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PETITIONER: MOHATTA BROTHERS

       Vs.

RESPONDENT: BHARAT SURYODAYA MILLS Co. LTD., AHMEDABAD

DATE OF JUDGMENT05/04/1976

BENCH: KHANNA, HANS RAJ BENCH: KHANNA, HANS RAJ GOSWAMI, P.K.

CITATION:  1976 AIR 1703            1976 SCR  (3)1022  1976 SCC  (4) 420

ACT:      Indian Partnership  Act (9  of 1932),  s. 69-Scope  of- Partnership deed  showing partners-Later deed showing change in partners-Proof that it was not acted upon.

HEADNOTE:      The appellant,  a registered  partnership-firm, was the managing agent  of  (he  respondent.  After  submitting  its resignation to  the board  of directors  of the  respondent- company, the  appellant filed a suit claiming a sum of money in accordance  with an  agreed  scheme.  The  appellant-firm consisted of  5 partners with effect from April 1, 1949, and in addition,  a minor  was entitled to a 4-anna share in the profits of  the partnership  but  was  not  liable  for  the losses. The minor was represented by his mother as guardian. On October  24, 1949,  another partnership deed was executed wherein the  mother was shown as a partner of the appellant- firm with  a 4-anna  share and the minor’s name was omitted. The respondent contended that the suit was not maintainable. because the constitution of the old firm had been changed on October 24,  1949,  and  that  the  newly  constituted  firm consisting of 6 partners had not been registered.      The trial  court held that the new partnership deed was not acted upon and decreed the suit for a part of the amount claimed. There  were appeals  by both  sides. The High Court disagreed with the finding of the trial court that the later partnership deed  had not  been acted upon and held that the mandatory condition of s. 69(2), Indian Partnership Act, was not fulfilled  as the  name Of the mother. who was a partner in the  reconstituted firm  and in  whose  favour  cause  of action had  accrued, was not shown in the register of firms, and that this defect was fatal to the suit.      Allowing the  appellant’s  appeal  to  this  Court  and remanding the  appeal to  the High  Court  for  disposal  on merits, ^      HELD: The  trial court  took the  correct view  of  the matter in  so far as it held that the later partnership deed was not  acted upon  and that  the mother  did not  become a partner of the appellant-firm. [1028B]      (1) The  question as  to when it was decided not to act upon the  later deed is not material. The evidence of one of

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the partners  of the  appellant-firm that  it was  not acted upon and that the mother was not a partner is admissible and is fully  corroborated by  the documentary evidence. It is a statement made  by him  against his  own Pecuniary interest, because, if  the mother was a partner, the loss of the other partners would  extend only  to 12-anna  share in the rupee; whereas if  she was  not a  partner then  they would have to bear losses  to the  full extent  of 16  annas in the rupee. [1029G-H; 1030H-1031D]      (2) In  the register  relating to  the registration  of firms kept  under  the  Indian  Partnership  Act,  an  entry relating to the registration of the appellant-firm dated May 5, 1952.  reveals that  even in  the year 1952, the stand of the partners  of the  appellant-firm was that the mother was not a  partner and  that it  was only  her minor son who was entitled to  a share  in the  profits  of  the  partnership. [1028G-1029A]      (3) In  the statement of accounts of the appellant-firm it is  only the  minor that  is shown to have a 4-anna share and not his mother. [1030B-C]      (4) Applications in connection with the registration of that firm  were pre  rented to  the Income  Tax  Authorities under s.  26A,  Indian  Income  Tax  Act,  1922.  All  there applications were  signed by  the mother  and they show that the mother  never claimed  to be a partner of the appellant- firm and that, on the contrary. she acknowledged that it was her minor  son who  was entitled  to the 4-anna share in the profits. [1029E-G] 1023      (5) The  directors of the respondent-company had passed a resolution  in 1950   referring  to  the  two  partnership deeds. But  the entry  which was made in the register of the respondent-company regarding  the partners  of its  managing agents as  required by  s. 87,  Indian Companies  Act, 1913, shows that  after April 1, 1949, there were only 5 partners, besides the  minor under  the guardianship  of his mother of the appellant-firm. If the mother had become a partner since October 24,  1949, it  is unlikely  that an  entry  to  that effect would  not have  been made  in the  register  of  the defendant-company, because,  under s. 87, a return has to be sent to  the Registrar  of Firms regarding any change in the particulars required  to be  contained in  the register  and non-compliance with  the requirement would entail imposition of fine. [1029A-E]      (6) The  letter of  resignation sent  by the appellant- firm was  signed by  the  mother  also,  but  there  was  no indication whether  she signed in her capacity as partner or as the guardian of her minor son. [1028F-G]      (7) Soon  after the  presentation of  the suit,  on  an application under  order XXX,  r. 2,  C.P.C., filed  by  the respondents, the  appellant-firm declared  the names  of its partners and  the declaration did not show the mother as one of the  partners. The  question as  to who  should share the profits  of  the  appellant-firm  and  should  be  otherwise entitled to  its assets  is essentially  a  matter  for  the partners of  that firm.  Unlike the case of a defendant-firm from which  money is  claimed  where  each  partner  may  be personally liable,  in the case of the plaintiff (appellant) firm claiming money, it would be a wholly untenable plea for the defendants,  from whom  money is  claimed, to  urge that even though  the mother  as well  as other  partners claimed that it  was not  she but her minor son that was entitled to the 4-anna  share in  the partnership, the Court should hold that it  was the  mother who  was entitled  to  that  share. [1030C-G]

