2001 Karachi 105 (PLP)

(2) Whether the plaintiff was admitted as a partner in the business of goods transport New Al-Tahir Goods Transport, Mauripur Road, Karachi? (3) Whether the partnership was dissolved in the month of August, 1982? (4) Whether the partnership business is liable to be dissolution and its assets to be distributed? (5) What should the decree be? The trial Court recorded the evidence of mother of the plaintiff/respondent No.1, Mst. Nurgis Perveen, Maqbool Ahmed Bhatti (defendant No.1/applicant) and Tahir Bhatti (respondent No.2/defendant No.2) and decided the suit and passed a preliminary decree under Order 20, Rule 15, C.P.C. By the aforesaid decree the trial Court directed the applicant and respondent No.2 to produce the accounts of all deals and transactions of the partnership or to furnish statement and particulars relating to the partnership business of M/s. Al-Tahir Goods and Transport Company, within one month and appointed the Nazir as Receiver to examine the said accounts. In pursuance of the above directions of the trial Court, the applicant/defendant No.1 filed a statement in the Court, submitting therein that the entire record of the partnership firm was in possession of respondent/defendant No.2 and he had no concern with the management or accounts thereof and it was not possible for him to submit any statement of account. The respondent/defendant No.2 also submitted a statement, wherein he stated that all the books of accounts except one note book, were with the applicant/defendant No.1 containing the admission/statement trade by applicant/defendant No.1 and according to which the receipt of the share of the aforesaid three parties, were mentioned in detail. The applicant/defendant No.1 filed objections to the statement of accounts, filed by respondent/defendant No.2. Subsequently respondent/defendant No.2 submitted a statement in Court, agreeing to passing of a final decree to the extent of his independent liability amounting to Rs.97,274.50. A note of no objection was endorsed on this statement by the advocate for the plaintiff, the exact words of which are as under:-- "I have no objection if the abovesaid statement of defendant No is trade the rule of Court." The above endorsement is actually incorrect, inasmuch as, the statement referred to therein, was trade by defendant No.2 and not by defendant No.

1. The trial Court on the basis of the above statement passed the final decree, holding both applicant/defendant No.1 and respondent/defendant No.2 to be severally liable for the sum of Rs.97,274.50 and ordered distribution of the share in accordance with the final decree. Feeling aggrieved and dissatisfied with the above judgment and decree of the trial Court, the applicant/defendant No.1 preferred an appeal, which was disposed of by V-Additional District Judge, Karachi South by its judgment dated 15-9-1994, dismissing the appeal and upholding the judgment and decree of the trial Court. The applicant/defendant No.1 not feeling satisfied with the aforesaid judgment and decree of the Appellate Court, has filed the above Revision Application. I have heard and considered the arguments advanced by the learned counsel for the parties and have also perused the material on record. The learned counsel for the applicant submitted that the two Courts below in deciding the suit as against the applicant/defendant No.2 have committed serious and grave illegalities as a result of which their respective judgments and decrees have been rendered illegal and liable to be set aside. The first illegality said to be committed by both the Courts below, is with regard to the non-fulfilment of the directions made in the preliminary decree. According to the preliminary decree the parties/party concerned were required to file statement of accounts of the partnership business and, thereafter the same was to be examined and verified by the Nazir, who was appointed receiver to examine the accounts of the aforesaid firm. The statement of accounts submitted by respondent/defendant No.2 was neither examined nor verified by the Nazir in his capacity as the Receiver. The Court instead of taking into consideration the correctness and veracity of the statement of accounts, filed by respondent/defendant No.2, completely ignored the same and proceeded to pass a final decree on the basis of a statement made by respondent No.2/defendant No.2, to the effect that he was independently liable to make payment of a sum of Rs.97,274.50 to respondent No.1/plaintiff. The trial Court relied on this statement alleged to be containing an admission by respondent/defendant No.1 for decreeing the suit against the applicant/defendant No.2 as well on the basis of the enunciation trade in the case of Bhika Mal and others v. Piram Mal and others reported in AIR 1923 Lahore 123, to the effect that an admission made by some defendants, who have joint interest with co-defendants or other defendants in the subject-matter in respect of which the admission is trade is binding on all other defendants. However, the trial Court before relying on the aforesaid admission and the enunciation, said to have been trade in the aforesaid case, did not proceed -to examine as to whether the said statement/admission was genuine, valid and could be legally acted upon so as to bind a co-defendant, i.e. the applicant/defendant No.1. The trial Court also did not bother to satisfy itself with regard to the validity,, legality and correctness of the said statement/admission and to find out as to on what basis respondent/defendant No.2 admitted himself to be liable to the extent of Rs.97,274.50 to respondent No.1/plaintiff. The two Courts below also failed to consider and overlooked the fact that respondents Nos.1 and 2 are brothers inter se and that the possibility of respondent/defendant No.2 filing a false, frivolous and illusive statement/admission of his liability to the tune of Rs.97,274.50 with a view to cause illegal and fraudulent gain to his real The learned counsel for applicant/respondent No.1 further submitted that apart from very serious and grave irregularities, enumerated above, both the Courts below have committed another illegality and violated the provisions of law, i.e. Rule 15 of Order 20, C.P.C. It was submitted that once a preliminary decree is passed, the Court has to proceed in accordance with the provisions of Rule 15, C.P.C. and the trial Court was under an obligation to take accounts either itself or through a Commissioner appointed for this purpose, which in this case was the Nazir of the Court but. no accounts were taken by him. It has been. submitted on behalf of the respondent that the final decree, passed by the trial Court, was not liable to be appealed against, inasmuch as, the applicant/defendant No.1 did not file any appeal against the preliminary decree and accepted the same. The contention is without any force, in view of the arguments made by the learned counsel for the applicant/defendant No.1 that the preliminary decree was passed in accordance with the provisions of Rule 15 of Order 20, C.P.C. and the order neither suffered from any illegality or irregularity nor offended or adversely effected the interest of the applicant/defendant No.1 which would have required the applicant/defendant No.1 to file an appeal, but the trial Court committed grave illegality in passing the final decree against the applicant/defendant No.1 in ignoring its directions and findings made in the preliminary decree and basing the final decree on an alleged admission, without taking steps to ascertain the validity, legality and correctness of such admission as against applicant/defendant No.

