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2003 (11) TMI 630
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.... appeals. Appellants Santokben and her son Praful died during pendency of the appeals. Necessary steps regarding substitution have been taken. Appellant No. 4 M/s. Bengorm Nilgiri Plantations Co. is a partnership firm. 2. The family owned a tea estate in the Neelgiris area. It was known as Bengorm Tea Estate. It was a co-ownership property of the members of the family. A partnership firm was constituted under the name and style of Bengorm Tea Plantations to manage the tea estate. The partnership did not have any proprietary interest in the estate. The shares of the parties in the tea estate as well as in the partnership firm are not in dispute. Pravinlal died on 4th May, 1969. He left behind a will. Taraben respondent No. 1 claiming to be sole executor of the estate of her husband Pravinlal filed the present suit claiming the following reliefs: "18(a) Decree for partitions by metes and bounds of the plaintiff's 33% share in Bengorm Estate mentioned in Schedule to the Plaint and separate possession thereof against defendants 1 to 4 and/or 6 in severally. (b) A decree for accounts against the defendants for the 30% share of Pravinlal Vithaldas Madhvani deceas....
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....sne profits after the death of Pravinlal Vithaldas Madhvani on 4th May, 1969 alongwith interest on the amount found due by way of mesne profits was allowed. The preliminary decree passed by the trial Court on 13th April, 1978 with respect to prayer contained in para 18(b) of the plaint became final. On the question of interest with respect to para 18(c) of the plaint even though the High Court had allowed the amendment to enable the plaintiff to claim interest at the rate of 13% per annum, the High Court took note of amendment of Section 34 C.P.C. in the meanwhile and treating the suit claim as a commercial transaction, allowed interest at the rate of interest as charged by nationalised banks during the relevant years from time to time on commercial loans. The trial court passed a final decree on 6th January, 1988 and determined a sum of Rs. 26,33016.33 paise as due by way of mesne profits. It awarded simple interest thereon at the rate of 13% per annum till realization. It also passed a decree for Rs. 67,111.37 paise in pursuance of prayer in para 18(b) of the plaint with simple interest at the rate of 6% per annum w.e.f. 5th May, 1969 till realisation. 4. The appellants appeal....
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..... Adjustment of admitted liability of Pravinlal towards the partnership firm in the sum of Rs. 4,13,364.24 paise. Point No. 1 7. So far as the question of determination of quantum of mesne profit is concerned the liability to pay is not being disputed. The only dispute is with respect to the determination of amount payable by way of mesne profits. As pointed out earlier the Division Bench of the High Court had appointed a Commission headed by a retired Judge of the Madras High Court and assisted by two Chartered Accountants, one nominated by each party, to carry out the exercise regarding determination of mesne profits. The Commission filed its report in the High Court. The High Court arrived at a finding regarding quantum of mesne profits after looking into the accounts, the report of Commission and other relevant facts and material. We have no reason to differ with the view of the High Court on this aspect. We are not required to reappreciate the material. As a matter of fact during the course of hearing, counsel for the appellant indicated willingness to go by the Commissioner's report in this behalf. Therefore, we accept the finding of the High Court on this issue. To....
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.... amount. The said section is reproduced below: "34(1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent, per annum as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment or to such earlier date as the Court thinks fit. (2) Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefore shall not lie." 11. Our attention was invited to para 18(b) of the plaint in which decree for accounts of the partnership firm to the extent of 30% share of Pravinlal is sought alongwith interest at the rate of 6% per annum from 5th May, 1969. The trial Court passed a prelimina....
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....d not be said to be a commercial transaction so as to attract rate of interest charged by nationalised banks from time to time on commercial transactions; (d) In view of Sections 13 and 97 of the Code of Civil Procedure (Amendment) Act 1976, the present suit having been instituted prior to amendment of the C.P.C., interest could be awarded as per provisions of unamended Section 34 only. Unamended Section 34 permitted interest maximum at the rate of 6% per annum from the date of decree till realisation. Clause (e) of Sub-section (2) of Section 97 of the Amending Act of 1976 is reproduced as under: "(e) the provisions of Section 34 of the principal Act, as amended by Section 13 of this Act, shall not affect the rate at which interest may be allowed on a decree in any suit instituted before the commencement of the said Section 13 and interest on a decree passed in such suit shall be ordered in accordance with the provisions of Section 34 as they stood before the commencement of the said Section 13 as if the said Section 13 had not come into force;" (e) Amendment of plaint once allowed relates back to the date of original plaint. Therefore, in view of the spe....
