P L D 1960 Supreme Court (Pak (PLP)

CORNELIUS, J.-This appeal by special leave calls in question a decision of a Division Bench of the High Court of West Pakistan, dated the 13th July 1959, in a- petition for a writ filed by Mr. B. A. Sheikh against the Custodian and Deputy Custodian of Evacuee Property and the Rehabilitation Authority, Lahore, to remove and quash certain proceedings from the Court of the Deputy Custodian at Lahore which had been commenced upon an order made by the Custodian on the 3rd April 1954. The petition was filed on the 5th November 1956, some time after the date on which it became possible for the first time to move the High Court by a writ after the interval of non-availability of that power which resulted from the decision of the Federal Court in the case of Mould Tamizuddin Khan (P L D 1955 FC 240), delivered on the 1st April 1955. The question of, delay however is immaterial in the present case. The facts may be briefly stated. On the 21st of July 1947, i.e. about three weeks before the partition of the Sub-continent, Mr. B. A. Sheikh filed a suit against three individuals, Jawahar SinglyBikram Singh and iqbal Chand Puri and five firms, namely, Messrs Kalu Rant Moti Ram, Messrs Sant Singh Partab Singh, Messrs National State Dealers, Messrs Sid Krishan Talwar and Messrs lqbal Chand Puri & Company,for partnership and rendition df accounts on the basis of a partnership deed dated the 20th August 1943. The plaintiff stated that on the 20th August 1943, he had entered into partnership with Messrs Jawahar Singh, Bikram Singh and lqbal Chand Puri to carry on business in the name of the Development Corporation of India, Lahore, the business being dealings in food grains, sugar, gur shakar, firewood, coal "or any other commodity controlled by the Government after taking permits, grants, con tracts, agencies etc., from the authorities concerned at one place or more in India." Although the allegation was that prior to the partnership the plaintiff had been the sole owner of the Develop ment Corporation, India, yet, when the plaintiff entered into the new partnership, it was provided that the firm of Jawahar Singh Bikram Singh would finance the enterprises and "carry on the actual execution of permits, grants, contracts, agencies etc. Secured by the plaintiff for the partnership" while the plaintiff was expressly not to be called upon at any time to contribute towards the financing of the partnership, and he would have nothing to do with the actual execution of permits, grants, contracts, agencies etc. but his sole function would be to "facilitate the obtaining of permits, grants, contracts, agencies and other concessions". The y nnanciat owigation undertaken by the plaintiff was to share B. A. Sheikh equally with his partners the expense of keeping accounts. As to the profit or loss, it was stipulated that it would be divided so that Evacuee the plaintiff would take 50% and his three partners the remain- property ing 50%. There were a number of other stipulations regarding the working of the partnership agreement and it may conveniently be Cornelius, J mentioned here that the grounds advanced for seeking dissolution were that the other partners had never given nor furnished any accounts to the plaintiff and had never given him his share apart from which they had committed breaches of a number of agree ments which had been concluded between them as to the working of the arrangement. One such violation was that his three partners had introduced into the partnership the five firms whose names have been given above in the list of defendants. Upon this basis, the plaintiff sought to oblige these five firms to account for the transactions carried on by them at the instance of the partners, Jawahar Singh-Bikram Singh and Iqbal Chand 1'uri urging that although he had been "paid sundry sums off and on" yet there had been no full and fair settlement of account,, that in the plaintiff's belief the firm had made very large profits, that the books of account were with the other partners who had failed to respond to registered notices asking for the reports of the working of the firm and for details of its staff etc. and that there was still a con tinuing busine s carried on by his three partners as Clearing Agents for food-grains to the Punjab Government for which the plaintiff intended to demand accounts so long as it continued. He prayed that the partnership should be dissolved and he should be awarded a decree for the amount due to him on taking of accounts, together with interest, that the books of account o: the firm should be immediately taken into the custody of the Court and that the plaintiff should be "declared entitled to all the profits arising out of the Clearing Agency till it be finally terminated or cancelled by the Punjab Government". The plaint was supported by applica tions under Orders XXXVIII and XXXIX and section 151 of the Civil Procedure Code, upon which ad interim injunctions were issued to the defendants restraining them from withdrawing money held on their account by eight different banks