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  • provisions of s. 68 of the Partnership Act.
  • s. 68 of the Partnership Act
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Citation Codes
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  • provisions of s. 68 of the Partnership Act.
  • s. 68 of the Partnership Act
Smart Summary

Structured Summary of the Opinion (Sen, J.)

Factual and Procedural Background

This is an interlocutory application brought by defendant No. 6 (Hajee Adam Abdul Shakoor) seeking: (a) revocation of the leave previously granted under clause 12 of the Letters Patent permitting the plaintiff to institute the suit in this Court, and alternatively (b) a stay of the suit. An earlier prayer for security for costs was abandoned by the applicant's counsel.

The underlying suit was instituted by the plaintiff Ali Mahomed Ebrahim Shakoor on June 27, 1938, against six defendants (numbered 1 to 6 in the opinion). The plaintiff seeks dissolution of an alleged partnership, accounts, and a declaration that a document executed by the plaintiff on February 3, 1936, in favour of defendant No. 1 is void for fraud, undue influence and related grounds. The partnership business is alleged to have been carried on at Calcutta.

Relevant dates and procedural steps recorded in the opinion:

  • Written statement of defendant No. 1 filed August 10, 1938; written statements of other defendants filed November 7, 1938.
  • On August 22, 1938, defendant No. 1 applied for a stay of the suit and security for costs (similar to the present application but without seeking revocation of leave); other defendants neither joined nor were served in that application.
  • By consent an order was passed on December 6, 1938: the plaintiff consented to furnish security (the prior application having been pending).
  • The present application by defendant No. 6 was made on December 19, 1938. Defendant No. 3 was not served with notice of the present application.

Legal Issues Presented

  1. Whether the leave previously granted under clause 12 of the Letters Patent permitting the plaintiff to institute this suit in this Court should be revoked.
  2. Whether, alternatively, the suit should be stayed on grounds of forum non conveniens, balance of convenience, or on the basis that the entire cause of action arose outside the jurisdiction of this Court.
  3. Whether any part of the cause of action has arisen within the jurisdiction of this Court (i.e., whether this Court has jurisdiction to try the suit).
  4. Whether the document dated February 3, 1936 (allegedly evidencing settlement of accounts and terminating the agreement) precludes the plaintiff's claim, or whether that issue must be tried at the main hearing.
  5. Whether the clause in the December 15, 1934 agreement (allegedly confining disputes to Bantva or Rajkot) prevents the plaintiff from suing in this Court.
  6. Whether the present application is a bona fide step to protect the defendants' rights or a mala fide attempt to harass the plaintiff and to obstruct access to this forum.

Arguments of the Parties

Petitioner's (Defendant No. 6) Arguments

  • There was no partnership between defendant No. 1 and the other defendants; the business belonged to defendant No. 1 alone and the plaintiff and others were servants entitled only to shares of profits.
  • The relevant agreement (dated December 15, 1934) was governed by the law of the Bantva State and did not constitute a partnership under that law; the head office was at Bantva, not Calcutta.
  • The agreement contains a term making Bantva or Rajkot the forum for disputes, precluding suits elsewhere.
  • The plaintiff had already settled accounts with defendant No. 1; on February 3, 1936 the plaintiff executed a document terminating the agreement and accepting over Rs. 3,00,000, and no fraud or undue influence was exercised.
  • On these grounds: (i) the entire cause of action arises outside this Court’s jurisdiction and (ii) the plaintiff contracted away the right to sue elsewhere; alternatively, even if part of the cause arose here, leave under clause 12 should be revoked or the suit stayed because the suit was brought to make it impossible for defendants to defend (books and witnesses are at Bantva).

