9911796707
TMI Blog2003 (11) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... varying rate of interest. Periods have been fixed based on change in bank rate of interest. The rate of interest varies between 10% p.a. to 19% p.a. The award of interest by the High Court is based on its earlier order dated 16th December, 1985 regarding levy of interest as per prevailing bank rate of interest on commercial transactions from time to time. This part of the judgment of the High Court in our view, is not correct. The rate at which is to be awarded is being separately considered under Point No. 2. That decision will govern the award of interest on mesne profits. A mistake has been committed by the High Court in calculation of interest on mesne profits. Interest has to be calculated on yearly basis because the amount of mesne profits on which interest is to be awarded has to be arrived at on year to year basis. Mesne profits for the first year would be from 5th May, 1969 to 4th May, 1970, for the second year it will be from 5th May, 1970 to 4th May, 1971 and so on. It keeps adding on from year to year. The total amount of mesne profits found due by the High Court on the basis of Commissioner's report comes to ₹ 38,41,920/-. This amount is the total of mesne pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is adopted, the plaintiff would have been entitled to much more amount than claimed by her. We are, therefore, of the opinion that the findings of the High Court being just and proper need not be interfered with. So far as the question of rate of interest is concerned , it may be noticed that the High Court itself found that the rate of interest should have been determined at 6%. The principles of res judicata which according to the High Court would operate in the case, in our opinion, is not applicable. Principles of res-judicata is a procedural provision. The same has no application where there is inherent lack of jurisdiction. We, therefore, are of the opinion that in the facts and circumstances of the present case, the principles of res judicata was not applicable. The term 'goodwill' signifies the value of the business in the hands of a successor, so far as increased by the continuity of the undertaking being preserved in the shape of the right to use the old name and otherwise. It is something more than a mere chance of probability of old customers maintaining their connection, though this is a material part of the practical fruits. 'Goodwill' may be the whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known as Bengorm Tea Estate. It was a co-ownership property of the members of the family. A partnership firm was constituted under the name and style of Bengorm Tea Plantations to manage the tea estate. The partnership did not have any proprietary interest in the estate. The shares of the parties in the tea estate as well as in the partnership firm are not in dispute. Pravinlal died on 4th May, 1969. He left behind a will. Taraben respondent No. 1 claiming to be sole executor of the estate of her husband Pravinlal filed the present suit claiming the following reliefs: 18(a) Decree for partitions by metes and bounds of the plaintiff's 33% share in Bengorm Estate mentioned in Schedule to the Plaint and separate possession thereof against defendants 1 to 4 and/or 6 in severally. (b) A decree for accounts against the defendants for the 30% share of Pravinlal Vithaldas Madhvani deceased in the defendant No. 6 in respect of profits and monies to his credits and in the assets of the firm including stocks in trade, stores and spares, standing crops, investments, provisions, reserves and goodwill as mentioned in paragraph 12 of the plaint and decree for the amount found to be due to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest with respect to para 18(c) of the plaint even though the High Court had allowed the amendment to enable the plaintiff to claim interest at the rate of 13% per annum, the High Court took note of amendment of Section 34 C.P.C. in the meanwhile and treating the suit claim as a commercial transaction, allowed interest at the rate of interest as charged by nationalised banks during the relevant years from time to time on commercial loans. The trial court passed a final decree on 6th January, 1988 and determined a sum of ₹ 26,33016.33 paise as due by way of mesne profits. It awarded simple interest thereon at the rate of 13% per annum till realization. It also passed a decree for ₹ 67,111.37 paise in pursuance of prayer in para 18(b) of the plaint with simple interest at the rate of 6% per annum w.e.f. 5th May, 1969 till realisation. 