in Lahore and from withdrawing security money amounting to about Rs. 19,000 deposited with the Director of Food Purchases Punjab and the Rationing Controller, Lahore, as well as other amounts held to their credit by five other Government Departments in Lahore. The Court also appointed an Advocate as a Commissioner to make an inventory of all the articles of furniture and assets of the firm Jawahar Singh-Bikram Singh and Iqbal Chand Puri and to take possession of all their account books. The paper-book contains a copy of an application by the defendants Jawahar Singh-Bikram Singh and Iqbal Chand Puri and Messrs Siri Krishan Talwar & Company protesting against these injunctions, which is dated the 25th July 1947. It appears that some time after that date, the defendants emigrated from Lahore and the case was continued against them ex parte. The partnership decd was proved before the Court and on the 13th January 1948, the Senior Sub-Judge, Lahore passed on ex-parte preliminary decree in favour of the plaintiff against defendants 1 to 3 dissolving the partnership and ordering that the plaintiff be given his "half share in the profit and after deducting the expenses incurred." A further order was made that the accounts of all the defendants, eight in number, should be gone into for this purpose, and a Lahore Advocate Mian Fazal Elahi was appointed as Local Commissioner for the purpose of taking accounts. The Local Commissioner having made his report, on the 24th March 1948, the Court made a brief order to the effect that the plaintiff was entitled to a decree on the basis of the report, and accordingly a decree was awarded to Mr. B. A. Sheikh in the sum of Rs. 9,85,000 as found due by the Local Commissioner, against all the defendants, with costs. On the 36th March 1948, Mr. B. A. Sheikh applied to the Custodian of Evacuee Property under section 13 (d) (ii) of the West Punjab Protection of Evacuee Property Act, 1948, preferring a claim for realisation of his decree for Rs. 9,85,000, as his share of the partnership profits, in addition to the costs, and he asked for recognition of his claim, and that action should be taken for its satisfaction out of a number of properties enumerated in paragraph 7 of the application. These included a locker in the National Bank of India, Lahore standing in the names of Jawahar Singh and Bikram Singh, considerable sums of money due to them from seven different Government Departments, lands, buildings, furniture etc. belonging to all the defendants in the Districts of Sheikhupura, Gujranwala and Lahore, a factory and workshop at Lahore, a rice and flour mill at Cbuhrkana and "any other property or monies, securities, bills, commission etc. whose parti culars and details may come to be known afterwards." This application coming before the Custodian on the 16th April 1948, an order was made to the following effect. Stating that the decree sheet showed that the petitioner was due a sum of Rs. 9,85,000 plus costs to the extent of Rs. 10,338-10-0, the order proceeded to say as follows : "There is no reason why this claim should not be admitted. I admit the claim under section 13 (d) (ii) of the Act." It further proceeds to state that the petitioner wished his claim to be realised from the movable and immovable properties belonging to ther espondents, and that it would be "convenient first to draw upon the movable." Detailed orders were then made regarding the contents of the locker mentioned above, which was to be opened and any cash found therein to be handed over to be peti tioner, and if any gold or ornaments were found they should be converted into money and the proceeds handed over to the petitioner. Two sums. of Rs. 50,000 and Rs. 66 362-4-6 which were due to Jawahar Singh and Bikram Singh from the Controller of Food Accounts West Punjab and the Railway Food Purchase Department at Lahore were ordered to be paid to the petitioner, in addition to any commission due to Jawahar Singh kram Singh by the Controller of Food Accounts. Next, Iqbal Chand Puri and the firm Messrs Iqbal Chand Puri & Company were entitled to Rs. 1,641-12-9 due to them from the Railway Food Purchase Department at Lahore, and this amount too was ordered to be paid to the petitioner. Lastly, an order was made that subject to any objection by the 'Hindustan Commercial Bank, Limited, or rupees one lac held by that Bank as security on behalf of Messrs Siri Krishan Talwar & Company should be handed over to the petitioner "whose claim had been admitted against respondent No. 7 also. It appears that this order was carried out although not in full Cornelius, J for in the subsequent order of Mr. A. M. Jan, Custodian, dated the 3rd April 1954, it is stated that the petitioner had appeared before the Custodian and had said that the monies directed to be paid to him had not been,Jully realised. This order also says that in January 1954, when Mr. Jan took over charge as Custodian and found that evidence was being recorded in respect of the some of the debts, the Custodian "considered it necessary to call upon the petitioner to show that