P L D 1967 Karachi 479 (PLP)

(2) Whether the plaintiff did not abandon any claim? (3) Is the present suit barred and not maintainable as alleged. At the hearing the defendant No. 1 has not pressed the additional issues. It is, therefore, unnecessary to discuss these issues. The parties are, therefore, now concerned only with the issues framed on 13th February 1963.

9. In support of their case plaintiff examined himself only as Exh. P. 1/A. Defendant examined himself as D. W. 1 (Exh. D. 12/A), D. W. 2 Nasim Pasha (Exh. D/21‑A), D. W. 3 Nasir Ali Malik (Exh. D/21‑B). D. W. 4 Ahmed Dawood (Exh. D/21‑C), D. W. 5 Haji Abdullah (D. W. 21/E).

10. The most important question for consideration in this suit is whether the plaintiff purchased the machinery listed in para. 9 of the plaint and hired these out to the partnership business. In this connection the plaintiff has relied on the receipts of the purchase of the machinery, Exh. P/4 to Exh. P/13. He stated that the business of the firm was to manufacture sewing machines and some machinery was required for the business of the firm. He further deposed that defendant No. 1 asked him to purchase some machinery for the manufacture of sewing machines in his own name and give the same on hire basis to the Firm. It was an oral agreement. Under this agreement he sent defendant No. 1 to purchase machinery from Lahore. Exh. P/4 was the bill of the machinery purchased from Lahore, and Exhs. P/5 and P/6 are the receipts of the payments of the purchases made at Lahore. Some machinery was also purchased at Karachi. Exh. P/7 is one of the receipts relating to the purchases at Karachi. Exh. P/7 is the receipt of the machinery purchased from one Sami, Exh. P/8 is the receipt of machinery purchased from Mubarak & Co. Karachi Exh. P/9 is the receipt of the machinery purchased from Standard Foundry Works, Lahore. Exh. P/10 is the receipt of the machinery purchased from Solid Ice and Cold Storage Co. Some machinery was also purchased vide Exhs. P/11, P/12 and P/13. The value of the above‑mentioned machinery comes to about Rs. 25,155 which was paid out of the plaintiff's funds. He further deposed that under the oral agreement the above‑mentioned machinery was handed over to the partnership Firm on hire. In the beginning the hire was fixed at Rs. 150 per month. Later on it was raised to Rs. 250 per month and then to Rs. 350 per month. Finally the hire was fixed at Rs. 450 per month which was paid to him only up to January 1957. Thereafter no hire was paid to him. He further stated that on 4th March 1958, while he was ill, the defendant No. 1 prevailed upon him to execute the dissolution deed, Exhs. P/14 and Y/

15. He did not willingly agree to dissolve the Firm, but as pressure' was put on him, he agreed to settle his claim in respect of the investment loan, profits, etc. in the sum of Rs. 1,05,

000. But admitted to a question put by the Court that after the dissolution he never informed defendant No. I that the dissolution was obtained by coercion or pressure, but only demanded the return of the machinery or its price and the arrears of hire. He relied on a letter dated 17th April 1958, Exh. P/16; by which he claimed from the defendant No. 1 to pay hire. He further relied on a notice dated 18th December, 1959 (Exh. P/t7) calling upon the defendant No. 1 to pay the hire money. He produced his reply Exh. P/18 and stated that no reply was received in respect of the first letter written in 1958. He denied that the machinery in dispute was given to, the partnership business and claimed that he was its sole proprietor and it was given on hire to the partner ship business. He admitted that he does not charge any interest on the money advanced by him as loan. He further stated that he is not conversant with the English language and did not consult any lawyer when the dissolution deed was executed between the parties, and claimed the return of the machinery or in the alternative its price in the sum of Rs. 25,

155. He further claimed Rs. 16,200 as arrears of hire from 1st May 1957, till 30th April 1960, besides future hire and cost of the suit.

11. In cross‑examination he admitted that the letter Exh. P/16 was an ordinary letter under postal certificate; and further admitted that he had filed previously the suit in the Chief Court of Sind on 8th February 1960; and has claimed in it a sum of Rs. 54,850 as the price of the machinery given on hire to the partnership business. But stated that the allegations made in the said suit were not made under his instructions and so he ad to withdraw it. He, however, admitted that the above suit was withdrawn by application Exh. D/2 and it was not alleged in the said petition that the allegation in plaint, Exh. D/1 was made without his instructions. He withdrew the suit only on the ground that necessary parties had not teen impleaded and it was for this reason he was allowed the refund of the court‑fee.

