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PETITIONER: LOON KARAN SETHIA ETC.

       Vs.

RESPONDENT: IVAN E. JOHN & ORS. ETC.

DATE OF JUDGMENT20/10/1976

BENCH: SINGH, JASWANT BENCH: SINGH, JASWANT RAY, A.N. (CJ) BEG, M. HAMEEDULLAH

CITATION:  1977 AIR  336            1977 SCR  (1) 853  1977 SCC  (1) 379  CITATOR INFO :  D          1992 SC1740  (23)

ACT:            Indian    Partnership    Act    1932--Sec.    69--Whether         mandatory---Whether  suit  can  be  filed  by   unregistered         firm--Dissolution  of firm--Suit by a partner  of  erstwhile         unregistered  firm--If  other  partners  of  erstwhile  firm         necessary     parties-Material     alterations     in      a         documents--Effect  of--Suit  for  specific  and  ascertained         amount--Whether  court can make out new case and grant  par-         tial relief on another basis.

HEADNOTE:             Messrs.John  & Co. were in financial  difficulties  and,         therefore, entered into a financial agreement with Sethia  &         Co.  a  partnership  firm of the plaintiff  and  Seth  Sugan         Chand.  On 6th July, 1948 Messrs. John & Co. obtained anoth-         er financial accommodation from Sethia & Co.  Messrs. Tejka-         ran Sidhkaran had also given some advances to Messrs. John &         Co.  The liability to the firm of Messrs. Tejkaran Sidhkaran         was transferred to Sethia & Co.             Seth  Loonkaran Serbia filed a suit against John  &  Co.         and  his partners (defendants first set) as well as  Messrs.         John, Jain, Mehra & Co. and its partners. (defendants second         set)  for recovery of Rs. 21,11,500/- with costs and  future         interest  and  for a declaration that the  plaintiff  had  a         prior  and  floating charge on all the  business  assets  of         Messrs.   John & Co.  It was alleged by the  plaintiff  that         the  defendants (second set) entered into  partnership  with         the  defendants  (first set ) under the name  and  style  of         Messrs.  John Jain, Mehra & Co and maliciously induced  them         to commit breach of the agreement dated 6-7-1948 by forcibly         turning out his representatives who used to remain in charge         of  the stocks, stores. coal, waste, etc., of the mills  and         making them enter into a financial agreement contrary to the         terms  of the agreement with his firm.  The  plaintiff  also         alleged  that accounts were again settled on 4-4-1949 and  a         sum of Rs. 47,23,738/- was found due to him from the defend-         ants.         The  defendants   (first set) contended that  there  was  no         settlement of accounts; that the accounts were tainted  with

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       fraud  and obvious mistakes and that  on a true and  correct         accounting a large sum of money would be found due to  them;         that  the  plaintiff and said Sugan Chand  obtained  various         documents, agreements, vouchers, receipts etc., and that the         same  were  of no legal value as they were  secured  by  the         former  by practising undue influence, fraud,  coercion  and         misrepresentation;  that  the plaintiff  had  illegally  and         contrary  to the agreement dated 6-7-1948 debited them  with         huge  amounts  which were not really due to them;  that  the         cotton supplied by the plaintiff was of inferior quality and         that the rates charged were exorbitant.  It was also  denied         that  the plaintiff had floating or prior charge on  any  of         their  stocks, stores, etc; that the suit was barred by  the         provisions Of section 69 of the Partnership Act and that the         agreement  dated  6-71948 which was  insufficiently  stamped         could  not  form  the basis of  the  suit.  The  defendants.         (second set) also denied the claim of the plaintiff.             The  Trial  Court held that the suit  was  maintainable;         that  the firm of Messrs. Sethia & Co. was dissolved  before         the institution of the suit; that the suit being one for the         recovery of the assets due to a. dissolved partnership  firm         from  a  third party, was not barred by section  69  of  the         Partnership  Act: that Seth Sugan Chand was not a  necessary         party  to  the suit; that the agreement dated  6-7-1948  was         duly stamped and that no undue influence etc., was exercised         by  the plaintiff on the defendants; that there was  no  ac-         counting  on 4-4-1949 as alleged by the plaintiff  and  that         both the plaintiff and the defendants (first set)  committed         a  breach of the agreement dated 6-7-1948.  The Trial  Court         also held that a charge was created in favour of the  plain-         tiff  in respect of the entire business assets and that  the         defendants  (second set) were liable to satisfy  the  plain-         tiff’s claim.  The Trial Court decreed the plaintiff’s  suit         to  the extent of Rs. 18,00,152 but rejected his  claim  for         specific performance and injunction. The Trial Court accord-         ingly  passed a preliminary decree against both the sets  of         defendants directing them to deposit         854         the said amount in the court within the prescribed time  and         in  default gave the plaintiff a right to apply for a  final         decree  for  the  sale of all the  business  assets,  goods,         stocks,  stores, etc.  The decree also gave a right  to  the         plaintiff to apply for a personal decree against the defend-         ants  for  the  balance of his claim in case  the  net  sale         proceeds of the property of the firm were found insufficient         to discharge his claim.             The  plaintiff  filed an appeal in the  High  Court   of         Allahabad  and the defendants also filed an  appeal  against         the  judgment  of the Trial Court.  The High  Court  allowed         both  the  appeals partially holding that  no  fraud,  undue         influence,  coercion or misrepresentation was  practised  by         the plaintiff; that the agreement dated 6-7-1948 was neither         insufficiently stamped nor did it require registration; that         the deed of dissolution dated 22-7-1948 was prepared for the         purpose of the case but there was sufficient evidence on the         record to indicate that said Sugan Chand had withdrawn  from         the partnership carried on in the name of Serbia & Co.  with         effect  from  30-6-1948;  that Seth Sugan Chand  was  not  a         necessary  party to the suit; that the suit was not  barred.         by  section 69 of the Partnership Act; that the  alterations         in the deed dated 6-7-1948 were not material alterations and         did not render the agreement void; that the plaintiff had  a         floating charge over the business assets of John & Co.; that         it  was  defendants (first set) and not  the  plaintiff  who         committed breach of the’ agreement.  The High Court,  there-

