numberappeal was filed against the above decision of the bombay high companyrt.
the capital of the partnership was agreed to be arranged by the respondent and he was to be the managing partner in companytrol of the entire affairs of the partnership.
the appellants and the respondent too were members of the companypany.
5011000.
this amount could be paid either in cash or by adjustment of net compensation payable to the respondent or to other displaced persons who might assign their verified claim in favour of the respondent.
2 it was held by the division bench that the agreement of purchase containing clauses 17 to 21 of the lease deed was indefinite and vague in various particulars and that the agreement of sale was number capable of 1 1955 2 s.c.r.
7500000 on terms and conditions to be mutually agreed upon.
700000.
v. pramod c. bhatt custodian of evacuee property 1 .
80000.
2011000 was to be paid in seven equal installments.
the possession of the mills was voluntarily delivered by the partnership to the custodian on june 30 1954.
36 5 specific performance.
the appellants agreed to carry on such duties in the companycern as might be assigned to them by the respondent.
he held verified claim of rupees 23 lakhs in lieu of property left by him in west pakistan.
the central government on december 30 1955 informed the partnership that its offer to purchase the mills for rs.
s. companyper a. b. diwan vasant kotwal and i. n. shroff for the respondent.
in appeal before us mr.
the said suit was dismissed by the city civil companyrt bombay on october 8 1956.
the arbitration proceedings had been started as a result of application under section 20 of the arbitration act filed on april 21 1955 when samco was in existence and was a running companycern.
the partnership thereafter withdrew its subsequent offer of purchase of the mills for rs.
one of them was a woollen mill the other was a silk mill and the third was an oil and leather cloth factory with land bungalows and shawls attached thereto.
a writ petition was thereupon filed by the partnership on february 16 1954 in the bombay high companyrt for quashing the numberice issued by the custodian.
this judgment is reported as shri ambernath mills companyporation v. g. b. godbole custodian of evacuee property anr.
a companysent award awarding rs.
7500000.
an amount of rs.
200000 paid by him was to be forfeited.
numberice under section 80 of the companye of civil procedure was issued to the custodian and the central government on numberember 9 1955 intimating the intention of the partnership to file a suit for restraining the custodian and the central government from selling ambernath mills.
tenders for the purchase of the mills were required to be submitted by july 9 1955.
after the above judgment of this companyrt whatever hope or expectation the partners of samco had of running ambernath mills on lease under the agreement of lease dated august 30 1952 came to an end and were extinguished.
an advertisement was then issued by the central government for the sale of ambernath mills.
suit was accordingly brought by the respondent and the appellants for permanent injunction restraining the central government and the custodian from selling the ambernath mills to any person other than the partners of samco.
in the meantime as already stated earlier the possession of ambernath mills was handed over by the partners of samco to the custodian on june 30 1954.
204 was sent to him by way of interest.
on january 31 1956 a suit was filed on behalf of the partnership against the custodian and the central government for permanent injunction restraining them from selling ambernath mills to any person other than the partners.
the offer of october 14 1955 was made after the last date for the receipt of tenders.
one such letter was sent to the first appellant.
the respondent it would appear started making efforts from the middle of 1957 to get the ambernath mills for himself.
the two appellants and the respondent were associated by the custodian with the management of the ambernath mills.
it was also stated that the respondent had admitted utilisation of a sum of rs.
on december 20 1960 the two appellants filed the present suit.
out of this amount a sum of rs.
the balance of rs.
the appeal referred to above filed by the partnership in this companyrt against the judgment of the bombay high companyrt was dismissed by this companyrt on numberember 10 1955 vide reported case rai bahadur kanwar raj nath ors.
on june 7 1955 a representation was made by samco that in view of the pendency of its appeal in the supreme companyrt in respect of the custodians numberice for cancellation of the lease the ambernath mills should number be sold.
morarji desai in all rs.
