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TMI Blog1974 (4) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... with the previous sanction of the Government, In pursuance of this decision, the liquidator invited bidders for purchasing the electricity concern. But before the date of public auction, it is alleged that five persons, namely, Ayodhya Prasad, Murli Prasad Respondent No. 1, Parasnath Prasad, Gurbharan Shah and Nandkishore Prasad entered into an oral agreement of partnership to purchase the electrical undertaking in the name of Murli Prasad, the share of Ayodhya was 8 annas, that of Murli Prasad 4 annas, Parasnath Prasad had 2 annas and Gurbharan Shah and Nandkishore Prasad had one anna each. It was also agreed that the licence will be obtained in the name of Murli Prasad alone, though each partner had to contribute to the total purchase money in proportion of their respective shares in the partnership. Thereafter the electrical undertaking was sold by the official liquidator on September 15,1944 to Murli Prasad as his was the highest bid of ₹ 4,10,000/-. Thereafter each of the partners including Murli Prasad contributed in proportion to their respective shares in the partnership to make up the total sum of ₹ 4,10,000/-. Payments to the official liquidator were made in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her Ram Sharan Shah got 3 annas 9 pies each while the two sons of Ram Sharan Shah, Brahmadev Prasad Gupta and Ramagya Prasad Gupta and respectively 1 anna 3 pies. There was no change in the shares of the two remaining partners Parasnath Prasad and Gurbharan Shah who held one anna and two annas share respectively. 2. It appears that some time after this revised partnership was registered, the Electrical Inspector, Government of Bihar, addressed a letter to Murli Prasad in which he stated that the partnership was illegal and void as it contravened the provisions of the Indian Electricity Act and that, therefore, the Government did not recognise the partnership. The Government ultimately cancelled the licence. It is alleged that all this was due to the manipulation of Murli Prasad who, taking advantage of the letter of the Electrical Inspector, tried to take forcible possession and wanted to dispossess the managing partner of the electrical undertaking. This attempt gave rise to proceedings under Section 144 of the CrPC, which, however, were decided on April 14, 1954, in favour of Ramagya Prasad Gupta and the other partners. Thereafter it is alleged that Murli Prasad got Parasnath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uits were thereafter consolidated and tried together. They were also disposed of by a common judgment dated February 10, 1959 passed by the 5th Additional Subordinate Judge, Chhapra. 4. The Trial Court decreed Parasnath Prasad's Title Suit No. 68/54 and dismissed Murli Prasad's Title Suit No. 94/56 and Nandkishore Prasad's Title Suit No. 113/57. Murli Prasad filed First Appeal No. 160/59 against the judgment and decree of the Trial Court in his Title Suit No. 94/96 and First Appeal No. 161/59 against the judgment and decree of the Trial Court passed in Title Suit No. 68/54. Nandkishore Prasad filed a First Appeal No. 154/59 against the decree in his Title Suit No. 113/57 but later he withdraw it and accordingly it was dismissed for non-prosecution. The remaining two appeals filed by Murli Prasad were heard together and were disposed of by a common judgment by which the High Court reversed the Trial Court's judgment and decree in Title Suit No. 94/56 by granting a declaration to Murli Prasad as prayed for that he alone was entitled to the entire money deposited or to be deposited by the State of Bihar as price for the assets purchased by them. This decision was ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court in Ramagya Prasad Gupta v. Murli Prasad [1973]1SCR63 where by a majority, Vaidialingam Palekar, JJ., Mathew, J. dissenting, held that the appeal could not be proceeded with and must be dismissed. We are not concerned with the reasoning for the dismissal, except to say that the question whether these two appeals would also abate seems to have been considered by this Court, because they observed at p. 68: We are not concerned with those two appeals at this stage because Jagdish Narain had not been made a party to the Original Suit filed by Murli Prasad nor had he applied to be made a party. Consequently Jagdish Narain does not and did not figure in the appeals from the decree passed in Suit No. 94/56. 6. At the hearing, a preliminary objection has been raised by the learned Advocate for the respondents that having regard to the abatement and dismissal of Civil Appeals Nos. 1711 of 1967 and 1985 of 1968 which arose out of Title Suit No. 68/54, the present two appeals are barred under Section 11 of the CPC and/or on the general principles of res judicata and should be dismissed. It is contended that the existence of a valid partnership was a ground of attack in Ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 11 nor by any other principle on Res Judicata. 