MOHATIA BROTHERS versus BHARAT SURYODAYA MILLS CO. LTD., AHMEDABAD

Citation: [1976] 3 S.C.R. 1022 · Decided: 05-04-1976 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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1022 
MOHATIA BROTHERS 
v. 
BHARAT SURYODAYA MILLS CO. LTD., AHMEDABAD 
April 5, 1976 
[H. R. KHANNA AND P. K. GOSWAMI, JJ.] 
Indian Partnership Act (9 of 1932), s. 69-Scope 
of-Partnership deed 
sho~ing partners-Later deed showing change in partners-Proof, that it was 
1101 acted upon. 
'The appellant, a registered partnership-firm, was the managing agent of 
the respondent. 
After submitting its resignation to the board of directors of 
the respondent-company, the appellant filed a suit claiming a sum of money 
in accordance with an agreed scheme. The appellant-firm consisted of 5 partners 
with effect from April 1, 1949, and in addition, a minor was entitled to a 
4-anna share in the profits of the partnership but was not liable for the losses. 
The minor was represented by his mother as guardian. 
On October 24, 1949, 
another partnership deed was executed wherein the mother was shown as a 
partner of the appellant-firm with a 4-anna share and the minor's name was \ 
omitted. The respondent contended that the suit was not maintainable, because, · 
the constitution of the old firm had been changed on October 24, 1949, and 
that the newly constituted firm consisting of 6 partners had not been registered. 
The trial court held that the new partnPrshio deed was not acted upon and 
decreed the suit for a part of the amount claimed. There were appeals by both 
sides. 
The High Court disagreed with the finding of the trial court that the 
later partnership deed had not been acted upon and held that the mandatory 
condition of s. 69(2), Indian Partnership Act, was not fulfilled as the name of 
the mother. who was a partner in the reconstituted firm and in whose favour 
a cause of action had accrued, was not shown in the register of firms, and 
that this defect was fatal to the suit. 
A1lowing the appellant's appeal to this Court and remanding the appeal 
to the High Court for disposal on merits, 
HELD : The trial court took the correct view of the matter in so far as it 
held that the later partnership deed was not acted upon and that the mother 
did not become a partner of the appellant-firm. [1028B] 
(1) The question as to when it was decided not to act upon the later deed 
is not material. 
The evidence of one of the partners of the appellant-firm 
that it was not acted upon and that the mother was not a partner is admissible 
:ind is fully corroborated by the documentary evidence. It is a statement inade 
by him against his own pecuniary interest. because, if the mother was a partner, 
the loss of the other partners would extend only to 12-anna share in the rnpee; 
whereas. if she was not a partner then they would have to bear losses to the 
full extent of 16 annas in the rupee. 
[1029G-H; 1030H-1031D] 
(2) In the register relating to the registration of firms kept under the Indian 
Partnership Act, an entry relating to the registration of the appeIIant-firm dated 
May 5. 1952. reveals that even in the year 1952, the stand of the partners of 
the· appellant-firm was that the mother was not a partner and that it wa-; only 
her minor son who was entitled to a share in the profits of the partnership. 
[1028G-1029Al 
(3) In the staiement of accouilts of the appellant-firm it is only the minor 
that is sho\vn to have a 4-anna share and not his mother. [1030B-C] 
( 4) Applications in connection with the registration of that firm were pre-
rented to the Income Tax Authorities under s. 26A, Indian Income Tax Act, 
1922. 
AU these applications were signed by the mother and they show that tho 
mother never claimed to be a partner of the appellant-firm and that, on the 
contrary, she acknowledged that it was her minor son who was entitled to the 
4-anna share in the profits. [1029E-GJ 
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MOHATTA BROS. v. BHARAT SURYODAYA MILLS (Khanna, J.) 
I 023 
(5) The directors of the respondent-company ,bad passed a resolution in 1950 
referring to the two partnership deeds. 
But the entry which was made in the 
register of the respondent-company regarding the partners of its managing 
agents as required by s. 87, Indian Companies Act, 1913, shows that after April 
1, 1949, there were only 5 partners, besides the minor under the guardianship 
-Of his mother of the appellant-firm. If the mother had become a partner since 
October 24, 1949, it is unlikely that an entry to that effect would not have been 
made in the reJdster of the defendant-company, because, under s. 87, a return 
has to be sent
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