the decree on which his claim was based was passed by a competent Court." The Custodian (Mr. A. M. Jan) in a careful order, citing the provisions of the relevant Act, namely, the West Punjab Protection of Evacuee Property Act, 1948, and certain Rules said that the decrees obtained from the Civil Courts by the petitioner were of no effect against the exclusive jurisdiction of the Custodian to decide on any matter affecting the property in the case. Section 11 of that Act barred the jurisdiction of the Civil Courts in respect of claims involving the question "whether any property is or is not evacuee property or as to what interest, if any, an evacuce has in such property" with a single exception, namely, a case in which the Custodian in whom exclusive jurisdiction was vested to decide on such questions, had himself referred a claimant to a Civil Court under section 17 of the Act for the establishment of his title. It was also provided by section 11 that no decision of a Court in respect of any such question delivered between the 15th August 1947 and the 19th February 1948, should be binding on the Custo dian or affect the rights or interests of any evacuee in the property left by him. The Custodian then went on to observe that "a suit for dissolution of partnership and rendition of accounts does involve questions of the parties' rights in partnership property" and that "right to the proceeds of a business is property within the meaning of law." He proceeded to deal with the contention that what was ordered by the previous Custodian on the 16th April 1948, to be given to the plaintiff petitioner was not evacuee property but only property which belonged to the petitioner himself, and that the execution of the decree did not diminish the evacuee property at all. To this the Custodian Mr. A. M. Jan made the reply that the property which had been ordered to be handed over to Mr. B. A. Sheikh "was held in the name of the respondents and as such was evacuee property." He then proceeded to observe that the preliminary decree of the Civil Court gave a half share of the partnership property to the petitioner, and the partnership business which was dissolved etc. was "property in which the evacuees were interested and it was therefore evacuee property." Referring to section 8 of the Act of 1948, the Custodian, Mr. A. M. Jan, observed that it had the effect of barring the jurisdiction of the Civil Courts "to declare that any portion of the property belonged to a non-evacuee." There had been no motion by the petitioner before the Custodian for the declaration that he was owner of half of the partnership property nor had B. A. Sheikh the Custodian made any enquiry as to such a claim, as provided by section 8 aforesaid. Referring to a rule in the Evacuee Property Rules, 1950 laYing down that no payment shall be made by the Custodian unless he is satisfied about the validity of the claim, the Custodian, Mr. A. M. Jan, declared that he was not satisfied about the validity of Mr. B. A. Sheikh's claim, and acting under powers conferred upon him by the law, he directed the petitioner to' produce evidence before the Deputy Custodian in, support of his claim. The Deputy Custodian was asked to "adjudicate upon the claim as regards partnership in the above mentioned business and the amount, if any, to which the petitioner is entitled as his share of the profits in the business." It was against this order that Mr. B. A. Sheikh filed his petition for a writ before the High Court, and the principal ground taken in the petition was that the order which had the effect of reviewing the previous order of the Custodian after the lapse of six years was illegal, ultra vines and without jurisdiction for three reasons, namely, that under the Pakistan (Administration of Evacuee Property) Ordinance XV of 1949, the Custodian was competent to review only his own order and could not review the order of his predecessor, secondly, the Custodian could not review such an order suo motu and thirdly, the Custodian could not review the order after the lapse of the prescribed period of limitation. Later, another ground was added, namely, that at the time when the first Custodian made his order of the 16th April 1948, an "actionable claim" did not fall within the definition of the term property" and therefore was not evacuee property. The Division Bench held that the objection as to the amen ability of the property in the case to the jurisdiction of the Custo dian was not sustainable, that the power of review granted to the Custodian for the first time in 1949, must be held to extend to orders of a Custodian made prior to the conferment of that power, and that upon a true construction of the Ordinance of 1949, the Custodian was competent to review not only his own order but also the orders of his predecessors. No decision was given upon the contention that the review was time-barred, but the judgment of the High Court refers to the decision of this Court in the case of Sahibrai (P L D 1957 S C (Pak.) 63), where it was clearly held that the rule under the Ordinance giving