4. The appellants appealed against the said final decree before the Madras High Court. During the pendency of the appeals, with the agreement of counsel for the parties, the High Court appointed a Commission to determine the amount of mesne profits payable to the plaintiff in the suit. The Commission filed its report on 2nd September, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esne profits. As pointed out earlier the Division Bench of the High Court had appointed a Commission headed by a retired Judge of the Madras High Court and assisted by two Chartered Accountants, one nominated by each party, to carry out the exercise regarding determination of mesne profits. The Commission filed its report in the High Court. The High Court arrived at a finding regarding quantum of mesne profits after looking into the accounts, the report of Commission and other relevant facts and material. We have no reason to differ with the view of the High Court on this aspect. We are not required to reappreciate the material. As a matter of fact during the course of hearing, counsel for the appellant indicated willingness to go by the Commissioner's report in this behalf. Therefore, we accept the finding of the High Court on this issue. Total amount by way of mesne profits as per the impugned judgment of the High Court comes to ₹ 39,41,920/-. This figure does not include interest. 8. Interest is leviable on the amount of mesne profits. The High Court has in its impugned judgment awarded interest w.e.f 5th May, 1970 till 5th August, 1986 on periodical basis at varying r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent, per annum as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment or to such earlier date as the Court thinks fit. (2) Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefore shall not lie. 11. Our attention was invited to para 18(b) of the plaint in which decree for accounts of the partnership firm to the extent of 30% share of Pravinlal is sought alongwith interest at the rate of 6% per annum from 5th May, 1969. The trial Court passed a preliminary decree on 13th April, 1978 as per which only para 18(b) of the plaint was decreed i.e. 30% share of Pravinlal in the partnership firm with interest at the rate of 6% per annum from 4th May, 1969 till realisation. This part of the preliminary decree was never challenged by any party. Rest of the prayers in the plaint were rejected in the preliminary decree. The pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 34 permitted interest maximum at the rate of 6% per annum from the date of decree till realisation. Clause (e) of Sub-section (2) of Section 97 of the Amending Act of 1976 is reproduced as under: (e) the provisions of Section 34 of the principal Act, as amended by Section 13 of this Act, shall not affect the rate at which interest may be allowed on a decree in any suit instituted before the commencement of the said Section 13 and interest on a decree passed in such suit shall be ordered in accordance with the provisions of Section 34 as they stood before the commencement of the said Section 13 as if the said Section 13 had not come into force; (e) Amendment of plaint once allowed relates back to the date of original plaint. Therefore, in view of the specific bar contained in Section 97 referred to above, such an amendment was clearly illegal; (f) The Court had only permitted amendment of the plaint which does not mean that the plea contained by way of amendment is accepted by the Court. The defendants had to be given a chance to contest the plea without which the amended claim with respect to rate of interest could not be enforced. 13. It may be noted at this stage that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J. Jermons v. Aliammal and Ors. AIR1999SC3041 . It was held that a new plea cannot be allowed to be raised without effecting amendment of pleadings, without giving reasonable opportunity to the opposite party to file further pleadings and adduce evidence. Thus the decision of the High Court in allowing interest on mesne profits at rate of interest charged by nationalised banks from time to time on commercial transactions is wholly illegal and unsustainable. As noted earlier even the High Court while passing the final decree felt that in its earlier order dated 16th December, 1985, it should not have proceeded on the basis of amended Section 34 of the Code of Civil Procedure while awarding interest at the rate charged by nationalised bank on commercial transactions from time to time. The impugned award of interest is thus wholly unwarranted and illegal and has to be set aside. 