12. In cross‑examination he further admitted that prior to 1955 the business of the Firm was to import sewing machines from Japan which were sold in the market. Thereafter the parts used to be imported and sewing machines were assembled from those parts. He further admitted that under the compromise deed dated the 10th December 1954, he became incharge of the cash and account books and used to maintain the accounts of the firm. At first he denied the account books as belonging to the firm, but later on admitted that some of the account books produced by the defendant related to the partnership business. He further stated that he used to maintain account only of the business concern and the accounts of the factory were maintained by Usman defendant No.

1. He admitted that in para. 9 of the suit filed by him in 1959; he fixed the valuation of the machinery in dispute at Rs. 40,

000. He expressed his ignorance about the fact that the machinery in dispute was shown in the income‑tax returns as belonging to the firm. He also expressed his ignorance about the assessment made in the year 1956‑57 and 1958‑59 by the Income Tax Department. He showed his ignorance about Exhs. D/3 and D/4 which were the assessments made by the Income Tax Department. He denied that the machinery supplied was shown as assets of the firm and its price was added to the investment made by him in the firm. He admitted that there was no other machinery except the one supplied by him on hire to the firm. The recital in para. 4 of Exh. P/15 that he and his daughter in future would have no connection with the machinery of the firm was alleged .to have been incorporated in it without his knowledge. Similarly, the recital in para. 5 of Exh. P/15 that any document obtained by him from Usman defendant No. 1 would be treated as cancelled was alleged to have been incorporated without his knowledge. He even went to the extent. of saying that the advertisements Exh. D/6 and Exh. D/8 were not issued under his instructions but by Mr. Liaquatullah Qureshi on his own. He admitted that he wrote a letter to the Income Tax Department Exh. D/8 in which he stated that he had separated from the partnership and all future liabilities for income tax are on defendant No. 1, Muhammad Usman. He was shown Exh. D/9, an account book of the firm, which at first he admitted to have nothing to do with him. After going through the account book he admitted that it related to the partnership business and that it was signed by his daughter and Usman, defendant No.1. He denied the entry dated 5th April 1957, written by defendant Usman showing the assets of the firm. Ha further denied the other entries in this account book. This is all the evidence produced by the plaintiff.

13. On the other hand, defendant has examined himself and has stated that in 1955 on his suggestion to the plaintiff that if they imported more parts and established an industry the partnership is likely to get more licences, the plaintiff agreed to invest more money for purchasing machinery, but he wanted some return. According to him the plaintiff did not charge interest and, therefore, suggested that he should be paid some hire as profit till the production starts. The witness admitted that the plaintiff advanced money to the firm and from that machinery was purchased. He deposed that the money advanced to him for this purpose was added to the capital of the plaintiff in the firm, and the money advanced was credited to his account in the firm. But the machinery became the property of the partnership firm. The witness further‑ stated that Abdullah Bhai was the accountant of the firm since 1953 on part time basis and used to write the account books under the supervision of the plaintiff. The account books written by him were produced before the Income Tax Authorities. It was signed by them. He further stated that in the assessment for the year 1956‑57 (Exh. D/3) the machinery in dispute was shown as belonging to the partnership firm.