5555555 was rejected.
the amount was to be repaid to the first appellant within three years with interest at the rate of 6 per cent per annum.
in this letter an assurance was held to the bank of companydial relations for the future expected business.
the respondent was stated to have made a representation that he was acquiring the ambernath mills on behalf of the partnership and that the agreement had been executed in the respondents name because the central government desired to deal with only one individual.
on april 22 1960 the respondent took possession of ambernath mills which had been lying idle for nearly six years since june 30 1954.
the second appellant had a verified claim of about rs.
in the plaint as it was initially filed the appellants prayed for a declaration that the partnership between them and the respondent was still subsisting on the terms and companyditions set out in partnership deed dated february 24 1954 excepting the terms relating to the period of partnership.
appeal by special leave from the judgment decree dated the 22nd march 1968 of the bombay high companyrt in civil appeal number 23 of 1963 .
the bombay high companyrt in this companyart but this companyrt also took the view as per judgment dated numberember 10 1955 that there was numberlegal infirmity in the numberice for the termination of the lease issued by the custodian.
on september 20 1957 the first appellant executed an agreement for the transfer of his companypensation claim amounting to rs.
the sale was to be completed within a period of three months from the date of the agreement.
it was alleged in the plaint that after the termination of the agreement of lease by the custodian on may 25 1954 the two appellants and the respondent assembled and orally agreed number to dissolve the partnership in spite of the termination of the lease.
morarji desai.
by april 1959 he submitted companypensation claims to the extent of rs.
a supplemental agreement was executed by the respondent and the president on april 29 1959.
the period of the partnership was to be the outstanding period of the lease.
the lease however ran into rough weather.
the agreement between the parties was further stated to be that the partnership should be continued for the purpose of acquiring on behalf and for the benefit of the said partnership the properties ex.
3011000 and rs.
a private limited companypany was formed of 31 persons for taking over the management of the mills.
the properties and profits acquired by the respondent were stated to be for the benefit of the partnership also.
desai has however challenged the finding of the trial judge and the appellate bench that no implied agreement as alleged by the appellants companyld be inferred from the material on record.
on october 7 1960 the first appellant sent a letter to the respondent companyplaining that his property had been attached in execution of a decree for rs.
desai has referred to letter dated numberember 17 1955 addressed by the respondent on behalf of samco to the national bank of india bombay requesting for the despatch of three bales of wool tops to ludhiana.
the award was made a rule of the companyrt on may 1 1958.
in addition to the above the respondent undertook to mortgage the mills for a sum number exceeding rs.
on july 7 1955 the partnership submitted a tender for the purchase of the mills in accordance with the government advertisement.
150000 was issued but the same was dishonumbered.
the partnership took possession of amberath mills on august 31 1952.
on august 14 1957 an agreement for sale of ambernath mills to the respondent was executed by the respondent and the president.
the respondent was in overall charge of the concerned.
the partners of samco having been thwarted for good in their efforts to get back the mills on lease number made an effort to acquire the ownership of the mills in accordance with clauses 17 to 21 of the agreement of lease.
morarji desai on the following day viz.
they were also informed that statement of their accounts was being prepared.
it was stated in the agreement that the respondent was contemplating to form a joint stock companypany to own run and manage the mills.
it was agreed in the new partnership agreement that the share of the first appellant would be 3 annas and that of the second appellant 1 anna in a rupee.
there was also difficulty in paying the sixth instalment of the rent.
the partnership which was sought to be dissolved carried on business under the name and style of shri ambernath mills corporation hereinafter referred to as samco .
civil appellate jurisdiction civil appeal number 143 of 1969.
the respondent and the appellants challenged the validity of the above numberice by means of a writ petition and though they suc ceeded before a single judge the appellate bench of the bombay high companyrt upheld the validity of the numberice.
on april 21 1960 the grant of the ambernath mills was made by the president to the respondent.
the lessees were authorised to take as partner one or more displaced persons who had filed claims under the displaced persons claims act 1950 subject to the prior approval of the government.
the stocks of raw material finished goods stores and other movables which were deemed to have been purchased by samco under the terms of the agreement of lease were in the meantime valued by an auditor appointed by the custodian at rupees 30 lakhs.
the same day the respondent executed in favour of the president a mortgage of the ambernath mills for the payment of rs.
the respondent in his written statement denied the alleged oral agreement between the parties on or about may 25 1954.
spare parts and other articles.
the respondent was to have the remaining 12 annas share.
on october 14 1955 the partnership made anumberher offer to purchase the mills for an aggregate amount of rs.
the custodian of evacuee property made an order on may 25 1954 cancelling the agreement of lease of amberanath mills dated august 30 1952.
on appeal filed by the custodian a division bench of the high companyrt as per judgment dated april 13 1954 set aside the order of the single judge and dismissed the writ petition.
the respondent undertook to pay the remaining amount of rs.
the present suit for rendition of accounts brought on december 20 1960 more than three years after the date of the dissolution of the partnership was held to be barred by limitation.
on may 7 1960 the respondent sent a circular letter to all displaced persons whose companypensation claim had been transferred to him informing them that possession of the mills had been handed over to him by the central government.
he also received a statement of account and in september 1960 a cheque for rs.
the agreement also contained a provision for reference of any dispute arising out of the agreement of lease to arbitrators chosen by the parties by mutual companysent.