the Custodian power to review his own order suo motu withont limit of time was essentially consistent with reason in the light of the purposes of the statute. Accordingly, the petition was dismissed and as already stated special leave was granted to Mr. B. A. Sheikh to appeal against that order. Mr. S. M. War appearing for the appellant repeated the argument that what the Custodian dealt with in his first order was not partnership property, but the separate property of Mr. B. A. Sheikh which could not be regarded as evacuee property. The argument is clearly unsound, and it is only necessary to refer to a few sections of the Partnership Act, 1932 to demonstrate this. Property of a partnership is defined by section 14 of that Act as including all property and rights and interest in property lawfully brought into the stock of the firm or acquirsed by purchase or otherwise in the course of the business, and includes also the good-will. Section 15 declares that subject to contract between the partners the property of the firm shall be held and used by the partners exclusively for the purposes of the business. This precludes the possibility of any of the partnership property being, Property or being deemed to be, separate property of any partner for so long as the partnership subsists. Again, a mere dissolution Emeus, J without division of assets as provided by the Act does not have the effect of ascertainment of the separate property of any partner. Dissolution may, as provided by section 43, of the Act take effec by delivery of notice of an intention to dissolve, but while this may furnish a starting point for the ascertainment of the interests of the partners which had become legally separated as from the date of the notice, yet the condition does not come into existence, by the mere effectuation of such a legal and notional dissolution; in which any partner can point to any piece of the partnership property as belonging to himself alone. That can only happen after action has been taken as provided by sections 46, 48 and 4 of the Act. These sections require that the debts and liabilities of the partnership should be first met out of the property of the firm and thereafter the assets should be applied in rateable payment to each partner of what is due to him, firstly, on account of advances as distinguished from capital, and, secondly, on account of capital, and thirdly, the residue, if any, should be divided rateably among all the partners. Therefore, the concep tion of the share of a partner in the assets of the partnership does not take a real and concrete shape until these processes have been gone through. Thus, for instance, in the present case it would be necessary for the disposal of the assets after payment of the debts and liabilities, to assign to Messrs Jawahar Singh, Bikram Singh, and lqbal Chand Puri all being evacuees, firstly, the amount which they had advanced for the purpose of the business, and secondly, the amount of capital which they had put into the business, before any residue could be ascertained in which Mr. B. A. Sheikh could claim a half sharp. As has been seen already, Mr. B. A. Sheikh, by the terms of the partnership deed, was relieved of all obligation to contribute towards the finances of the partnership firm, and therefore the provision in the sections of the Partnership Act cited above as to the preferential deductions on account of advances as distinguished from capital and on account of capital are of no benefit to him. On the other hand, the evacuees, and on their behalf the Custodian had the right to demand these preferential deductions before the last step was taken of disposing of the residue between Mr. B. A. Sheikh on the one side and his partners on the other. Of course, the debt3 and liabilities of the firm had to be ascertained as a first necessity, and in the ascertainment of those debts and liabilities the Custodian had a very direct interest, in order that they should be reduced to the very minimum and the property of which he became vested by law should be as large as possible. Therefore, it is perfectly clear that in this case, it is impossible to speak of Mr. B. A. Sheikh's separate share in the partnership property having come into existence either on the date on which B he filed his suit, namely, the 21st July 1947, or on the date of the preliminary decree, namely, the 13th January 1948, At this point it is desirable that we should deal with the question whether on the facts of this case, the dissolution of the partnership should be deemed to have taken effect on the date of final ecree by the Civil Court, viz. the 24th March 1948, or by virtue of the filing of the plaint and its service upon the opposite party. The point was raised before the High Court, and reference was made to sections 43 and 44 of the Partnership Act, as well as to the decision of the Privy Council in the case of Sathappa Chesty v. S. N. Subrahmanyan Chetty (AIR 1927 P C70). The case there was of an oral partnership at will and the Subordinate Judge had held that the partnership had been dissolved on a