7. At the hearing a great many authorities were cited and certain broad propositions were sought to be canvassed, as for instance, the principle that when there are two suits which have been tried together and disposed of by a common judgment and two appeals are taken therefrom, the judgment appealed against ceases to be res judicata even if one of the appeals is dismissed on the ground of limitation or otherwise because the very judgment, which is sought to be pleaded in bar, is still subjudice. In support of this proposition, the view expressed by the Lahore High Court Full Bench in Lakshmi v. Bhuli I.L.R. 8 Lah 384 has been cited and it was submitted that this view was approved by this Court in Narhari v. Sankar [1950]1SCR754 which it is submitted , has been followed in various decisions of the different High Courts. As against this view, it is claimed that this Court subsequently in Sheodan Singh v. Mst. Daryao Kaur [1966]3SCR300 took a different view, but according to the learned Advocate for the appellants, this case did not consider the correctness either of Narhari's (supra) decision or of the Lahore Full Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed to do so, because his cause of action has passed into a judgment, and the matter has become rex judicata. Even where two appeals have been taken from the same judgment by two different parties to which all others are parties either as appellants or respondents and one of the appeals is dismissed either on merits or for any other reasons, it has been held by some of the High Courts, but we express no opinion thereon, that the other appeal has also to be dismissed, because it is barred by the principles of res judicata as otherwise there will be conflict in the decrees. In the Lahore decision there were two cross suits about the same subject-matter filed simultaneously between the same parties and two decrees were prepared. An appeal being filed in respect of one decree and not in respect of the other, the question was whether the non-filing of the appeal against that decree creates an estoppel against the hearing of the other appeal. In Narhari's case (supra) what this Court held was, where there has been one trial, one finding and one decision, there need not be two appeals even though two decrees may have been drawn up and consequently the fact that one of the appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the parties, and further the High Court's decision in the two appeals arising from the respondent's appeals were undoubtedly earlier and, therefore, the condition that there should have been a decision in a former suit to give rise to res judicata in a subsequent suit was satisfied in that case. The decision in Narhari's case (supra) was distinguished by this Court in that case so that it could not be Laid that that decision was in any way in conflict with the decision in Narhari's case (supra). In appeals arising out of a subsequent suit and an earlier suit where there were common issues, common subject-matter and common trial and the appeals arising out of the subsequent suit were dismissed, a question would arise as to whether the anneals from the earlier suit which were pending are barred by res judicata A question may also arise where the subject-matter is the same and the issues are common in the two suits but some of the parties are different in one suit, whether the bar of res judicata would operate against the parties who are common. All these aspects need not be considered in these appeals because, in our view, the subject-matter of Title Suit No. 68 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f partnership being dissolved once the subject-matter has disappeared by the revocation of the licence and after the entire assets of the partnership were taken over by the Government. Even if the partnership was illegal and void as contended by the respondent in the other title suit, the same question, namely, whether the plaintiff/first respondent alone would be entitled to the entire compensation, was not the subject-matter of the Title Suit No. 68 of 1954. It so, no question of res judicata would arise. The preliminary objection is accordingly overruled. 11. On the merits the appellants' case is unassailable. The case of the first respondent that he paid the entire money for the purchase of the undertaking is, in our view, a dishonest plea. There is ample evidence in the case to establish that though Murli Prasad was the highest bidder at the auction at which the undertaking was sold to him and the licence was granted to him, there was an oral agreement which preceded the bidding at the auction where under five persons as stated already, including the first respondent, constituted a partnership. They also contributed the capital in proportion in their shares. Though at f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Bank, dated July 13, 1945 from the said Babu Saheb. This amount was debited to the Bank account of Ajodhya Prasad and credited to the Bank account of Murli Prasad. Exhibit M-Ledger Account of M/s. Ajodhya Prasad Gupta and Co. in the Central Bank, Chhapra, shows that on July 14, 1945 ₹ 2,04,000 was debit to him on account of cheque No. 34463 drawn in favour of Babu Murli Prasad the number of which tallies with the number mentioned in the receipt Ext. F-1. Similarly, Ext. M-1, Ledger Account of Murli Prasad in the Central Bank. Chhapra, shows that on July 14, 1945 a sum of ₹ 2,04,000 was paid into the account by cheque and credited to his account. In his evidence Murli Prasad denies in