavan claimed that the first defendant has paid tax in respect of the property to the tune of Rs. 64,598/-. There is absolutely no evidence for the same. Subsequently an extent of 4 grounds was acquired by the State under the Land Acquisition and compensation of Rs. 9,000/- had been received. Therefore, the total profit from this property is Rs. 1,63,000/-. The first defendant has to account for the same.

The next item is known as Valarasaravakkam Panthulu's property. The total extent of this property is 40.50 acres. The property has been purchased under four documents C-10 to C-13. Ex. C10 is dated 17-3-61. The extent under Ex. CIO is 7.50 acres for Rs. 20,000/-. Ex. C11 dated 19-3-61 of an extent of 15 acres for Rs. 40,000/-. Ex. C12 D/-23-7-61 of an extent of 3 acres for Rs. 8,000/- and Ex. C13 D/-29-4-61 of an extent of 15 acres for Rs. 40,000/-. While the sale deeds Exs. C10 and C12 were executed by Nadamarti Narasimhan, the sale deeds Exs. C11 and C13 were executed by Mrs. Nidamarti Venkata Narasamma. There is evidence to show that there was an agreement for sale in favour of one Masilamani Mudaliar. According to Mr. Raghavan the amoutn paid to Masilamani Mudaliar under the agreement for sale was Rs. 70,000/-. The stamp and registration charges come to Rs. 8,523/-. Therefore, the total cost of acquisition of this 40.50 acres comes to Rs. 1,86,523/-. A large portion of the sale consideration was paid by the first defendant after debiting his account for Sambhu Films. In certain other cases the amounts were drawn from Sambhu Films and then paid to the vendors. There is absolutely no evidence that the first defendant had paid for the consideration out of his own moneys. There is also evidence to show that during the time of the said sale deed the first defendant had withdrawn large amounts from the partnership business. Therefore he had withhim the funds of the partnership business. I have, therefore, no hesitation to come to the conclusion that this acquisition must ensure to the benefit of the partnership. Subsequently an extent of 12.99 acres was sold in January 1964 for Rs. 1,10,000/-. Four acres have been soid in February 1964 for a sum of Rs. 32,000/- under Ex. A 708. Six acres have been sold under Ex. A709 for Rs. 1,20,000/-, 8.50 acres have been sold under Ex. A 700 for Rs. 1,63,000/- and 5 acres have been sold under Ex. A71I for Rs. 96,000/-. The total extent sold out of 40.50 acres come to Rs. 36.49 acres. The first defendant has to account for 4.01 acres. The total sale proceeds of 36.49 acres comes to Rs. 5,21,000/-. The profit obtained by the defendant by the sale will come to Rs. 3,34,477/-. Mr. Raghavan made a claim for being given credit to Rs. 1,51,344 towards taxes paid. There is no documentary evidence regarding this payment. Therefore that claim is disallowed. In the absence of any materials as to the value of 4.01 acres which has to be accounted for by the first defendant, I adopt the valuation as given in Ex. A711 which is approximately Rs. 20,000/- per acre and on that basis the first defendant will have to account for Rs. 80,000/-. Thus the total amount to be accounted for by the first defendant for this property is Rs. 4,14,477/-.

The next item of property is what is known as Ganesan's land. This property has been purchased in the name of the first defendant's wife Rajamma and one D. Chowdary. The total consideration is Rs. 72,600/-. The property has been purchased under Ex. C20. The total extent of the property has been 16.30 acres. Chowdary is the son of the 10th defendant. He filed C. S. 208/71 for adeclara-tion that he was entitled to a half share in the property. Though in the trial court he succeeded, in OSA. 76/74 the claim was negatived and it was held that the 10th defendant's son has not paid any part of the consideration for the acquisition of these properties. Out of the sale consideration of Rs.72,600/- admittedly a sum of Rs. 22,740/-had come from the partnership funds. Mr. Raghavan contended that the balance of consideration after deducting the sum of Rs. 22,740/- must be deemed to have been paid by the first defendant out of his own funds. There is evidence to show that as on the date of this acquisition the first defendant had in his hands a large amount which he had withdrawn from the partnership funds. Therefore, in the absence of any clinching evidence to show that the first defendant had utilised the separate funds, it must be deemed that he has used the partnership funds for the acquisition. I, therefore, find that this property in its entirety should belong to partnership. To the cost of acquisition Rs. 7,000/-has to be added which according to Mr. Ragahvan represent the stamp duty and registration expenses so that the total cost price of the land will be Rs.79,600/-. It is admitted that this entire property has been compulsorily acquired by the State Government under the Land Acquisition Act and that a sum of Rs. 2,77,000/ - has been received by the first defendant after the mortgagee withdrew a sum of Rs. 60,000/- in the court deposit. Therefore, the balance to be accounted for by the first defendant on this property is Rs. 1,97,400/-.

