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Judgment
A. Selvam, J.—These second appeals have been preferred against the concurrent judgments passed in Original Suit Nos. 166 & 167 of
1995 and in Appeal Suit Nos. 8 & 7 of 2001 by the District Munsif Court, Virudhunagar and by the Additional District cum Fast Track Court,
Virudhunagar, respectively.
The appellant herein as plaintiff has filed Original Suit Nos. 166 of 1995 and 167 of 1995 on the file of the District Munsif Court, Virudhunagar,
praying to declare that he retired from the partnership firms known as S.V.S. & Co. and S.V.Shanmugananthavel on 08.09.1987 and
consequently direct the first defendant not to claim arrears of sale tax from the plaintiff in pursuance of the notices issued in Na.Ka.Aa. No.
3/837/90 and Na.Ka.Aa. No. 3/947/90 wherein the present respondents have been shown as defendants.
Original Suit No. 166 of 1995:
It is averred in the plaint that the plaintiff, fourth defendant and one S.V. Shanmugananthavel have started a partnership firm by known as S.V.S.
& Co. in the year 1981. The said S.V.Shanmugananthavel has been a minor at the time of establishing the partnership firm and his father by name
Vanniyaperumal has represented him. The plaintiff, fourth defendant and the said Vanniyaperumal have started another partnership firm known as
S.V. Shanmugananthavel & Co. from the year 1977. On 02.04.1986 the said minor Shanmugananthavel and his father Vanniyaperumal have
retired from partnership firms and subsequently, the plaintiff and fourth defendant have continued in the said firms as partners. On 08.09.1987 the
account of the plaintiff has been settled and he retired from the partnership firms. From 08.09.1987 the plaintiff is not having any connection
whatsoever with the partnership firms mentioned supra. On 09.07.1991 the first defendant has issued a notice in Na.Ka.Aa. No. 3/837/90 and
thereby directed the plaintiff to pay arrears of sale tax in respect of S.V.S. & Co. After receipt of the said notice, the plaintiff has issued a notice to
the fourth defendant on 04.09.1991 and the fourth defendant has given a reply notice on 20.09.1991. In the reply notice given by the fourth
defendant, it has been clearly stated that he has been running the business mentioned supra. The plaintiff has filed a Writ Petition and the same has
been taken on file in Writ Petition No. 15840/1991 and the same has also been disposed of. After a lapse of three years, a notice has been sent to
the plaintiff wherein he has been directed to appear before the first defendant. The plaintiff has appeared before the first defendant on 31.08.1994.
No enquiry has been conducted. After a lapse of six months. The first defendant has issued a notice dated 10.02.1995. The plaintiff has given a
notice to the first defendant u/s 80 of Civil Procedure Code. On 27.07.1995 the first defendant has given attachment notice to the plaintiff, wherein
it has been specifically directed that the plaintiff should pay arrears of sales tax in respect of S.V.S. & Co. Under the said circumstances, the
plaintiff has come forward with the present suit for the relief mentioned supra.
In the written statement filed on the side of the first defendant and adopted by the defendants 2 & 3, it is stated that it is false to contend that the
plaintiff has retired from the partnership firms on 08.09.1987. The plaintiff has not given any notice u/s 40 of the Sales Tax Rules, 1959. There is
no merit in the suit and the same deserves dismissal.
In the written statement filed on the side of the fourth defendant, it has been stated that the fourth defendant has been running the business
mentioned in the plaint as a proprietor and the fourth defendant is an unnecessary party to the present suit and therefore, the present suit is liable to
be dismissed.
On the basis of the divergent pleadings raised on either side, the trial Court has framed necessary issues and after contemplating both the oral
and documentary evidence, has dismissed the suit. Against the judgment and decree passed by the trial Court, the plaintiff as appellant has
preferred Appeal Suit No. 8 of 2001 on the file of the first appellate Court. The first appellate Court after reappraising the evidence available on
record, has dismissed the appeal, whereby and where under confirmed the judgment and decree passed by the trial Court. Against the concurrent
judgments, the plaintiff as appellant has filed Second Appeal No. 278 of 2003.
Original Suit No. 167 of 1995:
It is averred in the plaint that the plaintiff, fourth defendant and one S.V. Shanmugananthavel have started a partnership firm known as S.V.S. &
Co. The said S.V. Shanmugananthavel has been represented by his father viz., Vanniyaperumal since he is a minor. The plaintiff, fourth respondent
and the said Vanniyaperumal have started another partnership firm known as S.V.Shanmugananthavel & Co. On 08.09.1987 the account of the
plaintiff has been settled and he retired from the said partnership firms from the said date and after 08.09.1987 the plaintiff is not having any
connection whatsoever with the partnership firms mentioned in the plaint. On 09.07.1991 the first defendant has issued a notice to the plaintiff
whereby the plaintiff has been directed to pay the arrears of sales tax in respect of S.V. Shanmugananthavel & Co. The plaintiff has issued a notice
to the fourth defendant and the fourth defendant has given a reply notice wherein he has clearly admitted that the business mentioned in the plaint is
being looked after by the fourth defendant as proprietor. The plaintiff has filed Writ Petition No. 15841 of 1991 and the same has also been
disposed of. On 27.07.1995 another notice has been given by the first defendant, wherein the plaintiff has been directed to pay arrears of sales tax
in respect of S.V. Shanmugananthavel & Co. Under the said circumstances, the plaintiff has filed the present suit for the reliefs indicated supra.
