P L D 1957 (W (PLP)

LARI, J.

Plaintiff Abdul Hakim filed this suit against Abdul Majid defendant No. 1 for dissolution of partnership and rendition of accounts with the allegations that the parties entered into a partnetship business by means of a deed dated 13th August 1949, for carrying on the business of running a restaurant under the name and style of ' Okhla Cafe ' at Mohatta House, Bunder Road, Karachi having equal shares in the capital i.e., Rs. 30,000 and in profit and loss, that the defendant No. 1 committed breach of the terms of partnership and ultimately excluded him from partnership business some time about middle of February 1.950, that the partnership being a partnership-at-will he served one month's notice of determination of partnership on 1st March 1950. Defendant No. 1 Abdul Majid filed a written statement in which he admitted that the parties had entered into a partnership, as alleged, on 13th August 1949, but asserted that subsequently the plaintiff wanted to sell away his share in the partnership and accordingly reached an agreement with one Ahmad Ali Khan on or about 22nd January 1950, and to whom he sold his share for an agreed price of Rs. 20,000 and that the plaintiff had asked the defendant Abdul Majid to take Ahmad Ali Khan as a partner and that as a result of the above the plaintiff ceased to be partner. Subsequently an application was made by Ahmad Ali Khan that he be made a party. This application was allowed by Agha, J., and Ahmad Ali Khan was made defendant No.

2. Sometime after Ahmad Ali Khan died. Mubarak Ali Khan came up as an heir of Ahmad Ali Khan and wanted to be impleaded as a defendant in place of Ahmad Ali Khan. This Court ordered that Mubarzk Ali Khan be made a party without determining whether he was an heir to Ahmad Ali Khan or not. Mubarak Ali Khan filed a written statement to the same effect that Abdul Hakim had sold his share in the partner ship to Ahmad Ali Khan anti yeas not gntjtled to the relief Claimed by him, The following issues were framed :- "(1) Were the terms of the partnership deed not observed in actual working of the business with the consent of the plaintiff ? (2) Was the plaintiff maintaining the accounts ? (3) Did the defendant contravene the terms of the partnership and was guilty of gross misconduct, etc., and excluded the plaintiff from business as alleged in paras. 3 and 4 of the plaint ? (4) Did the plaintiff agree to sell his share in the partner ship business to the defendant No. 2 whereby the defendant No. 2 entered into joint possession of the shop and business with defendant No. 1 (para. 6 of the defendant 1's written statement). (5) (i) Is Mubarak Ali (defendant No. 2) a legal representative of Ahmad Ali Khan ? (ii) Was the interest, if any, of Ahmad Ali Khan in Okhla Cafe validly assigned to Mubarak Ali Khan (defend ant No. 2) ? (iii) Has Mubarak Ali Khan (defendant No. 2) entered into partnership with defendant No. l in the business of Okhla Cafe ? (iv) If (i), (li) and (iii) are proved in the affirmative what is the effect of the same ? (v) Is it necessary in this suit to decide issue No. 5 (i) to (i0 ? (6) Is the plaintiff estopped from filing the suit ? (7) To what relief if any is the plaintiff entitled in this suit ?" The issues have not been happily framed and at this stage the following points arise for determination :- "(1) Whether Abdul Hakim transferred his share in the partnership to Ahmad Ali Khan so as to cease to be a partner in the partnership business. (2) If the reply to the above be in the negative whether the partnership was dissolved by a notice dated 1st March 1950. (3) If not, whether the plaintiff is entitled to dissolution." The plaintiff examined himself, S. M. Sadiq P. W. 1 and Mujtaba Khan P. W.

