1. Heard Sri Bankatlal Mandhani, learned counsel for the appellants and Sri K.K. Waghray, learned counsel for respondent No.1. Perused the entire record.

2. The City Civil Court Appeal is preferred by the appellants/defendant Nos. 1 to 4 aggrieved by the order and decree dated 11.03.2024 passed by the learned XXV Additional Chief Judge, City Civil Court at Hyderabad, (‘trial Court’) in I.A.No.393 of 2022 in O.S.No.479 of 2018, whereby a petition filed under Order XII Rule 6 of CPC, to pass judgment and preliminary decree dissolving appellant No.1-firm has been allowed with costs in favour of respondent No.1 herein/plaintiff.

Brief facts of the case:

3. In short, respondent No.1 herein filed suit for dissolution of partnership firm and rendition of accounts against the appellants and the respondent No.2 herein. In said suit, after filing of the written statement, respondent No.1 filed the I.A.No.393 of 2022 under Order XII Rule 6 of CPC, to pass a preliminary decree with respect to the dissolution of partnership on the basis of admission made by the appellants in a reply notice dated 19.03.2022 and paragraph No.13 of the written statement filed on 02.11.2018.

4. Respondent No.1 pleaded that for the purpose of rendition of accounts, I.A.No.1674 of 2018 was filed and a notice was given under Order VII Rule 8 of CPC to the learned counsel for appellants to produce income tax returns from the year 2010 onwards upto the year 2016 along with balance sheet. Upon receiving said notice, the appellants herein have sent reply on 19.03.2022 with a clear and categorical admission about dissolution of firm i.e. appellant No.1. In the said reply, it is stated that once a notice of termination was received from respondent No.1, since the partnership is at will under Section 43 of Partnership Act, 1932 (‘Partnership Act’), the partnership got terminated or dissolved and said fact was communicated to the concerned authorities. There is a specific pleading that the partnership discontinued its business with effect from 01.04.2016. In view of said clear admission, according to respondent No.1, a preliminary decree can be passed and therefore, the petition was filed under Order XII Rule 6 of CPC.

5. The appellants opposed the I.A. under appeal referring to Section 42 of Partnership Act, which deals with dissolution by notice of partnership at will. A partner can dissolve a firm by giving notice in writing stating his intention to dissolve the partnership from a particular date. Respondent No.1 got a legal notice dated 23.08.2015 issued determining the partnership with effect from the date of receipt of notice. The said notice was received by the appellants on 26.08.2015. At paragraph No.13 of the written statement, there is a clear mention that appellant No.1 partnership firm was dissolved when respondent No.1 got a legal notice issued, appellant No.1 firm stood closed with effect from 30.09.2015. The closure of the partnership firm was informed to Commercial Tax Officer on 06.12.2016. The suit was filed on 11.07.2018 and on said date appellant No.1 firm is not in existence and therefore, it is the case of appellants that the suit ought to be dismissed as not maintainable. The appellants denied the contents of written statement being admission which can be acted upon under Order XII Rule 6 of CPC. The income tax returns have been submitted to concerned authorities for the 2010 to 2016 and therefore, said relief is also not maintainable. Appellant No.2 is the sole owner of all the immovable properties claimed by respondent No.1 and said properties do not belong to appellant No.1-partnership firm and therefore, the appellants sought dismissal of the suit.

6. In that context, the learned trial Court considered the question as to whether a preliminary decree can be passed based on admission made by the appellants and allowed the petition. Aggrieved by the same, the present City Civil Court Appeal is preferred.

Grounds of appeal:

7. In grounds of appeal, the appellants pleaded that there is complete misreading of the judgment in the case of P. Venkateswarlu v. C. Lakshmi Narasimha Rao (AIR 2002 AP 62) and misreading of Section 43 of Partnership Act. The appellants contend that the partnership stood dissolved as on the date of the filing of the suit immediately after receipt of notice of dissolution and said fact was intimated to the taxing authority and therefore, filing of the suit for dissolution of partnership after a long lapse of time is itself not maintainable. The appellants denied making any clear admission with regard to the claims raised by respondent No.1 in the suit. Further, it is emphasized that having allowed the petition, the learned trial Court framed issues wherein the first issue is about entitlement of respondent No.1 for passing of a preliminary decree for dissolution of appellant No.1-firm and for allotment of one fifth the share in the assets of appellant No.1-firm said issues are extracted and produced below:

               “1. Whether the plaintiff is entitled for a preliminary decree for dissolution of defendant No.1 partnership firm for distribution of assets and whether the plaintiff is entitled for 1/5th share?

               2. Whether the plaintiff is entitled to claim directions from the Court directing the defendant Nos.2 to 5 to render the accounts as prayed for?

               3. To what relief?”

8. When the trial Court has passed a preliminary decree, on the basis of admission of written statement there was no need for framing issue No. 1 with respect to entitlement of respondent No.1 for dissolution of partnership. The appellants denied making any kind of admission either in reply notice or in the written statement that can be appreciated as an admission for passing decree under Order XII Rule 6 of CPC.