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JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2075 & 2076 of 1968.      From the judgment and decree dated the 29th March & 1st April 1968  of the  Gujarat High Court in First Appeals Nos. 769 and 1029 of 1960.      A.K. Sen, L.M. Singhvi. S. K. Bagga and Mrs. Bagga, for the appellant.      R.P. Bhatt, B.S. Trivedi H. S. Parihar and I.N. Shroff, for the respondent.      The Judgment of the Court was delivered by      KHANNA, J.  These two appeals on certificate by Mohatta Brothers plaintiff-firm are directed against the judgment of Gujarat High Court whereby that court reversed on appeal the judgment of  the trial  court awarding a decree for recovery of Rs.  77,286/0 Anna/2  Pies in  favour of  the  plaintiff- appellant against  the respondent-company  and dismissed the suit.      The plaintiff  is a  partnership  firm  doing  business under the name and style of Mohatta Brothers. The plaintiff- firm carried  on the  business of  managing  agency  of  the defendant company  up to  September 4, 1950. Sometime before that  date,  it  appears  the  plaintiff-firm  expressed  an intention of giving up the post of managing agents. July 31, 1950  Chaturbhujdas   on  behalf   of  M/s.   Chaturbhujdas, Kharawala  Mohatta   &  Co.  submitted  scheme  Ex.  168  in consultation with  the plaintiff.  Paras 5,  6 and  7 of the scheme were as under:           "(5) Before  our this  Scheme is  approved by  the      Company the  present Directors  shall submit before the      Company 1024      the Balance Sheets and the Profit and Loss Account upto      the end  of the  year 1949 and get the same passed, and      they shall get the Proforma Balance Sheet upto the date      31-7-50 prepared  by the  Auditors of  the Company  and      shall hand  over the  same to  us, and  this Scheme has      been  given   while  understanding   that  at   present      everything is  according to the list of machinery given      to us by the present Agents. And no one has any kind of      charge or debt claimable from the Company till this day      excepting the  appropriate amount of Rs. 4,77,850/- due      to the  Agents and their kith and Kin till this day and      the list  of which  is given to us. We give this Scheme      believing the said fact true.           (6) The  amounts of  the Agents of the Company and      their kith and kin which may have been deposited in the      Company on  the day  the date 31-7-50 and which come to      about Rs.  4,77,850/- as told by the present Agents are      to be  kept credited  in their  accounts  and  interest      thereon is  not to  be given  from the date 1-8-50. And      when our  Scheme is  approved they have not to take any      interest on  the said amounts from the Company for five      years from  the date we start the work of the Mills and      they have not to withdraw the said amounts for a period      of ten  years thereafter  but the  same are  to be kept      credited in  the Company with interest at six per cent.      But the  Company shall  return the amount earlier if it      so desires.           (7) At  present the amount of Rs. 3,46,466-11-8 is      due to the Punjab National Bank Ltd. by the Company and      the demand  of giving bonus to the workers for the year

