Madhukar S/O Wamanrao Jadhav and anr. Vs. Dayalbabu S/O Shyamlal Jaiswal and anr. - Court Judgment

D.G. Deshpande, J.

1. The appeal from order as well as the civil revision application have been filed by the original defendants in Suit No. 1505/1996.

2. There is a long history giving rise to the appeal and the revision as under:

3. The parties hereinafter are referred to as original defendant in Suit No. 1505/1996 and the original plaintiff in the same suit.

4. There was a partnership between the original defendant in Suit No. 1505/1996 and original plaintiff for running a licensed liquor shop. This partnership came into existence in 1991 by a deed of partnership. So far as the duration of partnership is concerned, the deed of partnership is silent, but according to the Counsel for the original defendant, it is a partnership at Will by virtue of provisions of section 7 of the Partnerships Act. The original defendant gave a notice in 1993 i.e. notice dated 27-3-1993 for dissolution of the firm. Thereafter he filed a Suit No. 593/1993 for dissolution of the firm or for declaration. In that suit, the original plaintiff appeared, filed his written statement, but subsequently did not appear and a decree came to be passed. The notice dated 27-3-1993 of dissolution was sent to the original plaintiff. He refused to accept it. But since the original plaintiff remained absent in the same suit, decree came to be passed in favour of the original defendant meaning thereby that the trial Court accepted the case of the original defendant that the notice of dissolution was duly and properly served. This decree in Suit No. 593/1993 came to be passed on 29-10-1996. The original plaintiff filed appeal against the said judgment and decree and the same is pending with stay order in favour of the original plaintiff.

5. Thereafter, the original plaintiff filed Suit No. 400/93 for declaration and injunction in respect of the same partnership. But this suit was withdrawn by the original plaintiff (without seeking leave and liberty of the Court to institute the fresh suit). Thereafter, the original plaintiff filed another Suit No. 163/1993 and this suit was also withdrawn. According to the Counsel for the original defendant, this was withdrawn without obtaining leave of the Court, however, Counsel for the original plaintiff contends that leave and liberty of the Court to file fresh suit was obtained.

6. Thereafter, the original plaintiff again filed a fresh Suit No. 613/1994 for same reliefs and prayed for liberty to file fresh suit under Order II, Rule 2 of the Civil Procedure Code. The liberty was granted and again the suit was withdrawn. Thereafter, the original plaintiff filed Suit No. 1505/1996 for the same reliefs and in addition, the original plaintiff also claimed in the last suit a relief relating to the accounts of the firm and monetary claim valued at Rs. 33 lacs. It is this Suit No. 1505/1996 (hereinafter referred to as the last suit between the parties), that has given rise to both these appeal and revision.

7. In the last suit, the original plaintiff filed an application for appointment of Receiver. The prayer for Receiver was rejected by the Court, but the Court directed an order that the original defendant to furnish security of Rs. 33 lacs. In the last suit, the original defendant filed an application under Order VII, Rule 11(d) of the Civil Procedure Code for rejection of the plaint. That prayer was rejected. The appeal from order is preferred by the original defendant challenging the order for furnishing security by the original defendant to the extent of Rs. 33 lacs and the revision is filed against the order of the Court rejecting his objection under Order VII, Rule 11(d) of dismissal or rejection of the plaint.

8. Counsel for the original defendant (who has filed revision as well as appeal), contended that two points support his contention under the specific order of refusal to reject the plaint or dismiss the suit under his objection. According to him, the plaintiff had filed first Suit No. 400/93 for declaration and injunction. The said suit came to be withdrawn without obtaining leave from the Court, and, therefore, not only the last suit, but all his subsequent suits were untenable, but this entire aspect is totally disregarded by the trial Court. It is therefore necessary to refer the relevant provisions of the Civil Procedure Code.

9. Order XXIII of the Civil Procedure Code provides for withdrawal and adjustment of the suit. Rule 1 of the said Order gives right to the plaintiff to withdraw the suit or abandon his suit or abandon a part of his claim. Sub-rule (4) of Rule 1 of Order XXIII provides that where the plaintiff : ...................., (b) withdraws from a suit or part of a claim without the permission referred to in sub-rule (3) ............., shall be precluded from instituting any fresh suit in respect of such subject matter or such part of the claim. This withdrawal is permitted under sub-rule (3) of Rule 1 where the Court is satisfied that : .........., (b) that there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject matter or a suit or part of a claim, it may grant such permission to the plaintiff with liberty to institute a fresh suit. Further, Order VII, Rule 11(d) provides that the plaint shall be rejected where the suit appears from the statement in the plaint to be barred by any law. Counsel for the original defendant contended that when Order XXIII, Rule 4 prohibits institution of a fresh suit, in the circumstances referred to above, the last Suit No. 1505/1996 was barred suit and, therefore, the plaint should have been rejected.