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       fore,  passed  a preliminary decree for Rs.  11,33,668/-  in         favour  of the plaintiff and against the  defendants  (first         set)  but dismissed the suit with costs as against  the  de-         fendants  (second set).  The High Court granted  certificate         under Article 133 in both the appeals.             Dismissing  the  plaintiff’s  appeal  and  allowing  the         appeal of the defendants (first set) held:             (1)  Section 69 of the Partnership Act is  mandatory  in         character and its effect is to render a suit by a  plaintiff         in  respect  of a right  vested in him  or acquired  by  him         under  a contract which he entered into as a partner  of  an         unregistered firm, whether existing or dissolved, void. [869         A]             (2)  A partner of an erstwhile unregistered  partnership         firm cannot bring a suit to enforce a right arising out of a         contract  failing  within  the ambit of section  69  of  the         Partnership  Act.  The suit out of which the  appeals  arise         was  for  enforcement of the agreement entered into  by  the         plaintiff  as partner of Serbia & Co.  It was never  pleaded         by  the  plaintiff not even in his replication that  he  was         suing to recover the outstanding of a dissolved firm.   Thus         the  suit was clearly hit by section 69’ and was  not  main-         tainable. [869 B-C]             (3) A close scrutiny of the document and other  evidence         clearly  negatives the plaintiff’s claim that the  firm  was         dissolved with effect from 30th June 1948.         [865 C]             (a)  The agreement dated 6th July 1948 itself is  signed         by  the plaintiff as a partner and the,  expression  partner         also appears in the body of the agreement.         [865 D]             (b) The alleged deed of dissolution dated 22nd July 1948         between the plaintiff and Seth Sugan Chand was prepared on a         stamp  paper  printed in the Government Press  in  November,         1948.   The  said Dissolution Deed was,  therefore,  clearly         fabricated  by the plaintiff.  The plaintiff signed  various         cheques  in July, 1948 as the partner of Sethia &  Co.  [865         F-H; 866 A-C; 867 F]             (c) No service by post or advertisement in the newspaper         about  the dissolution was given either by the plaintiff  or         by Seth Sugan Chand. [867 F]             (4)  Seth Sugan Chand was a necessary party to the  suit         and  in  spite  of the objections raised on  behalf  of  the         defendants the plaintiff did not care to implead’ Seth Sugan         Chand. The suit was bound to fail on that ground also.  [869         D-E]             (5)  A  material alteration in a  document  without  the         consent  of a party to, it has the effect of cancelling  the         deed. [870 A]         Volume  12  of Halsburys Laws of  England  (Fourth  Edition)         referred to.         855             Nathu Lal & Ors. v. Musammat Gomti & Ors. (A.I.R.   1940         P.C.  160) relied on.             In the present case there were many material alterations         of  the document. The material alterations,  therefore  have         the effect of cancelling the deed   in question. [870 B-D]             (6)  The plaintiff’s suit was for a specific and  ascer-         tained  sum of money on the basis of settled  account.   The         Courts below found concurrently that there was no settlement         of  account as alleged by the plaintiff on 4th  April  1949.         After that it was not open to the courts below to make out a         new  case  for the plaintiff which he  never  pleaded.   The         courts be.low could have either dismissed the suit or passed         a  preliminary decree for accounts directing that the  books

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       of  account  be  examined item by item  and  an  opportunity         allowed  to defendants to impeach and falsify the  accounts.         [871 A-C]

JUDGMENT:             CIVIL  APPELLATE JURISDICTION: Civil Appeal Nos. 416  of         1973 and 572 of 1974.             (From  the Judgment and Decree dated 22-12-1972  of  the         Allahabad High Court in F.A. No. 465/54 connected with  F.A.         65/55).             A.  K.  Kirty, Yogeshwar Prasad, S.K.  Bagga,   Mrs.  S.         Bagga  Miss Rani Arora for the Appellant (in CA. No.  416/73         and Respondent No. 1 in CA. No. 572/_74).             G.B. Pal, R.K. Mehta, Pramod Swarup and Miss Uma   Mehta         for the Appellants (in CA 572/74 and Respondents 1-3 in  CA.         No. 415/73).             B.  Sen, S.M. Jain, Indra Makwana and Sushil Kumar  Jain         for Respondents 5/2, 5/3 and 6 (in CA. No. 416/73).             S.T. Desai, Rajinder Singh and S.K. Dhingra for Respond-         ents 7 & 8 (in CA. No. 416/73).         The Judgment of the Court was delivered by         JASWANT  SINGH,  J.   These  two  appeals  by   certificates         granted  under  Article 133 of the  Constitution  which  are         directed against the common judgment and decree dated Decem-         ber 22, 1972 of the High Court at Allahabad in two connected         Civil  First  Appeals Nos. 465 of 1954 and 65 of  1955  pre-         ferred  against the judgment and preliminary decree  of  the         Second Additional Civil & Sessions Judge, Agra, dated  April         5, 1954, in suit No. 76 of 1949 shah be disposed of by  this         judgment.             The  facts  material for the purpose  of  these  appeals         are:  The appellant in Appeal No. 416 of 1973 and respondent         No.  1  in appeal No. 572 of 1974, Seth  Loonkaran  Sethiya,         (hereinafter  referred   to for convenience as  ’the  plain-         tiff’)  is  a financier living and carrying on  business  in         Agra.   Respondents  Nos. 1 to 3 in the  first  appeal   and         appellants  Nos.  1 to 3 in the second appeal viz.  Ivan  E.         John,  Maurice  L.  John and Doris  Marzano,  grandsons  and         grand-daughter  of  one A John, are partners of  the  regis-         tered, firm called ’John & Co.’.  There         856         are three spinning mills and one flour mill at Jeoni  Mandi,         Agra,  which  are compendiously described as  ’John  Mills’.         Originally,  the members of the John family were the  exclu-         sive owners of all these mills which have been in  existence         since  the beginning of the current century.  In  course  of         time,  some strangers acquired interest therein and  by  the         time the present lis commenced,  the  following  became  the         joint owners thereof to the extent noted against their names         :-                       1.  Ivan E. John, Maurice L.  John  and  Doris                       Marzano,  appellants  Nos. 1 to  3  in  Appeal                       No.  572 of 1974 and respondents Nos. 1  to  3                       in  .Appeal No. 416 of 1973--Partners  of  the                       firm   ’John   &  Co.’,  appellant  No.  4  in                       Appeal  No.572 of 1974 and respondent No. 4 in                       Appeal No. 416 of 1973:11/40th share                       2.  Seth .Munilal Mehrs (respondent. No. 6  in                       appeal  No. 416 of 1973 and respondent  No.  9                       in  Appeal No, 572 of 1974).and Hiralal  Patni                       (respondent   No..5  in  Appeal  No.  416   of                       197.3,   ’deceased’and  now  represented    by                       respondents   Nos,  5/1 to 5/7  i3  the  ’said