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    1949 is outstanding from the Company. The present Agent      states that in both of the said matters payments can be      made from  the amounts obtained by selling the goods of      stores,  etc.  which  is  lying  with  the  Company  at      present, the  list of  which is  given  to  us  by  the      present Agents,  and from the amounts of E.P.T. deposit      and advance  payments of  the  income  tax.  On  making      arrangement accordingly  if the debt of the Bank is not      fully paid  or the  liability of  bonus  is  not  fully      fulfilled and  if the  Company is  found responsible in      any way,  then the  same is  to  be  fulfilled  by  the      present Agent.           But after  fulfilling all  liabilities accordingly      if any  amount remains  in balance  the same  shall  be      treated as  assets of  the Company and half of the said      amount shall  be returned  to wards the above mentioned      amount deposited  in the  Company and  which belongs to      the present  Agent and  their  kith  and  kin.  But  on      fulfilling completely  the liability  of the  Bank from      the sale of goods of the Stores, etc. if there does not      remain sufficient  surplus or before getting the amount      of E.P.T. deposit and income tax advance payment if the      amount of bonus is required to be paid then the present      Managing Agents has to give that amount first." 1025 On the  following day,  i.e. August  1, 1950,  the following letter was  addressed by  the plaintiff-firm to the Board of Directors of the defendant-company :           "We  Messrs  Mohatta  Brothers,  the  Secretaries,      Treasurers & Agents of the company hereby beg to tender      our resignation  as Secretaries,  Treasurers and Agents      of the  Company on  condition of  the scheme  of  Sheth      Chaturbhujdas Chimanlal  dated 31-7-50 duly approved by      the Board  of Directors,  being passed  by  the  share-      holders of  the company  in the  Extraordinary  General      Meeting of  the company  to be  held on  4th September,      1950.      FOR MOHATTA BROTHERS      Ahmedabad      Shivaratan G. Mohatta      Chandratan G. Moondhra      D.R. Moondhra      Brijratan S. Mohatta      S.R. Mohatta Satyavati Mohatta" A notice  was then issued for convening a general meeting of the defendant-company  on September  4, 1950 for sanctioning the said  scheme.  The  said  scheme  was  approved  by  the shareholders on September 4, 1950. Accordingly, as from that date Messrs  Chaturbhujdas Kharawala Mohatta & Co. took over as the  new managing agents of the defendant-company instead of the plaintiff-firm.      The plaintiff’s  case was  that the  liability  of  the Punjab National  Bank was  fully discharged  by sale  of the stores. No  bonus was  held to  be payable by the Industrial Court to  the employees of the company for the year 1949. It was stated that there was surplus left after discharging the liability of  the Punjab National Bank from earmarked assets consisting of excess profit tax deposits, income tax advance amount and the amounts realised from the sale of the stores. The plaintiff-firm  claimed half  the surplus  in  terms  of clause (7)  of the scheme towards the deposit amounts of the plaintiff. Prayer  was made  for accounts of the surplus and decree for  the amount due as per terms of the scheme with 9 per cent interest.      It may  be stated  that the  plaintiff-firm with effect