Plaintiff's (Respondent's) Arguments

  • There was a partnership and it was registered at Calcutta; Calcutta was the principal place of business of the partnership, which gives this Court jurisdiction to try the suit.
  • The deed of partnership does not contain any clause precluding the plaintiff from suing in this Court.
  • The suit can be conveniently tried in Calcutta; the application for stay/revocation is mala fide and intended to harass the plaintiff.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Radha Bibee v. Mucksoodun Doss Authority where the entire cause of action arose outside jurisdiction and jurisdiction was improperly sought to be attracted by a device; plaintiff should not be permitted to invoke jurisdiction by such devices. The Court distinguished the present case from Radha Bibee on the ground that here jurisdiction was not created by a device but rested on an existing entry in the register of firms showing principal place of business at Calcutta.
Kalooram Agarwala v. Jonisthalal Chakraburti Similar line of authority where suits on promissory notes had the entire cause of action outside Calcutta and jurisdiction was sought to be created by assignment made within the jurisdiction — treated as a device to attract jurisdiction. The Court held the case distinguishable for the same reason: jurisdiction here rests on pre-existing facts (the registered firm entry), not on an artificial device to create jurisdiction.
Daulatram Rawatmull v. Maharajlal One of the series of cases holding that where subject-matter of suit is outside the jurisdiction, plaintiffs should not be allowed to confer jurisdiction by device. Distinguished on the ground that the present plaintiff relies on an existing registration under the Partnership Act rather than on a device to attract jurisdiction.
Radhilca Mohan Ray v. Bhabani Prasanna Lahiri Noted as a case in which earlier decisions (above) were not followed in a later decision on grounds relating to negotiability; raised but not applied to alter the Court's reasoning in this matter. The Court observed that the earlier cases were not followed in Radhilca Mohan Ray on negotiability grounds but stated that negotiability is not the issue in the present case and did not adopt that divergence.
Jethabhai Versey & Co. v. Amarchand Madhavji & Co. Principles for when a stay is justified: where a plaintiff commences an action in the forum not for a legitimate advantage of trial there but for purposes foreign to that, the Court may and should stay proceedings; more than mere balance of convenience is usually required — hardship or practical injustice must be shown. The Court found the facts of the present case did not fall within those principles: it was not satisfied that trial in Calcutta would result in such a degree of inconvenience or injustice to defendants as to justify a stay.

Court's Reasoning and Analysis

The Court structured its analysis around two primary questions: (1) whether any part of the cause of action arose within the jurisdiction of this Court and, if so, (2) whether the leave granted under clause 12 of the Letters Patent should be revoked or the suit stayed.

The Court began by reminding that interlocutory applications are not appropriate forums to resolve complex factual matters requiring detailed evidence and cross-examination; such issues (for example, whether the plaintiff's allegations of fraud are justified) must be decided at trial.

On the jurisdiction point the Court relied on the register kept under the Partnership Act and specifically on s.68 of the Partnership Act (the opinion quotes and relies on the statutory provision) which makes statements in the Register of Firms conclusive proof, as against the person by whom or on whose behalf they are made, of facts so stated. The register stated that all parties were partners and that the firm's principal place of business was at No. 1, Amratala Lane, Calcutta. The defendants contended that this entry was a mere formality for Small Causes Court and income-tax purposes and did not reflect the real situation. The Court expressed strong doubt whether the defendants could successfully contradict the register in an interlocutory application in view of s.68, and concluded for the purposes of the application that the register provided sufficient evidence that a partnership existed and its principal place of business was in Calcutta. Consequently the Court found that a part of the cause of action had arisen within its jurisdiction and that the Court had jurisdiction to try the suit for dissolution of the partnership.

On the contention that the February 3, 1936 document had settled accounts and terminated the agreement, the Court held that the allegation of fraud relied upon by the plaintiff to impeach that document was a matter to be decided at trial and could not be resolved on affidavits in an interlocutory application.

Regarding the clause in the December 15, 1934 agreement which the petitioner said confined disputes to Bantva or Rajkot, the Court noted that the petitioner's translation was not on affidavit while the plaintiff produced an affidavit-supported translation. After perusal the Court said it could not conclude that by that document the plaintiff had divested himself of the right to sue in this Court.

On the balance of convenience and mala fide contentions the Court examined relevant authorities. It distinguished earlier cases (Radha Bibee; Kalooram Agarwala; Daulatram Rawatmull) where jurisdiction had been artificially created by devices because in those cases the entire cause of action lay outside Calcutta and plaintiffs had resorted to devices to attract jurisdiction. By contrast, in the present case the plaintiff relied on a genuine pre-existing register entry which the Court considered sufficient for jurisdiction.

With attention to the Jethabhai Versey principles the Court observed that to justify a stay there must generally be something more than a mere balance of convenience and ordinarily the applicant must show that trial in the forum would render it very difficult or practically impossible to get justice. The Court accepted that some witnesses and documents might be in Bantva, but concluded that the inconvenience was not of such a scale as to cause injustice or to justify a stay.