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                     appeal  and  represented by respondents  Nos..                       2  to  8 in Appeal No.  572  of  1974):19/40th                       share                        3.Gambhirmal  Pandya (P)   Ltd.--part-ner  in                       M/s. John Jain Mehra & Co,:    8/40th    share                        4. Ivan E. John: 2/40th share             Having  run into financial difficulties, M/s John &  Co.         were  driven  to tap various sources for raising  loans  for         their  business and  other requirements.  By virtue  of  the         deed  of agreement (Exn.. 1321 ) dated June 14,  1947,  they         entered  into  a financial agreement with Sethira &  Co.,  a         partnership  firm  of  the plaintiff  and  Seth  Suganchand.         Under this agreement which was originally meant to last  for         five  months but which was allowed to remain in  force  even         after ’the expiry of that period Sethiya & Co. undertook  to         advance  to  M/s  John  & Co. funds to  the  extent  of  Rs.         8,00,000/-  on  the  security of  yarn and to  act  as  sole         selling  agents of the latter.  On  January 29,  1948,   the         Collector, Agra, attached moveable and immoveable properties         of    the mills pursuant to a certificate issued for  reali-         zation  of income tax dues for the years 1943 to  1945  out-         standing  against  M/s  John   &Co. which  exceeded  Rs.  20         lakhs.  On February 5, 1948, the Collector,  Agra,  appoint-         ed Ivan E. John, Maurice L. John and Doris Marzano as custo-         dians  for  running  the mills.  On February  9,  1948,  the         aforesaid  agreement (Exh. 1321) dated June 14,  1947,  with         Sethiya & Co. which continued to remain in operation  beyond         its  original term was renewed upto the end of April,  1948,         by agreement (Exh. 1320).  This agreement gave an option  to         the  partners  of Sethiya & Co. to allow it to  continue  in         force until their dues were         857         paid  in full by M/s John & Co.  These financial  agreements         with Sethiya & Co. did not prove adequate to meet the  mone-         tary requirements of M/s John & Co.  Accordingly on the same         day  i.e.  on February 9, 1948, they  entered  into  another         agreement  (Exh. 1319) with the proprietory concern  of  the         plaintiff  carrying on  business under the name and style of         ’M/s.   Tejkaran  Sidkaran’  whereby the  latter  agreed  to         advance certain amounts to them against mortgage of  cotton,         its products and bye-products which might be in their  stock         from  time to time during the continuance of the  agreement.         By this agreement, M/s John & Co. also undertook to. pay  to         M/s  Tejkaran Sidkaran a sum of Rs. 2,09,245-9-10 which,  on         going  into the accounts, was found to be due to the  latter         in  respect  of the supply of cotton.   Nearly  five  months         thereafter  i.e. on July 6, 1948 the aforesaid  partners  of         M/S. John & Co. succeeded  in  obtaining  another  financial         accommodation from Sethiya & Co. vide agreement Exhibit 168:         Exhibit A-1.  By this deed,  the financiers  agreed, for the         efficient working of the mills, to advance loan, as and when         required, upto the limit of Rs. 25 1/2 lakhs to the partners         of M/s John & Co. on condition that they i.e. the financiers         would have a floating and prior charge for all monies due to         them for the time being including the amount due to .them on         the date of the agreement  and  all monies which -they might         choose   to.  advance under the agreement, on  all  business         assets  including  stores,  coal, oil process  etc.  of  the         aforesaid three spinning mills.             Describing  himself as the sole proprietor of  the  firm         ’Sethiya & Co.; and ’M/s. Tejkaran Sidkaran’. Seth Loonkaran         Sethiya flied in the Court of the Civil Judge, Agra on April         18, 1949 an original suit, being suit No. 76 of 1949 against         M/s.  John  & Co.’ and its aforesaid  partners  (hereinafter         referred  to as ’the defendants first set’) as also  against

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       Munnilal  Mehra, Hiralal Patm and Gambhirmal Pandya and  M/s         John.  Jain  Mehra & Co., (hereinafter referred to  as  ’the         defendants second set’) for recovery of Rs. 21,11,500/- with         costs and pendente lite and future interest by sale o.f .the         assets  of M/s John & Co. and for permanent  injunction  re-         straining  the  defendants  first set  from  committing  any         branch of the aforesaid agreement dated July 6, 1948 as also         for  declaration that he had a prior and floating charge  on         all  the  business assets of M/s John. & Co.  The  suit  was         later on amended by the plaintiff with the permission of the         trial Court.  By his amended petition of plaint, the  plain-         tiff  sought  a decree against the defendants first  set  as         also against the defendants second set.             The case of the plaintiff was that Mr. Ivan E. John, Mr.         Maurice  L. John and Doris Marzano who were part  owners  of         the aforesaid three spinning mills and a flour mill as  also         certain  other  properties and had been  carrying  on  their         business  and running the mills under the name and style  of         John  &  Co. being heavily indebted and in  urgent  need  of         money to pay arrears of income tax as well as other dues and         to carry on day to day business of the milks approached  him         time  and again for finances, loans etc. for  the  aforesaid         purposes,  that  he ’lent considerable sums of  money  under         various  agreements executed by the defendants first set  in         his favour and in favour of the firm ’M/s Tejkaran  Sidkaran         of  which he was the sole owner  and in  that of  Sethiya  &         Co.; that on or about July 6, 1948 all accounts between his         858         firm ’Sethiya & Co.’ and defendants first set were gone into         and  after a full scrutiny thereof, a settled amount of  Rs.         12,72,000/-  was  found to be due to Sethla & Co.  from  the         defendants first set upto June 30, 1948; that this amount as         admitted and accepted by the defendants first set and was as         such  debited in their account books and was  also  acknowl-         edged  by them in the subsequent agreement entered  into  by         them  with him; that the  aforesaid  settlement,   the   de-         fendants first set solicited further financial help from him         to  run  the mills and to meet  their  pressing  liabilities         which was acceded to by him on the terms and conditions  set         out in the agreement dated July 6, 1948 (Exh. 168); that  by         this  agreement, he agreed inter alia to  advance  requisite         funds  to  the  defendants first set (for  carrying  on  the         business of the mills ’and payment of the claims of Raja Ram         Bhawani  Das and to meet other liabilities) up to the  limit         of Rs. 20 lakhs inclusive of the aforesaid amount admittedly         found  due to him from the defendants first set on the  date         of  the agreement and to make a further advance of a sum  of         Rs. 5,50,000/- on the security of business assets and stocks         other than bales of yarn and cotton; that it was also stipu-         lated that he would have a floating and prior charge for the         entire amount due to him on the date of the agreement on all         the business assets including stores, coal, oil process etc.         of all the three spinning mills of the defendants first  set         and  that he would be paid interest at the rate 6  per  cent         per  annum  from date of including liability in  respect  of         each individual item besides commission at the raw of 1  per         cent  on all sales of products of the three  spinning  mills         whether  sold directly or otherwise during the  currency  of         the   agreement  and a luther commission at the rate  of  12         per  cent on value of all the purchases of  cotton  required         for consumption of the three spinning mills and godown  rent         as  might be agreed.  The plaintiff further averred that  it         was specifically agreed between him and the defendants first         set that the agreement would be in operation for the minimum         period  of one year and would also continue to be  in  force

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       thereafter  until  the  entire amount due to  him  from  the         defendants  first  set was fully paid  up.    The  plaintiff         further  averred  that the accounts  of business done by him         under the name of M/s Tejkaran Sidkaran with the  defendants         first   set were gone into and finally the defendants  first         set admitted that a sum of Rs. 17,79,100/- was due from them         to  his  firm ’M/s Tejkaran Sidkaran’ and that  under  their         written authority, he transferred the above liability to his         firm ’Sethiya & Co.’ and thus all accounts of the defendants         first  set with him were amalgamated in one account i.e.  of         Sethiya  &  Co. and the  account of his firm  ’M/s  Tejkaran         Sidkaran’  with the defendants first set was squared up  and         closed.   The plaintiff further averred that the  defendants         second set including Hiralal Patni, the ex-financier of  the         John  Mills  who had not despite best efforts  succeeded  in         securing  possession of the mills as  co-proprietor  thereof         entered into partnership with the defendants first set under         the  name and style of M/s John Jain Mehra & Co.  and  mali-         ciously  induced  them to commit breaches of  the  agreement         dated  July 6, 1948 by forcibly turning out his  representa-         tives  who  used to remain incharge of the  stocks,  stores,         coal,  waste etc. of the mills and making them enter into  a         finance  agreement  contrary to the terms of  the  agreement         with his firm.  The plaintiff also alleged that the  defend-         ants  first  set had at the instigation  of  the  defendants         second set unjustifiably closed the business of John & Co.         859         and were colluding with the latter who were guilty of misap-         propriation and conversion of the goods over which he had  a         prior and floating charge. -The plaintiff also averred  that         on April 4, 1949, accounts were again gone. into between him         and the defendants first set and a sum of Rs.  47,23,738/4/9         were  found due to him from them; that agreement dated  July         6,  1948  between  him and the defendants  first  set  still         subsisted  and would continue to subsist till July  6,  1949         and thereafter at his option till all his dues were paid up;         and  that a sum of Rs. 21,11,500/- was due to him  from  the         defendants  first set as per Schedule A of the plaint  which         both sets of the defendants were liable to pay.             The  statement  of account as contained  in  Schedule  A         annexed to the plaint was as follows:         -----------------------------------------------------------                                                 Rs.     a.      p.         "1. Settled balance on 4th April, 1949         according to accounts books of the def-         endants.  (The accounts upto 4th April,         1949 were fully  gone  through and se         ttled by both the parties  and confirmed         by the defendants by making nec         essary entries in  their books         45,74,980 10  1         2. Plaintiff’s charges of commission,         interest, godown rent etc., according         to the terms of the  agreement and         duly checked by the defendant’s accountant         and chief Account officer as detailed below:--         From 13th October to 31st October, 1948  14,516 13 6         From 1st November to 12th December        33,783 4 3         From 13th December to 12th January 1949  34,100 3 3         From 13th January to 12th February, 1949 38,716 12 3         From 13th February to 12th March, 1949  27,632  9 2         Total                            1,48,749    10    8          9th April, 1949 paid to Mahalaxmi         Oil Mills  through Kirpa         Narayan advocate and others .      8,708 5 0         10th April 1949 paid to Bishambar