3. The plaintiff also tendered certain documents in evidence which will be taken note of at their proper place. Mr. S. M. Sadiq is an advocate of the Court. He denied that he drafted any notice for dissolution. He further stated that he had been told that a notice for dissolution had been served. The plaintiff stated that he entered into an agreement for sale of his share with Ahmad Ali Khan for Rs. 20,000 by means of an agreement dated 30th January 1950, Exh. 14/9. This agreement recited that Rs. 5,000 had been paid as earnest money and the remaining Rs.15,000 would be paid by 28th February 1950. Out of Rs. 15,000, Rs. 4,000 were to be kept as 'Amanat' with Agha Muhammad Ashraf and were to be paid on the clearance of sales-tax, income-tax and the rent of the cafe. In case Ahmad Ali Khan failed to pay the amount by 28th February 1950, the earnest money of Rs. 5,000 shall be forfeited and' Ahmad Ali Khan will have no right in the partnership business. The witness further stated that this amount of Rs. 15,000 was not paid and the agreement fell through. Defendant Abdul Majid, however, excluded him from partnership business. The plaintiff further deposed that he sent a notice of dissolution on 1st March 1950. He denied that Ahmad Ali Khan ever showed him any receipt showing that Rs. 11,000 and Rs. 4,000 had been deposited with Agha Muhammad Ashraf. Mujtaba Khan P. W. 3 was, originally employed as a Store Keeper in Okhla Cafe. He stated that Abdul Hakim had taken a notice for dissolution of partnership to Abdul Majid about three years ago. Abdul Majid got it read by him. He explained the notice to Abdul Majid who asked him to sign receipt of the notice. He accordingly recorded a receipt and handed over the same to Abdul Hakim. The witness admitted in cross-examination that Abdul Majid had dispensed with his services in the first week of April 1950. The defendant examined himself, Zikrur Rahman D. W. 1, Ali Muhammad D. W. 3, Shamshad Hussain D. W. 4 and Agha Muhammad Ashraf D. W. 5, Abdul Majid deposed that the plaintiff to him that he wanted to sell his share and put up a dividing wall in the cafe so as to partition his share in the premises physically. He replied that he should either sell off the entire concern or sell it to somebody with whom he could carry on. On 21st January 1950, the bargain between Abdul Hakim and Ahmad Ali Khan was struck. Both Abdul Hakim and Ahmad Ali Khan enquired from him as to whether he would carry on the business in partnership with Ahmad Ali Khan and he had agreed. Ahmad Ali Khan began to work in the hotel from 22nd January 1950. Ahmad Ali Khan was ready and willing to pay the remaining Rs. 15,000 to the plaintiff. The defendant alleged that after 21st January 1950, the partnership business in the cafe was carried on in partner ship between him and Ahmad Ali Khan. The defendant admitted in cross-examination that he had no writing to show that the plaintiff had asked him to take Ahmad Ali Khan into partnership in his place. He further admitted that the plaintiff had seated Ahmad Ali Khan in the cafe 3 days before the striking of the bargain to enable him to ascertain the real position in the cafe, Mr. Zikrur Rehman an Additional City Magistrate, Karachi stated that in January 1950, Abdul Hakim told him that he had agreed to sell his share in Okhla Cafe to one Ahmad Ali Khan for Rs. 20,000 and that he had received Rs. 5,000 as advance and he further told him that he had given possession to Ahmad Ali Khan. The witness also stated that in March 1950, the plaintiff told him that as the taxes and dues had not been verified the balance of the consideration had not been paid to him. He happened to meet Agha Muhammad Ashraf who told him that the balance of consideration had been paid to him and this could be given to the plaintiff after dues payable by the plaintiff in regard to the partnership had been determined. He proved certain documents to show that the plaintiff had approached him and Agha Muhammad Ashraf in connection with the dispute with Ahmad Ali Khan. The witness admitted in cross-examination that he had not made any note of the. conversation between him and the plaintiff and was depending on his memory for his statement. Ali Muhammad D. W. 3 is a Nazir of the Court. His statement is to the effect that when he went to the cafe on 22nd April 1950, he found Ahmad Ali Khan working at the counter of the cafe. Shamshad Hussain D. W. 4 deposed that the matter of purchase was settled between the plaintiff and Ahmad Ali Khan on 21st January 1950, at about midnight and that Ahmad Ali Khan began to sit in the cafe from the morning of 22nd as a partner. The witness stated in cross examination that Abdul Majid used to live in the same Mohallah and they have been play-mates and that he had borrowed from the Refugee Rehabilitation Finance Corporation a sum of Rs. 5,000 and Abdul Majid had stood as a surety. Agha Muhammad Ashraf D. W. 5 stated that both Abdul Hakim and Ahmad Ali Khan had told him that Abdul Hakim's share in Okhla Cafe was to be purchased by Ahmad Ali Khan and that Ahmad Ali Khan had given earnest money to Abdul Hakim towards the price of the share. He further deposed that Ahmad Ali Khan had deposited with him two cheques for Rs. 11,000 and Rs. 4,000 on the understanding that the same would be handed over to Abdul Hakim after amounts payable as taxes, etc., by the plaintiff had been determined. The witness further stated that possession of Okhla Cafe had been handed over to Ahmad Ali Khan by Abdul Hakim even before the 27th February 1950. Point No. 1.-Whether Abdul Hakim transferred his share in the partnership to Ahmad Ali Khan so as to cease to be a partner in the partnership -business. There is only one document dealing with the point in issue but this is decisive in its nature. The document may be reproduced in full. It is as under :- "I Abdul Hakim, son of Haji Abdul Qadir, resident of Karachi, hereby acknowledge receipt of Rs. 5,000 (rupees five thousand only) by cheque No. KB452902 dated 30th January 1950, on Habib Bank Ltd., Bunder Road. Karachi from Mr. Ahmedalikhan, son of Muhammad Anwar Khan, resident of Karachi as earnest money for the sale of my share Rs. 20,000 in partnership business in "Okhla Cafe" situated on Bunder Road, Karachi. The purchaser will have all rights of goodwill and running concern in the business on payment of Rs. 15,000 which are in balance. Out of the remaining Rs. 15,000 the purchaser will deposit Rs, 4,000 with Agha Muhammad Ashraf and for which he will produce a receipt for the same. The balance of Rs. 11,000 he will pay me in cash. Rs. 4,000 which are kept as "Amanat" which Agha Muhammad Ashraf will be paid to me on the clearance of sales-tax, income-tax and the rent of the cafe of my share in the business. If the purchaser fails to pay the entire Rs. 20,000 by end of 28th February 1950, his earnest money of Rs. 5,000 will be forfeited and he will have no right in the business of partnership." The above document is obviously an agreement of sale. The rights in the partnership were to pass on payment of Rs. 15,000 by 28th February 1950. In case the payment was not made by 28th February 1950, the earnest money of Rs. 5,000 admitted to have been received by Abdul Hakim from Ahmad Ali Khan shall stand forfeited. Rs. 4,000 out of Rs. 15,000 were to be kept as 'Amanat' with Agha Muhammad Ashraf and this amount was to be paid to Abdul Hakim only after liabilities in respect of sales-tax, income-tax and rent of the cafe had been discharged by Abdul Hakim. Dispute, however arose between the parties before 28th February 1950. Ahmad Ali Khan sent a telegram through his counsel Zahir Alam to Abdul Hakim the plaintiff that the amount of Rs. 15,000 could be paid only if he cleared all the dues. The telegram assumed that Abdul Hakim had to pay dues exceeding Rs. 4,

