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TMI Blog2001 (4) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed. Against this, both S.K. Parthasarathy Naidu and Benedict jointly filed A.S. No. 109 of 1999. This was dismissed. Therefore, S.A. No. 499 of 2000 has been filed. O.S. No. 5006 of 1996 is the comprehensive suit. So reference to parties will be based on their array in S.A. No. 499 of 2000. The main contest is amongst the aforesaid three persons Benedict, Parthasarathy Naidu and Rama Naidu. It is the case of the two appellants that there was a partnership business amongst the three of them and the appellants had each contributed Rs.1.00 lakh. According to them, the business was real estate business, the partnership agreement was oral and pursuant to the oral agreement, there were two documents; one is Ex.A1 dated 23.9.87 and the other is Ex.A4 dated 16.4.88 wherein the respondent Rama Naidu had agreed to give a fixed share in the profits and had also acknowledged receipt of the contribution of Rs.1.00 lakh. According to the appellants, they expected the respondent to develop the suit property by plotting it into a lay-out' and upon sale of the several plots, share the profits with them. Contrary to the arrangement between the parties, the respondent had sold several pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits arising out of those transaction depending upon the agreed share of investments and the share of profits fixed therefore. He also referred to section 14 of the Partnership Act and Section 88 of the Trusts Act to support his case that the appellant is entitled to a share in the profits and in the property that is also acquired by the partner. He submitted that section 100 of C.P.C. may permit re-appreciation of evidence, but definitely the Courts shall interfere, where there a wrong construction is placed upon a vital document that will decide the rights of the parties. According to the learned senior counsel, Exs.A1 and A4 , if properly read, would permit of no other construction except that there was a relationship of partners between Rama Naidu, Benedict and S.K. Parthasarathy Naidu. Ex.A1 is signed by the first respondent herein and it is in, favour of 1st appellant. The document is termed as This acknowledges receipt of Rs.1.00 lakh and speaks of an agreement to share 1/5th of the profit. Ex.A4 which is signed by Rama Naidu is in favour of 2nd appellant. It is termed as and this also speaks of an agreement to share the profit by giving 1/5th of the same to the 2nd appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt of Rs.1.00 lakh is not denied. The business understanding is not denied by the respondent and inspite of this, the courts below have failed to construe what could be the nature of the relationship between the parties in these circumstances. There was an understanding between the parties which was evident from the recitals in Ex.A1. The understanding spoke of the appellants handing over to the first respondent Rs.1.00 lakh each with intention to do some business in real estate and also with the intention to share the profits. Therefore, the documents Exs.A1 and A4 showed that there was an agreement amongst the three persons. The agreement was to share profits and the intention was to carry on business of real estate by the first respondent herein on behalf of the other two. When these three elements are present, the partnership comes into existence as per section 4 of the Partnership Act. There is also no law that forbids a single venture partnership. So, even if the case of the appellant that there were intermittent partnership ventures between the three persons is not believed, Exs.A1 and A4 atleast show that in respect of the suit property, the parties intended to deploy cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Wakf v. Anjuman-E-Ismail Madus-un-Niswan, and submitted that the concurrent finding of the trial and appellate courts cannot be reversed by the High Court by substituting its own subjective satisfaction in their place under section 100. In this case, the concurrent finding is that Exs.A1 and A4 were not partnership agreements and except for sharing of profits, the other elements are not there. He then referred to the judgment reported in Kondiba Dagadu Kadam v. Savitribai Sopan Gujar, and pointed out to Head notes (in AIR) B and D: B. Civil Procedure Code, 1908 - S. 100 (as amended in 1976) - Second appeal Opinion of High Court - High -Court, held, cannot substitute its own opinion for that of the first appellate court unless it finds that the conclusions drawn by the lower court were erroneous being (1) contrary to the mandatory provisions of applicable law; or (2) contrary to the law as pronounced by the Apex Court; or (3) based upon inadmissible evidence or no evidence. D. Civil Procedure Code, 1908 - S. 100 (as amended in 1976) - Second appeal -Substantial question of law in the absence of factual basis - A question arising between parties in absence of factual format should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel submitted that when it was their intention to sell the plots, they cannot attack the partner's actions which are not in excess of the partner's authority. If at all, they have a right, it is only to share in the profits and therefore, according to the learned counsel for the 7th respondent the sale in his favour is perfectly valid and cannot be attacked. 