examination in chief that there was a completed agreement before the auction sale between Ajodhya Prasad, Parasnath, Nandkishore Prasad and himself-each representing their respective families to enter into a partnership and that he had not purchased at the auction on behalf of the partners or on behalf of any other person, but had purchased it at the auction for himself alone. He also denies that the licence was obtained in his name with their consent or the transfer of the lice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the partnership and the shares of each of the partners and that there was nothing secret or sinister about the agreement or partnership. When the partnership decided to have some new machinery, it required ₹ 1,50,000 to take delivery of that machinery. The proceedings of the meeting of the partners. Ext. E-l dated August 28, 1950 clearly show that this amount was to be jointly collected from all the partners. But since some of them were not able to get the money, Babu Parasnath proposed to sell his one annas share and retain his one anna only and Murli Prasad, that is respondent No. 1 also proposed to dispose of his one anna share, out of 4 annas share. These two annas were offered to any or the partners who was willing and take in. Ajodhya Prasad was agreeable to purchase these shares and the shares were re-constituted and the amount that each one had to contribute according to his share has been set out ill that document. The amount of ₹ 1,00,000 has been divided exactly according to the snares that each of the family has to pay. These proceedings, Ext. R-l was shown to respondent No. 1 and while he admits his signature thereon, he denies that he consented to thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and Article 62 of the limitation Act is barred by limitation, because the suit of Parasnath was filed more than 3 years after 13-7-45 by which date they were aware of the fact that consent of the Government had not been obtained to transfer the licence. This view of the High Court cannot be sustained. It appears to us that there is nothing to suggest that the partners knew or were aware that their partnership was illegal; nor could it be said because at the time when they entered into the agreement of partnership, this is clearly established, as no licence had been granted to Murli Prasad. The amounts were contributed by all the partners in accordance with their shades before the licence was assigned to Murli Prasad. Even on the admission of the first respondent, on behalf of the partnership balance-sheets were being prepared and they were being forwarded not only to the partners but to the Government also. If so, the Government as well as the Electrical Inspector, as is evident from several letters Exts. D-4, D-6, D-10, D-12, D-30, D-32, D-44, D-45, C-3/1 and C-4/1, were made aware of the partnership. If they did not take notice it was not the fault of the partners nor does it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Act. The agreement, therefore, is not void. In these appeals it is not necessary to decide the question whether the carrying on of the business of partnership as an electricity undertaking, when the licence stood in the name of Murli Prasad is invalid. Even if it is void, what we have to consider is, as pointed out earlier, whether the money of the partners which went to purchase the electrical undertakings at the auction sale and which by virtue of Section 14 of the Partnership Act became the assets of the partnership, those assets which have been converted into money which has been deposited in the Court, can be claimed by all those who had originally contributed the amount. Section 65 of the Contract Act will readily come to the rescue of the partners. That Section lays down that when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it. A Full Bench of the Hyderabad High Court in Bitdhtt Lal v. Deccan Banking Company Ltd. AI.R. (1995) HVD 69 to which one of us was a party had occasio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that it is a perfectly legal agreement and where one of them sues the other or wants the other to act on it, it is then that he may discover it to be void. There is nothing specific in Section 65. Indian Contract Act or its corresponding section of the Hyderabad Contract Act to make it inapplicable to the such cases. 12. The above view, which has been noticed in subsequent edition of Pollock's Book (See 9th Edition, p. 463 Note 41), is in consonance with authority, equity and good reason. After this conclusion it is not necessary to consider whether Section 70 of the Contract Act or Section 39 and 41 of the Specific Relief Act can be invoked in aid of the appellants. 13. On any view of the matter whether the agreement was void at initio, or was void or valid initially but became void or discovered to be void subsequently, the appellants are entitled to succeed in these appeals. We accordingly allow these appeals, reverse the judgment and decree of the High Court and dismiss Suit No. 94 of 1956 with costs. We hold that the first respondent Murli Prasad is not entitled solely to the whole of the compensation money, but that all those whose names appear in the partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X
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