9. According to the appellants, the relief for dissolution of appellant No.1 is totally misconceived contrary to Section 43 of Partnership Act and therefore, the question of passing any judgment and decree does not arise.

               It is also emphasized that whenever a judgment is pronounced under Order XII Rule 6 (1), a decree has to be drawn up with the judgment, but in this case, no such decree is drawn up. Currently, as per the issues framed on 27.04.2024, the learned trial Court is poised to address the issue of dissolution of partnership and therefore, the impugned order is liable to be set aside. Lastly, it is pleaded that the trial Court has no jurisdiction to try the suit as the same falls under the Commercial Courts Act, 2015 and the Court lacks inherent jurisdiction and therefore, the decree passed is void ab initio.

Contentions of the appellants:

10. The learned counsel for appellants argued that the reliefs sought in the suit are misconceived and the suit itself is not maintainable. The suit is not maintainable not only on merits, but the Court which passed the order lacks inherent jurisdiction as the subject matter falls under the jurisdiction of Commercial Courts. It is argued that appellant No.1 was a partnership firm constituted under the Partnership Act, wherein, as per Section 43, any partner who intends to dissolve the partnership at will, can issue a written notice stating their intention to dissolve the firm and said intention has to be communicated to all the other partners. Once such a written notice is given, the firm shall cease to exist on the date mentioned in the notice or from the date when such a communication is intimated to the remaining partners of the firm. In the instant case, respondent No.1 intimated his intention to dissolve the partnership firm i.e., appellant No.1 on 23.08.2015, expressing his intention to appellant Nos.2 to 4 and respondent No.2, seeking dissolution of appellant No.1-firm and for rendition of accounts.

11. It is argued that immediately after receipt of notice dated 23.08.2015, the partnership stood dissolved and the said fact is communicated to the taxing authorities i.e., the Commissioner of Commercial Tax vide letter dated 06.12.2016. There is specific pleading to the effect that appellant No.1 firm was closed with effect from 30.09.2015 and the same was informed to the taxing authority on 06.12.2016. In that context, it is argued that when the firm itself is not in existence on the date of filing of the suit in the year 2018, the relief sought for dissolution of partnership itself is not maintainable. Further, the prayer for rendition of accounts is also time- barred and therefore, the entire suit is not maintainable. It is in that context the pleadings of the written statement have to be read, but not in the form of admissions.

12. The learned counsel for appellants relied upon judgment in the case of S.M.Asif v. Virender Kumar Bajaj ((2015) 9 SCC 287), wherein it is held that the word ‘may’ in Order XII Rule 6 of CPC suggests that the power under said provision is discretionary and cannot be claimed as a right. The judgment on admission is not a matter of right. When the defendants raised objection which go to the root of the case, it would not be appropriate to exercise discretion under Order XII Rule 6 of CPC.

13. Further, in the case of Hari Steel and General Industries Limited v. Daljit Singh (2020 (1) ALD 260 (SC)), it is held that a mere admission of entering into agreement/contract itself cannot be considered in isolation. Further, objections raised by the contesting party have to be considered and therefore, any conceding of fact cannot be termed as categorical and unconditional for the purpose of delivering judgment by allowing an application filed under Order XII Rule 6 of CPC.

14. On the basis of aforementioned judgments, the learned counsel for appellants contended that there is a serious dispute to the plaint averments and therefore, the pleading with respect to dissolution of the partnership cannot be considered in isolation rather it has to be considered together with the objections raised with respect to the veracity of the facts stated by respondent No.1 in the plaint which go to the very root of the case, i.e., maintainability of the suit itself.

Contentions of respondent No.1:

15. The learned counsel for respondent No.1 adhered to the version presented before the trial Court i.e. the suit is filed seeking dissolution of appellant No.1-partnership firm and there is an admission on the part of the appellants in the reply notice dated 19.03.2022 and the written statement filed by them with respect to the dissolution of partnership firm and therefore, a petition was filed for passing of preliminary decree under Order XII Rule 6 of CPC. It is submitted that the trial Court considered the admission made by the appellants in the written statement and has rightly passed the preliminary decree. Therefore, it is the case of respondent No.1 that the appeal lacks merits and is liable to be dismissed.

