PREM BALLABH KHULBE versus MATHURA DATT BHATT

Citation: [1967] 2 S.C.R. 298 · Decided: 16-12-1966 · Supreme Court of India · Bench: K.N. WANCHOO · Disposal: Dismissed

Judgment (excerpt)

PREM BALLABH KHULBE 
r. 
MATHURA DATT BHATT 
December 16. 1966. 
(K. N. WANCHOO, R. S. BAC'HAWAT AND .J.M. SHELAT JJ.) 
Code of Ci1·i/ Procedure (Act 5 of 1908). cl. (c) of the pro'l'L<o to 
s. 5 l-Partners-lf in fiduciary r1..>lationship. 
The partnership business carried on by the appellant, respon"ent and 
t>\.ll others \\:as dissolved. 
The appellant obtained a final 
decree 
for 
.. 1.'.'Ilain sums against the rcspc._1dcnt, who was the ntanaging partner of thi: 
partnership assets. The appellant applied for the execution of the decree by 
arrest and detention of the respondent in prison. 
The executing court 
held that the provisions of cl. (c) of the proviso to s. 51 of the Code of 
Civil Procedure were satisfied and issued a warrant for the arrest of 
the ·respondent. 
The Hi,gh Court set aside this order. 
On appeal, this 
('ourt. 
HELD : The appeal must be dismissed. 
In the absence of special circumstances a partner cannot be regarded 
as a kind of trustee for the other partners or liable to render accounts lo 
them in a fiduciary capacity, [300 DJ 
In the present case, the conditions of cl. ( c) of the proviso to s. 51 
were not satisfied. No fraud or clandestine dealing was alleged o·r proved. 
The fac!s did not disclose that the-. decree was for a sun1 for which the 
r~spondent v.·as bound to account in a fiduciary capacity. (300 El 
Piddock,• v.Burt, Cliittv, [ 1894] I Ch. 343, Rodriquez v. Speyer IJro-
tha.<, [1919) A.C. 59, Bli11hm1 Moha11 Rana v. Sure11da Moha11 .D<u. 
l.L.R. [1952] :'.Cal. 123 and Vdji Ra11/1a1·j/ Paid v. Stak of Maharashtra 
[ 1965] 2 S.C.R. 429, approved, 
' 
CIVIL APPELLATE JURISDICTION 
: Civil Appeal No. 615 of 
1964. 
Appeal from the judgment and decree dated March 3, 1960 
of the Allahabad High Courl in Execution First Appeal No. 332 
of 1956. 
C. B. Agarwala and A'. P. Gupta for the appellant. 
S. G. Palll'ardhan. Yashpal Singh and M. S. G11pfa for the 
respondent. 
The Judgment of the Court was delivered by 
Bacbawa:, J. The appellant, the respondent and two other 
persons carried on business in partnership under the name and style 
of Nayagaon Farm. The respondent was the managing partner 
and was incharge of the partnership assets. The firm was dis-
solved and a suit was instituted by the appellant for the taking 
of the accounts of the dissolved firm. 
Eventually a final decree 
A 
c 
D 
E 
G 
H 
A 
B 
c 
D 
E 
PREM BALLABH \'. MATHURA DATT (Bachawat, J.) 
299' 
was passed in the suit in favour of the appellant against the res-
pondent for Rs. 17, 143/ 11 /0 and Rs. 3.171 !6 as on account of costs.' 
The appellant applied for execution of the decree by arrest and de-
tention of the respondent in prison. 
In this affidavit in support 
of the application, the appellant relied upon the grounds mentioned 
in clauses (a) and (b) of the pro1·iso to s. 51 of the Code of Civil 
Procedure 1908. At the hearing of the application those grounds 
were not pressed but his counsel relied upon the ground mentioned 
in cl. (c) of the proviso. 
By cl. (c) of the pro1·iso to s. 51, the court 
is empowered to order execution of a money decree by detention 
of the judgment debtor in prison if it is satisfied "that the decree 
is for a sum for which the judgment debtor was bound in a 
fiduciary capacity to account". The executing court held that the 
provisions of cl. (c) were satisfied and issued a warrant for the arrest 
of the respondent. 
On appeal, the High Court of Allahabad 
set aside this order. The decree holder now appeals to this court 
under a certificate granted by the High Court. 
· 
On behalf of the appellant our attention 
w~s drawn to 
ss. 9, 15, 18, 46 and 48 of the Indian Partnership Act 1932 and ss. 88, 
94 and 95 of the Indian Trusts Act 1882, and it was urged that the 
respondent as the managing partner of the firm was bound in a 
fiduciary capacity to account for tbe assets of the partnership in 
his hands and the decree against him must be regarded as a decree 
for a sum for which he was bound in .a fiduciary capacity to 
account. 
On the question whether a fiduciary relation exists between 
the partners, the law is stated thus in Halsbury's Laws of England 
Jrd Edition, Vol. 38, art. 1363, p. 820 : 
"Partnership itself does Mt create a fiduciary rel<t-
tion between the partners or make one of therr. a truste(. 
1
1
' 
for the 
other or for his representatives. The relation 
may, however, arise on the death of one of them or be 
created by other special circumstances."

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