14. The witness further stated that in October 1955 a run ning workshop was purchased for installing the factory. The premises on which the workshop was situated was also taken on lease. Some of the machinery was installed on the back of the showroom and the rest was installed at Golimar. He stated "that the firm used to maintain a stock book of the assets of the firm. Exh. D/9 is the stock book of the sewing machines. This position continued up to 5th November 1955. On 31st March 1957, a balance‑sheet of the entire stock was prepared including the machinery purchased by the firm. An entry to that effect was made in the stock book which is in the handwriting of Abdullah Bhai and bears his signature. The entry marked A was exhibited as D/16, which was written by Abdullah Bhai under the directions of the plaintiff. On 5th December 1957, further stock was taken of the assets of the firm. He, Abdullah Bhai and the plaintiff prepared a stock list which was entered in Exh. D/9 by Abdullah Bhai. Exh. D/17 is that entry. It bears the signature of the plaintiff and was signed by him in his presence." The witness stated that the firm stopped paying profit in the shape of hire to the plaintiff towards April 1957, because by that time the factory had started production and, therefore, under the oral terms the plaintiff was no longer entitled to any hire or profit. Before that profit in the shape of hire was paid to the plaintiff every month and he used to charge profit at 18 per cent. per annum. The witness stated that the plaintiff used to create difficulties in the conduct of the business. As there were differ ences between the partners, the plaintiff suggested that either he should be allowed to carry on the business as sole owner or the witness should take it over: Plaintiff offered him Rs. 25,000 for separating from the firm and demanded a lac of rupees for separating from the business of the firm. In this connection negotiations went on between the parties for about three weeks. Two persons Dada Bhai and Ahmed Daud intervened between the parties and got the dispute settled. It was agreed between the parties that the witness would pay rupees one lac and five thousand to the plaintiff and defendant No. 2, his daughter, in full and final settlement of the investment and profits earned by them in the business concern. The witness stated that the sum of rupees one lac five thousand represented the cash investment including the machinery, the right in the licenses and goodwill, etc. He relied on dissolution deeds Exhs. P/14 and P/15 which, according to him, were prepared by Mr. Khalilullah. Advocate who was the counsel of the plaintiff. The document was attested by Mr. Khalilullah, Advocate and Ahmed Daud, one of the witnesses. D. W. 3 Nasirali Malik (Exh. D/21) is the Assistant Manager of Dntm who proved Exhs. D/21, D/6 and D/18 and advertisement published in the Dawn dated the 11th March, 1958, Exh. D/20 inserting the dissolution of the partnership. D. W. 4 Ahmed Daud supported the defendant No. 1 on the ques tion of dissolution and the circumstances under which it was brought about between the parties. He stated that the amount of rupees one lac and five thousand was paid to the plaintiff and defendant No. 2 in lieu of their claim in the partnership including the investment made in the shape of machinery purchased for the firm D. W. 5 Abdullah Bhai, accountant of the firm, produced the account books and stated that from 1955 the partnership firm purchased some machinery which was entered in the account books. The money for purchase of machinery was advanced by Haji Sahib and it was credited to his account. The machinery purchased was mentioned as property of the firm in the account book. He stated that in the cash book of 1955, at Folio No. 72, there was an entry (Exh D/23) of Rs. 8,120, which was paid towards the purchase of the machinery. This entry was carried forward in the ledger book, Exh. D/25. He further proved the cash entries at pages 64, 92, 159, 160, 301, 312, 314, 71, 72 and 260 which relate to the purchase of the machinery of the firm from the funds advanced by the plaintiff. These entries were carried forward in the ledger separately in the account of Haji Sahib and machinery account and are Exhs. D/26 to D/35 and their translations are Exhs. D/36 to D/46. He further proved the investment of the plaintiff in the business in 1956‑57 and 1957‑58 from the account books of the partnership business and stated that all these entries were entered under the instructions of the plaintiff. He further stated that the account books were produced before the Income‑tax Authorities and assessment was made on that basis. This is all, the evidence produced by the defendant.

15. Admittedly, the case of the parties is that dissolution was effected between them in respect of Salika Sewing Machine Company business In 1958 and the plaintiff had executed dissolu tion deed, Exhs. P/14 and P/15, and he and defendant No. 2 were paid rupees one lac five thousand in lieu of their investment loan, etc. in the said business. In the dissolution deed, Exh. P/15 which relates to the partnership business, the following tern! was agreed upon between the parties which is reproduced below:‑ "(iv) That the Party of the second part have no rights and interest in the firm and business thereof Salika Sewing Machine Co. They will have no claim to the name and good‑will of the firm and for the Institute or other Departments attached in the stocks, machineries, and assets, monies, credits, claims, licences, trade marks in whatsoever rights, tendency rights and all Departmental Registrations, etc. concerning directly and indirectly with the firm and business thereof. The name, goodwill, Institute or other Departments, attached, stocks and the machineries, the monies, credits, claims, licences, trade marks, tenancy rights, etc. at Frere Road and/or at Firdous Colony now exclusively belong to the Party of the first part." It will thus be noticed that the plaintiff had taken the sum of Rupees one lac five thousand in full and final satisfaction of his claim and had surrendered all his claim in respect of the goodwill of the firm and for the institute or other departments and in the stocks, machineries, assets, monies, claims and trade marks, etc., etc. He further agreed that the name, goodwill, Institute or other Departments attached, stocks and machineries, the monies, credits, claims, licences, and trade marks etc., at Frere Road, and/or at Firdous Colony thereafter would exclusively belong to defendant No. 1, Muhammad Usman. In his deposition the plaintiff stated that there was no other machinery except the one which was supplied by him to the partnership business. It is therefore, quite clear that in respect of the machinery which was used in the firm he had agreed that there was no interest left in him so far as that was concerned. It is, therefore, difficult to accept the version of the plaintiff that after the dissolution deed, the machinery purchased by him and handed over to the firm remained his property and he is entitled to claim its hire. It is in evidence that all the machinery purchased from his fund was entered in the account Looks as belonging to the partnership business and the amount advanced for the machinery was credited in his account as his capital investment in the partnership business. D. W. 5 Haji Abdullah Bhai has proved these entries which are D/26 to D/35 and whose transactions are D/36 to D/46. These entries leave‑no doubt in my mind that the plaintiff's version that the machineries continued to remain as hi: property has no basis whatsoever. The plaintiff has denied the authenti city of the account books but no importance can be attached to it because these documents were produced before the Income‑tax Authorities and bear their initial. Besides, on the basis of these accounts books the parties from time to time submitted balance -sheet to the Income Tax Department for assessment purposes. Exh. P/21 is one of the balance‑sheets which was submitted to Income‑tax Department showing the property of the partnership on 31st March 1956. In this document plant and machinery are also shown as assets of the partnership business. New plant and machinery are valued at Rs. 20,075 and old Plant and machinery are valued at Rs. 5,