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....leadings and the object of allowing amendment of pleadings is to determine the real questions in controversy between the parties. This means the parties have to be given a chance to contest the questions in controversy and the Court has to give its decision ultimately on such contested issues. This procedure was not followed in the present case. The procedure followed is wholly illegal. This Court had occasion to pronounce on this issue in J. Jermons v. Aliammal and Ors. AIR1999SC3041 . It was held that a new plea cannot be allowed to be raised without effecting amendment of pleadings, without giving reasonable opportunity to the opposite party to file further pleadings and adduce evidence. Thus the decision of the High Court in allowing interest on mesne profits at rate of interest charged by nationalised banks from time to time on commercial transactions is wholly illegal and unsustainable. As noted earlier even the High Court while passing the final decree felt that in its earlier order dated 16th December, 1985, it should not have proceeded on the basis of amended Section 34 of the Code of Civil Procedure while awarding interest at the rate charged by nationalised bank on comme....
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....ard of interest at the rate of 6% per annum on the amount found due on account of mesne profits to be calculated on an yearly basis as indicated earlier would be fair and reasonable in the facts and circumstances of the case. 18. We may now note the submission on behalf of the respondent in reply to the arguments of the appellants on the question of award of interest. The learned counsel for respondent only banked upon the fact that a Special Leave Petition against the preliminary decree dated 16th December, 1985 had been dismissed by this Court on an earlier occasion and according to the learned counsel, the consequence of that dismissal would be that the decision on the question of award of interest contained in the preliminary decree dated 16th December, 1985 had the seal of approval of this Court and therefore, it need not be interfered with at this stage. the learned counsel further argued that assuming that award of interest by the High Court as per the preliminary decree dated 16th December, 1985 was erroneous, it was not such an error as may render the decree a nullity. According to him the court had earlier declined to interfere with these findings therefore, at this st....
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....cceeds on point No. 2 i.e. with regard to award of interest on the decree passed by the Court with respect to prayers contained in para 18(b) and para 18(c) of the plaint. The appellant will be liable to pay interest under both the heads at the rate of 6% per annum. In the case of decree for mesne profits i.e. prayer as per para 18(c) of the plaint, the interest has to be calculated on yearly basis as indicated already at the rate of 6% per annum and on the lump sum amount of Rs. 39,41,920/- at the same rate from 6.8.1986 till realisation. Similarly on the decree for accounts as per prayer contained in para 18(b) of the plaint the respondent No. 1 will be entitled to interest at the rate of 6% per annum on the sum of Rs. 1,23,111.37 from 5th May, 1969 till realisation. Point No. 3 24. The learned counsel for the appellant vehemently argued that the admitted liability of Pravinlal towards the partnership in suit to the extent of Rs. 4,13,364.24 paise has to be adjusted against his share of the amount falling due to the plaintiff on accounts being taken. The High Court accepted the finding of the trial court that this amount stood already adjusted. The learned counsel for the a....
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....e cross appeals filed by the plaintiff in the suit against the judgment and decree dated 23rd September, 1993 passed by the Madras High Court. The respondent's appeals against the said judgment are Civil Appeals No. 6429-31/1995. all the appeals including the present appeals were heard together and are being disposed of in terms of the judgment in C.A.Nos. 6429-31/1995. In Civil Appeals No. 6484-86/1995, the appellant was plaintiff in the suit. Two questions have been raised. One pertains to reimbursement regarding payment of gratuity alleged to have been made by the plaintiff to the workers who came to her share along with the 1/3rd share in the Bengorm Tea Estate which she received in terms of the decree passed by the court below. The second issue sought to be raised by the appellant is with respect to the award to interest under the decree in her favour by the courts below. 31. so far as the question of reimbursement of the appellant regarding amount of gratuity paid by her to the workers who came to her share along with 1/3rd share in the Bengorm Tea Estate allotted to her in terms of the decree, the claim is totally untenable in our view. The learned counsel for the def....