The next property is what is known as Richardson Park property. The document is Ex. C16 dated 5-1-61 executed by one Mohamed Sheriff. The total extent is 56 grounds and the sale price is Rs. 30,200/-. The stamp duty and expenses come to Rs. 3,000/-. It is admitted that a sum of Rs.20,200/- is paid by way of withdrawal from Sambu Films. It is stated by Mr. Raghavan that the balance money came from the first defendant. There is evidence to show that at the time of acquisition the first defendant had withdrawn large sums of the partnership funds. A major portion of the consideration is admittedly from the partnership funds. Though Mr. Raghavan would contend that when once the partnership amount is debited these withdrawals must be deemed to be the drawings on the part of the first defendant and therefore such amounts must be deemed to be the first defendant's own funds in his hands. I have already repelled this contention. I have therefore no hesitation in coming to the conclusion that the entire 56 grounds should belong to the partnership. The document inrespect of this property stands in the name of the first defendant's son. Admittedly at the time of the acquisition the first defendant's son had no resources. The first defendant has stated that no porlion of this property has been sold and the property is in litigation. The first defendant disclaims that he is in possession of the property. The first defendant has not placed any materials regarding the litigation connected with the property. In the absence of any such evidence it has to be presumed that he got possession of the property as per the terms of the sale deed. Therefore, the entire extent of 56 grounds has to be accounted for by the first defendant. Mr. V. S. Subrarnaniam claims Rs. 20,000/- per ground. There is no concrete evidence for this. However, taking into account the escalation in the prices of lands, I fix the value of one ground at Rs. 10,000/-. Thus the first defendant will have to account for Rs. 5,60,000/- for the 56 grounds.

The next item is what is called Gulabi property. This was purchased on 12-4-61 under Ex. C15 in the name of the first defendant and one A. V. Raghava Rao for a sum of Rs. 4 lakhs in the ratio of 2/3 and 1/3. The 2/3 share of the first defendant comes to 140 grounds. The consideration for the 2/3 share paid by the first defendant comes to Rs.2,60,000/-. Out of this, there is evidence that Rs. 1,86,000/- came from the partnership. As regards the balance, there is evidence to show that large amounts have been withdrawn from the partnership funds arc credited to YVC account. In the absence of direct evidence to show that it was with the first defendant's personal funds that the balance of consideration was made it has to be only assumed that the entire sale consideration was paid from out of moneys of the partnership. I, therefore, hold that the entire property enure to the benefit of the partnership.

In May 1961 51/3 grounds have been sold for Rs. 12,500/- to one Visalakshi and Mr. V. M. Rao. In April 1962, 22 grounds were acquired by the Government and the total compensation received was Rs.57,714/-, 13 grounds were sold by the first defendant and his son of J. P. Builders for Rs. 1,30,000/-. On28-6-72, 4.6 grounds have been given to the son of Raja of Pithapuram in pursuance of a compromise under Ex. A 678. In April, 36 grounds have been acquired by the Govt. under the Land Acquisition Act for Rs. 4,60,000/-. Out of this Rs. 2,37,662/- has been drawn by the first defendant. The balance of Rs. 2,22,338 is kept in revenue deposit in I.A. 758/74. In August 1974 the first defendant is said to have sold 72 grounds to Vanadurga Enterprises firm of which the first defendant, his relations and third parties are partners. At the time this property was sold an order of injunction was in force restraining the first defendant from alienating the property. Mr. Raghavan has stated that Vanadurga Enterprises sold 25 grounds to Boston School for a consideration of Rs. 4,31,000/-. The balance 47 grounds have to be accounted for. At the rate paid by Boston School, the price for 47 grounds will come to roughly Rs. 8 lakhs. Therefore, for the balance of 72 grounds the first defendant will have to account for Rs. 12,31,000/-. Therefore for the total 140 grounds the first defendant is liable to account for Rs. 18,91,214/- from this the purchase price of Rs.2,60,000/- must be deducted. Therefore the First defendant will have to account for Rs. 16,31,214/ - out of this there is a sum of Rs. 2,22,338/- to the credit of I. A. No. 758/ 74. Therefore that amount should also be deducted. Therefore with regard to Gulabi property the first defendant has to account for only Rs. 14,08,876/-.