Finally the Court examined the surrounding conduct for signs of mala fides. It noted: (i) a very similar application had been made a few days earlier by defendant No. 1 but without seeking revocation of leave, (ii) the other defendants had not joined or been served in that earlier application and had not replied to the plaintiff's solicitor's letters, and (iii) defendant No. 3 (a brother of defendant No. 1) had not been served in the present application. These facts, the Court held, raised a suspicion of deliberate tactic and supported the conclusion that the present application was not bona fide.

Holding and Implications

Holding: The Court dismissed the application.

APPLICATION DISMISSED

Consequences and immediate effect:

  • The application by defendant No. 6 for revocation of leave under clause 12 of the Letters Patent, or alternatively for a stay, was refused.
  • The applicant was ordered to pay costs: costs to be assessed as of a defended action; there will be only one set of costs.

Broader implications: The opinion did not announce or purport to establish a new principle of law; the Court applied existing statutory rule (s.68 of the Partnership Act) and distinguished prior authorities. The decision's practical consequence is the refusal of the interlocutory relief sought and the maintenance of the plaintiff's chosen forum; the issues of fraud, the effect of the 1936 document, and the true effect of the forum clause remain to be decided at trial.

Source limitation: This summary is based exclusively on the material contained in the provided opinion and does not add facts or inferences beyond that text.

    Ali Mahomed Ebrahim Shakoor v. Adam Hajee Peer Mohamed Essack

    Sen, J.:— This is an application by the defendant No. 6, Hajee Adam Ahdul Shakoor, for an order that the leave granted under cl. 12 of the Letters Patent of this Court to the plaintiff to institute this suit in this Court be revoked, in the alternative for an order staying the suit. There was a prayer for security for costs; that was abandoned by learned counsel for the petitioner.

    This motion arises out of a suit instituted by the plaintiff Ali Mahomed Ebrahim Shakoor against six defendants they are: (1) Adam Hajee Peer Mohamed Essack, for self, (2) Adam Hajee Peer Mohamed Essack, as Manager of Peer Mohamedi Fund, (3) Ahmed Hajee Peer Mohamed, (4) Abdul Karim Adam, (5) Taiyub Ali Mohamed and (6) Hajee Adam Abdul Shakoor. It will be more convenient, I think, to refer to the defendants by their respective numbers and not by their names which are confusing by reason of the fact that the names of the different defendants are very similar and seem to be a permutation and combination of one another's names.

    The defendant No. 1 is the same person as the defendant No. 2. The defendant No. 3 is the brother of the defendant No. 1 and the defendant No. 4 is the son of the defendant No. 1. The defendant No. 5 is the plaintiff's son, and the defendant No. 6 is the manager of the defendant No. 1. It is clear from this statement that the defendants Nos. 1, 3 and 4 are closely related as brothers and son, and the defendant No. 6 is the manager of the defendant No. 1.

    The plaintiff's suit is one for the dissolution of a partnership alleged to be existing between him and the five defendants and for accounts. There is a further prayer for a declaration that the document executed by the plaintiff on February 3, 1936, in favour of the defendant No. 1 is void on the ground of fraud, undue influence and similar grounds. It is alleged that the partnership business was carried on at Calcutta.

    The suit was instituted on June 27, 1938. The written statement of the defendant No. 1 was filed on August 10, 1938, and the written statements of the other defendants were filed on November 7, 1938.

    On August 22, 1938, the defendant No. 1 applied to this Court for a stay of the suit and for security for costs. In fact that application was similar to the present one in all respects except that there was no prayer for an order to revoke the leave granted under cl. 12 of the Letters Patent. The other defendants did not join in that application, nor were they served with notice of that application.

    On December 6, 1938, by consent an order was passed. The plaintiff consented to furnish security. While that application was pending the other defendants were written to by the solicitors of the plaintiff asking them to state their attitude with respect to the application, but no reply was given to this letter.

    Thirteen days after that consent order, that is, on December 19, 1938, the present application has been made by the defendant No. 6, who, as I have said, is the servant of the defendant No. 1. In this application it is worthy of notice that the defendant No. 3, who is the brother of the defendant No. 1, has not been served with notice.

    On behalf of the petitioner the allegations are briefly as follows: He says that there was no partnership between the defendant No. 1 and the other defendants. He claims that the business belonged to the defendant No. 1 alone and that the plaintiff and the others were servants, who had a share in the profits of the business. His contention is that, under the peculiar law prevailing in the Bantva State where the agreement between the parties was entered into and where all the parties reside, the agreement did not constitute a partnership. This agreement is dated December 15, 1934. It is stated that the head office of the business is at Bantva and not at Calcutta, and it is pointed out that there is a term in the agreement whereby the plaintiff agreed that all disputes would be settled at Bantva or Rajkot and that he would not be permitted to institute legal proceedings elsewhere.

