Commissioner of Income-Tax v. R.B. Bansilal Abirchand Firm:

The suit was styled as a suit for dissolution of partnership, taking of accounts and recovery of moneys. However, the four Daga partners who were common in both these firms completely identified themselves with the “Kamptee firm” which would appear from the plaint filed in the suit. The said suit was filed on or about 27th July, 1942, in the court of the then Additional District Judge, Nagpur. It appears that before the suit was filed one of the original partners Sir Bisesardas Daga, died on 18th August, 1941, and his heirs, who also became the partners in the said firm, had joined in the suit.

After setting out the relevant clauses of the deed of partnership, the plaintiffs, that is, the partners of the “Kamptee firm”, alleged that the defendant in that suit, Sir M.B. Dadabhoy, has wilfully and persistently committed breaches of the terms of the said partnership and gave several breaches alleged to have been wilfully committed by Sir M.B. Dadabhoy, it reads as:

“The plaintiffs say that as hereinafter specially mentioned the defendant has wilfully and persistently committed breaches of the terms of said partnership in the following among other respects;—

(a) The defendant has contrary to his obligation under clause (7) of the said deed failed to pay for value of the machinery required for the Chirimiri Colliery in spite of repeated demands.

(b) The defendant in spite of repeated demands has failed to hand over to the plaintiffs' firm the safe custody receipt in respect of the 20,000 shares of the Central Provinces Prospecting Syndicate Ltd. (now known as the Central Provinces Manganese Ore Company Ltd.) in terms of clause (16) of the said deed.

(c) The defendant has in contravention of clause (12) of the said deed continuously prevented the plaintiff's firm from participating in the management of the suit-firm.

(d) The defendant has contrary to the terms of clause (11) of the said deed and in breach of his obligations as a partner wrongfully made secret profits in the business of the suit-firm and failed to render a true and faithful account of his management.”

The plaintiffs in that suit being the partners of both the Kamptee firm and the Bisesar House firm felt some technical difficulty in the Kamptee firm filing a suit for recovery of the amount due to it from the Bisesar House firm and it was considered that the advances of amount by the Kamptee firm to the Bisesar House firm could only be recovered on accounts being taken of the Bisesar House firm on the dissolution of partnership, and, hence, the suit was filed by the partners of the Kamptee firm who were also the partners of the Bisesar House firm for dissolution of partnership with Sir M.B. Dadabhoy and for taking of accounts in which they also claimed recovery of certain tentative amount which might be found due on taking of accounts and also asserted that they were creditors of the Bisesar House firm to the extent of Rs. 62 lakhs and odd which they desired to be secured by the defendant. Several reliefs were claimed in this suit and I shall set out some of the reliefs which are material for the purposes of this reference. They are:

(1) that the suit-firm may be ordered to be dissolved as from the date of the suit or from such other date as may appear to the court just and proper;

(2) that an account may be taken of the suit-firm by and under the direction of this court and in the said accounts the defendant may be ordered to render an account of all the secret profits, commissions, allowances and other benefits received by him in respect of the partnership dealings and not duly accounted for by the suit-firm;

(3) that the defendant may be ordered to render a true and complete account of his management of the suit-firm on the footing of wilful default;

(4) that the defendant may be ordered to pay to the plaintiffs such sum as may be found due by the defendant to the plaintiffs' firm on proper accounts being made up;

(5) that the defendant may be ordered to pay to the paintiffs the sum of Rs. 8,45,700-1-9;

(6) that it may be declared that 20,000 shares of the Central Provinces Prospecting Syndicate Ltd. (now known as the Central Provinces Manganese Ore Co. Ltd.) have been hypothecated with the plaintiffs by the defendant to secure repayment of the moneys due by the defendant to the plaintiffs on taking of the accounts of the suit-firm and the balance due by the defendant at foot of the defendant's account No. 1;

(7) that it may be declared that the amount that may be found due by the defendant to the plaintiffs on taking of partnership accounts and the balance due at foot of the said defendant's account No. 1 are duly charged on the properties mentioned in exhibit “B” hereto;

(8) that it may be declared that the New Chirimiri Colliery belongs to the suit-firm and that the defendant has no exclusive right or interest therein;

(9) that in the course of such winding-up or otherwise the said 20,000 shares of the Central Provinces Prospecting Syndicate Ltd. (now known as the Central Provinces Manganese Ore Co. Ltd. and the right, title and interest of the defendant in the properties described in exhibit “B” may be sold by and under the directions of this court and the net sale proceeds thereof may be utilised in or towards the satisfaction of the decree that may be passed in favour of the plaintiffs against the defendant in the suit;

(10) that pending the hearing and final disposal of this suit the defendant may be restrained by an order or injunction of this court from managing the suit-firm or from directly or indirectly interfering with or obstructing the management of the suit-firm by the plaintiffs or from charging, dealing with or disposing of any of the assets of the suit-firm.