5. The substantial question of law is the proper construction of the documents and the reliefs that flow therefrom. Exs. A1 and A4 are the crucial documents. Under Ex.A1, the 1st respondent agrees to sell the suit property after dividing it into plots and return the amount given along with a share of 1/5th of the profit. Under Ex.A4, the 1st respondent agrees that he would deal with the suit property after it is plotted out and return the amount given along with a share of 1/5th of the profits. Therefore, the agreement between the parties, for the moment, we will not decide what their relationship is, is that the 1st respondent should sell the plots and give to each of the appellant 1/5th of the profit and a sum of one lakh. Now if we look at O.S. No. 1125 of 1991 plaint paragraph 7 reads as follows: As submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion must be issued directing the 1st respondent to plot out and sell it. Even if one assumes and accepts the case of the appellant as true and that there was an agreement of partnership, it is clear from Ex. A.1 and A4 that the appellants had authorised the 1st respondent to sell the property and realise profits. If he had the authority to sell, it would also include the authority to sell, in the manner he deems fit. The courts below rightly to grant injunction against the 1st respondent. Therefore, there is no illegality in the dismissal of O.S. No. 1125 of 1991. S.A. No. 1311 of 2000 is dismissed. 6. Now, we come to the other appeal which arises against O.S. No. 5006 of 1996. The case of the appellants that there was a partnership is sought to be supported by the following factors: (1) That in Exs.A1 and A4, the 1st respondent has agreed to share the profits that arise out of the real estate business and therefore, it cannot be a mere debtor/creditor relationship; (2) The 1st respondent in his evidence has given a list of all the creditors, but has not mentioned the name of the appellants which would go to show that he treated the appellants not as creditors, but as partners; (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent herein, where the following words of are found. The appellant's case is that there was no occasion for the use of the above words to indicate joint business unless there was an agreement of partnership. But, it is not possible for this Court to come to the conclusion that there was a relationship of partners between parties merely because there was such a statement in a document. The legal existence of a partnership is proved by facts to support-such a claim. There need not be any particular form of document and in fact, the partnership can even be oral, but, whether a relationship of partners exists or does not exist depends on what was intended by the parties. In the decision reported in Hirabai v. Bhagirath Co. the Division Bench of the Bombay High Court held: Thus although the right to participate in the profits of a business is a strong test of a partnership, yet whether that relationship does or does not exist must depend on the real intention and contract of the parties. The true test is whether such a participation of profits constitutes the relationship of principal and agent between the person taking the profit and those actually carrying oh the business. In the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be proved and established to the satisfaction of a court. To decide the question of partnership only on the basis of an agreement to sharing of profits is fraught with danger. In the decision reported in Nagendrier v. Muthiah Bagavathar, the learned Judge held that a loan to a person engaged in any trade upon a contract with such person that the lender shall receive interest and also a share of the profit does not of itself constitute the lender a partner. Therefore, a transaction may be a loan transaction, yet the parties may have agreed to share the profits. 8. In the decision reported in S. Das Gupta v. D. Murzamull, the learned Judges held thus: It is inconceivable that the parties should have entered into an oral agreement of partnership without retaining any record of its terms and conditions. This is not the normal course of business. It is equally inconceivable that the partnership business should have maintained no accounts of its own, which would be open to inspection by both parties even though kept secret from the rest of the world. Absence of such accounts is conceded by the appellant before us. Maintenance of separate accounts by the plaintiff and the defendant firm a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the word 'partnership' either in the agreement or in the pleadings. There must be three elements before any relationship which can be called a partnership comes into existence: (1) there must be an agreement entered into by all the parties concerned; (2) the agreement must be to share the profits of the business, and (3) the business must be carried on by all or any of the persons concerned action for all. All these elements must exist in a partnership. One searches in vain for any satisfactory evidence even of an oral agreement entered into by all the persons concerned in this case namely, the two appellants in S.A. No. 499 of 2000 and the 1st respondent. The third factor is also conspicuously absent. The Exhibits do not show that the 1st respondent agreed to do the business on behalf of the appellants and even in the oral evidence, nothing was pointed out to show that the 1st respondent was acting on behalf of the appellants. When two factors are missing, the court would have to strain its sinews to reach for an inference of partnership. 