P L D 1955 Lahore 350 (PLP)

KAIKAUS, J.--‑This appeal arises out of a suit for dissolu tion of partnership and rendition of accounts. There are four‑ plaintiffs in the suit, plaintiffs Nos. 1 and 2 being minor sons of one Ahmad Ali, through whom they sue. The defen dants too are four in number, defendant No. 1 being one Barkat Ullah, defendants Nos. 2 and 3 his two brothers and defendant No. 4 his m or son. The allegations in the plaint are that in April 1950 the plaintiffs and defendants entered into a partnership for running an ice‑cream factory, that in 1950 and 1951 they ran it together, that accounts were to be maintained by defendant No. 1 who was to control the business, that no accounts had been rendered and that since December 1951 the plaintiffs had been excluded from the business. The share of the plaintiffs in the partnership business was alleged to be one‑half and that of the defendants one‑half. It was claimed that the partnership had come to an end and that the plaintiffs were entitled to the amount which may be found due to them on the taking of accounts. Only defendant No. 1 contested the suit. Defendants Nos. 2 and 3 remained absent in spite of service. On behalf of defendant No. 4 a Court guardian put in a formal written statement pleading ignorance of the facts stated in the plaint. Defendant No. 1 stated that it was he who had provided the capital and that he and defendants Nos. 2 and 3 had agreed to pay one‑fourth share of the profits to the plaintiffs, that the plaintiffs had through Ahmad Ali, father of plaintiffs Nos. 1 and 2, worked the factory in 1950 and 1951 but had closed it without rendering any account. They, he stated, were the accounting party. He did not admit that defendant No. 4 had any share in the partnership. He pleaded too that plaintiffs Nos. 1 and 2 had no locus standi to file the suit. The written statement of defendant No. 1 was interpreted as an admission of the existence of the partnership and the following four issues were framed :‑ (1) Was the share of the plaintiffs one‑half in the partner ship in dispute ? (2) Are the defendants the accounting party ? (3) Cannot plaintiffs Nos. 1 and 2 file this suit ? (4) Relief. Later defendant No. 1 put in two applications alleging that he had not admitted any partnership. In the first applica tion he prayed for the framing of two more issues, the first as to whether in fact there was any partnership in existence and the second as to whether plaintiffs Nos. 1 and 2 could legally be partners. In the second application he prayed for permission to amend his written statement so as to clarify that in fact he did not admit the partnership. These two applica tions were rejected. The trial Court decreed the suit. It found on issue No. 1 that the plaintiffs' share was one‑half. As regards issue No. 2 it stated that a finding would be given after the report of a local commissioner who had been appointed to examine the accounts. Issue No. 3 was decided in favour of the plaintiffs. The share of the plaintiffs was declared to be one half but nothing was said about the share of defendant No. 4 or whether he was a partner at all. On appeal by the defendants, the learned Additional District judge armed the findings of the trial Court. With respect to the application for framing of issues he agreed that on the written statement of defendant No. 1 the issues did not arise. With respect to the application for amendment he said it was delayed having been put in about a year after the written 51atement was filed. The attention of the learned judge was drawn towards the fact that defendant No. 4 had not, in his written statement, admitted the partnership and it was urged that for this reason too an issue as to partnership was necessary. As a reply to this argument, the learned Additional District judge pointed out that the written state ment of the minor defendant stated only that the minor was ignorant of the facts and held that a plea of ignorance did not amount to denial and, therefore, on the pleading of defendant No. 4 also no issue as to the existence of partnership arose. On issue No. 3 the learned judge held :‑ (1) That on account of the admission in the written statement, plaintiffs Nos. 1 and 2 were actually partners, therefore, entitled to sue ; (2) even if they were not partners, they were entitled to the benefits of the partnership and could sue under section 30 (4) of the Partnership Act. (3) that even if section 30 did not apply, the suit could be allowed to be maintained on grounds of equity, justice and good conscience. Before I proceed to deal with the point that is material, namely, the existence of the partnership, I will make a short reference to the grounds which the learned Additional District Judge advanced for rejecting the argument of learned counsel for the defendants that an issue as to partnership arose even on the pleading of the minor defendant. The learned Additional District judge had said that a simple pleading of ignorance of the facts stated in the plaint did not amount to a denial of those facts. Technically the learned judge was correct. But his observation implies that a Court guardian can very well be allowed by the Court to make an admission of facts though the admission may be against the interests of the minor. Let me state that truly it is the Court that is the guardian of the minor and it is the duty of the Court to protect the minor's interest. The Court will not allow a Court guardian merely on account of ignorance to confess to facts that may harm the minor. If a Court guardian puts in a written statement pleading mere ignorance, and the Court is of the opinion that the pleading amounts to admission of such facts as would prejudice the minor, it is the duty of the Court to point out to the guardian the effect of his pleading. If the guardian still persists in putting in the same written statement it would be the duty of the Court to remove him and to appoint another guardian. The Court will never allow a minor to be prejudiced by a legally defective written state ment. I do not mean that a guardian adlitem cannot admit any facts when filing a written statement on behalf of the minor. If after a careful enquiry, the guardian is convinced of the truth of the plaintiffs case, he is entitled to admit it, for he is not to make untrue statements. But a guardian who makes no enquiry and says in the written statement that he knows nothing of the facts cannot simply by a legal defect in the form of pleading be allowed to prejudice the minor.) The guardian never intended to admit any facts in the present case and it is just a technical plea that the form of the pleading is one which does not amount to a denial. I do not think this was the view of the learned trial judge about the pleading of the minor else I would expect him to take suitable action in the matter to protect the interests of the minor. The learned Additional District Judge should either not have taken such a technical view of the pleading having regard to the fact that the pleading was by a Court guardian of a minor or he should have interfered even B at the appellate stage and should have removed the guardian and directed the filing of a new written statement. I now come to the real point of dispute. It has been urged before me that there could be no partnership with the minor and that the present suit should be dismissed simply on this ground. The Courts below relied upon the fact that defendant No. 1 had in his written statement admitted the partnership and, therefore, refused to frame an issue with respect to whether there could be a partnership with the minor plaintiffs. I do not feel the need of going into the question whether the interpretation of the written statement of the defendant was correct. He had in paragraph No. 3 of his written statement, as translated by the learned Additional District judge, said that the plaintiffs had been co‑opted as karkuns and were to be entitled to 1/4th share in the profits. A mere promise of a share of profits in lieu of work does not necessarily involve partnership as it does not entail responsibility for loss, but the learned Additional District judge has pointed out some further passages in the written statement and reading as a whole he reached the conclusion that the admission was there. I would, under these circumstances, refrain from recording a finding as to the correctness of the interpretation as such finding is not necessary for the decision of the appeal. As regards the objection that plaintiffs Nos. 1 and 2 could not be partners at all, there was no need of an issue. The matter in so far as it is a pure question of law could be raised even at the time of arguments. It is always open to a defen dant to argue that accepting the plaint as correct no cause of action is disclosed or no case for relief is made out. The lower Courts have in fact dealt with this point though only under issue No.