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....on thereof against defendants 1 to 4 and/ or 6 in severally. (b) A decree for accounts against the defendants for the 30% share of Pravinlal Vithaldas Madhvani deceased in the defendant No. 6 in respect of profits and monies to his credits and in the assets of the firm including stocks in trade, stores and spares, standing crops, investments, provisions, reserves and goodwill as mentioned in paragraph 12 of the plaint and decree for the amount found to be due to the plaintiff as ascertained in this suit on enquiry with interest at 6% per annum from 4th May, 1969. (c) Decree for accounts for mesne profits and/ or illegal gains from 5th May, 1969 till payment as mentioned in paragraph 13 of the plaint and decree for the amount found to be due to the plaintiff as ascertained in this suit on enquiry with interest at 6th per annum from the date herein. (d) for appointment of Receiver (e) for the costs of the suit, and (f) for such other reliefs as to this Hon'ble Court may seem fit and proper in the circumstances of the case." 36. The Trial Court in terms of its judgment and preliminary decree dated 13.4.1978 did not grant any relief i....
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.... 4 liable to pay gratuity to workers from 5.5.1969 to 6.8.1986. The said order came to be challenged by the defendants by filing a C.R.P. being No. 337 of 1989. Another Interlocutory Application marked as I.A. No. 211 of 1988 was filed to incorporate the two items "missing articles" and "gratuity deposits" in the final decree passed in O.S. No. 1 of 1987 which was allowed. There against also the defendants preferred an appeal before the High Court which was marked as A.S. No. 350 of 1988. On 14.12.1990 an order was passed in I.A. No. 211 of 1988 amending the operative portion of the final decree where against also the defendants preferred a Civil Revision Application marked as C.R.P. No. 1008 of 1991. The trial Judge further made some corrections in the decree which again became a subject matter of Civil Revision Application before the High Court. By reason of the impugned judgment the High Court disposed of all the matters. The parties herein have preferred three appeals before this Court against the judgment of the High Court. 40. Various other interlocutory applications were also filed before the District Court. The orders passed thereon were subject matter of different Civil....
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....Firm. Even small items of expenditure like personal gifts made to sisters, hotel expenses, club expenses and the like find a place in the Firm Accounts. Defendants cannot be heard to say that club expenses and travel expenses were intended to promote the business since during the life time of Pravinlal no such expenses were incurred by the Firm. Further we find from Ex.A-129 that there were over drawings made by the defendants even beyond their capital contribution. And all the monies borrowed from Central Bank of India were diverted by the defendants to their own other Companies like Kodanadu Estate, Koshipathi Estate and Powraj Chemicals etc." 44. It also noticed the fact that the defendants had entered into transactions with their sister concerns. 45. Before the High Court, it is relevant to notice that it was contended that the genuineness of the said books of account was not disputed. The books of accounts, it was urged, also came to be accepted by the Income-Tax Department. 46. The High Court, however, on analyzing the materials on records found the said pleas to be unacceptable. By way of example, it noticed that while the price of green leaves per kilogram of tea w....
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.... claimed by the plaintiff." 48. It was further noticed that in any event the plaintiff could not be made liable for any part of the loss purported to have been suffered by the firm as it was for it to compensate the Plaintiff for the user of her share in the immovable properties and the mesne profit has to be worked out only after payment of such compensation. It, thus, came to the conclusion that irrespective of the fact as to whether the firm was earning any profit or not, the plaintiff was entitled to be suitably compensated. 49. The Court found that even if the Commissioner's report after making necessary correction of the mistakes contained therein is accepted, the plaintiff would be entitled to mesne profit amounting to a sum of Rs. 47,00,000/- which would exceed the amount claimed by her. 50. The Court noticed that the Auditor had filed a calculation memo wherefrom it would appear that the plaintiff's claim for her 1/3rd share of mesne profits comes to Rs. 1,63,08,623/-. The said figure was arrived at on the basis of the capital value of the entire tea Estate being Rs. 32,00,000/- in 1969. The High Court observed: "P.W. 2 Guha the Auditor has filed ....
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....e profit should have been considered strictly in terms of Order 20 Rule 12 of the code of Civil Procedure. The learned counsel would contend that having regard to the fact that there has been no suppression as regard the quantum of yield of tea from the tea estate and as no major irregularities have been found in respect thereof, the Commissioner could not be held to have committed a manifest error in relying on the books of account maintained by them. We do not agree. 53. Mesne profit has been defined in Section 2(12) of the Code of Civil Procedure to mean as profits which the person in wrongful possession of property actually received or might with ordinary diligence would have received therefrom, together with interest on such profits. 54. A decree for mesne profit was granted in favour of the plaintiff respondent for wrongful use of the property. The quantum of mesne profit can be arrived at by the High Court keeping in view the well-known principles of valuation for determining the same. The Court is not enjoined with any duty to accept the quantification determined only on the basis of books of account maintained by the defendants, particularly when the same had not bee....