The next item is Pithapuram Kodambakkam Property. This property is of an extent of 25.77 acres. It was purchased under Ex. C14 in the name of the first defendant for a consideration of Rs.75,000/-. The stamp duty and registration expenses came to Rs. 5,600/-. Therefore the total cost of acquisition comes to Rs.80,600/-. It is not in dispute that a sum of Rs. 50,000/- was paid out of the withdrawal from the partnership firm. Of course Mr. Raghavan would contend that the withdrawals were from the advances made by the first defendant to the firm. I have already negatived the case of advances by defendants 1 and 11 to the firm. As regards the balance there is no evidence as to wherefrom the first defendant got moneys. There is evidence to show that large funds of the partnership were with the first defendant at the relevant time having been withdrawn from the partnership account. I have therefore, no hesitation in holding that these properties are partnership properties. These properties have been disposed of as follows :--

8.45 acres had been sold to AVM Charities for Rs. 1,13,400/- 3.41 acres have been sold to AVM House Building Society for Rs. 41,500/- 1.95 acres have been sold to Karpagam Theatres for Rs. 1,20,000/- 7.40 acres have been sold to A.V.M. Concerns for Rs. 88,000/-. The total consideration comes to Rs. 3,62,000/- the balance extent is 3.56 acres. Out of this one acre is stated to have been gifted to the Singeri Mutt and surrendered to Government under the Urban Land Ceiling Act. Therefore, the balance of 2.56 acres has to be accounted for by the first defendant. The profit on this transaction is Rs. 3,62,900/- Rs. 80,600 Rs. 2,82,300/-. The first defendant has to account for Rs. 2,82,300/- in addition to the 2.56 acres. For want of better particulars the value of 2.56 acres of land can be fixed on the basis of the valuation given in the sale deed in favour of Karpagam Theatres Rs. 60,000/- per acre. Therefore, the value of 2.56 acres will be Rs. 1,53,600/- thus in respect of this properly the first defendant will have to account for Rs.4,35,900/-.

The next item is Narasu's lands. These lands have been purchased under Ex C 18 and C 19 for Rs. 2 lakhs. Out of this admittedly only a sum of Rs.35,000/- has been paid towards the sale consideration and the liability in respect of the balance has only been undertaken to be discharged by the first defendant. I am, therefore of the view that there is no evidence that this property has been acquired with the funds belonging to the partnership. Therefore, the first defendant is not liable to account for this property.

On the foregoing findings the amounts which have to be accounted for by the first defendant in respect of various items of properties are as follows :

1. Saidapet Abdul Razack Property 1,63,0002. Valasaravakkam Panthulu's Property 4,14,4773. Ganesan's lands 1,97,4004. Ricardson property 5,60,0005. Gulabi property 14,08,8766. Pithapuram Kodambakkam Property 4,35,9007. Narasu's lands .........__________Total 31,79,653__________ In this amount admittedly the 7th defendant will be entitled to 1/22 shares, 8th defendant will be entitled to 1 / 22, the estate of the 10th defendant will be entitled to 3/22 shares and the 19th defendant will be entitled to 1/88 shares'.

53. It is difficult for any person to find fault with the approach of the learned single Judge. There is no error of law committed by him in treating such monies invested by the first defendant/appellant in the acquisition of the above mentioned properties as monies belonging to the firm. Learned single Judge has referred to the authorities such as the judgments in the case of Ghumammal v. Papurbai, 30 Ind Cas 24 : AIR 1915 Sind 10, Ahmed Musaji Saleji v. Hashim Ebrahim Saleji, ILR Cal 914 : AIR 1915 PC 116, Gokul Krishna Das v. Shashi Mukhi Dasi 13 Ind Cas 23, Sudarsanam Maistri v. Naras Imhulu Maistri, ILR(1902) Mad 149 , Amir Chand v. Jawahir Mal, 32 Ind Cas 853 : AIR 1916 Lahore 410, Debi Prasad v. Jai Ram Dass , C.R.R. Gowder v. C. P. Nanjappa, : AIR1973Mad179 and Ulhasibari Jcthmal Bagman v. S. Bhagchand, ILR (1959) Bom 680 and several other cases and has deduced correctly the law that in the absence of any allegation and proof to the contrary, the properties bought in the name of one partner and paid for by the firm out of the profits of the partnership business, are prima facie partnership properties. There is clear evidence on record that the first defendant in his capacity as managing partner directly issued cheques; in some cases withdrew sums from the partner-ship account and credited to YVC account and then issued cheques on the YVC account for payment of consideration for the purchase of the properties; in some cases he had withdrawn cash from the partnership account and paid the sale price in cash, Sections 14 to 16 of the Indian Partnership Act which have been set out by us earlier, read together create clearly the obligation upon a partner acting on behalf of other partners to account for each such property and income that is found in his hands and show on such accounting that there has been certain personal profits earned by him or that any transaction of acquisition of a property by him was not one which affected any right or interest of the firm and thus any other partner.