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from April  1, 1949  consisted of five partners. In addition to those  five partners,  Shashi Kumar,  who was a minor and whose mother  Satyavati was  his guardian,  was entitled  to four Anna share in a rupee in the profits of the partnership but was  not liable for its losses. Partnership deed Ex. 116 was executed for this purpose on May 19, 1949 and was signed by the  five partners  and Satyavati.  On October  24,  1949 another  partnership  deed  Ex.  116  was  executed  wherein Satyavati was  shown as  a  partner  of  the  plaintiff-firm instead of her minor son Shashi Kumar. 1026      The suit was resisted by the defendant-company. Besides taking other  pleas with  which we  are not  concerned,  the defendant  contended  that  the  plaintiff  firm  could  not maintain the  suit as the constitution of the old firm which acted as  managing agents  of the defendant-company had been changed on  October 24, 1949. From that date, it was stated, the plaintiff-firm  consisted  of  six  partners,  including Satyavati. The  newly constituted  firm,  according  to  the defendant-company, had  not been  registered and as such the suit was not maintainable.      The trial  court held that the new partnership deed Ex. 116 by  which Satyavati became a partner was not acted upon. As the  original partnership  mentioned in  the  partnership deed dated  May 19, 1949 had been registered, the plaintiffs suit was  held to  be not barred by section 69 of the Indian Partnership Act.  It is  not necessary to refer to the other issues and  the findings of the trial court on those issues. Suffice it  to say  that the  defendant was held entitled to deduct certain  amounts  from  the  amount  claimed  by  the plaintiff. The  trial court accordingly passed the following order :           "The plaintiff  has filed this suit for account as      the account  was to  be taken  of the  realisation  and      expenses of  the stores.  But by pursis Exhibit 424 the      parties have  agreed about  the net  realisation of the      stores and have therefore urged that no Commissioner be      appointed and  a  final  decree  be  passed.  The  real      account was  to be  taken of  the actual  receipts  and      expenses of  the sale  of stores.  But now  nothing  is      required to  be done and hence there is no necessity of      passing any preliminary decree. The plaintiffs as shown      above are  entitled to  receive  Rs.  77,286-0-2,  from      defendant towards  their deposit  amount being  the net      surplus which  they are  entitled. Hence defendants are      liable  to  pay  the  said  amount  to  plaintiff.  The      plaintiff should  pay  the  remaining  Court-fee  stamp      within a month. I, therefore, pass the following order.                            ORDER           Defendants do  pay Rs.  77,286-0-2 and the cost of      the suit  to plaintiff  with future  interest at  6 per      cent from  1st January,  1956. The plaintiff should pay      the remaining  Court fees within a month. Defendants to      bear their own cost."      Two cross-appeals  were filed  against the judgment and decree of  the trial Court. One appeal was by the defendant- company praying  for the  dismissal of the plaintiff’s suit. The other  appeal was  by the  plaintiff-firm  claiming  for enhancement of the amount decreed by the trial court. One of the contentions  advanced by  the defendant  company was  as under :           "The plaintiff-firm  was not  entitled to  file  a      suit as  the plaintiff-firm was differently constituted      from the firm of Mohatta Brothers as on 31st July 1950,      and, in any event, as the minor Shashi kumar had become

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    major in 1953 and had 1027      become  a   partner  of   the  plaintiff-firm   Mohatta      Brothers, Ahmedabad,  and as even the name of Satyavati      Devi who  was the  partner suing  did not appear in the      entry in  the register  of firms  the present  suit was      barred under section 69(2) of the Act." Dealing with  the above contention, the High Court disagreed with the  finding of  the trial  court that partnership deed Ex. 116  dated October 24, 1949 had not been acted upon. The learned Judges  of the  High Court  held so far as the first part of  the above  contention is concerned that when a firm is reconstituted  by introduction of a new partner, it would remain the  same registered  firm, and  there  would  be  no necessity of  fresh registration  if the continuing firm was registered with  the Registrar of the Firms under section 59 of the  Indian Partnership  Act. Dealing with the contention that Shashi  Kumar had  become major,  the High  Court found that there  was no  evidence to show the age of Shashi Kumar and the  whole argument  in this  respect was  based on mere conjecture. On  the latter  part of the submission, the High Court held  that the mandatory condition under section 69(2) of the  Indian Partnership  Act was  not  fulfilled  in  the present case  as the  name of Satyavati who was a partner of the reconstituted firm and in whose favour a cause of action had accrued was not shown in the register of the firms. This defect was  held to be fatal. The High Court in this context observed .           "In view  of this  legal position  which  we  have      discussed the  second mandatory condition under section      69(2) is  not fulfilled in the present case as the name      of Satyavati  who was partner of the reconstituted firm      and in  whose favour the cause of action had accrued is      not shown  in the  register of firms. This defect would      be fatal as the first defect of want of registration of      the firm  itself and in both the cases we would have no      option but  to dismiss  the suit.  In that  view of the      matter it would be wholly unnecessary to go into any of      the other  contentions which  have been raised in these      two appeals  and to  record any  finding on  the issues      relating to  the merits  of the  case or as regards the      other appeal  of the  plaintiff as well. Howsoever much      we may  regret to  dismiss the  plaintiff’s suit  which      apparently is well founded by up-holding this technical      objection of  the defendant  company, we  are bound  to      dismiss this  suit as  in law  a non-compliance of this      second mandatory condition is also equally fatal as the      non-compliance of  first condition.  At the  same time,      however,  in  the  circumstances  of  the  cases  while      dismissing the plaintiff’s suit we would order both the      parties shall bear their own costs all throughout."      In appeal before us Mr. Sen on behalf of the appellants has assailed  the judgment of the High Court in so far as it has disagreed  with the  finding of  the  trial  court  that Satyavati was  not a  partner of  the plaintiff-firm and the deed of  partnership dated  October 24,  1949 had  not  been acted upon.  Mr. Sen  has also questioned the correctness of the view  taken by the High Court regarding the construction of section 1028 69(2) of  the Indian  Partnership Act.  As against that, Mr. Bhatt on  behalf of  the respondents  has canvassed  for the correctness of the view taken by the High Court. both on the question of fact as well as on the question of law.      After hearing  the learned  counsel for the parties and