10. Counsel for the original defendant also contended that apart from the aforesaid provision, the last suit was barred by limitation because the original defendant had given a notice of dissolution of the partnership on 27-3-1993. The said notice came to be refused, which fact is accepted by the trial Court and a decree has been passed against the original plaintiff and since the dissolution of the partnership took place on 27-3-1993 or in any case in the first or second week of April 1993, the institution of the last suit on 26-9-1996 is clearly barred, because, for a suit for account, Article 5 of the Limitation Act applies which provides a period of limitation of three years and the time from which the period begins to run is the date of dissolution. Therefore, according to him, when the firm is dissolved by notice dated 27-3-1993, the period for the original plaintiff to institute a suit for account commences from the date of dissolution and, therefore, when the suit is filed in September 1996, it is barred by limitation.

11. As against these two submissions, Counsel for the original plaintiff (who is respondent before this Court) contended that firstly there is no specific recital or covenant in the partnership deed about the duration. However, when questioned specifically in this regard, particularly with reference to the provisions of the Indian Partnership Act and particularly section 7, which provides that, where no provision is made by a contract between the partners for the duration of their partnership, for the determination of their partnership, the partnership is a partnership at Will, he has no answer. There is an specific clause in the partnership deed which provides that the matters for which the Will is silent, shall be governed by the Partnership Act. It is therefore clear that since the partnership deed does not provide for the duration of partnership and since it also provides that the provisions of the Partnership Act will govern the agreement between the parties, it has to be held that it was a partnership of Will. Once it is concluded that the partnership was at Will, the question of deciding Limitation comes easy if the partnership Will can be dissolved by any of the partners by giving notice of his intention to dissolve. The notice was given by original defendant as aforesaid on 27-3-1993 and, therefore, in the ordinary case, the limitation will start to run against the original plaintiff from 27-3-1993 or in any case from 1-4-1993.

12. It was strenuously urged by the Counsel for the original plaintiff that since the original plaintiff has not received the notice, the question of starting limitation would not arise. As against this, the Counsel for original defendant contended that the notice was sent. It was refused. The defendant/original plaintiff appeared in the suit. Filed his written statement, did not enter into witness box, did not cross-examine the original defendant, and, therefore, the Court accepted the case of the original defendant about due service of the notice, and in view of that matter, the original plaintiff cannot be permitted now to agitate that he has not received any notice.

13. There is strong force in the submissions made by the Counsel for the appellant. If the original plaintiff has negatived the contention of the original defendant about service of notice, then the matter was different. But a Court of competent jurisdiction has already given a finding in that regard, and, therefore, now it cannot be held that the notice of dissolution of the firm was not served on the original plaintiff.

14. Apart from the findings of that Court, in Suit No. 593/1993, which are subject of appeal and which are being challenged, the aforesaid facts on the face of it clearly show that notice of dissolution of firm was duly served on the original plaintiff.

15. Once this situation is accepted, then the question is when the period of limitation will start. When the original plaintiff filed the last Suit No. 1505/1996 and claimed declaration and injunction and also made a claim of suit for accounts and money claim, the limitation against him would start running from the date of service of the notice. A refusal of notice once proved and accepted is sufficient service as accepted by the provisions of law. Therefore, filing of a suit in September 1996 after refusing to accept the notice in March 1993 is filing a suit beyond the period of three years, because the period begins to run from the date of dissolution. Admittedly, therefore, the last Suit No. 1505/1996 was barred by limitation.

16. So far as this aspect is concerned, the trial Court has segregated and gone aspects that has no relevance on the point of limitation and, therefore, given the findings which are required to be said to be perverse.