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....overnment Pleader who had raised this objection, had not been instructed by the Chief Justice or the High Court to put in appearance on their behalf, the counsel did not pursue this contention further. Moreover, this is a pure question of law depending upon the interpretation of Article 371-D. If the argument holds good, it will make the decision of the Tribunal as having been given by an authority suffering from inherent lack of jurisdiction. Such a decision cannot be sustained merely by the doctrine of res judicata or estoppel as urged in the case." 57. In Dwarka Prasad Agarwal (D) By LRs. and Anr. v. B.D. Agarwal and Ors. AIR2003SC2686 , it is stated: "It is now well-settled that an order passed by a court without jurisdiction is a nullity. Any order passed or action taken pursuant thereto or in furtherance thereof would also be nullities. In the instant case, as the High Court did not have any jurisdiction to record the compromise for the reasons stated hereinbefore and in particular as no writ was required to be issued having regard to the fact that public law remedy could not have been resorted to, the impugned orders must be held to be illegal and without jurisdi....
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....dgment found that a sum of Rs. 5,34,993.94 is due to the plaintiff; where for the loan taken by the husband of the plaintiff as proprietor of Darjeeling Tea Plantation Company and liabilities towards Income Tax adjusted had already been deducted, the details whereof are as under: "Amount found payable Rs. 5,34,993.94 Less DTP Loan Rs. 4.13.364.24 Less towards Income tax Rs. 20,996.00 Less towards Firms Tax Rs. 33,522.33 (his share - 30% of Rs. 1,11 ,741.10) Rs. 4,67,882.57 Rs. 4,67,332,57 Balance Rs. 67,111.37 Missing Articles Rs. 56,000.00 TOTAL Rs. 1,23,111.37 The amounts receivable by the plaintiff were as under: Share in the assets of the firm: 1) 30% share of 4,17,887. 31 being difference of receivable over payable as par Balance Sheet of 4.5.1969 Rs. 1,25,306.34 2) 30% share of further claims on pro-rata basis for 4.5.63 on the basis of balance sheet and profit & loss account as on 30.8.69 Rs. 23,102.96 3) 33% share in the Goodwill of the firm as on 4.5.69 Rs. 3,45,139.34 &nb....
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....", as Lord Machaghten described 'a thing very easy to describe, very difficult to define', in Inland Revenue Commissioner v. Muller & Co. (1901) AC 223. 66. The term 'goodwill' signifies the value of the business in the hands of a successor, so far as increased by the continuity of the undertaking being preserved in the shape of the right to use the old name and otherwise. It is something more than a mere chance of probability of old customers maintaining their connection, though this is a material part of the practical fruits. 'Goodwill' may be the whole advantage belonging to the firm, its reputation as also connection thereof. It, thus, means that every affirmative advantage as contrasted with negative advantage that has been acquired in carrying on the business whether connected with the premises of business or its name or style everything connected with or carrying the benefit of the business. 67. In Halsbury's Laws of England (Fourth Edition) Volume 35 at page 114, the law is stated in the following terms: "201. Goodwill generally; right to use name; sale to a partner. The goodwill of the business carried on by a partnership forms pa....
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.... under the national health service to sell any part of the goodwill of his medical practice." 69. The goodwill has been claimed for the firm's continuous business since 1954. The court has proceeded to calculate the amount of goodwill on the basis of the profits derived by the firm for the last five years on an average. It is not contended that such a method is unknown in commercial field. Whenever a firm is dissolved the value of the goodwill has to be worked out and divided between the partners. 70. The District Judge as also the High Court had assigned sufficient and cogent reasons for awarding a sum of Rs. 3,45,139.14 towards the plaintiff's share in goodwill. The second defendant examining himself categorically stated that the firm is the only one which has been continuously doing business since 1954. We do not, therefore, find any infirmity in the judgment of the courts below in this regard. 71. So far as the loan amount to Rs. 4,13,364.24 is concerned, it appears that the same stood adjusted as far back as in the year 1972. 72. The learned District Judge in his judgment has recorded: "The debt due from M/s. Darjeeling Tea Plantations Company sand....