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TMI Blog2024 (11) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany is derived from the assets of the firm is a matter of evidence which parties may have to adduce in the course of the proceedings relating to the preparation of the final decree pursuant to the order of remand. Considering that by the impugned order the matter has been remanded to the trial court, there are no good reason to interfere with the order impugned - appeal disposed off. - CJI. ( Dr. D. Y. Chandrachud ) , Justice ( J. B. Pardiwala ) And Justice ( Manoj Misra ) JUDGMENT MANOJ MISRA, J. 1. These two appeals are against common judgment and order of the High Court of Judicature at Madras High Court dated 19.11.2019 passed in First Appeal No.328 of 2005 and Cross Objection No.10 of 2012 preferred against a final decree passed by the Court of II Additional District Judge, Pondicherry in I.A. No.33 of 1995 arising out of Original Suit No.286 of 1978 instituted by the first respondent, inter alia, for dissolution of a partnership firm. FACTUAL MATRIX 2. The first respondent (i.e., the original plaintiff) instituted Suit No.286 of 1978 inter alia for: (a) dissolution, settlement of accounts and distribution of shares of a partnership firm, namely, Crystal Transport Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner to take accounts from 01.05.1971 till 15.11.1978; (iii) while taking accounts the Commissioner shall have due regard to Sections 37 and 48 of the 1932 Act; (iv) the Commissioner s fee shall be 10% of gross collections; (v) defendants 1 and 2 shall neither convert nor transfer or dispose of assets of the firm till the accounts are finally settled; and (vi) the decree shall bind the fourth defendant (i.e., the first appellant herein). 7. A second appeal preferred against the appellate decree failed. Hence, the aforesaid preliminary decree attained finality. 8. The Receiver/Commissioner appointed by the first appellate court could not comply with the task, therefore another Receiver was appointed. The defendants challenged the order changing the Receiver, which was disposed of by confirming his appointment with a direction that he would take charge of the management of Crystal Transport Pvt. Ltd. (i.e., the first appellant). Aggrieved by the aforesaid order, a civil revision was preferred before the High Court which was dismissed vide order dated 30.07.1991. The defendants thereafter challenged the order of the High Court before this Court in Civil Appeal No.4856 of 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the report was not considered; documents submitted were not taken into consideration; and the prayer to change the Receiver was not properly dealt with. After hearing the parties, the High Court while allowing the appeal by the impugned order observed: Therefore, it is seen that the court has considered the issues involved in the matter and proceeded to pass the final decree based only upon the inadmissible and unreliable documents projected by the respondents/ defendants as well as unreliable and unacceptable report of the Receiver and without providing an opportunity to the petitioner/plaintiff to cross examine the authors of the aforesaid documents, namely, the auditors of the respondents/ defendants as well as the Receiver. Thus the endeavor of the court below to determine the amount payable to the petitioner /plaintiff based upon the abovesaid unreliable and inadmissible documents, cannot at all be countenanced as per law and when the court had come to the conclusion that the Receiver has not placed any proof as to (whether) he had filed his reports based on the actual scrutiny of the statement of accounts projected by the respondent/ defendants and also when it is seen tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.1978, the trial court had erred in embarking upon an inquiry as regards the income that would have been derived even after 15.11.1978. 13. The above argument was countered by the plaintiff by submitting that the assets of the firm had been taken over by the fourth defendant even before the plaintiff could realize the fruits of the decree, in such view of the matter, bearing in mind the provisions of Section 14 and 37 of the 1932 Act, the profits generated even post dissolution of the firm would have to be accounted for by the fourth defendant till accounts are finally settled as per the final decree. 14. The first appellate court accepted the aforesaid submissions made on behalf of the original plaintiff and rejected the cross-objection. The operative portion of the impugned order is extracted below: In the light of the above said factors, the final (sic) decree order dated 23/4/2004 passed in I.A. No.33 of 1995 in OS No.286 of 1978 on the file of the IInd Additional District Judge, Pondicherry is set aside in toto and the matter is remitted back to the trial court with the direction to provide opportunities to both the parties to adduce further evidence particularly to sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra, the learned counsel for the plaintiff (the first respondent) submitted that final decree would have to be prepared in terms of the preliminary decree. The preliminary decree which is binding on the fourth defendant (i.e. the appellant-company) in clear terms states that assets of the firm were taken over by the fourth defendant (i.e., the first appellant herein). In these circumstances as also that the impugned order is a remand order, no case for interference is made out. ANALYSIS 19. Having considered the rival submissions and having perused the records, we notice that in the preliminary decree, inter alia, there is a clear direction to the following effect: that in taking accounts the Commissioner shall have due regard to Section 37 and 48 of the Indian Partnership Act . 20. Section 37 of the 1932 Act reads thus: Where any member of a firm has died or otherwise cease to be a partner, and the surviving or continuing partners carry on the business of the firm with the property of the firm without any final settlement of accounts as between them and the outgoing partner or his estate, then, in the absence of a contract to the contrary, the outgoing partner or his estate is enti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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