Findings of the Court:

16. When the version presented by both the rival parties considered, it is seen that respondent No.1 filed suit for dissolution of partnership firm and for rendition of accounts of appellant No.1-firm. In the said plaint, there are several claims made against the appellants about misappropriation and mismanagement of the partnership business. There is a reference to several immovable properties and collection of rents from several entities warranting rendition of accounts. Respondent No.1 claimed that the partnership came into existence on 01.04.1992 and he was inducted on 01.04.1997. Appellants Nos.2 to 4 and respondent No.2 were collecting rents from various entities and used for household maintenance. Reference is made to several properties involving the role of the appellants and the respondents. In the year 2015, respondent No.1 questioned the appellants with respect to maintenance of accounts and the properties and investments. When the differences could not be resolved, respondent No.1 felt need for dissolution of the partnership firm and got legal notice issued on 23.08.2015. The said legal notice was received by the appellants on 26.08.2015. Despite receiving the legal notice, the appellants did not take any steps and continued with their activities. In spite of giving sufficient time, the appellants did not wind up the affairs of the firms and settle the accounts with respondent No.1. Therefore, respondent No.1 got a caution notice issued in Times of India on 22.05.2018, apart from Hindi Millat newspaper, and thereafter, filed the suit for dissolution of partnership and for rendition of accounts of said partnership i.e., appellant No.1.

17. This entire sequence of facts, as narrated by respondent No.1 in the plaint are disputed. The mismanagement of the partnership firm, the ownership of the immovable properties and entitlement of respondent No.1 for 1/5th share in said immovable properties is denied by the appellants. Further, at paragraph No.13 of the written statement, the appellants have conceded that appellant No.1 firm was closed with effect from 30.09.2015. The said paragraph is extracted and produced below:

               “13. It is submitted that Defendant No.1 firm was already dissolved by the plaintiff by issuing a notice and accordingly business of the dissolved 1st Defendant Firm were closed with effect from 30-9-2015 and said fact was also informed to the Commercial Tax Officer, Special Commodities Circle, Hyderabad on 6-12-2016.”

18. Besides, the appellants' disputed mismanagement of the business and misappropriation of income or forging the signature of respondent No.1. Further, along with the pleading about the dissolution of partnership in view of legal notice dated 23.08.2015, the appellants had also pleaded that the plaint averments are misconceived and baseless. Relevant paragraph No.19 of the written statement is extracted and produced below

               “19. The contention of the plaintiff in para 16 of the plaint are totally misconcerned and baseless to his knowledge. As already submitted above, the defendant No.1 was dissolved in view of the notice dt: 23.08.2015 by the plaintiff as the partnership was at will and the said dissolution of defendant No.1 was also informed to the Taxation Department as mentioned above.”

19. There is also denial of the contention of respondent No.1 that the partnership is continuing with its activities and therefore, there is a need for dissolution of partnership. The appellants denied the immovable properties mentioned in the plaint being assets of the partnership. Relevant paragraph No.22 is extracted and produced below:

               “22. That the contention of plaintiff in para 18 and 19 of the plaint are baseless and false and hence defendant 2 to 5 specifically deny that dissolution of defendant No.1 firm requires to be done through the process of this Hon’ble Court and that immovable properties are all treated as share under partnership Act and that all the alleged assets both movable and immovable are accountable are not correct and hence the defendant 2 to 5 specifically deny the same.”

20. To sum up, the appellants at paragraph Nos.27 and 28 have pleaded that the suit itself is not maintainable as the same is based on false averments. Relevant paragraphs are extracted and produced below:

               “27. That the suit and suit claim are based on falsehood and without any basis and hence the suit is not maintainable.

               28. That the suit is not properly valued. According to the plaintiff his share is more than what he valued the suit. That the suit is barred by the limitation as the suit cannot be filed for unlimited periods. The accounts of the firm has already been the subjected of assessment before the Taxing Authorities and hence the relief claimed is also not maintainable. It is not out of place to mention that the accounts submitted before the Taxing Authorities have not been challenged and hence the plaintiff is stopped from making false allegations and he is bound by the assessment of income as assessed which become final.”

21. When the above-mentioned contents of paragraph Nos.19, 22, 27 and 28 are perused it is seen that the appellants did not make any kind of admission in isolation, rather the averment with respect to closing of the partnership is tied up with many other averments about the truthfulness of the plaint averments made by respondent No.1. According to the appellants, the suit itself is not maintainable. Without considering the maintainability of the suit, passing of preliminary decree by an isolated reading of paragraph No.13 of the written statement, is erroneous and therefore liable to be set aside.

22. The dilemma of the trial Court is also evident from the fact that, in spite of passing the impugned order, while framing issues, there is issue No.1 with respect to the entitlement of respondent No.1 for dissolution of appellate No.1-partnership firm. In case the trial Court was fully convinced that there is no need to consider the issue of dissolution of partnership as held in the impugned order, there was no need for framing issue No.1.

23. In view of these contradictions and in view of the discussion of the averments of the written statement, this Court is of the considered opinion that the written statement averments were not perused in correct perspective and therefore, the trial Court arrived at an erroneous conclusion and said finding needs to be set aside.

24. In the result, the City Civil Court Appeal is allowed by setting aside the impugned order and decree dated 11.03.2024 passed by the learned trial Court in I.A.No.393 of 2022 in O.S.No.479 of 2018 and consequently, the I.A.No.393 of 2022 is dismissed. There shall be no order as to costs. Miscellaneous applications, if any, pending shall stand closed.