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after having been taken through the relevant material on the record, we  are of  the opinion  that the trial court took a correct view  of the  matter in  so far  as it has held that Satyavati did not become a partner of the plaintiff firm and that the  deed of partnership dated October 24, 1949 was not acted upon.      The main  consideration which  prevailed with  the High Court in  holding that  Satyavati became  a partner  of  the plaintiff-firm was  the execution  of  deed  of  partnership dated October  24, 1949.  According to  this deed, Satyavati became a  partner to  the extent  of 4 Annas share out of 16 Annas, which  had been  previously held  by  her  minor  son Shashi Kumar.  Shashi Kumar under the deed of partnership of May 19,  1949 was  entitled to  the share  of profits to the extent of  four Annas  in a rupee and was not liable for the losses which  were to  be borne  by the other five partners. Satyavati became entitled under the deed of October 24, 1949 not only  to the share of profit to the extent of 4 Annas in a rupee  but also  became liable  to share  losses  to  that extent. The other circumstance relied upon by the High Court was resolution dated January 21, 1950 passed by the Board of Directors  of   the  defendant-company.   That  meeting  was presided over  by  Shivratan  G.  Mohatta,  partner  of  the plaintiff-firm. In  that resolution  there was  reference to partnership deeds  dated May  19, 1949  and October 24, 1949 which had  been received along with letter dated December 1, 1949 from Mohatta Brothers. The Board of Directors took note of the  changes mentioned in the above two partnership deeds and agreed  to accept  the partners  therein mentioned.  The third circumstance  relied upon  by the High Court is letter dated August 1, 1950 Ex. 118 which was sent on behalf of the plaintiff  firm,   Mohatta  Brothers,  for  the  purpose  of tendering resignation  as Secretaries, Treasurers and Agents of the  defendant-company. This  letter was  signed, besides the other  partners, by  Satyavati. There  was, however,  no indication in  the letter  as to whether Satyavati signed it in her capacity as a partner or as the guardian of her minor son Shashi Kumar.      As against  the circumstances  relied upon  by the High Court,  we  find  that  in  the  register  relating  to  the registration of firms kept under the Indian Partnership Act, an  entry   was  made   on  May  5,  1952  relating  to  the registration of  the plaintiff-firm.  The  above  entry  was plainly in  pursuance of  application filed on behalf of the plaintiff-firm shortly  before the making of that entry. The above entry  shows that  the position  taken up on behalf of the plaintiff-firm even in the year 1952 was that there were only  five  partners  of  the  plaintiff-firm  and  that  in addition to  that, Shashi  Kumar minor  was admitted  to the benefit of  partnership. The entry thus reveals that even in the year  1952 the  stand of  the partners of the plaintiff- firm was  that Satyavati was not a partner of the plaintiff- firm and that it was her minor son 1029 Shashi Kumar who was entitled to share in the profits of the partnership. This  entry would  be inexplicable if Satyavati had become  a partner of the plaintiff firm with effect from October 24, 1949.      Another circumstance  which goes to show that Satyavati did not  become a partner of the plaintiff-firm is the entry in the  registers of  the  defendant-company.  According  to section 87  of the  Indian Companies Act 1913, which was the Act in  force at the relevant time, every company shall keep inter alia  at its  registered office  a register d managing agents containing with respect to each of them the following