17. So far as the objection of the original defendant under Order VII, Rule 11 is concerned, he also strongly supported by the provisions of law. The original plaintiff filed Suit No. 400/93 for declaration and injunction. He withdrew the said suit without seeking leave of the Court as provided by the provisions referred to above. Then he filed fresh Suit No. 163/1993 for the same reliefs and again withdrew the same with liberty to file a fresh suit. Firstly withdrawal of Suit No. 400/93 without seeking leave and liberty of the Court prohibits and bar filing of a fresh suit, but may be the fact was not brought to the notice of the Court when Suit No. 163/1993 was not instituted or the Court did not make any enquiry in that regard and, therefore, permitted (if it is accepted that the original plaintiff has sought liberty of the Court to institute fresh suit and such liberty was granted), then it was necessary and obligatory on the part of the original plaintiff to file a suit for which liberty was obtained. But the original plaintiff, for reasons best known to him, filed Suit No. 613/1994, but again withdrew the same suit with liberty to file fresh suit and it is surprising to find that Court also liberally granted such liberty without questioning the plaintiff as to why he withdrew the earlier Suit No. 163/1993 and filed Suit No. 613/1994. Why he is withdrawing the said Suit No. 613/1994 and why he requires any liberty to file fresh suit. All these orders of granting liberty are perverse and contrary to the provisions of law, without application of mind. Liberty to file fresh suit cannot be granted for the sake of asking, cannot be so lightly granted without questioning the plaintiff about his need to withdraw the existing suit and need to file fresh suit. In fact, it is clear that Suit No. 613/1994 was only filed in the Court and withdrawn and then after two years, the last Suit No. 1505/1996 came to be filed. The whole exercise by the Court, who were the Judges at the time was entirely illegal, uncalled for in the situation, but the Court which rejected the objection of the original defendant under Order VII also did not care to look at the seriousness of the situation and the fact that the original plaintiff was misusing the judicial process for his own advantage. The rejection of the objection under Order VII is also nothing but a perverse order and it is an order without application of mind, without going to the relevant provisions of law and without looking to the conduct of the original plaintiff. That order cannot be sustained even for a minute in any circumstances.

18. So far as the order of the Court asking the original defendant to furnish security of Rs. 33 lacs is concerned, it is also a perverse order because the original plaintiff has applied for appointment of Receiver. Admittedly from the order it is clear that the Court was not satisfied with the case of the original plaintiff that facts requiring the appointment of Receiver in the circumstances. But without looking to the relevant provisions of law, without looking to the law applicable and without looking to the provisions of Order XXXVIII of the Civil Procedure Code, the Court asked the original defendant to furnish the security of Rs. 33 lacs. Order XL of the Civil Procedure Code does not contemplate asking the parties in the suit to furnish security. The Order only relate to appointment of Receiver if the Court finds it just and convenient in the circumstances of the case. The Court may, when it is moved under Order XL, either appoint Receiver or reject the prayer. If the Court thinks it fit that the interest of the parties are required to be permitted, it has to give opportunity to the parties before invoking other provisions. Nothing appears to have been done by original defendant. There was no prayer in the application that the original defendant be called upon to furnish security. It is only under Order XXXVIII of the Civil Procedure Code that the Court can ask or call upon the defendant or a party to the suit to furnish security if at all the application for attachment before judgment is made. The criteria for attachment before judgment and the criteria for appointment of Receiver are totally different. The plaintiff or the person applied under Order XXXVIII, Rule 5 has to make a very strong case for attachment before judgment and then only the Court has firstly to give option to other side to furnish security and on his failure to do so, can order attachment before judgment. In the instant case, the original plaintiff did not ask for attachment before judgment, did not ask the Court that the other side be called upon to furnish security. In the circumstances, after coming to the conclusion that the original plaintiff was not entitled for appointment of Receiver, the Court passed an order directing the original defendant to furnish security of Rs. 33 lacs. This order is also a perverse order without application of mind, misinterpretation of the provisions of law.

19. To sum up, the objection of the original defendant under Order VII, Rule 11 was fully justified, supported by facts and circumstances as discussed above, the objection to limitation was also fully justified and, therefore, the last suit of the plaintiff is liable to be dismissed. Once the suit is dismissed, even the interim orders have to be come to end, but since the appeal is filed to that order of furnishing security of Rs. 33 lacs, a separate order would be necessary in the circumstances of the case. Therefore, I pass the following Order :

ORDER

The appeal and the revision, both are allowed. The order calling upon the appellant before this Court to furnish security of Rs. 33 lacs is quashed and set aside. The revision is allowed. The objection raised by the original defendant under Order VII, Rule 11 is upheld and the suit is dismissed as not tenable. In addition, the original plaintiff i.e. respondent in this appeal from order and non applicant in the revision, shall pay costs of appeal and revision at Rs. 5000.00 as compensation for false and vexatious claim. It is clarified that the observations of this Court are restricted to the facts and circumstances and they will not affect the appeal pending against the Suit No. 593/1993.