    The next important allegation of the petitioner is that all accounts between the plaintiff and defendant No. 1 have already been settled and that on February 3, 1936, the plaintiff executed a document evidencing this settlement of account and terminating the agreement. This document, it was alleged, was executed at Bantva. This is the document which was challenged on the ground of fraud and undue influence. The petitioner alleges that no fraud or undue influence was exercised, and that the circumstances all indicate that the plaintiff willingly and with full knowledge of all the facts executed this document.

    It is said that pursuant to this document the plaintiff was given a sum of over Rs. 3,00,000 which he accepted. The contentions of the petitioner are:— firstly, that the entire cause of action in this suit arises outside the jurisdiction of this Court; secondly, that the plaintiff contracted that he would not be entitled to bring any suit except in the Bantva and Rajkot Courts. On these grounds it is contended that this Court has no jurisdiction to entertain this suit. Thirdly, it is said that, even if this Court has jurisdiction to entertain this suit on the footing that part of the cause of action has arisen here, the leave granted should be revoked or the suit should be stayed inasmuch as the suit has been brought here with intent to make it impossible for the defendants to defend the suit. It is pointed out that all the books are at Bantva, all the witnesses reside there, and that the suit could be most conveniently tried at Bantva or Rajkot. The contention is that this suit has been brought here deliberately with the object of making it impossible for the defendants to carry on their defence.

    On behalf of the plaintiff respondent the contention is that there was a partnership and that the partnership was registered at Calcutta. It was further pointed out that Calcutta was the principal place of business of the partnership. On this ground it is argued that this Court has jurisdiction to try this suit. It is contended further that the deed of partnership does not contain any clause which precludes the plaintiff from suing in this Court. Lastly, it is said that this suit can be conveniently tried here and that this application is a mala fide one made for the purpose of harassing the plaintiff.

    The first thing to remember in an interlocutory application like this is that matters of difficulty and importance which require a meticulous consideration of facts and law and which are best determined upon the evidence of witnesses who have been subjected to cross-examination should be decided at the trial of the suit and not in the application. I do not consider that it is necessary to go into the facts in detail or to decide finally whether the plaintiff's allegations of fraud are justified or whether they are themselves fraudulent. What has to be decided on this application is whether any part of the cause of action has arisen within the jurisdiction of this Court and if so whether the leave granted under cl. 12 of the Letters Patent should remain. Upon the materials before me and as at present advised I have no hesitation in coming to the conclusion that the plaintiff has shown that a part of the cause of action has arisen within the jurisdiction of this Court. There is a register which is kept in accordance with the terms of the Partnership Act. In that register it is stated that all the parties are partners and that the principal place of business of the partnership firm is at No. 1, Amratala Lane, Calcutta. Under s. 68 of the Partnership Act it is laid down that the statements contained in the Register of Firms shall as against any person Joy whom or on whose behalf such statements have been made be conclusive proof of any fact therein stated. The defendants say that this entry was made merely to enable the plaintiff to file suits in the Small Causes Court at Calcutta and to deal with certain income-tax matters and that it does not represent the real state of things. I am extremely doubtful whether the defendants can be allowed to say this in view of the provisions of s. 68 of the Partnership Act. In any case for the purposes of this application the register of firms is sufficient evidence to establish that there was a partnership business, that the plaintiff and the defendants were all partners in this business and that the principal place of business of the firm was at Calcutta. This suit is for a dissolution of this partnership, therefore this Court has jurisdiction to try this suit.

    On behalf of the petitioner it is said that the plaintiff has already by a document of February 3, 1936, given up his rights. The plaintiff says that this document was brought about by fraud: This question must be decided in the suit and cannot be decided upon affidavits on an application of this nature.

    Next the petitioner relies upon the clause in the partnership agreement of December 15, 1934, which he says debars the plaintiff from suing in any other Court except the Courts at Bantva and Rajkot. The translation of this document furnished by the petitioner is not on affidavit. On behalf of the plaintiff there is a translation which is supported by an affidavit. After perusing this translation I cannot say that by this document the plaintiff has divested himself of his right to bring a suit of the nature of the present one in this court.