In the written statement filed on the side of the first defendant and adopted by the defendants 2 & 3 it is stated that it is false to contend that the
plaintiff has retired from the partnership firms on 08.09.1987. The plaintiff has not given any notice u/s 40 of the Sales Tax Rules, 1959. There is
no merit in the suit and the same deserves dismissal.
In the written statement filed on the side of the fourth defendant, it has been stated that the fourth defendant has been running the business
mentioned in the plaint as a proprietor and the fourth defendant is an unnecessary party to the present suit and therefore, the present suit is liable to
be dismissed.
On the basis of the divergent pleadings raised on either side, the trial Court has framed necessary issues and after pondering both the oral and
documentary evidence, has dismissed the suit. Against the judgment and decree passed by the trial Court, the plaintiff as appellant has filed Appeal
Suit No. 7 of 2001 on the file of the first appellate Court. The first appellate Court, after reappraising the evidence available on record, has
dismissed the appeal, whereby and whereunder confirmed the judgment and decree passed by the trial Court. Against the concurrent judgments,
the plaintiff as appellant has filed Second Appeal No. 777 of 2003.
At the time of admission of the Second Appeal No. 278 of 2003, the following substantial questions of law have been formulated for
consideration;
a) Whether the appellant ceased to be a partner of S.V.S. & Co. with effect from 08.09.1987?
b)Whether the appellant is not liable to pay sales tax payable by the above said firm for the period after 08.09.1987?
12.At the time of admission of the Second Appeal No. 777 of 2003, the following substantial questions of law have been formulated for
consideration;
a) Whether the Courts below have committed an error in holding that the plaintiff has not complied with the statutory requirement of giving From
No. X as per Rule 40 of the Tamil Nadu General Sales Tax Rules and whether the said Rule does not specify submitting of the said Form by
Registered post?
b) Whether the Courts below are justified in dismissing the suit by applying Sections 45 & 72 of the Indian Partnership Act?
c) Whether the Courts below are justified in holding that the assessment order under Ex.A7 dated 10.02.1995 is valid and enforceable and
whether the same was passed contrary to the directions issued by this Court under Ex.A6?
Since common questions of law and facts are involved in the present second appeals, common judgment is pronounced.
The learned Counsel appearing for the appellant/plaintiff in both the appeals has repeatedly contended that the plaintiff, fourth defendant and
one S.V. Shanmugananthavel have formed partnership firms known as S.V.S. & Co. and S.V. Shanmugananthavel & Co and the accounts of the
plaintiff have been settled on 08.09.1987 and on the same date, he retired from the partnership firms and before his retirement, the said S.V.
Shanmugananthavel and his father by name Vanniyaperumal have retired from the partnership firms and from 08.09.1987 the plaintiff is not at all a
partner in the said partnership firms and the first defendant has unnecessarily issued notices in Na.Ka.Aa. No. 3/837/90 & Na.Ka.Aa. No.
3/947/90 and thereby directed the first defendant to pay arrears of sales tax in respect of the said partnership firms and the fourth defendant has
been running the business mentioned in the plaint and the plaintiff is not bound to pay the alleged arrears of sales tax in respect of the partnership
firms mentioned in the plaints and under the said circumstances, the plaintiff has filed the present suit so as to declare that he retired from the
partnership firms on 08.09.1987 and also for restraining the first defendant by means of permanent injunction from collecting sales tax from the
plaintiff, but, the Courts below without considering the documents filed on the side of the plaintiff have erroneously non-suited him and therefore,
the concurrent judgments passed by the Courts below are liable to be set aside.
The learned Additional Government Pleader (CS) appearing for the respondents 1 to 3 has also equally contended that even though on the
side of the plaintiff it has been contended that he retired from the partnership firms from 08.09.1987, the plaintiff has not followed the relevant
provisions of the Indian Partnership Act, 1932 and the Courts below after considering all the contentions raised on either side, has rightly non-
suited the plaintiff and therefore, the concurrent judgments passed by the Courts below are not liable to be interfered with.
Before touching the legal points involved in the present appeals, it would be more useful to look into the relevant documents filed on the side of
the defendants 1 to 3 so as to establish that on the date of filing of the suit, the plaintiff is also one of the partners of the firms mentioned in the
plaints.