54. We have no manner of doubt that as has been found by this court in case of Sundarasham Mistri v. Narasimhulu Maistri ILR (1902) Mad 149 in the instant case, it has to be found that all acquisition by the first defendant were properties of the firm. He has definitely failed in showing full accounts of the partnership assets or that withdrawals by him were genuine for discharge of debts and or expenses that were to be incurred by the firm.

55. We are in full agreement with the findings aforequoted and accordingly affirm that all such properties that are found acquired out of such funds in the hands of the first defendant/appellant which were withdrawn from the firm but not accounted for, belong to the firm. There is no dispute before us as to the respective interest of the partners in the assets of the firm. We have already seen that the first defendant/appellant has given no acceptable account of the expenses on the production of the film. There is dearth of evidence. Therefore, on the actual expenses that the firm incurred on the production of the films for the reason of the first defendant/ appellant not disclosing the correct accounts, there is no escape from the fact that the available capital alone could be spent and if other monies belonging to the firm were diverted by the first defendant/appellant in acquisition of some properties, it cannot be said that there was any other money availablefor spending on the production of the film. In the instant case, however, the acquisitions are after the production and release of the film. The available funds that could not be expanded by any other method for incurring expenditure on the production of the film. The contesting defendants, however, have been able to show the cost of a comparable production and for the reason of a complete failure on the part of the first defendant/ appellant to account for, the trial court has accepted the comparable expenditure as the basis for determining the cost incurred by the firm in the production of the film. It may not be a very sound basis, but one who alone has knowledge that is to say the first defendant/ appellant of the actual expenses, has chosen to withhold and or to give incorrect accounts. In such a situation, we cannot but agree with the findings of the learned single Judge in this behalf.

56. There has been no serious objection before us as to the interest etc., except that as we have noticed earlier, a serious objection has been raised on behalf of the appellant as to the appeal being maintainable for the reason that the court in the impugned order has directed the contesting defendants to file a memo of calculation. A memo of calculation shall do nothing except that it shall complete the process of computation of the amounts that the first defendant/appellant shall be liable to make available to the firm for distribution amongst the partners and upon which partners shall have a claim to the extent of their respecive shares. We have found for good reasons that the appeal is maintainable and the calculations which are required to be made are clerical and arithmetical works in terms of the impugned Judgments. Some calculations have been presented before us by the learned counsel for the contesting defendants/respondents. Learned counsel for the appellant has seriously objected to these calculations. We think however, keeping in view the chequered history of this case, it is necessary to order for early calculation and completion of the work of the court so that if there is any benefit of the Judgment of the court, that must reach the successful party as early as possible.

57. While affirming the impugned Judgment, we modify the direction to the learned counsel for the contesting defendant/respondent to file a memo of calculation and direct the Master of the Court to complete the calculation and accordingly prepare the decree of the court.

58. The appeal is accordingly dismissed with costs. Hearing fee Rs. 5,000/- (one set).

59 Appeal dismissed.

Subject	Commercial
Court	Chennai High Court
Decided On	Mar-23-1993
Case Number	O.S. Appeal No. 92 of 1979
Judge	P.S. Mishra and;S.M. Mohamed, JJ.
Reported in	AIR1994Mad140
Acts	Code of Civil Procedure (CPC), 1908 - Sections 96, - Order 20, Rule 15 - Order 43, Rule 1; Partnership Act, 1932 - Sections 4, 12, 14 and 16; Evidence Act, 1872 - Sections 34 and 271(1); Trustee Act - Sections 88; Urban Land Ceiling Act
Appellant	Y. Venkanna Chowdry (Died) and Another
Respondent	G. Lakshmidevamma and Others
Cases Referred	Sundarasham Mistri v. Narasimhulu Maistri

Y. Venkanna Chowdry (Died) and Another Vs. G. Lakshmidevamma and Others - Court Judgment