15. Coming to the legal aspect of the amendment of plaint allowed in the present case by the High Court, it is to be noted that Section 34 of the Code of Civil Procedure deals with the question of award of interest. Section 34 C.P.C. as it stood before amendment in February 1977 deals with the question of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petition against the preliminary decree dated 16th December, 1985 had been dismissed by this Court on an earlier occasion and according to the learned counsel, the consequence of that dismissal would be that the decision on the question of award of interest contained in the preliminary decree dated 16th December, 1985 had the seal of approval of this Court and therefore, it need not be interfered with at this stage. the learned counsel further argued that assuming that award of interest by the High Court as per the preliminary decree dated 16th December, 1985 was erroneous, it was not such an error as may render the decree a nullity. According to him the court had earlier declined to interfere with these findings therefore, at this stage, this Court should not go into this. 19. The learned counsel for respondent tried to draw our attention to the limitations in exercise of jurisdiction by this Court under Article 136 of the Constitution of India. In our view, the argument advanced by the learned counsel for the respondent has no substance. The scope of powers of this Court under Article 136 of the Constitution of India was elaborately considered in a recent decision of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 39,41,920/- at the same rate from 6.8.1986 till realisation. Similarly on the decree for accounts as per prayer contained in para 18(b) of the plaint the respondent No. 1 will be entitled to interest at the rate of 6% per annum on the sum of ₹ 1,23,111.37 from 5th May, 1969 till realisation. Point No. 3 24. The learned counsel for the appellant vehemently argued that the admitted liability of Pravinlal towards the partnership in suit to the extent of ₹ 4,13,364.24 paise has to be adjusted against his share of the amount falling due to the plaintiff on accounts being taken. The High Court accepted the finding of the trial court that this amount stood already adjusted. The learned counsel for the appellant challenged this finding and tried to demonstrate that the adjustment had not been made so far. 25. The learned counsel for appellant also argued that the respondent-plaintiff was not entitled to any share in the goodwill of the partnership firm because the firm had no goodwill. the firm was only managing the affairs of the tea estate and the question of goodwill did not arise. The tea produced by the tea estate does not have a name, or a brand name. It has no r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertains to reimbursement regarding payment of gratuity alleged to have been made by the plaintiff to the workers who came to her share along with the 1/3rd share in the Bengorm Tea Estate which she received in terms of the decree passed by the court below. The second issue sought to be raised by the appellant is with respect to the award to interest under the decree in her favour by the courts below. 31. so far as the question of reimbursement of the appellant regarding amount of gratuity paid by her to the workers who came to her share along with 1/3rd share in the Bengorm Tea Estate allotted to her in terms of the decree, the claim is totally untenable in our view. The learned counsel for the defendants submitted that in fact the defendants never wanted to transfer any of the workers to the plaintiff. It was at the insistence of the plaintiff that some of the workers were transferred to her. The plaintiff's insistence was on account of the fact that she wanted trained workers to continue the operations in the portion of tea estate which fell to her share. It is submitted on behalf of the defendants that when the plaintiff took over a certain number of workers, all the obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiry with interest at 6% per annum from 4th May, 1969. (c) Decree for accounts for mesne profits and/ or illegal gains from 5th May, 1969 till payment as mentioned in paragraph 13 of the plaint and decree for the amount found to be due to the plaintiff as ascertained in this suit on enquiry with interest at 6th per annum from the date herein. (d) for appointment of Receiver (e) for the costs of the suit, and (f) for such other reliefs as to this Hon'ble Court may seem fit and proper in the circumstances of the case. 36. The Trial Court in terms of its judgment and preliminary decree dated 13.4.1978 did not grant any relief in respect of prayers (a) and (c) treating the business as one run by the partnership and granted relief in favour of the plaintiff in relation to prayer (b) only with 6% interest thereon. The plaintiff there against filed an appeal before the High Court. The High Court while allowing the said appeal also granted enhanced interest at the bank rate varying between 10% and 19%, upon allowing an application for amendment of plaint claiming interest at the rate of 13% p.a. Two Special Leave Petitions filed by the appellants herein - one against the impugned judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative portion of the final decree where against also the defendants preferred a Civil Revision Application marked as C.R.P. No. 1008 of 1991. The trial Judge further made some corrections in the decree which again became a subject matter of Civil Revision Application before the High Court. By reason of the impugned judgment the High Court disposed of all the matters. The parties herein have preferred three appeals before this Court against the judgment of the High Court. 