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particulars, that is to say, in the case of a firm, the full name, address  and nationality of each partner, and the date on which  each became a partner. The entry which was made in the register of the defendant company regarding the partners of its managing agents showed that after April 1, 1949 there were five  partners besides  Shashi Kumar  minor  under  the guardianship of  his mother  Satyavati, of  the firm  of the managing agents  Mohatta Brothers.  Although the above entry was made  on October  6, 1949,  no subsequent entry was made there after  showing Satyavati  as partner  of the  firm  of Mohatta Brothers.  Had Satyavati  in fact  become a  partner since  October  24,  1949  of  Mohatta  Brothers,  it  seems unlikely that  an entry  to that effect would Not be made in the register  of  the  defendant-company.  It  may  also  be mentioned in the above context that return has to be sent to the Registrar of Firms under section 87 regarding any change in the particulars required to be contained in the register. Failure  to   comply  with  the  above  directions  entailed imposition of fine.      The third  significant circumstance which tends to show that  Satyavati   despite  the  execution  of  the  deed  of partnership dated  October 24, 1949 did not become a partner of  the  plaintiff-firm  is  evidenced  by  applications  in connection with  the registration  of that  firm which  were presented to the income-tax authorities under section 26A of the Indian  Income-tax Act,  1922. Ex.  280 to  286 are  the applications which  were filed  on behalf  of the plaintiff- firm  for  the  years  1949-50  to  1956-57.  In  all  these applications, Shashi  Kumar minor  under the guardianship of Satyavati was  shown entitled to 4 Annas share in a rupee in the plaintiff-firm.  Satyavati was not shown in any of these applications as  partner of  the plaintiff-firm.  All  these applications which  were signed  by Satyavati  clearly go to show that during these years she did not claim herself to be partner  of   the  plaintiff  firm.  on  the  contrary,  she acknowledged that  it was her minor son Shashi Kumar who was entitled to 4 Annas share in the profits of the partnership.      Documentary evidence  which has  been  brought  on  the record,  in  our  opinion,  clearly  lends  support  to  the statement  of   Shivratan  (PW   1)  that  partnership  deed dated‘October 24, 1949 was not acted upon and that Satyavati did not  become a  partner of  the plaintiff-firm. Jivan Das PW, who  was  an  employee  or  the  defendant-company,  has likewise deposed  that Satyavati  was  never  a  partner  of Mohatta Brothers.      During  the   hearing  of   the  appeal,  affidavit  of Satyavati has  been filed  stating  that  she  was  never  a partner of Mohatta Brothers and it 1030 was her  son Shashi  Kumar who  was at  all  material  times admitted to  the benefit  of the  partnership. Mr. Bhatt has objected to  this Court taking notice of the contents of the affidavit of  Satyavati  including  her  disclaimer  of  any interest in  the plaintiff-firm.  In this  respect we are of the view that even without the above affidavit, the material on the  record clearly goes to show that Satyavati was not a partner of the plaintiff-firm.      In addition  to what has been pointed out, we find that in the  statement of  accounts of  the plaintiff-firm  it is Shashi Kumar  and not Satyavati who is shown to have 4 Annas share in  the plaintiff-firm. Entries show that Shashi Kumar shared the profits as well as the losses in that proportion. The significant  thing which  emerges from the account books is that  Satyavati was not shown as the person entitled to 4 Annas share in the partnership firm.