3. On the plaint it is obvious that there can be no legal partnership in existence. Partnership is an agreement and an agreement with a minor is void. No doubt under section 30 of the Partnership Act a minor can be admitted to the benefits of partnership, but in order that section 30 may apply there should, as was held in Muhammad Rafzq v. Qamar Din (A I R 1922 Lah. 441) and Devi Ditta Mal v. Firm Thau Mal‑Parja Ram (142 I C 203) be a partnership already in existence and cases where a minor became a partner from the very inception of partnership are beyond the scope of section

30. The cases cited above are Division Bench judgments of our own Court and are binding upon me. The present is not a case where there was a partnership already in existence. The allegations are that a partnership came into existence between the plaintiffs and the defendants. The learned judge of the trial Court stated in his judgment that there was no bar to a minor becoming a partner through a guardian. The proper approach is not to search for a bar but to demand authority which a person, called guardian, has, to bind by his act another who is a minor. There is no statute providing any such authority. Muhammadan Law, which by virtue of section 2 of the Punjab Muslim Personal Law (Shariat) Application Act, governs matters relating to guardianship makes no provision for a guardian binding a minor by a contract. It only allows an alienation of the property of the minor by guardian under certain circumstances. The learned Additional District judge did not rely on this argument, but held that in the cases cited for the defen dants it was the minor who was pleading non‑existence of a valid partnership and that those cases did not apply where it was the minor to whom it was sought to be deprived of his share of the profits. This line of reasoning places void agree ments and voidable contracts‑on the same footing. There are cases where one party alone has an option to avoid a contract. In such cases, the defect in the contract can be taken advantage of only by one party. But an agreement that is void has no existence in the eye of law. An agreement with a minoris void and even the minor can base no claim upon it. may also state that, according to the allegations in the plaint, defendant No. 4 who too is a minor became a partner of this firm at the time when it was originally formed. In any case the fact that any minor was a party would prevent a valid partnership from coming into existence. As no valid partnership came into existence, the basis of the claim for dissolution of accounts, as laid in the plaint, does not exist and if I were to regard the existence of partnership as the sole basis of the suit, the suit would have to be dismissed. I am of the opinion, however, that in the present case this finding does not end the matter. Parties have in fact been carrying on a partnership and have been making profits. The rights of partners in the assets and the profits of the business have to be adjusted on an equitable basis. A de facto partner ship, though it fails to produce the legal effects of a partner ship agreement, will all the same give rise to equitable rights. Assets and profits cannot be allowed to remain where they accidentally happen to be. Of course, if the object of the partnership was an illegal one, the Court may have refused to help either party but it is different where the de facto partnership is innocent though not clothed with legal incidents. I would, therefore, instead of dismissing the suit, remand this case to the trial Court for a fresh trial. The Court will now determine the relief to which the plaintiffs may be entitled on grounds of equity, justice and good conscience. The Court should allow an amendment of the plaint so as to include an alternative claim by the plaintiffs on the new bases. I may point out that in assessing the relief on these new bases, the Court will have to take into consideration :‑ (a) The agreement between the parties, i.e., the capital to be contributed, the service to be rendered, distribution of the profits and similar matters ; (b) the capital in fact furnished ; and (c) the services in fact rendered, which may be rendered either personally or by some person on behalf of a partner. If the parties in fact comply with their agreement, it may be that in a de facto partnership the Court ultimately dis tributes profits in the same proportions as it would have done if the partnership was valid in ‑law, for the agreement of parties may be a fair criterion for what is just and equitable but this may not be so in all cases and I should not in any way be regarded as prejudging the case. I accept the appeal, set aside the judgment and decree of the learned Additional District judge and remand the case to the trial Court for a fresh trial in the light of what is stated above. Costs of this appeal as well as in the lower Courts will be costs in the cause. A. H. Case remanded.