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       Nath & Co. (for  Cotton supplied         to John & Co.)                   1,57,005 3 0         Charges from 13th March to         12th April, 1949                 62,804 12 3                         Total           49,52,2489 0          9th April, 1949:         Proceeds by sale of 5731 bales         of yarn sold by defendants         as per their authorities        28,40,748 9 0                        Balance         21,11,500 0 0         Twenty one lacs, eleven thousand         five hundred only.         5 --/338SCI/76         860         The  suit  was  contested by both sets  of   defendants   on         various  grounds.  Defendants first set inter  alia  pleaded         that  there was no ’settlement of accounts between them  and         the  plaintiff as alleged by the latter; that ’the  accounts         were liable to be reopened as they were tainted with  fraud,         obvious  mistakes etc., and that on a true and  correct  ac-         counting  a large sum of money would be found due  to  them;         that  though the plaintiff and Seth Sugan Chand  (who  owned         Indra  Spinning and Weaving Mills and had a covetous eye  on         John  Mills)  had obtained  various  documents,  agreements,         vouchers, receipts etc. at various times from them, the same         were of no legal value as they were secured by the former by         practising undue influence, fraud, coercion and misrepresen-         tation.  It was further pleaded by the defendants that  :the         plaintiff  had  illegally and contrary   to   the  agreement         dated July 6, 1948 debited them with huge amounts which were         not really due to them.  It was further pleaded by the  said         defendants that the cotton supplied to them by the aforesaid         financiers  was  of inferior quality and the amounts charged         by them in respect thereof were exorbitant and far in excess         of the prevailing market rates. The said defendants  further         pleaded  that though under the terms of the agreement  dated         February  9, 1948 no commission on sales and  purchases  had         been  agreed  to be paid by them to the   financiers   still         they had been debited with huge amounts on that account  and         likewise  though simple interest had been stipulated in  the         said agreement compound interest with monthly rests had been         debited   to  their account which was not at all  justified.         The  said  defendants  also disputed their liability to  pay         certain  items of expenditure like demurrage, wharfage  etc.         which had been debited to their account. It was also pleaded         by the said defendants that the plaintiff  had  no  floating         or  prior  charge on any of their stocks,  stores  etc.  nor         could  any  such charge be claimed by him in law;  that  the         suit was barred by the provisions of Section 69 of the Part-         nershlp Act and that the agreement dated July 6, 1948  which         was  insufficiently stamped could not form the basis of  the         suit.             In  the written statement filed by them  the  defendants         second  set  denied the allegations  and  insinuations  made         against them by the plaintiff and raised a number of techni-         cal  and other pleas.  They also pleaded that the  plaintiff         alone .was not entitled to file the suit concerning the firm         M/s. Sethiya as it did not belong to his joint Hindu  family         but was a partnership firm.             The  trial  court framed as many as 21 issues and  on  a         consideration of the evidence adduced by the parties it held         inter  alia  that the suit as brought-by the  plaintiff  was         maintainable; that though  the plaintiff had failed to prove         that the dissolution of the partnership between him and Seth         Sugan  Chand took place on June 30, 1948, and  no  alternate

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       date  of dissolution subsequent to June, 30, 1948, had  been         set  up  by  him, it was evident from the  record  that  the         dissolution  took place some time after July 30,  1948,  and         before the institution of the suit; that the suit being  one         for  recovery of the assets due to a  dissolved  partnership         firm from a third party was not barred by Section 69 of  the         Partnership  Act; that Seth Sugan Chand was not a  necessary         party  to the suit; that agreement dated July 6,  1948,  was         duly stamped and that no undue influence etc. was  exercised         by the         861         plaintiff  on  the defendants first set in relation  to  the         execution  of the agreements between Sethiya &  Company  and         the  defendants first set. The ,trial court also  held  that         there was no accounting on April 4, 1949, as alleged by  the         plaintiff  and  that both the plaintiff and  the  defendants         first  set  committed a breach .of agreement dated  July  6,         1948.   The  breach committed by the  defendants  first  set         according  to  the trial court lay  in  their  unjustifiably         handing over possession to M/s. John Jain Mehra & Co. of the         goods on which the plaintiff held a charge thereby  furnish-         ing him with a cause of action against both sets of  defend-         ants.   The trial court also held that under clause    13 of         the  agreement  dated July 6, 1948, a charge  in  favour  of         the plaintiff was created in respect of the entire  business         assets  including  stock-in-trade, stores,  coal,  oil  etc.         lying  inside the three spinning mills which were being  run         by  John & Company; that defendants first set utilised  con-         sumed and otherwise dealt with the goods which were burdened         with  the  floating charge from July 6, 1948, to  April  13,         1949, when John & Co. ceased to be a going concern and there         was a final rupture between the plaintiff and the defendants         I  st set and the plaintiff’s floating charge got  fixed  or         crystalised.   It also found that defendants second set were         not entitled to prior charge on the properties of John & Co.         existing  on April 13, 1948, and were liable to satisfy  the         plaintiff’s  claim as despite notice of his floating  charge         they  consumed,  converted and  misappropriated  stocks  and         stores  and  other business assets of the  defendants  first         set.    Finally,  the trial court held the plaintiff  to  be         entitled  to a decree for Rs. 18,00,152/- against both  sets         of  defendants but rejected his claim for specific  perform-         ance  and injunction.   It accordingly passed a  preliminary         decree against both the sets of defendants on April 5,  1954         directing  them to deposit the said amount in  Court  within         the  prescribed  time and in default, gave the  plaintiff  a         right  to apply for a final decree for the sale of  all  the         business  assets,  goods, stocks, stores etc. of  the  three         spinning mills as mentioned in the operative portion of  its         judgment.  The decree also gave a right to the plaintiff  to         apply for a personal decree against the defendants first set         and  the defendants second set for the balance of his  claim         in  case  the net sale proceeds of the  said  property  were         found  insufficient to discharge his claim.    Aggrieved  by         the said judgment and decree of the trial court, the  plain-         tiff  preferred  an appeal, ’being first appeal No.  465  of         1954,  before the High Court at Allahabad claiming the  fol-         lowing reliefs :-                          "(a)  A  decree for a further  sum  of  Rs.                       64,082/3/5  by  which  amount  his  claim  was                       reduced by the   trial                       (b)  Such  rate  of interest as  he  might  be                       entitled  to  on  the  aforesaid  sum  of  Rs.                       64,082/3/5  under the agreement dated July  6,                       1948;