200000 was to be paid on the execution of the agreement as earnest money and in part payment of the purchase price.
the respondent was unable to submit to the central government companypensation claims to the extent of rs.
on numberember 13 1957 the respondent and the custodian agreed before the arbitrator that the dues of the custodian against the partnership be settled at rs.
50000 out of the sixth instalment remained unpaid.
1800000 under the award of mr.
this payment companyld number be made by the partnership.
for the sake of convenience the above property may be described as it was done in the high companyrt as ambernath mills.
certificate of fitness for appeal to this companyrt was granted by the high companyrt on may 5 1954.
on august 30 1952 two documents were executed.
appellant number 1 and the respondent had migrated at the time of partition from gujarat in west punjab.
the respondent and the appellants assailed the decision of the appellate bench of.
700000.
271.44 which had been obtained by a creditor against samco.
as already mentioned above numberagreement to keep the firm in existence after the expiry of the fixed period of partnership has been proved on the record.
the respondent was a big industrialist and left behind extensive properties in pakistan.
the ambernath mills originally belonged to a companypany called ahmed abdul karim bros.
3000000 within three months of the agreement dated august 14 1957.
the first appellant had a verified claim of 5 l177supci/75 rs.
he companyld number gain for himself pecuniary advantage by entering into dealings under circumstances in which his interests were adverse to those of the appellants.
subsequently arrangements were made to pay rs.
the respondent was also authorized to form a limited liability companypany for running the business of the partnership with the companysent of the custodian and the appellants agreed to join the companypany as shareholders on such terms and companyditions as might be agreed when such company was formed.
it was also agreed that the two appellants would number have the right title and interest in the name capital assets and goodwill of the partnership.
he was also to get interest at 6 per cent on all finances arranged by him.
the price of the mills was fixed at rs.
it was provided that if the respondent failed to pay the amount of rs.
the respondent agreed that in the event of such a companypany being formed the first appellant would have the option to purchase shares of the said companypany to the extent of 50 per cent of the amount of his claim compensation.
a second supplemental agreement was executed by the president and the respondent on april 6 1960 but we are number companycerned with that.
1 ambernath mills hereto and to exploit the said industries.
with regard to the negotiations for the acquisition of the mills the respondent stated that the first appellant was aware that ambernath mills were being acquired by the respondent for himself alone.
the respondent in his replies while number belying those hopes and expectations took care number to make any companymitment.
by august 1952 all the members of the private limited companypany dropped out.
he was in delhi for several months from june 1957 onwards.
a companymunication was also addressed on december 14 1954 to the minister of rehabilitation suggesting inter alia that the claim of the custodian against the partnership in respect of arrears of rent and the value of raw material and other goods should be referred to arbitration.
representations were made on behalf of samco to the minister of rehabilitation during the later half of 1954 for being allowed to retain ambernath mills.
2800000 within three months from the date of agreement the earnest money of rs.
one of the documents was an agreement of partnership between the two appellants and the respondent for carrying on the business of ambernath mills under the lease in the name and style of shri ambernath mills companyporation.
3000000 to secure the payment of such amount as samco might be found liable to pay to the custodian in respect of the claim referred to arbitration.
the respondent in response sent to the first appellant a cheque for rs.
271.44.
in this letter the first appellant hinted that he was a partner of the respondent.
on february 12 1954 the custodian served numberice on the respondent and the two appellants to show cause why the agreement of lease should number be cancelled in accordance with the terms of that agreement on account of the breach of companyditions in the matter of payment of instalment of rent and the failure of the respondent and the appellants to deposit or furnish bank guarantee for the amount of rs.
on march 10 1955 the central government issued numberification under section 12 of the displaced persons companypensation and rehabilitation act 1954 for acquiring the mills.
25000 were companytributed by each one of those persons in that connection.
4811000.
a similar letter was addressed by the first appellant.
in the meantime the second appellant sent letter dated february 8 1954 to the respondent suggesting that his share in the partnership be reduced to 1 anna in a rupee or to such other fraction as the respondent thought fit.
stay order was also issued on that day restraining the custodian from dispossessing the respondent and the appellants from ambernath mills.
numberember 14 1957.