The specific case of the plaintiff is that from 08.09.1987 the plaintiff has become retired from the partnership firms mentioned in the plaints. In
Original Suit No. 166 of 1995 on the side of the defendants 1 to 3, Ex.B5 and in Original Suit No. 167 of 1995 on the side of the defendant,
Ex.B3 have been filed. Ex.B5 has come into existence on 29.06.1988. Likewise Ex.B3 has come into existence on 01.08.1988, wherein the fourth
defendant has clearly stated that he is running the partnership firms mentioned in the plaints. If really after 08.09.1987 the fourth defendant has
become the sole proprietor of the business mentioned in the plaints, definitely, he would not have mentioned that he has been running the said
partnership firms mentioned in the plaints. Therefore, Exs.B5 and B3 are the clear answers to the contention urged on the side of the plaintiff.
Even assuming without conceding that on 08.09.1987 the plaintiff has retired from the partnership firms mentioned in the plaint, the Court has
to look into as to whether such retirement is valid in law and also as to whether the plaintiff is not liable to pay arrears of sales tax in respect of the
two partnership firms mentioned in the plaints.
The second substantial question of law framed in Second Appeal No. 777 of 2003 is as to whether the Courts below are justified in dismissing
the suit by applying Sections 45(1) & 72 of the Indian Partnership Act, 1932.
Section 45(1) of the Indian Partnership Act, 1932 reads as follows;
Notwithstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would
have been an act of the firm if done before the dissolution, until public notice is given of the dissolution.
Section 72 of the said Act reads as follows;
A public notice under this Act is given-
(a) where it relates to the retirement or expulsion of a partner from a registered firm, or to the dissolution of a registered firm, or to the election to
become or not to become a partner in a registered firm by a person attaining majority who was admitted as a minor to the benefits of partnership,
by notice to the Registrar of Firms u/s 63, and by publication in the Official Gazette and in at least one vernacular newspaper circulating in the
district where the firm to which it relates has tis place or principal place of business, and
(b) in any other case, by publication in the Official Gazette, and in at least one vernacular newspaper circulating in the district where the firm to
which it relates has its place or principal place of business.
The provision of Sections 45(1) & 72 of the Indian Partnership Act, 1932, should be read together and as per Section 45(1) of the said Act
even if a partnership firm is dissolved, the partners are deemed to continue and they are also liable to pay liability of the partnership firm to the third
parties until public notice is given with regard to dissolution.
The provision of Section 72 deals with mode of giving public notice and the concerned public notice mentioned in Section the said should be
given in the official gazette and also in a vernacular newspaper circulating in the District where the firm has its place or principal place of business.
In the instant cases, the specific contention of the plaintiff is that the plaintiff, fourth defendant and S.V. Shanmugananthavel and his father by
name Vanniyaperumal have started the partnership firms mentioned in the plaint and after some time, the said S.V. Shanmugananthavel and his
father viz., Vanniyaperumal have retired from the partnership firms and after some time, the plaintiff has become retired from the partnership firms
from 08.09.1987. Therefore, as per the pleadings mentioned in the plaints, the entire partnership firms have become dissolved on 08.09.1987 and
after that the fourth defendant has become sole proprietor. But, as contemplated u/s 45(1) of the Indian Partnerships Act, 1932, no publication has
been given with regard to the alleged dissolution of partnership firms mentioned in the plaints. Since no publication has been given with regard to
the alleged dissolution of partnership firms, as per Section 45(1) of the said Act, the plaintiff as one of the partners is also bound to pay arrears of
sales tax.
It has already been pointed out that even after the alleged dissolution of partnership firms, the fourth defendant has been running the business
mentioned in the plaints as partnership firms, as per the documents referred to supra. If really, after 08.09.1987 the fourth defendant has become
sole proprietor of the business mentioned in the plaints, definitely, he would not have stated that he has been running the business mentioned in the
plaints as partnership firms and further neither the plaintiff nor other partners has had followed the mandatory conditions mentioned in Section
45(1) of the Indian Partnership Act, 1932. Therefore, it is quite clear that all the contentions raised on the side of the plaintiff are nothing but false.
The Courts below after analysing all the contentions raised on either side, have rightly non-suited the plaintiff. Since the second question of law
raised in the Second Appeal No. 777 of 2003 is decided against the appellant/plaintiff, the other questions of law framed in these appeals are also
decided against the appellant/plaintiff.
In fine, these second appeals deserve dismissal and accordingly are dismissed without costs. The concurrent judgments passed in Original Suit
Nos. 166 & 167 of 1995 by the District Munsif Court, Virudhunagar and in Appeal Suit Nos. 8 & 7 of 2001 by the Additional District cum Fast
Track Court, Virudhunagar are confirmed.