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                        (c) Interest on the sum already decreed  at                       the  rate agreed to under the agreement  dated                       July 6, 1948;                          (d)  Injunction in terms of para  47(b)  of                       the  plaint  and specific performance  of  the                       agreement dated July 6, 1948;                       862                              (e) Costs of the appeal and costs which                       the lower court wrongly disallowed or deducted                       and also interest on the costs already  award-                       ed;                              (f)  A decree for sale of the    shares                       of the defendants in the machinery over  which                       he had a charge."               M/s  John  Jain Mehra & Co., of which  the  defendants         first  set  too  were partners,  also  preferred  an  appeal         against  the  aforesaid  judgment and decree  of  the  trial         court,  being first appeal No. 65 of1955, praying  that  the         decree passed by the trial court in favour of the  plaintiff         be set aside and the suit dismissed with costs throughout.              The High Court allowed both the appeals No. 465 of 1954         and     No. 65 of 1955 partially by its  aforesaid  judgment         dated December    22,1972, holding inter alia that no fraud,         undue  influence,  coercion or misrepresentation  was  prac-         tised  by the plaintiff on the defendants first set in  con-         nection  with  the  execution of  agreement  dated  February         9,1948,  or agreement dated July 6,1948 (which is the  basis         of  the  suit); that the agreement dated  July  6,1948,  was         neither insufficiently stamped nor did it require  registra-         tion; that though it appeared  that the deed of  dissolution         dated  July 22, 1948, was prepared for   the purpose of  the         case,  there was sufficient evidence on the record to  indi-         cate that Seth Suganchand had withdrawn from the partnership         carried on under the name of Sethiya & Co. with effect  from         June  30, 1948, and had nothing to do with  the  transaction         evidenced   by  the agreement dated July 6,1948,  which  was         entered  into  by the plaintiff as the  sole  proprietor  of         Sethiya  &  Co., that the entire    rights  and  liabilities         flowing from the agreement dated July 6, 1948 having  become         the  rights and liabilities of the plaintiff alone  and  the         suit   not  being one for recovery of dues  of  a  dissolved         partnership  firm  arising out of a cause  of  action  which         accrued  before  the dissolution of the firm,  neither  Seth         Suganchand  was a necessary party to the suit, nor  was  the         suit  barred under section 69 of the Partnership  Act;  that         the alterations in the deed of agreement dated July 6,  1948         pointed out by the defendants were not material  alterations         and  did not render the agreement void; that  the  plaintiff         had  a  floating charge over the business assets of  John  &         Co.,  that  it  was the defendants first .set  and  not  the         plaintiff who committed breach of the agreement by wrongful-         ly  delivering possession of the charged goods on  or  after         April  13, 1949 i.e. after ceasing to be a going concern  to         M/s. John Jain Mehra & Co.--a partnership firm of which  the         defendants first set became a constituent part by virtue  of         agreement  dated April 11, 1949--that despite the  knowledge         of  the  aforesaid prior charge, M/s John Jain Mehra  &  Co.         illegally  intermeddled with the charge goods and used  them         for their own business; that the plaintiff’s floating charge         on  the  assets  of the defendants first  set  valuing   Rs.         13,25,000/-   became crystallised on April 13,1949  when  on         default of the defendants first set, he intervened by bring-         ing the suit to recover all his out standings by sale of the         charged properties; that the charge of the plaintiff  having         become  crystallised,  as indicated  above,  the  defendants

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       first   and second set held the properties as  trustees  and         were liable to make them         863         available  to the plaintiff for recovery of his  dues;  that         keeping in view the legal position as well as the nature  of         the  transactions involved, the practice of courts  and  the         fact that the litigation between the parties had been suffi-         ciently protracted, it would be reasonable to award pendente         lite as well as future simple interest from the date of  the         decree  to the date of actual payment or realization at  the         rate of 4 per cent per annum on the principal sum  adjudged;         that  though keeping  in view the facts that no balance  was         struck on April 4, 1949 in  the Rokar (Exh. 179) of  Sethiya         & Co. and the auditor’s report which showed that no specific         figure was mutually agreed upon on accounting on that  date,         it  could  not be said that accounts  were  finally  settled         between  the parties on April 4, 1949, the defendants  first         set  had failed to point out which entry in the charts (Exh.         6103 to 6112) produced by the plaintiff was wrong; that  Rs.         49,35,925/5/7  were advanced by Sethiya & Co. to the defend-         ants first set under the agreement dated July 6, 1948,  from         the  date of its execution to the date of the suit;  that  a         sum of Rs. 11,17,000/- was due to old Sethiya & Co. from the         defendants first set upto June 30, 1948 under the agreements         dated  June  14,  1947  and  February  9,  1948;  that   Rs.         1,55,000/were  advanced by Sethiya & Co. on July 3, 1948  to         the  defendants first set for purchase of the share of  Beni         Madho; that in accordance with the obligation undertaken  by         it  under  para 1 (8) of the agreement dated July  6,  1948,         Sethiya  & Co. paid, on the basis of transfer voucher  (Exh.         3039) dated February 28, 1949, drawn by the defendants first         set,  a sum of Rs. 17,79,100/- to Tejkaran Sidkaran in  full         satisfaction  of  the  amount due to the  latter  under  the         agreement dated February 9, 1948; that whereas the aggregate         of the debit items came to   Rs. 82,47,380/15/4, the  aggre-         gate of the credit-items came to Rs. 71,13, 712/6/6  leaving         a balance of Rs. 11,33,668 and  paise  55  which the defend-         ants  first  set were liable to pay to the  plaintiff;  that         since  the receivers appointed by the court at the  instance         of   the  plaintiff after the institution of the  suit  were         able  to  secure possession of the charged  properties  that         existed prior to April .11, 1949 and it had not been  estab-         lished that there was a removal from the mills’ premises  of         the  said properties or dissipation thereof because  of  the         aforesaid  conversion and detention, the plaintiff  was  not         entitled  to  the decree for money  against  the  defendants         second  set;  that the plaintiff could,  no  doubt,  proceed         against  the charged goods which were in the custody of  the         receivers  for recovery of his dues but as no.  property  on         which  he  held  a charge or on which  his  floating  charge         crystallised had  remained in the custody of the  defendants         second  set after the appointment of the receivers,  no  li-         ability for his dues could be fastened  on them nor could he         obtain a decree for specific performance against them.    In         the  result,  in modification of the decree  passed  by  the         trial Court, the High Court passed a preliminary decree  for         Rs.  11,33,668.55  with proportionate  costs  and   pendente         lite  and future  interest from the date. of the  decree  to         the date of the actual payment or realisation at the rate of         4   per  cent  per  annum  on  the  principal  sum  of   Rs.         10,87,674.05  in favour Of the plaintiff  and   against  the         defendants  first set but dismissed the suit with  costs  as         against   the  defendants second set.   The High Court  made         it obligatory for the defendants         864