40. Various other interlocutory applications were also filed before the District Court. The orders passed thereon were subject matter of different Civil Revision Applications, details whereof are not required to be adverted to herein. 41. In the said proceedings, it is pertinent to note that Receiver and Joint Receiver had been appointed. 42. The High Court having regard to the nature of controversy and upon taking into consideration the fact the mesne profits were required to be evaluated, at the suggestions of the parties, appointed a Commissioner. 43. The Commissioner, inter alia, upon examining the books of accounts of the partnership firm submitted a report before the High Court. The plaintiff filed objections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like Kodanadu Estate, Koshipathi Estate and Powraj Chemicals etc. 44. It also noticed the fact that the defendants had entered into transactions with their sister concerns. 45. Before the High Court, it is relevant to notice that it was contended that the genuineness of the said books of account was not disputed. The books of accounts, it was urged, also came to be accepted by the Income-Tax Department. 46. The High Court, however, on analyzing the materials on records found the said pleas to be unacceptable. By way of example, it noticed that while the price of green leaves per kilogram of tea was ₹ 1.25, such leaves were purchased from Kodanad Tea Estate, a cistern concern of the defendants at the price of ₹ 2.75 per kilogram. It was also found that no such admission was made on behalf of the plaintiffs. It was observed: Even assuming that there was such an admission by the counsel, it would not certainly bind the plaintiff. 47. As regard quantification of the mesne profit, the High Court relied upon various circumstances in support of its conclusions. It noticed that the tea Estate was making profit since 1954. It was observed that even when the area was going throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report after making necessary correction of the mistakes contained therein is accepted, the plaintiff would be entitled to mesne profit amounting to a sum of ₹ 47,00,000/- which would exceed the amount claimed by her. 50. The Court noticed that the Auditor had filed a calculation memo wherefrom it would appear that the plaintiff's claim for her 1/3rd share of mesne profits comes to ₹ 1,63,08,623/-. The said figure was arrived at on the basis of the capital value of the entire tea Estate being ₹ 32,00,000/- in 1969. The High Court observed: P.W. 2 Guha the Auditor has filed a calculation memo regarding the plaintiff's claim for her 1/3 share of mesne profits at ₹ 1,63,08,623/-. He states in his evidence that his calculation is based on the capital value of the entire Tea Estate. He has adopted the value of the entire Estate ₹ 32,00,000/- in 1969 and proceeded to estimate the reasonable return at the rate of 10% of the value. The value of the plaintiff's 33% share in the entire Estate in 1969 was ₹ 10,56,000/-. On the basis of 10% of the value of plaintiff's 33% share he arrived at the figure ₹ 1,08,000/-. He has added intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to mean as profits which the person in wrongful possession of property actually received or might with ordinary diligence would have received therefrom, together with interest on such profits. 54. A decree for mesne profit was granted in favour of the plaintiff respondent for wrongful use of the property. The quantum of mesne profit can be arrived at by the High Court keeping in view the well-known principles of valuation for determining the same. The Court is not enjoined with any duty to accept the quantification determined only on the basis of books of account maintained by the defendants, particularly when the same had not been proved. The High Court in our opinion has rightly considered the matte from different angle. Even if any of the methods adverted to the High Court and referred to hereinbefore is adopted, the plaintiff would have been entitled to much more amount than claimed by her. We are, therefore, of the opinion that the findings of the High Court being just and proper need not be interfered with. 55. So far as the question of rate of interest is concerned, it may be noticed that the High Court itself found that the rate of interest should have been determined at 6% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarwal (D) By LRs. and Anr. v. B.D. Agarwal and Ors. AIR2003SC2686 , it is stated: