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Judgment
A. Ramamurthi, J.—Defendants 1 to 3 in the suit are the appellants.
The case in brief is as follows:- The plaintiff and the defendants were carrying on business in partnership dated 01.07.1972 under the name and
style of Diana Rolling Shutters at No.167, Walltax Road, Madras. In and by a deed of dissolution dated 31.08.1973 the firm was dissolved
effective from 31.08.1973. The defendants were however allowed to carry on the business under the same name and style. They undertook to
submit a statement of account to the plaintiff of the said business within six months and settle his account. Contrary to the promise, they did not
settle the accounts. The 1st defendant wrote to the plaintiff on 08.03.1974 sending the plaintiff a copy of the current accounts and promising to
send a copy of the balance sheet for the year ending 30.06.1973. On 26.03.1974 the plaintiff wrote to the Company rejecting the correctness of
the current accounts. On 24.10.1978 they forwarded to the plaintiff the assessment order of the Income Tax Officer dated 27.06.1977. The
plaintiff wrote again on 09.02.1979. On 13.02.1979 they acknowledged the receipt of the letter dated 09.02.1979 and regretted the delay in
sending the statement of account, but forwarded the copies of the final accounts and also enclosed a statement of account showing a sum of
Rs.4,085.49 as due by the plaintiff to the defendants and calling upon him to pay the same. On 28.02.1979 the plaintiff wrote to them with
reference to the letter dated 13.02.1979 denying earlier receipt of the final accounts as mentioned in the letter. The plaintiff also pointed out
number of discrepancies as mentioned in the plaint. The defendants are liable to render account for dissolved firm and hence, he filed the suit
directing the defendants to render accounts to the plaintiff of Diana Rolling Shutters dissolved effective from 31.08.1973 and to pay the accounts.
The defendants filed a written statement and admitted the partnership dated 01.07.1972 as well as the dissolution from 31.08.1973. The plaintiff
was a full time working partner of the partnership firm. On the same day, a new partnership firm was evolved of which the plaintiff is not a partner.
After dissolution of the partnership firm, the plaintiff has started a new business under the name and style of Dawn Engineering with the object of
manufacturing rolling shutters and rolling grills to compete with Diana Rolling Shutters and against clause 6 in the deed of dissolution and in
complete violation of the same. The plaintiff was well aware of the accounts of the company. In fact, in 1971 defendants 1 and 2 were residing at
Calcutta. The plaintiff was the sole person who was running the business. The entire accounts have also been submitted and a copy of the same
was also given to the plaintiff as early as 08.03.1974 with a covering letter. The present suit filed by the plaintiff is also barred by time. The plaintiff
himself has examined the entire accounts and satisfied. A perusal of the balance sheet and profit and loss account will clearly reveal the fact that in
the year 1971, there was a loss of Rs.6953-42. The entire business was managed by single handed under a valid power of attorney by the plaintiff.
It is true that the 1st defendant on behalf of company sent a statement of current account along with letter dated 08.03.1974 and the plaintiff
replied back saying that there were some defects in the accounts. There are no defects in the accounts at all. As per the accounts, the plaintiff is
liable to pay a sum of Rs.4085.49 and the suit filed by the plaintiff is liable to be dismissed.
The trial court framed 5 issues and on behalf of the plaintiff, P.Ws.1 and 2 were examined and Exs.A-1 to A-38 were marked and on the side of
the defendants, D.Ws.1 to 3 were examined and Exs.B-1 to B-18 were marked. The trial court granted a preliminary decree in favour of the
plaintiff and aggrieved against this, defendants 1 to 3 preferred A.S.No.163 of 1989 on the file of IX Additional Judge, City Civil Court, Madras
and the learned Judge after hearing the parties, dismissed the appeal and aggrieved against this, defendants 1 to 3 have come forward with the
present second appeal.
At the time of admission of the second appeal, this Court framed the following substantial questions of law for consideration:
(1) Whether the courts below have properly appreciated and applied the principles of limitation to the facts of the present case ?
(2) Whether the courts below have misconstrued and omitted to construe the material evidence on record when they held against the defendants ?
Heard the learned counsel for the parties.
It is admitted that the plaintiff and defendants entered into a partnership deed dated 01.07.1972 for running a business under the name and style
of Diana Rolling Shutters. Subsequently, they have entered into a dissolution of partnership dated 31.08.1973. According to clause 4 of the
dissolution deed, the accounts of the party of the second part taking into account his share of profit or loss upto the period ending 31.08.1973 will
be settled within six months. The plaintiff sent number of letters to the defendants to send copies of accounts as well as profit and loss account for
the period ending with 31.03.1973. The defendants sent a copy of the account, but the plaintiff was not satisfied with the same and thereafter,
pointed out number of discrepancies in the accounts. On 13.02.1979, the defendants sent a letter to the plaintiff enclosing a detailed statement
pointing out as if the plaintiff alone is liable to pay amount to them.
It is not in dispute that after dissolution of the partnership on 31.08.1973, the defendants alone carried on the said business under the name and
style of Diana Rolling Shutters and the plaintiff started another company. The suit was filed by the plaintiff to call upon the defendants to render a
true and proper account relating to the business transaction. Although the dissolution of the partnership is dated 31.08.1973, admittedly the plaintiff
filed the suit only in the year 1979. The trial court as well as the lower appellate court granted a preliminary decree in favour of the plaintiff and
aggrieved against this, the defendants have come forward with the present second appeal.