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       first  set to pay or deposit in Court the aforesaid  sum  of         Rs. 11,33,668.55 together with interest within six mouths of         the  passing  of  the  decree  failing  which  it  held  the         plaintiff  entitled to apply for a final decree for sale  of         all  the  business assets, goods, movables,  stocks,  stores         etc.  mentioned  in  the  inventory  of  Shri  P.N.   Raina,         Commissioner,   and  the receivers’  inventories.  The  High         Court further directed that if the net sale proceeds of  the         said  property  were  found  insufficient  to  satisfy   the         plaintiff’s  aforesaid  amount,  he would  get   a  personal         decree  against  defendants 1 to 3 for the  balance  of  his         claim  remaining  due  after scale.   The  High  Court  also         directed  that  a  sum of Rs. 28,  662/9/   ....   the  sale         proceeds of cotton waste over which the plaintiff had charge         and  which was in deposit with the Bank in the  Court’s  ac-         count -- would also be utilised towards the satisfaction  of         the aforesaid amount decreed in the plaintiff’s favour.   It         is  against  this judgment and preliminary decree  that  the         present appeals   are directed.             We have heard counsel for the parties at length and gone         through  the entire record relevant for the purpose  of  the         appeals  before us. As per contentions of the  counsel,  the         following main questions arise for our determination :--                           (1) Whether the first ’sethiya & Co.’  (of                       which  the plaintiff and Seth Suganchand  were                       partners) was dissolved with effect from  June                       30, 1948, as claimed by the plaintiff ?                           (2)  Whether the agreement dated  July  6,                       1948,  was entered into by the plaintiff  with                       the defendants first set as a sole  proprietor                       of Sethiya & Co. or was it entered into by his                       as a partner of Sethiya & Co. ’?                       (3) Whether the suit is barred by section   69                       of the Partnership Act ?                       (4)  Whether Seth Suganehand was  a  necessary                       party to the suit ?                           (5) Whether any material alterations  were                       made in the aforesaid agreement dated July  6,                       1948, which rendered it void ?                          (6)  Whether the suit which was based  upon                       accounts stated or settled could be dealt with                       in the manner in which it has been done ?                           (7) Whether in addition to the  imposition                       of burden on the charged business assets  etc.                       of John & Co. for satisfaction of the decretal                       amount,  the  defendants second set  could  be                       saddled with any liability in that behalf ?              We  shall take up these question seriatim.    Questions         Nos. 1 & 2.: As these two questions are inextricably  linked         up, they have to be dealt with together.         865              According  to  the plaintiff, the firm Sethiya  &  CO.,         which    was formed by him in partnership with  Seth  Sugan-         chand  for the specific purpose of providing  money  against         pledge  of goods to the defendants first set and to  act  as         their  sole  selling agents and which  consequently  entered         into  financial  agreements with the  said  defendants  vide         exhibits  1321  and 1320 on June 14, 1947, and  February  9,         1948,  respectively was dissolved with effect from June  30,         1948,  and there-. after he alone carried on  dealings  with         the  said defendants in the name: of Sethiya & Co.  and  M/s         Tejkaran Sidkaran as their sole proprietor and as such,  the         agreement (Exh. 168) dated July 6, 1948,   was entered  into         by  him with the said defendants as the sole  proprietor  of         Sathiya  & Co.  On the contrary, the defendants assert  that

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       the  firm ’Sethiya & Co.’ was in existence on July 6,  1948,         and  thereafter  as well.   Let us examine the  material  on         the  record and see which of these contentions  is  correct.         While the plaintiff relied in support of his contention upon         the  deed of agreement (Exh. 168)  dated  July 6,  1948  and         the deed of dissolution dated July 22, 1948 produced by him,         the  defendants strongly relied upon Exhibit A-1 and    cer-         tain  other documents.  A close scrutiny of these  documents         and   other evidence adduced in the case  clearly  negatives         the  contention  of  the plaintiff and goes a  long  way  to         support  the assertion of the defendants. It would be  noted         that  in  the  preamble of Exh. A-1 which  is  admittedly  a         counter  part of Exh. 168, the word ’partner’  occurs  after         the  word ’Sethiya’ and before the word ’of’ and  in  conso-         nance  with  its preamble, Exh. A-1 has been signed  by  the         plaintiff,  Seth  Loonkaran  Sethiya, as a  partner  of  M/s         Sethiya & Co.  Now  though the word  ’partner’ occurring  in         the  preamble  of Exh. 168 has been scored out, it  has  not         been initialled either by the plaintiff or by any one of the         partners  of John & Co.  It is also significant  that  while         affixing his signatures on Exh. 168 and its counterpart Exh.         A-1 the plaintiff described himself  as  a  partner  of  M/s         Sethiya   & Co,  The contention  of the plaintiff  that  his         partnership  with  Seth  Suganchand came to    an  end  with         effect from June 30, 1948, and the agreement dated   July 6,         1948  was entered into by him with the defendants first  set         as the sole proprietor of Sethiya & Co. is further falsified         by the dissolution deed dated July 22, 1948, itself produced         by  him before the   trial Court on December 13, 1949  which         would  have  passed muster if the defendants  had  not  been         vigilant.  It seems that on seeing this deed written  partly         on an impressed stamp paper of Rs. 10/- which was not in use         in  July, 1948, the suspicion of the defendants about    the         spurious character of the deed was aroused and they hastened         to  make an application requesting the trial court  that  in         view of the fact that the deed appeared to have been  ’anti-         dated  and  manufactured for the purpose of the  case’,  the         stamp  papers  on  which  it was  written  be  sent  to  the         officer-in-charge, India Security Press, Nasik, for examina-         tion and report as to when the said stamp papers were issued         for  sale from the press.  The reaction of the plaintiff  to         this  application and his subsequent conduct in relation  to         the  investigation  sought to be made to get  at  the  truth         regarding the date of issue of the aforesaid impressed stamp         Paper and consequently regarding the alleged dissolution  of         the  firm ’Sethiya & Co.’ is revealing.  It is amazing  that         the         866         simple request made by the defendants which should have been         readily  agreed to by the plaintiff if he had been  innocent         was  stoutly opposed by him.   The circumstances.  in  which         the so called deed of dissolution of partnership dated  July         22,  1948,  and the report dated February 27, 1950,  of  the         Assistant  Master,  India Security Press,  Nasik  disclosing         that ’the first high value (Rs. 10/-) impressed stamp in the         type  of  water marked paper as used in the  document  dated         July 22, 1948,was printed in his Press on November 23, 1948,         and  as such couldnot  have  been, existence  on   July  22,         1948--the alleged date of execution of the  document--disap-         peared is very  intriguing  It is also remarkable that  when         during  the cross-examination of the plaintiff on March  29,         1950,  in connection with the issue relating to the  bar  of         section 69 of the Partnership Act the defendants wanted   to         make  use  of the aforesaid report from the  India  Security         Press,  Nasik, and it came to light that the report and  the