207. Similarly in the trading account for the period 1st April 1957 to 31st March 1958 the balance‑sheet on 3rd March 1958, shows machinery of the value of Rs. 20,000 as assets of the firm. This balance‑sheet is attached to the assessment order and the Income‑tax Return, Exh. P/20. It is thus quite clear that the parties have been representing to the Income Tax Department that the machinery brought in the firm belonged to it and had nothing to do with any individual partner.

16. Besides, defendant has also produced the entries Exhs. D/16 and D/ 17 which relate to the stock of the partnership business and these entries also show that the machinery in dispute was included and considered as assets of the partnership business. In view of this clear evidence it cannot be doubted that the machinery, Which was purchased from the funds provided by the plaintiff, became the partnership property and the plaintiff, had been given credit of the amount advanced by him towards it in the account books.

17. It is quite correct that the receipts of the purchases of the above‑mentioned machinery are in the name of the plaintiff, but that in my opinion has no significance whatsoever on account of the subsequent conduct of the parties and the manner in which the machinery was treated by them.

18. In the light of the above evidence it is perfectly clear to me that the machinery in question was the partnership property and the plaintiff had at the time of dissolution agreed about it that on payment of rupees one tae five thousand it would become the sole property‑of the defendant No.

1. This is quite clear from the terms of Exh. P/15. The evidence produced by the plaintiff is wholly unsatisfactory. Defendant No. 2, his daughter, did not come forward to support his version on oath as witness in the‑Court. His bare statement that he claimed the hire of this amount after the dissolution of the firm by letter dated the 17th April 1958, has no meaning whatsoever. In the first place, I doubt very much if any such letter was written to defendant No.

1. Assuming for the sake of argument that any such letter was written it could not in the least help his case because merely sending of the letter would not make him the owner of the machinery in dispute. The case of the defendant that the plaintiff, being a Muslim, was riot prepared to charge interest on the loan advanced by him is also admitted by the plaintiff himself. In these circumstances, the version of the defendant that it was for this reason that hire money was paid to the plaintiff as profit seems to be quite correct and is well founded. The mere fact that the plaintiff was paid hire up to 1957 cannot in the least help the plaintiff's case or demolish the case of the defendant No. 1 for holding that the machinery in dispute belonged to him. 18A. After carefully considering the evidence led by the parties, I am satisfied that after dissolution deed Exh. 15 was executed between the parties and the plaintiff had received along with his daughter a sum of rupees one lac five thousand in full and final settlement of their claim, the plaintiff was left with no interest in the machinery in dispute and his claim on that account is unfounded and cannot be accepted as good.

19. Mr. Ghani, learned counsel for the defendant No. 1 has referred me to the case of Robinson v. Ashton ((1875) 20 E C 25). It was suggested before Jessel M. R. that the mill and machinery belonged to Robinson and that the partnership had only paid rent for them but the learned Judge rejected this plea on the ground that it was brought by Robinson as his investment in the business and not hired out. In the present case also the same is the position. It is quite true that the machinery was purchased by the plaintiff but it was brought by him in the partnership business as his further investment and, therefore; after the dissolution cannot be claimed by him as his own property. In view of this my findings on the issues are as under:‑ Issue No. 1.‑The machinery in dispute was purchased with the money of the plaintiff. Issue No. 2.‑The machinery became the property of the partner ship business. Issue No. 3.‑After dissolution, the defendant No. 1 became the sole proprietor of the business and its assets including the machinery in dispute. Issue No. 4.‑In view of my finding does not arise. Issue No. 5.‑The hire amount received by the plaintiff was in fact profits paid to him on the additional investment made in the shape of machinery purchased for the firm. Issue No. 6.‑(I) The plaintiff was in charge and control of the accounts. (2) Has no material effect on the decision of the case. Issue No. 7.‑The sum of rupees one lac five thousand was paid to the plaintiff in full and final satisfaction of his claim including for the machinery in dispute. Issue No. 8.‑Does not arise. Issue No. 9.‑The plaintiff is not entitled to any claim.

20. In the result, I would dismiss the plaintiff's suit with costs. K. B. A. Suit dismissed.