11. In the decision reported in Mohd. Musa Sahib v. N.K. Mohd. Ghodse, this Court observed that a creditor who supervises the conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiff and the 2nd defendant for contribution of one lakh each towards the amount to be deposited in court, undertaking to give 1/5th share of the net profits out of the sale proceeds of plots to be laid out in the plaint schedule property, after purchase.... The 1st defendant also received similar amount from the 2nd defendant and executed similar agreement. Under the said agreement, therefore, the plaintiff has to plot out the property as and when he got the sale deed in his favour in respect of the plaint schedule property and sell them in plots and share the profits, as indicated above. The 2nd appellant is an advocate and we see how carefully he hovers around the edge without exactly committing himself to a categoric statement that there was a partnership. This establishes the correctness of the findings of the court below that there was no partnership though there was an agreement to share profits. Much was made of what was called an admission by the 1st respondent herein as D.W.3 wherein he has admitted that he is aware of the recitals in Exs.A1 to A4 and that they are correct. But, when the evidence is read as a whole, we see that the 1st respondent constantly denies th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to share profits, relief must be granted to the appellants moulding the prayer. So, we look at the written statement filed by the 1st respondent in C.S. No. 507 of 1998: The defendant further states that to meet the total expenditure of the purchase of the lands including the sale consideration of the lands this defendant was running short of Rs.2,00,000 (Rupees two lakhs only). This defendant warned to make up this amount by borrowing through outside sources. As such this defendant approached the plaintiff and asked him to lend an amount of Rs.1,00,000 (Rupees one lakh only). The plaintiff asked the details as to when the loan would be repaid. To safeguard the loan given by the plaintiff to this defendant the plaintiff also demanded a share of profits when the lands were resold by this defendant. To put it in more precise words the plaintiff demanded a 20% share over and above the sale consideration of Rs. 10,75,000. (Rupees Ten lakhs and seventy-five thousand only) in addition to the principal amount. This defendant conceded the demand of the plaintiff in return for the loan amount availed by this defendant. Based on the above terms this defendant received a sum of Rs.1,00,001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or specific performance granted a money decree in his favour since there was an admission of receiving an-advance. The plaintiff and the defendants filed appeal before the High Court and the defendants challenged the propriety of a money decree when that was not the case of the plaintiff. The Supreme Court held that the High Court had taken a rigid and technical view. The Supreme Court held as follows: The question, however, arises whether, in the absence of any such alternative case in the plaint it is open to the Court to give him relief on that basis. The rule undoubtedly is that the Act cannot grant relief to the plaintiff on a case for which there was no foundation in the pleadings and which the other side wax not called upon or had an opportunity to meet. But when the alternative case, which the plaintiff could have made, was not only admitted by the defendant. In his written statement but was expressly put forward as an answer to the claim which the plaintiff made in the suit, there would be nothing improper in giving the plaintiff a decree upon the case which the defendant, himself makes. A demand of the plaintiff based on the defendants own plea cannot possibly be regarded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinivas Ram v. Mahabir Prasad, the Supreme Court held that it would not be proper to drive the plaintiff to a separate suit. In fact, when this respondent had enriched himself with the funds advanced by the appellants, he is bound to return the same as per the agreement between the parties. The Court should not shut its eyes to realities, remain shackled by technicalities, when the materials for granting the relief is on record, the oral and documentary evidence is available and the finding regarding the existence of loan is unchallenged. The 2nd appellant herein filed only a suit for the basis for bare injunction. It is only in the comprehensive suit against which S.A. No. 499 of 2000 has been filed, that the suit for dissolution of partnership and share in the property was asked for. In this suit, the 2nd appellant is the 2nd defendant and he had undertaken to pay the necessary court-fee upon the suit being decreed. The 2nd appellant therefore shall pay the Court fee within eight weeks from date. The findings of the court below as regards the reliefs of dissolution of partnership and consequential allotment of 1/5th share etc. are all confirmed. But in view of the findings above, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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