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       original  deed of dissolution set up by the  plaintiff  were         missing, the plaintiff came forward with an amusing applica-         tion  stating therein that "in the interest of    the  early         disposal  of  the case, he undertakes not to  rely  on  that         document  in the suit and to argue the case  without  that."         The  manner in which the plaintiff behaved when the  defend-         ants attempted to have   the duplicate copy of the aforesaid         report  of the Assistant Master.  India Security  Press  ob-         tained  by  the  Court proved is no  less  interesting.    A         reference  to the minutes of proceedings of the trial  Court         shows  that after the Court had, at the request of  the  de-         fendants  and with  the consent of the plaintiff’s  counsel,         passed  the order on May 21, 1950, for issuing a  commission         to Nasik for examination of the said officer of the Press in         respect  of the aforesaid report about the  impressed  stamp         paper,  the plaintiff made an application for stay  of  that         order  and on Jully 4, 1950, his counsel, Shri Walter  Dutt,         made the following statement :--         ,lm15               "The  court may for the purpose of deciding the  issue         under  section 69, Partnership Act take  into  consideration         the  fact that the "document purporting to be a  dissolution         deed  executed between the partners of Sethiya & Co. is  not         genuine although this fact is not admitted by the  plaintiff         and  the court may therefore, discard such portions  of  the         oral  evidence of both plaintiff and Seth Suganchand  as  it         considers would be rendered unreliable if the view be  taken         that  the document in question was a fabricated one and  the         court may presume that the document was not executed on  the         date on which it purports to be executed."             On  a  consideration therefore of the  totality  of  the         tell-tale  facts and circumstances especially the  aforesaid         description of the plaintiff as partner of Sethiya & Co.  in         the  preamble and at the food of Exh. A-1 and Exh. 168,  the         clumsy attempt made to obliterate the aforesaid  description         in  the preamble of Exh. 168.   the execution of a  part  of         the so called deed of dissolution of partnership dated  July         22, 1948 on the aforesaid non-judicial impressed stamp Paper         of  the denomination of Rs. 10/- which was not in  existence         on July 22, 1948,   the         867         resistence  offered  by  the plaintiff  to  the  defendants’         application   requesting the Court to call for a report from         the India Security Press, Nasik, about the data of issue  of         the  said  stamp Paper, the aforesaid  report   No.   780/26         dated   February  27,  1950  of  the India  Security  Press,         Nasik,  that  Rs. 10/- non-judicial  impressed  stamp  paper         which had been used for part execution of the aforesaid deed         of  dissolution  had not been printed  before  November  23,         1948,  the disappearance of the said deed of dissolution  of         partnership  of Sethiya & Co.   set up by the plaintiff  and         the  report  of the Assistant Master of the  India  Security         Press, Nasik, the defendants’ endeavour to’ have the  dupli-         cate  copy  of the aforesaid report of  the  India  Security         Press, Nasik about the impressed stamp paper of the  denomi-         nation of Rs. 10/obtained by the Court proved and the plain-         tiff’s  frentic  efforts  to thwart the attempt  firstly  by         making an application stating therein that he would not rely         on  the aforesaid deed of dissolution dated July  22,  1948,         secondly,  by making an application for stay of  the   order         passed by the trial Court regarding issue of a commission to         Nasik for formally proving the report of the India  Security         Press  and thirdly, by asking his counsel, Shri Waiter  Dutt         to  make the above quoted statement strongly incline  us  to         think  in agreement with the subdued findings of  the  trial

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       Court that the aforesaid deed of dissolution was  fabricated         by  the plaintiff with the dishonest intention of playing  a         fraud  on the Court and gaining an undue advantage over  the         defendants.             In  addition  to  the facts and  circumstances  set  out         above,  the debit of items of Rs. 1,55,000/- and Rs. 1,  68,         552/12/6  to the account of the partnership firm ’Sethiya  &         Co.’ on July 3, 1948, and   July 10, 1949, respectively  and         issue  by the plaintiff of cheques No. BL 003628 dated  July         16, 1948 (Exh. B-11)for Rs. 1,55,000/-, No. BL 003634  dated         July  16,  1948 (Exh. B-12) for Rs. 25,000/, No.  BL  004636         dated  July  20, 1948 (Exh. B-13) for Rs.  73,000/,  No.  BL         003630 dated July 9, 1948 (Exh. B-14) for Rs. 10,000/-,  No.         BL 003635 dated July 17, 1948 (Exh. B-15) for Rs.  16,500/-,         No.  ’BL  003632  dated July 10, 1948 (Exh.  B-16)  for  Rs.         1,30,000/-,  and No. BL 003633 dated July 10, 1948 (Exh.  B-         17) for Rs. 1,68,552. 14/6 as partner of Sethiya & Co.  also         go  to demolish the theory of dissolution of the  firm’  ’S-         ethiya & Co.’ on June 30, 1948 which the plaintiff sought to         build up on sandy foundations and furnish  as eloquent proof         of  the fact that the firm was very much in  existence  when         the  agreement (Exh. 168) dated July 6,  1948,   came   into         being.  It has also to be borne in mind that service by post         or  advertisement in some paper of notice about the  retire-         ment of a partner from a partnership firm on persons who are         in know of the existence of the firm and have been  carrying         on dealings with it is of utmost importance to prevent  them         from  assuming that the partnership continues.  In  the  in-         stant  case, it is manifest from the evidence educed by  the         plaintiff  himself that neither he nor Seth Suganchand  gave         notice  in  writing  to the defendants first  set  that  the         latter had retired from Sethiya & Co. with effect from  June         30,  1948.  The evidence also makes it clear that  the  con-         cerned persons and the general public were         868         not  informed about the retirement of seth  Suganchand  from         the  partnership  firm ’Sethiya & Co.’ by publication  of  a         notice  in some paper. The absence of these notices  further         belie the plea of the plaintiff regarding dissolution of the         partnership firm ’Sethiya & Co.’ on   June 30, 1948.    That         the  plaintiff’s story regarding dissolution of    the  firm         ’Sethiya  &  Co.’ is a complete myth  also  receives  strong         support  from  the fact that although  approximately  Rs.1,1         0,000/-  are  admitted by Seth Suganchand to be due  to  him         from  the partnership not   a farthing appears to have  been         paid  to  him nor any document acknowledging  the  liability         appears to have been passed on to him.             The  letter (Exh. 21) addressed to the Manger,  Bank  of         Bikaner  Ltd., Agra, intimating to him that Seth  Suganchand         had withdrawn from the partnership of Sethiya & Co. on which         strong reliance  is placed on behalf of the plaintiff is not         helpful  to him as it was not sent to the Bank  before  July         20, 1948.             The alleged dissolution of the partnership between  Seth         Suganchand and the plaintiff not having been established, it         can  be safely presumed in view of the  above  circumstances         that  the partnership between them continued to  subsist  at         least upto July 20, 1948.   We are accordingly of the  opin-         ion  that  the firm ’Sethiya & Co.’ was not  dissolved  with         effect from June 30, 1948, as claimed by the plaintiff,  and         that   the agreement dated July 6, 1948, was entered into by         the plaintiff with the defendants first set not as the  sole         surviving  proprietor of Sethiya & Co. but as a  partner  of         the firm ’Sethiya & Co.’             Question  No.  3: --For a proper determination  of  this