000. The contents of this telegram were confirmed in a letter Exh. 14/7. The operative portion of the letter recited :- "You are therefore hereby informed that my above said client is willing to pay the amount of the balance of the sale consideration less the amount of Rs. 4,000 mentioned above within the date and time referred to above, i.e., 28th February 1950, subject to your clearing the dues and giving my client clear and marketable title." Abdul Hakim replied by a telegram Exh.14/5 that any amendment to original agreement was unacceptable. He followed this telegram by a letter Exh, 14/2. Therein it was stated on behalf of Abdul Hakim that unless the entire amount was paid by 28th February 1950, the contract would stand cancelled and the earnest money paid would be forfeited. I may note that date of the agreement is January but has been wrongly described in the telegram and the letter as 5th February. Ahmad Ali Khan did not pay the amount to the plaintiff but it is alleged that a cheque for Rs. 11,000 and also a cheque for Rs. 4,000 were deposited with Agha Muhammad Ashraf on or before 28th February 1950. Agha Muhammad Ashraf has been examined on behalf of the defendant and he has stated that the two cheques were deposited with him but admits that he did not give any written information about the deposit to the plaintiff. There seems to be no adequate reason to disbelieve Agha Muhammad Ashraf on the question of deposit. The deposit of the two cheques with Agha Muhammad Ashraf however is not a literal or even substantial compliance with the agreement between the parties incorporated in Exh. 14/9. It is however a matter of admission that no actual transfer of the share of Abdul Hakim in favour of Ahmad Ali Khan did take place on or after 28th February 1950, it being conceded that the Exh. 14/9 does not amount to a transfer but is only an agreement to sell. The interest of a partner in a partnership concern is property and can only be assigned under section 130 of the Transfer of Property Act. The said section provides that transfer of an actionable claim whether with or without/ consideration shall be effected only by the execution of an instrument in writing signed by the transferor or his duly authorised agent, and shall be complete and effectual upon the execution of such instrument. In this case no assignment deed was executed and consequently the proposed transfer by Abdul Hakim never became effective. This conclusion of mine is supported by a decision in case Mulchand Tagiomal ,and another v. Shamdas Jethanand and others (I L R 1944 Kar. 21) and also by decision of Calcutta High Court in case Dharam Chand Boid and another v. Mouji Shahy and others (16 I C 440). Mr. A. S. Farooqee appearing for the defendant conceded that in this case there was no completed sale but argued that the plaintiff retired from the partnership and relinquished his interest in the partnership by calling upon Abdul Majid to take Ahmad Ali Khan into partnership with effect from 22nd January 1950. Only this much is established from oral evidence that Ahmad Ali Kuari began to sit at the cafe with effect from 22nd January 1950. Mere permission to Ahmad Ali Khan to sit at the counter would not amount to a relinquishment particularly when it is admitted by Abdul Majid in his statement that the plaintiff (Abdul Hakim) had seated Ahmad Ali Khan in the cafe three days before the striking of the bargain to enable him to ascertain the real position in the cafe. The witness further stated that partner ship between him and Abdul Hakim came to be dissolved on 21st January 1950. It could not be so. The agreement of sale is itself dated 30th January 1950, and the earnest money was also paid by means of a cheque bearing the same date. It is incredible that even before payment of earnest money and execution of agreement of sale Abdul Hakim would be fool enough to agree to dissolution of partnership between him and Abdul Majid. The contents of Exh. 14/9 belie this assertion of Abdul Majid. It clearly stated that purchaser (Ahmad Ali Khan) will have all rights of goodwill and running concern in the business on payment of Rs. 15,