The learned Senior Counsel for the appellants mainly contended that the courts below have erred in holding that the suit is not barred by
limitation. The courts should have seen that the partnership was dissolved on 31.08.1973 by a deed of dissolution, Ex.B-2 and accounts have been
settled immediately after that on 26.03.1974 under Ex.B-3. The courts below also have failed to note that the accounts were furnished in March
1974 and the plaintiff acknowledged receipt of the same as seen from Ex.B-4. Even assuming but without conceding that by letter dated
13.02.1979 the appellants have sent the accounts and also acknowledged the liability to render accounts, the same is only after the lapse of three
years from the date of the dissolution of the partnership. Such an acknowledgment will not clothe the plaintiff with any right to maintain the present
suit, which is clearly barred by limitation. This plea alone has been taken as a main substantial question of law by the appellants.
The learned Senior Counsel for the appellants relied on Karam Chand ..vs.. Basheshar Nath and another (AIR 1932 Lahore 519) that where
after dissolution of partnership, a suit was brought for rendition of accounts and for mesne profits, Art. 106 and not Art.120 held to be applicable.
It has also been held in Balgis Beevi Ammal Vs. Hathija Beevi Ammal, that a suit for accounts in respect of a partnership which has already
been dissolved in governed by Art.106 and not by Art.120.
Reliance is also placed on Peeran Sahib ..vs.. Jamaluddin Sahib (AIR 1958 Andhra Pradesh 48) that for the application of the articles of
limitation, the real nature of the suit and not its formal or verbal description should be criterion.
It has also been held in Saligram Ruplal Khanna and Another Vs. Kanwar Rajnath, that Article 5 of the Limitation Act 36 of 1963 applies in a
suit for rendition of accounts of partnership.
The learned counsel for the respondent also relied on Krishnamachari Vs. Chengalaraya Naidu, as follows:
The principle of laches or delay is based on the equitable doctrine of English Courts and cannot be applied where the legal rights of a party to a
proceeding come up before the Court for determination. It would be different where an equitable relief is sought.
Therefore objection as to laches or delay cannot be allowed to prevail where a legal relief is sought and the only question is whether a right is
barred by the statute of limitation"".
There is no dispute about this principle.
The learned counsel also relied on Venkatlal Baldeoji Mahajan Vs. Kanhiyalal Jankidas and Others, wherein it is stated as follows:
An objection as to delay or laches does not avail the defendant when a legal relief is sought against him except as a circumstance to show
abandonment. He can of course rely on the statute of limitation but if the suit is instituted within the period prescribed by the Limitation Act, his suit
cannot be thrown out because of any amount of laches or delay"".
Reliance is also placed on Dharam Chand Manroop Chand Vs. Firm Mool Chand Anraj and Another, relating to the starting point of limitation
and in that case, the averment in the plaint was to the effect that the business continued till 08.03.1947 and the suit was instituted on 08.07.1947
and as such, it was held within time.
It is clear from Article 5 of the Limitation Act 36 of 1963 that in respect of dissolution of the partnership for rendition of accounts, the time
begins to run from the date of dissolution. This position of law cannot be disputed. If it is taken into consideration, admittedly the dissolution of the
partnership was made on 31.08.1973 and as such, the suit ought to have been filed within three years. But, presently the suit was filed only in the
year 1979. However, the learned counsel for the respondent contended that there was negotiation between the parties and the appellants promised
to send the accounts and in fact, they have also sent the accounts subsequently. Even assuming that the contention of the respondent is true, it will
not save the limitation. When once the dissolution is effected in writing on31.08.1973, as adverted to the accounts have to be completed in a
period of six months. If this is not done, naturally the time for accounting begins to run and the only option available to the respondent is to file a
suit before the appropriate forum in a period of three years. No doubt, the accounts copies were sent on 13.02.1979 by the appellants, but this
will not save the limitation. There is also no acknowledgment of any liability and even if there was any acknowledgment made after the period of
limitation, it will not enure to the benefits of the respondent. Unfortunately, both the courts below came to a wrong conclusion relating to a legal
plea raised by the appellants. Simply because there was correspondence between the parties, one calling for the accounts and another sending
copy of the accounts, it will not extend the period of limitation, which is prescribed under Article 5 of the Limitation Act.
The learned counsel for the respondent next contended that there is a concurrent finding by the courts below and as such, it cannot be
interfered with the second appeal. I am unable to agree with the contention of the learned counsel for the respondent. The plea now raised by the
appellants is a legal plea and there is patent error on the part of the courts below in complying with Article 5 of the Limitation Act. The learned
counsel for the respondent relied on Santhosh Hazari ..vs.. Purushottam Tiwari (dead) by LRs. 2001 (1) CTC 505 that ""substantial question of law
must be debatable not previously settled by Law of land or binding precedent and must have material bearing on decision of case which if
answered either way would affect rights of parties before Court - substantial question of law should have foundation and should emerge from
sustainable findings of facts decided by Court - New point raised for first time before High Court is not question involved in case unless it goes to
root of the matter"". In the same decision , it is stated that the First Appellate Court is entitled to reverse findings of facts arrived at by Trial Judge
where appraisal of evidence suffers from material irregularity or based on inadmissible evidence or conjectures and surmises. Errors of Law or
erroneous findings of first Appellate Court even on question of law cannot be challenged in second appeal unless such questions of law are
substantial one.
The learned counsel for the respondent relied on Shri Hafazat Hussain Vs. Abdul Majeed and Others, that ""concurrent findings should not e
disturbed, but this is not an absolute rule. Exceptions are there"". There is no dispute about the aforesaid principles. Now, admittedly in respect of
the plea of limitation, it has not been properly considered and Article 5 of the Limitation Act has not been discussed at all. The statutory plea of
limitation goes to the root of thematter and hence, I am of the view that the suit filed by the plaintiff/respondent is clearly barred by time. Since the
findings of the courts below are perverse or not based on proper application of law, an interference is called for.
For the reasons stated above, the Second Appeal is allowed and the judgment and decree of the courts below are set aside and the suit is
dismissed. However, there will be no order as to costs.