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       question,  it  is necessary to refer to section  69  of  the         Partnership  Act,  1932,  the relevant  portion  whereof  is         reproduced below for ready reference :--                             "69."(1)  No  suit to  enforce  a  right                       arising  from a contract or conferred by  this                       Act shall be instituted in any Court by or  on                       behalf  of any person suing as a partner in  a                       firm against the firm or any person alleged to                       be  or  to  have been a partner  in  the  firm                       unless  the firm is registered and the  person                       suing is or has been shown in the Register  of                       Firms as a partner in the firm.                             (2)  No suit to enforce a right  arising                       from  a  contract shall be instituted  in  any                       Court  by or on behalf of a firm  against  any                       third party unless the firm is registered  and                       the  persons suing are or have been  shown  in                       the  Register of of Firms as partners  in  the                       firm.                             (3)  The provisions of sub-sectiOns  (1)                       and (2) shall apply also to a claim of set-off                       or other proceeding to enforce a right arising                       from a contract, but shall not effect--                             (a) the enforcement of any fight to  sue                       for dissolution of a firm or for accounts of a                       dissolved  firm,  or  any right  or  power  to                       realise  the  property of  a  dissolved  firm,                       or  ....  "         869             A  bare glance at the section is enough to show that  it         mandatory in character and its effect is to render a suit by         a plaintiff in respect of a right vested in him or  acquired         by  him under a contract which he entered into as a  partner         of an unregistered firm whether existing or dissolved, void.         In other words, a partner of a erstwhile unregistered  part-         nership firm cannot bring a suit to enforce a right  arising         out of a contract falling within the ambit of section 69  of         the Partnership Act.   In the instant case, Seth  Suganchand         had to admit in unmistakable terms that the firm ’Sethiya  &         Co.’  was not registered under the Indian  Partnership  Act.         It  cannot also be denied that the  suit  out of  which  the         appeals  have  arisen was for enforcement of  the  agreement         entered  into by the plaintiff as partner of Sethiya  &  Co.         which was an unregistered firm.   That being so, the suit is         undoubtedly a suit for the benefit and interest of the  firm         and consequently a  suit on behalf of the firm.   It is also         to be borne in mind that it was never pleaded by the  plain-         tiff,  not  even-in the replication, that he  was  suing  to         recover the outstandings of a dissolved firm.  Thus the suit         was clearly hit by section 69 of the Partnership Act and was         not maintainable.             Question  No.  4: It would be noticed that  the  present         suit has been brought by the plaintiff alone and in spite of         the objection raised on behalf of the defendants, he did not         care to implead Seth Suganchand who was a necessary party to         the suit.   Assuming without holding therefore, that section         69 of the Partnership Act did not apply to the present case,         the  plaintiff could not in any event maintain the suit  for         recovery  of  the  aforesaid amount (which was  made  up  of         items, some of which were admittedly due to the old  Sethiya         & Co.) without impleading Seth Suganchand.             Question  No. 5 :--Before proceeding to  determine  this         question  it would be well to advert to the  legal  position         bearing  on the matter As aptly stated in paragraph 1378  of         Volume  12 of Halsbury’s Law: of England  (Fourth’  Edition)

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       "if an alteration (by erasure,   interli-neation, or  other-         wise) is made in a material part of a deed, after it  execu-         tion,  by  or  with the consent of any party  to  or  person         entitle,  under it, but without the consent of the party  or         parties  liable  under it, but without the  consent  of  the         party or  parties liable under it, the deed is rendered void         from  the time of the alteration so as to prefer the  person         who’ has made or authorised the alteration, and those  claim         ing  under  him, from putting the deed in  suit  to  enforce         against  an  party bound by it, who did not consent  to  the         alteration,  any  obligation, covenant, or  promise  thereby         undertaken or made.             A  material alteration, according to this  authoritative         work,  is on which varies the rights, liabilities, or  legal         position  of the parties  a ascertained by the deed  in  its         original state, or otherwise varies the legal effect of  the         instrument as originally expressed, or reduces to  certainty         some provision which was originally unascertained and a such         void,  or which may otherwise prejudice the party  bound  by         the deed as originally executed.         870             The  effect  of making such an  alteration  without  the         consent   of the party bound is exactly the same as that  of         cancelling the deed."         To  the same effect are the observations made by  the  Privy         Council on Nahtu Lal & Ors. v. Musarnat Gomti and Ors.(1).             Now a comparison of Exh. A-I (produced by the defendants         first  et)  with Exh. 168 (produced by  the  plaintiff)would         show  that  besides the obliteration of the  word  ’partner’         from the preamble as   stated above, the plaintiff made  two         other  alterations  in Exh. 168.    Originally,  the  second         proviso to sub-clause (8) of clause 1 of the agreement stood         as given in Exh. A-1 ran thus:-         "The  payment  for purchase of cotton will be  made  on  the         first (underlining is ours) day of its receipt in the  mills         of the partners."             In  Exh 168, however, the word ’first’ has been  changed         into  ’tenth’ thus making it read as "the payment  for  pur-         chase of cotton will   be made on the tenth (underlining  is         ours) day of its receipt in the mills of the partners."             The third alteration is no less important.   As would be         evident  from Exh. A-1, sub-clause (3) of clause 12  of  the         agreement  as actually drawn up between the parties read  as         follows :--                       "A commission of Rupee one percent on value of                       all  sales  of  products of  the  above  three                       spinning mills, viz. yarn, and newar,  whether                       sold directly by the partners or otherwise but                       delivered and produced during the currency  of                       this agreement."                       After the alteration, the clause has been made                       to read as follows on Exh. 168 :--                       "A commission of Rupee one percent on value of                       all  sales  of  products of  the  above  three                       spinning mills, viz.  yarn, and newar, whether                       sold directly by the partners or otherwise but                       delivered  or produced during the currency  of                       this agreement."                           As  a result of the last change, the  word                       ’and’ has been substituted by the word ’or’.                           As  the above mentioned  alterations  sub-                       stantially vary the rights and liabilities  as                       also  the legal position of the parties,  they                       cannot  be  held to be anything  but  material                       alterations  and  since they  have  been  made

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                     without  the consent of the  defendants  first                       set, they have   the effect of cancelling  the                       deed.  Question No. 5 is, therefore,  answered                       in the affirmative.                       (1) A.I.R. 1940 P.C. 160.         871             Question  No. 6--The plaintiff’s suit, as already  indi-         cated,  was for a specific and ascertained sum of  money  on         the  basis of settled account.   The courts below have  con-         currently  found that there was no settlement of account  on         April  4,  1949,  as alleged by the  plaintiff.  After  this         finding, it was not open to them to make out a new case  for         the  plaintiff  which he never pleaded and go into  the  ac-         counts  and pass a decree for the amount which they  consid-         ered was due from the defendants first set to the plaintiff.         They should have, in the: circumstances,  either   dismissed         the   suit or passed a preliminary decree fox  accounts  di-         recting that the books of account be examined item  by  item         and  an opportunity allowed to. the defendants first set  to         impeach and falsify either wholly or in part the accounts on         the ground of fraud; mistakes, inaccuracies or omissions for         it  is  well settled that in case of fraud or  mistake,  the         whole account is affected and in  surcharging and satisfying         the accounts, errors of law as well as errors of fact can be         set  right.  By adopting the latter course indicated by  us,         the defendants first set would have got a fair and  adequate         opportunity of scrutinizing the accounts and showing whether         they were tained with fraud, mistake, inaccuracy or omission         or of showing that any item claimed by the plaintiff was  in         fact not due to him.             Question No. 7 :--The High Court has for cogent  reasons         held that the goods on which the burden of charge lay  being         available  for the satisfaction of the liabilities, if  any,         under  the   agreement  dated July 6, 1948,  the  defendants         second  set could not be held personally liable for  payment         of  the decretal amount.  The opinion expressed by the  High         Court is correct and we see no warrant or justification   to         interfere with the same.             In  view  of  the foregoing, we have  no  hesitation  in         holding  that as material alterations have been made by  the         plaintiff in the agreement dated July 6, 1948 (which is  the         basis  of  the  suit) rendering it void and as  the  bar  of         section  69 of the Partnership Act clearly  applies  to  the         case, the suit is clearly untenable and has to be dismissed.             the  result, Appeal No. 572 of 1974 is allowed  and  the         suit  out  of which it arose  is  dismissed.   Consequently,         Appeal   No.  416  of 1973 fails and is dismissed.   In  the         circumstances of the case, parties are left to Pay and  bear         their own costs of these appeals.                                                 C.A. 572/74 allowed.         P.H.P.                                 C.A. 416/73 dismissed.         872