1. The trial Court could pass a judgment on the basis of the admission of liability made by respondent/defendant No. 2 but could not hold the applicant/defendant No.1 liable to the extent of the amount admitted by respondent/defendant No.2 to be due by him to the plaintiff/respondent No.1 and to decree the suit against the applicant/defendant No.

1. The finding of the trial Court to this effect confirmed by the Appellate Court is not sustainable. The pronouncement made in the cited case is of no help to the respondents as the facts of the cited case were absolutely different and the same is not applicable to the facts of this case inasmuch as the question to be determined in the cited case, whether the admission of a claim made by a partner against the firm would bind all other partners and the question was decided in the affirmative. In the present case, respondent/defendant No.2 admitted liability in favour of respondent No.1 on his behalf and not on behalf of the firm. Another point which has been raised on behalf of the applicant/defendant No.1 is that both the Courts below did not give a proper and valid finding with regard to the maintainability of the suit on the ground that the same was barred by the provisions of the Arbitration Act as the Partnership Deed provided for reference to arbitration of any dispute arising out or touching any matter relating to the partnership business. In this connection the learned counsel for the applicant/respondent No.1 placed reliance on section 32 of the Arbitration Act and submitted that the jurisdiction of the Civil Courts to entertain a suit with regard to any dispute or issue arising out of or relating to any matter pertaining to the business of a partnership, wherein the parties had agreed to refer the same to arbitration, is completely barred and that if the trial Court was of the view that the suit filed by respondent No.1/plaintiff was not liable to be dismissed outright then it should have stayed the same and should have directed the parties to take their dispute to arbitration. He placed reliance on the case of Abdul Karim v. Haji Ilyas and others reported in 1986 CLC 1660, in support of his contention that it is open to the defendant to ask the Court for stay of the suit and pray for direction that the party filing the suit be ordered to go to the arbitration. From perusal of the record it transpires that initially the applicant/defendant No.1 as well as respondent No.2 did raise objections to the maintainability of the above suit but thereafter, they participated in the proceedings before the trial Court filing the written statement, settling issues and allowing the trial Court to pass a preliminary decree, therefore, it would be deemed that they had waived their right to have recourse to arbitration proceedings and would not now have the right to raise such objection and ask for stay of the suit. The learned counsel for the respondent/defendant No.2 in support of his contention referred me to the case of Mubarik Cotton Factory v. M/s. General Agencies, Multan, reported in PLD 1980 BJ

1. From the above discussion and perusal of the material on record, have come to the conclusion that both the Courts below have committed grave and serious illegalities and irregularities in arriving at their respective findings as against the applicant/defendant No.1. Both the Courts below had not adhered to the provisions of law and had relied upon the material/evidence without entertaining an enquiry as to the validity, legality and correctness thereof and the fact whether the same could be admitted and relied upon for the purpose of decreeing the suit against the applicant/defendant No.

1. The statement/admission submitted by the respondent No.2/defendant No.2 could only be used against him and not against the applicant/defendant No.1 for holding him liable to make payment of the amount of Rs.97,274.50 to respondent No.1/plaintiff. The respondent No.1/plaintiff failed to lead any evidence before the trial Court to hold the applicant/defendant No.1 liable for making any payment to him out of his share of profits earned from the partnership. The judgments of the Courts below cannot be said to be proper, valid and cannot be sustained. Accordingly, I allow this Revision Application and modify the judgment of the Courts below to the effect that the suit stands decreed as against respondent No.2/defendant No.2 on the basis of his admission of his liability to the tune of Rs.97,240.50. The suit against the applicant/ defendant No.1 stands dismissed. The parties are left to bear their respective costs. Q. M. H./M-115/K Revision allowed.