000. This could not be inserted in the agreement if Abdul Majid had already been asked to take over Ahmad Ali Khan into partnership with him in place of the plaintiff. Apparently what happened was that Ahmad Ali Khan was allowed to sit at the counter to ascertain the real position and keep a watch over the working of the concern till the transfer in his favour was completed. As a matter of law also right and interest of Abdul Hakim in the partnership could not pass to Ahmad Ali Khan merely by admission or relinquishment. It is well, settled that where statute requires a deed of transfer title cannot pass merely by admission or relinquishment. On careful examination of the evidence and documents in the case I have come to the conclusion that no actual assign ment of the share of the plaintiff in the partnership in favour of Ahmad Ali Khan came into existence. Abdul Hakim and Ahmad Ali Khan entered into an agreement to transfer the share but owing to disputes that arose between the parties before 28th February 1950, the transaction did not come through and necessary assignment deed did not come into existence. The effect was that Abdul Hakim continued to be partner as before. It is not necessary to decide whether deceased Ahmad Ali Khan was entitled to specific per formance of the contract entered into between Abdul Hakim and Ahmad Ali Khan because this question is not before me. Point No. 2.-If the reply to the above be in the negative whether the partnership was dissolved by a notice dated 1st March 1950. The evidence on this point consists of statement of Abdul Hakim and Mujtaba Khan P. Ws. 2 and

3. Obviously Mujtaba Khan is telling a lie because his services had been dispensed with by Abdul Majid. The statement of Abdul Hakim is belied by the statement of his own witness Mr. S. M. Sadiq P. W.

1. The defendant denied that any notice for dissolution dated 1st March 1950, was served on him. The issue is decided accordingly. Point No 3.-If not, whether the plaintiff is entitled to dis solution. The partnership in question was a partnership at will and consequently the plaintiff is entitled to get it dissolved any day. The plaint in this case operates as a notice for dissolution. The partnership therefore came to be dissolved on 21st May 1950, a month after the filing of the plaint. The issue is decided accordingly. In view of my findings on the points mentioned above it is necessary that a preliminary decree within the meaning of Order XX, rule 15, Civil P. C., be passed. It is admitted that the share of the parties, namely, Abdul Hakim and Abdul Majid was half and half. I have found that the partnership came to be dissolved on 21st May 1950. I direct that account of partnership be taken by the Official Receiver in accordance with law. I may note for the guidance of the Official Receiver that it is a matter of admission that all the account books are with Abdul Majid and so are the proceeds and capital of the partnership. Let a preliminary decree be prepared in terms of Order XX, rule 15, Civil P. C. The cost shall abide the result. Mubarak All Khan has nothing to do with the partnership in question. He shall bear his own cost. A. H. Partnership dissolved.