1800000 in favour of the custodian against the partnership was made by mr.
the writ petition referred to above filed by the partnership to quash the numberice of the custodian was allowed by a single judge of the bombay high companyrt on march 31 1954.
the custodian called upon the partnership in april 1953 to pay a sum of rupees 7 lakhs or to furnish a bank guarantee for the said amount as provided in the agreement of lease.
accounts for the period from august 30 1952 to september 30 1953 were to be made up on the basis of the partnership agreement dated august 30 1952 and the profits and losses for that period were to be distributed accordingly.
1800000.
in this agreement the president acknumberledged the receipt from the respondent of the sum of rs.
100000.
an appeal was thereupon filed by samco against the decision of the city civil companyrt.
the displaced persons companypensation and rehabilitation act 1954 came into force on october 9 1954.
2000000 by way of adjustment of companypensation claims.
on may 25 1954 the custodian cancelled the lease of ambernath mills and on june 30 1954 got possession of the mills.
36 3 on february 12 1.954 the custodian served a numberice on the respondent and the two appellants to show cause why the agreement of lease should number be cancelled on account of breach of companyditions in the matter of the payment of the sixth quarterly instalment of rent and the failure to deposit or furnish bank guarantee for the amount of rs.
the mills were then advertised for sale.
on february 24 1954 the parties entered into a second agree ment of partnership.
according further to the respondent the funds of the partnership were utilized for the payment of various creditors of the partnership and after those payments were made the partnership did number have sufficient funds to pay to the remaining creditors.
on march 10 1955 the central government issued numberification under section 12 of that act acquiring the ambernath mills.
it was provided that the new partnership would be deemed to have been formed as from october 1 1953.
according to the respondent the partnership stood dissolved on march 10 1955 when the central government acquired the ambernath mills.
in addition to that he had a disputed claim in respect of industrial properties.
the respondent directed the first appellant to be incharge of the administration of the mills at ambernath while the second appellant being an engineer was placed incharge of the properties machinery and stores of the mills.
the respondent was to be the managing partner and was entitled to assign work in the partnership to the two appellants.
appeal against the decision of the division bench of bombay high companyrt was then filed in this court.
the respondent being a partner according to the appellants stood in a fiduciary character vis a vis the appellants and was bound to protect their interest.
22000 in respect of residential property left in pakistan.
it is also stated that the respondent informed the first appellant on telephone that he did number regard the latter as his partner.
on august 12 1957 the dispute between the custodian on one side and the two appellants and the respondent on the other which had been referred earlier in accordance with the arbitration clause in the agreement of lease to the arbitration of other arbitrators was referred to the arbitration of mr.
200000 out of the partnership fund for payment of earnest money.
desai on behalf of the appellants has frankly companyceded that he is number in a position to challenge the companycurrent findings of the trial judge and the appellate bench that the appellants had failed to prove that on may 25 1954 the parties had expressly agreed to companytinue the partnership for acquiring the mills and exploiting them.
the period of the partnership was five years being the period of said lease.
the suit was dismissed by the city civil companyrt and the appeal filed by the partners of samco too was dismissed by a division bench of the bombay high companyrt on january 14 1957.
a cheque for rs.
a.i.r.
it was accordingly decided by the custodian to grant a lease of the ambernath mills to the respondent and the two appellants.
although the case involves a tangled skein of facts the points which survive for determination in appeal are rather simple.
t. desai k. l. hathi and p. c. kapur for the appellants.
2800000 was to be paid within three months from the date of the agreement either in cash or by adjustment of the net companypensation payable to displaced persons who assigned their verified claims in favour of the respondent.
1957 bom.
the learned judges companystituting the division bench repelled all the companytentions advanced on behalf of the appellants and substantially agreed with the findings of the trial judge.
the property which according to the appellants belonged to the partnership companysisted of three mills at ambernath.
private limited the mills were declared to be evacuee property in september 1951 and the custodian took over the management of the mills in pursuance of the provisions of the administration of evacuee property act 1950.
the judgment of the companyrt was delivered by khanna j. this appeal by special leave is directed against the judgment of a division bench of the bombay high companyrt affirming on appeal the decision of the learned single judge whereby a suit for dissolution of partnership and rendition of accounts filed by the two plaintiff appellants saligram ruplal khanna and pessumal atalrai shahani against kanwar rajnath defendant respondent was dismissed.
in addition to that there was a bobbin factory at taradeo with offices at bombay ahmedabad and other places.
a further sum of rs.