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    Soon  after   the  present  suit  had  been  filed,  on application filed  on behalf  of the  defendants under order XXX, Rule  2 of  the Code  of Civil  Procedure, names of the partners of  the plaintiff-firm  were declared  on behalf of the plaintiff-firm. In the declaration the name of Satyavati was not mentioned as one of the partners of the plaintiff  firm.  The question  as to  who should share the profits of the plaintiff-firm  and should  be otherwise entitled to its assets is  essentially a  matter for  the  partners  of  the plaintiff-firm. The  facts of  the case  disclose  that  the partners  of   the  plaintiff-firm   have   agreed   between themselves that  so far  as the 4 Annas share in the profits and assets  of the plaintiff-firm are concerned, it would be Shashi Kumar  who  would  be  entitled  to  the  same.  That position is  also accepted  by Satyavati in the applications in connection  with the  registration of  the  firm  to  the income-tax authorities.  It would,  in  our  opinion,  be  a wholly untenable  plea for  the defendant from whom money is claimed, to  urge that  even though Satyavati as well as the other partners  claim that  it is not she but her son Shashi Kumar who  is entitled  to 4 Annas share in the partnership, the court  should hold  that it is Satyavati who is entitled to that  share. The distinction between a plaintiff-firm and a defendant-firm  in the  above context  should not  be lost sight of. So far as a defendant-firm against whom a suit for recovery of  money has  been filed is concerned, it would be open to the plaintiff to prove that a person is a partner of the defendant  firm despite  the denial of that fact by that person as  well as the other partners of the defendant-firm. The reason  for that  is that a creditor of a defendant-firm can, except  in some  cases to  which it is not necessary to refer, also  proceed against the personal assets of each and every partner.  Such a consideration does not hold good when the dispute  relates to  the question  as  to  who  are  the partners of the plaintiff-firm.      It has  been mentioned  above that  Shivratan stated in the course  of his  deposition that  partnership deed  dated October 24,  1949 had not been acted upon. This statement is against the  pecuniary interest  of Shivratan.  It is  plain that if  Satyavati were  a partner  of  the  plaintiff-firm, Shivratan and  other partners  would have  to bear losses to the extent  of 12  Annas in  a rupee.  As against  that,  if Shashi Kumar be entitled to share profits to the extent of 4 Annas in a rupee and be not 1031 liable for  the losses, in such an event Shivratan and other partners A  would have to bear the losses to the full extent of 16  Annas in a rupee. If despite that fact, Shivratan has deposed that  Satayvati did  not be  come a  partner of  the plaintiff-firm and the deed of partnership dated October 24, 1949 was  not acted  upon, his  statement  in  this  respect should not,  in our view, be rejected, especially when there is over  r whelming documentary evidence which lends support to the above statement.      The entire  course of  dealings shows  that despite the execution of the deed of partnership dated October 24, 1949, the said  partnership  deed  was  not  acted  upon  and  the relations between  the  partners  of  the  -  plaintiff-firm continued to  be governed by the deed - of partnership dated May 19, 1949 according to which it was not Satyavati but her son Shashi Kumar who was entitled to four Annas share in the partnership. The  question, to  which a  reference has  been made in  the course  of arguments, as to when it was decided not to  act upon  the deed  of partnership dated October 24, 1949 is  hardly of  much importance,  the material  thing is

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that the  said deed was not given effect to or acted upon by the parties concerned. The firm which came into existence as per deed  of partnership  dated May  19, 1949 was admittedly registered under the Indian Partnership Act and its partners were shown in the Register of Firms.      Looking to all the facts we are of the opinion that the trial court  took a  correct view of the matter in so far as it held  that Satyavati  had not  become a  partner  of  the plaintiff-firm and  that the  deed  of  partner  ship  dated October 24, 1949 had not been acted upon. The High Court, in our opinion,  was in  error in reversing that finding of the trial court.  In view  of this conclusion of ours, it is not necessary to  go into  the legal question as to, what should be the  proper construction  of section  69(2) of the Indian Partnership Act.  Learned counsel for the parties are agreed that such  question would  arise only  in case we had marked the finding  of the  High Court  that Satyavati had become a prtner  of   the  plaintiff-firm   and  that   the  deed  of partnership dated October 24, 1949 had been acted upon. F      The High  Court did  not deal  with the  merits of  the cross-appeals filed by the parties in view of its finding on the point  as to whether Satyavati had become partner of the plaintiff-firm and  the construction  it placed upon section 69(2) of  the Indian  Partnership Act.  In the  light of the conclusion we  have arrived  at,  it  becomes  essential  to remand the  matter to  the High  Court so  that  the  cross- appeals filed  by the  parties may be disposed of on merits. We accordingly accept the appeals, set aside the judgment of the High Court and remand the case to it for disposal of the appeals filed  by the  parties on  merits Looking to all the circumstances, we  leave the parties to bear their own costs of these appeals.      As the  matter has  been pending  for a  long time, the High Court may dispose of the appeals at an early date. V.P.S.    Appeals allowed. 1032