date prior to the institution of the suit. The Judicial Committee reversed this view, holding that "there never had been any dissolution until the plaintiff, by the present suit, by his writ and plaint claiming dissolution, intimated his will to dissolve which of itself is enough to put an end to a partnership at will". The learned Judges distinguished this case on the ground that the Judicial Committe were thinking of section 43 and not of section 44, which provides that a partner ship may be dissolved by a Court upon allegations of misconduct or breach of agreement, and they concluded that in the latter case, the date of dissolution would be the date on which the Court orders dissolution. With respect, we do not consider that the view of the learned Judges is correct The present was a case of a partnership which was to last upon its terms for the duration of the Second Great War, but it was continued beyond that date, without anything more being said, and consequently the partnership must be held, by virtue of the provisions of section 17 of the Partnership Act to have been a partnership at will from that date onwards and up to the date when the plaintiff filed his suit. It istrue that in the plaint allegations of breach of agreement etc. Were made, but that does not alter the legal position which is entirely clear, namely, that a partnership at will is dissolved by intimation to the other partners of the will of any one of the partners that the partnership should be brought to an end. The proposition appearing in the judgment of the Judicial Committee in the case of Sathappa Chetty v. S. N. Subrahmanyan Chetty will be found repeated in the standard work by Lindley on Partnership, 11th Edition, at pages 179, 675 and 677, and in the monograph on Partnership in Halsbury's Laws of England, 2nd Edition, Volume 24 in paragraphs 937, 938 and

952. Certain decisions of Indian High Courts in which this principle was accepted and applied may also be mentioned with advantage. These are Sambasiva Ayyar and another v. Canapati Ayyar and another (A I R 1918 Mad. 264) and Shib Ram v. Chinta Har (A I R 1933 Lah. 1032). Therefore, with due respect to the view of the learned Judges, the dissolution of the partnership in the present case does not date from the preliminary decree passed by the Court on the 13th January 1948, but from a date between the 21st July 1947, and the 25th July 1947, upon which the defendant-partners received intimation of the will of Mr. B. A. Sheikh to dissolve their partnership. This however is without effect of a material character upon the question of the Custodian's clear jurisdiction to deal with the property which by the earlier order of the Custodian dated the 16th April 1948, was directed to be handed over to the petitioner. That was an exclusive jurisdiction, and it is clearly provided by section 11 of the law then in force, that no Court should entertain any claim in respect of evacuee property or as to the interest of an evacuee in a property, and no decision of such a Court on such a claim given between the 15th August 1947 and the 19th February 1948, when the Act itself came into force should be binding on. the Custodian or have any effect on the rights or interests of any evacuee in the property in question. Exclusive jurisdiction was conferred upon the Custodian by section 8 to deal with such questions. The preliminary decree of the 13th January 1948, by which the partnership was ordered to be dissolved may perhaps not be regarded as a decree directly affecting th; property, but ill is clear that the subsequent proceedings before the Commissioner' which culminated in the final decree of the 14th March 1948, directly involved determination of rights in property in which the evacuees in the case had a major interest. We refer here to the ascertainment of the debts and liabilities of the firm, to the advances made for the purpose of the business by the evacuee partners and the amounts which they had put into the business by way of capital. Without ascertainment of these amounts, it was impossible for the Local Commissioner to arrive at a residue in which Mr. B. A. Sheikh could have been awarded a share. We have not been informed of the process by which the Local Commissioner ascertained the sum of Rs. 9,85,000 as being due to Mr. Sheikh, but it is not necessary for the purposes of this case that we should be provided with this information. It is sufficient that the questions which the Local Commissioner was requird by section 46 of the Partnership Act to examine, necessarily involved the ascer tainment of . the interests of evacuees in property, namely, the money and assets of the partnership, and that this was a function which neither he nor the Civil Court by which he was appointed was competent to perform. The matter lay within the exculsive jurisdiction of the Custodian. On this point, therefore there can be no doubt whatsoever that the decision of the Custodian, Mr. A. M. Jan, is correct. The question of the power of Mr. A. M. Jan as Custodian to review the earlier order of his predecessor dated