It is now well-settled that an order passed by a court without jurisdiction is a nullity. Any order passed or action taken pursuant thereto or in furtherance thereof would also be nullities. In the instant case, as the High Court did not have any jurisdiction to record the compromise for the reasons stated hereinbefore and in particular as no writ was required to be issued having regard to the fact that public law remedy could not have been resorted to, the impugned orders must be held to be illegal and without jurisdiction and are liable to be set aside. All orders and actions taken pursuant to or in furtherance thereof must also be declared wholly illegal and without jurisdiction and consequently are liable to be set aside. They are declared as such. 58. In Shree Bharat Laxmi Wool Store, Panipat and Ors. v. Punjab National Bank and Anr. AIR1992SC521 , this Court held: In the instant case, the suit was filed on April 20, 1972. The amendment of Section 34 referred to above, therefore, clearly is not applicable. The Court is required to allow proper rate of interest under the unamended Section 34. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets of the firm: 1) 30% share of 4,17,887. 31 being difference of receivable over payable as par Balance Sheet of 4.5.1969 ₹ 1,25,306.34 2) 30% share of further claims on pro-rata basis for 4.5.63 on the basis of balance sheet and profit loss account as on 30.8.69 ₹ 23,102.96 3) 33% share in the Goodwill of the firm as on 4.5.69 ₹ 3,45,139.34 ₹ 4,93,548.04 Add: Balance in current Account or 4.5.69 before crediting profit for the period 4.5.89 ₹ 3.870.00 ₹ 4,97,418.64 Add: Profit actually credited in-Balance Sheet on 4.5.69 (Rs. 3870 + 9480 -13359) as in Bengorm Nilgiri Plantations. C o; RS. 9,489.84 ₹ 5,06,907.64 Less: Amount . due by Darjeeling Plantations C o. in the books of Bengorm Nilgiri Plantation C o. ₹ 4,13,364.24 Rs. 93,543.40 II. OTHER ADJUSTMENTS: Amounts due being refunds of IT arid Agrl IT as per accounts Rs 10,575 Amounts due by us, for payments made by Bengorm for IT and Agrl Rs. 20,996 IT The following chart shows the accounts as prepared by the parties. 62. The amounts receivables, inter alia, are closing stock, stores and spares and loans and advances. So far as the closing stock is concerned, the plaintiff stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss. 67. In Halsbury's Laws of England (Fourth Edition) Volume 35 at page 114, the law is stated in the following terms: 201. Goodwill generally; right to use name; sale to a partner. The goodwill of the business carried on by a partnership forms part of the assets to be realised on distribution. If the goodwill is not sold, each partner may use the name of the firm, if by doing so he does not hold out the other partners as still being partners with him. If a partner agrees to retire and his partners buy his share but do not take any express assignment of the goodwill, they are not entitled to continue the use of his name as part of the firm name, and where a business is carried on under the name, solely or with any addition, of an outgoing partner who is still living and not bankrupt, a purchaser of the business including the goodwill is not entitled to use the name of the outgoing partner in such a way as to suggest that he is still connected with the business, unless the right to use the firm name is expressly assigned. On dissolution, a partner may advertise that he is no longer connected with a periodical that the firm publishes. Where the goodwill becomes on dissolution th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it appears that the same stood adjusted as far back as in the year 1972. 72. The learned District Judge in his judgment has recorded: The debt due from M/s. Darjeeling Tea Plantations Company sands adjusted by taking of accounts as per Ex. A24. The 6th respondent obtained the Reserve Bank permission Ex. B566 and has adjusted the debt due from Darjeeling Tea Plantations Company to Bengorm firm on 24.6.1972. In the Balance sheets subsequent to 1972, the Darjeeling Tea Plantation Company is not shown as a debtor and demand of payment was not made. 73. It was further observed: The debt due from the Darjeeling Tea Plantations Company to the Bangorm firm has been adjusted in 1972 and the debt is no longer subsisting and no amount is due from Darjeeling Tea Company to the Bengorm firm is the admission of R.W. 3. The debt due from Darjeeling Tea Plantations Company has been adjusted as on 4.5.1969 as per the admission of R.W. 3. The debt due from Darjeeling Tea Plantations Company to the Bengorm firm has to be adjusted as on 4.5.1969 is admitted by the respondents 1 to 6 in paragraph 29 of Ex. A109. 74. The claim of the appellant to the effect that the plaintiff's husband was liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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