    I shall now deal with the next contention urged on behalf of the petitioner, namely, that even if this Court has jurisdiction to try this suit leave should be refused on the ground of balance of inconvenience or on the ground that the plaintiff has brought this suit mala fide in this Court merely to harass the defendant. Certain cases were cited in support of this contention. They are Radha Bibee v. Mucksoodun Doss,; Kalooram Agarwala v. Jonisthalal Chakraburti, and Daulatram Rawatmull v. Maharajlal,. In my opinion these decisions can be distinguished from the circumstances of the present application. In Radha Bibee's case (supra) a widow was suing for maintenance. The entire cause of action arose outside the jurisdiction of this Court. The widow sought to invoke the jurisdiction of this Court by praying for an order that a charge may be declared upon certain Calcutta property for her maintenance. In the other cases the suits were on promissory notes. The entire cause of action was outside Calcutta. The plaintiff brought the suits in this Court depending upon assignments of the promissory notes made within the jurisdiction of this suit obviously for the purpose of creating jurisdiction. In all these cases it will be seen that the jurisdiction of this Court was sought to be attracted by a device and it was held that when the subject matter of a suit is outside the jurisdiction of this Court the plaintiff should not be allowed to bring a suit in this Court by the adoption of such devices. The decisions in Kalooram, Agarwala's case (supra) and Daulatram Rawatmull's case (supra) were not followed in another case, Radhilca Mohan Ray v. Bhabani Prasanna Lahiri, on the ground that if the view of the earlier cases were adopted it would strike at the root of negotiability. I am not concerned with the question of negotiability in this case. It is quite clear, however, that in all these cases jurisdiction did not exist until jurisdiction was attracted by the adoption of a device for the express purpose of conferring jurisdiction on this Court.

    In this case the position is quite different. The plaintiff relies not upon any device; he relies upon facts which were in existence long before this suit was ever contemplated. He relies upon the entry in the register kept under the Partnership Act. It cannot be said that this entry was made with the object of giving the plaintiff an opportunity of bringing the suit in this Court. I am of opinion, therefore, that the cases cited by learned counsel on behalf of the petitioner do not help him.

    Learned counsel for the petitioner then relied upon the case of Jethabhai Versey & Co. v. Amarchand Madhavji & Co.,. In that case certain principles were laid down upon which the Court would be justified in ordering a stay of the suit. In my opinion the facts of the present case do not fall within the scope of those principles. It was said there:—

    If the Court taking all the facts into consideration, comes to the conclusion that a plaintiff in commencing an action in this country has not done so on account of any legitimate advantage which a trial in this country will give him, but for purposes entirely foreign to that legitimate purpose, then, apart from any question as to expense or inconvenience, in my opinion, not only has the Court jurisdiction, but it is its duty to stay the proceedings.

    Again there is the following passage:—

    As I have already pointed out, in order to justify a stay it is, as a rule, necessary that something more should exist than a mere balance of convenience in favour of proceeding in some other country. In my opinion it must be proved to the satisfaction of the Court that either the expense or the difficulties of trial in this country are so great that injustice will be done in this sense, that it will be very difficult, or practically impossible, for the litigant who is applying for stay to get justice in this country.

    It may be that in this case many of the witnesses are residents of Bantva. It may also be true that some documents are at Bantva. But I do not think that it can be said that if the suit were tried here it would be so inconvenient for the defendant as to result in injustice being done.

    I shall next take up the contention of the respondent that this application is mala fide. In my opinion, this contention is not groundless. As I have said before, there was an application by the defendant No. 1 a very few days before the present one which was almost in identical terms. The only substantial difference between that application and the present one is that there was no prayer for revoking the leave granted under cl. 12 of the Letters Patent. It is curious that the other defendants did not join in that application. It is also curious that this prayer for revocation of leave was not made then although all the facts which are now relied upon were well known to the defendant No. 1 at that time. It is also curious that the other defendants although they were written to by the plaintiff did not care to disclose what their attitude was in respect to that application.

    A further fact which raises a suspicion in my mind is, that the defendant No. 3, who is a brother of defendant No. 1, has not been given notice of this application, nor has he joined in this application.

    The suggestion made by the petitioner that this has been done deliberately so that the defendant No. 3 may come up with another application is not without foundation.

    In these circumstances, I consider that this application should be refused. I, accordingly, dismiss it with costs. The costs will be as of a defended action. There will be only one set of costs.

    G.K.D
    Application dismissed.

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    Ali Mahomed Ebrahim Shakoor v. Adam Hajee Peer Mohamed Essack
    (Apr 6, 1939)