the 16th April 1948, has been dealt with comprehensively in the judgment of the F High Court, and the conclusion reached thereon is in our opinion, correct. In another aspect of the matter, it would seem that Mr. A. M. Jan was not purporting to review the earlier order at all. By his order he was directing for the first time an enquiry under section 8 as to the right of Mr. B. A. Sheikh in respect of part or all of the monies and valuables belonging to his evacuee partners and lying in deposit with the Banks and Government Departments. In this connection the wording of section 8 of the Act of 1948, is significant. It provides that any person claiming an interest in an evacuee property, may by petition to the pres cribed Custodian ask for a declaration "that it is evacuee property to a limited extent only." The case being that Mr. B. A. Sheikh was entitled to a part of the partnership assets as provided by ship assets would necessarily be evacuee property, his claim as made by him in March 1948, clearly fall within section 8 aforesaid. It was for him to satisfy the Custodian that the properties which he had enumerated were evacuee properties to a limited extent only, the balance being his'by virtue of being a separated partner whose share had been ascertained at law in terms of money to be satisfied out of the partnership assets. Ignoring for a moment that the ascertainment of the partnership assets and the extent of the interests of the evacuees therein was a matter within the exclusive jurisdiction of the Custodian, even the subsequent step, namely, the ascertainment of the share of the non-evacuee M. B. A. Sheikh was a necessary step in his aid, which the Custo dian should have taken before proceeding to provide satisfaction for him. The order of the 16th April 1948, does not deal with the ascertainment of the evacuee or non-evacuee part of the assets in question at all. It merely directs that certain specified property and monies should be handed over to the petitioner. The Custo dian purported to admit Mr. B. A. Sheikh's claim under section 13 (d) (ii) of the Act, which conferred power upon him "out of any money belonging to an evacuee in his possession . . . . . to pay sums due to a person having a claim against the person or property of any evacuee, if the claim in the opinion of the Custo dian does not involve any complicated question of law or fact or if the claim is based on a decree or order of a competent Court." But in the present case, although the claims were based upon a decree, yet in view of the provisions of the Act of 1948, that decree was not a competent decree, and the claim could not have been ascertained otherwise than by the Custodian himself. Moreover, section 13 does not have the effect of giving legal validity to the admission of any claim by the Custodian ; it does not in fact provide for making of such an order, but merely given power in the circumstances of the present case to direct payment of an ascertained claim out of assets held by the Custodian. The order of the 16th April 1948, does not purport to be a final order. The order itself states that it was proposed to deal first with the mov able assets leaving the application of the immovable assets to the satisfaction of the claim to a later date. Viewing the order of the 16th April 1948, in its proper light as an order under section 13 (d) (ii) for payment of a claim based upon a decree of a Court which had no jurisdiction to make it, out of the assets of an evacuee, we cannot see that it provides any foundation for the argument that the claim itself had been dealt with as provided by the relevant law and held to be good by the Custodian. rhere tore, it seems to us that the order of Mr. A. M. Jan of the 3rd April 1954, was not the second order made regarding the question of the validity of Mr. B. A. Sneikh's claim under the Evacuee Property Law, but was indeed the first order of its kind; and consequently it is not to be regarded as a review of an earlier order on the same point. As to the competency of a review, we are in agreement with the High Court that the provision for a review made for the first g time in the Ordinance of 1949 must be understood to empower the Custodian to review orders made under the Evacuer Property prior to the promulgation of the Ordinance of 1949. The contention that the Custodian had no power to review any order except those made by himself was also in our view rightly repelled by the High Court. As was indicated in the judgment of this Court in the case of Sahibrai the context of the law relating to evacuee property requires that the Custodian should have power irrespec tive of time to review earlier orders made by authorities acting under the Evacuee Property Law, including the Custodian. To impose any restrictions upon this power either in respect of persons or in point of time would have the effect of defeating the provisions of the law, and we agree that the relevant provisions are not to be interpreted so as to produce such a result. The appeal fails and we hereby dismiss it with costs. Appeal dismissed.