V. ANANTHA RAJU & ANR versus T.M. NARASIMHAN & ORS. on 26 October 2021

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[2021] 11 S.C.R. 860

SUPREME COURT REPORTS

[2021] 11 S.C.R.

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V. ANANTHA RAJU & ANR

v.

T.M. NARASIMHAN & ORS.

(Civil Appeal No. 6469 of 2021)

BOCTOBER 26, 2021

[L. NAGESWARA RAO, SANJIV KHANNA AND

B. R. GAVAI, JJ.]

Partnership – Share in the profit and loss – A partnershipfirm was constituted in the year 1986 – In 1992 the partnershipCfirm was re- constituted and the plaintiff no.1/appellant No.1 wasinducted as a partner with 50% share in profit and loss, along withoriginal partners, i.e., defendant Nos. 1 to 5 – It was howeverprovided in the 1992 Deed, that if plaintiff no.1 fails to bring in anamount of Rs.50,00,000/- as his capital contribution on or beforeD31.3.1993, his share in the firm would be only to the extent of 10%– The firm was again reconstituted in 1995, whereby the plaintiffno.2, son of the plaintiff no.1 was inducted as partner – As per1995 Deed, the share of the plaintiff Nos. 1 and 2 was to be 25%each – Differences arose between the parties in 2004 and aresolution was passed for expulsion of the plaintiffs from the firm –EA suit was filed by the plaintiffs for rendition of accounts and forreleasing their 50% share in the profits of the firm – Trial Courtheld that the plaintiffs together are entitled to 10% share in theprofits and losses of the partnership firm till their expulsion –Aggrieved, plaintiffs filed an appeal before the High Court, whichFwas dismissed – Before the Supreme Court, the plaintiffs/appellantscontended that the trial Court and the High Court erred in holdingthat they will have only 10% share in the profits and losses of thepartnership firm – Whereas, the respondents/defendants contendedthat 1995 Deed inadvertently mentioned that the plaintiffs will have25% share each – Held: Once the plaintiffs had specificallyGcontended that the terms of the Deed were amended by the 1995Deed, and the defendants admitted about the execution of the saiddocument, then the burden to prove mistake in the deed shifted uponthe defendants – In 1992 Deed, the share of plaintiff no.1 wasspecified as 50%, however, it was specifically mentioned that if heHfails to bring in an amount of Rs. 50,00,000/- as his capital contribution to the firm on or before 31.3.1993, his share would be10% – In the 1995 Deed, there was no mention regarding suchcontingency – In view of Section 91 of the Evidence Act, theevidentiary value of the 1995 Deed would stand on a much higherpedestal, as against the oral testimony of the parties – This court isunable to accept the contention of the defendants that the share inthe profits and losses of the partnership firm as mentioned in the1995 deed is inadvertent or a mistake in fact – If it was a mistake orinadvertence, nothing precluded the respondents/defendants fromrectifying the same between 1995 and 2004 – The trial court aswell as the High Court have erred in holding that the plaintiffstogether were entitled to only 10% share – Insofar as the expulsionof the plaintiffs is concerned, the trial court has given sound reasonsfor upholding the expulsion – No reason to interfere with the same.

Evidence Act, 1872 – ss. 91 and 92 – Discussed and explained.

Partly allowing the appeal, the Court

Conclusion

HELD: 1. This Court has held in Roop Kumar v. MohanThedani that the integration of the act consists in embodying it ina single utterance or memorial — commonly, a written one. Thisprocess of integration may be required by law, or it may beadopted voluntarily by the actor or actors and in the latter case,either wholly or partially. It has been held that the question thatis required to be considered is whether the particular documentwas intended by the parties to cover certain subjects of transactionbetween them to deprive of legal effect of all other utterances. Ithas been further held that the practical consequence of integrationis that its scattered parts, in their former and inchoate shape,have no longer any jural effect and they are replaced by a singleembodiment of the act. It has been held that when a jural act isembodied in a single memorial, all other utterances of the partieson the topic are legally immaterial for the purpose of determiningwhat are the terms of their act. It has been held that when personsexpress their agreements in writing, it is for the express purposeof getting rid of any indefiniteness and to put their ideas in suchshape that there can be no misunderstanding, which so oftenoccurs when reliance is placed upon oral statements. It has beenobserved that the written contracts presume deliberation on the AB

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Apart of the contracting parties and it is natural that they shouldbe treated with careful consideration by the courts and with adisinclination to disturb the conditions of matters as embodied inthem by the act of the parties. It has been held that the writteninstruments are entitled to a much higher degree of credit thanparol evidence. [Para 22][882-D-H]B

2. This Court has further held that Sections 91 and 92 ofthe Evidence Act would apply only when the document on theface of it contains or appears to contain all the terms of thecontract. It has been held that after the document has beenproduced to prove its terms under Section 91, the provisions ofCSection 92 come into operation for the purpose of excludingevidence of any oral agreement or statement for the purpose ofcontradicting, varying, adding or subtracting from its terms. Ithas been held that it would be inconvenient that matters in writingmade by advice and on consideration, and which finally importDthe certain truth of the agreement of parties should be controlledby averment of the parties to be proved by the uncertaintestimony of slippery memory. It has been held that when partiesdeliberately put their agreement into writing, it is conclusivelypresumed, between themselves and their privies, that theyintended the writing to form a full and final statement ofEtheir intentions, and one which should be placed beyond the reachof future controversy, bad faith and treacherous memory.[Para 23][883-A-D]

3. It could thus be seen that once the plaintiffs/appellantshad specifically contended that the terms of the 1992 Deed wereFamended/modified by the 1995 Deed, and the defendants/respondents admitted about the execution of the said document,i.e., the 1995 Deed, if it was the case of the defendants that theterms mentioned in the 1995 Deed were inadvertent or a mistakein fact, then the burden to prove the same shifted upon theGdefendants. In view of Section 92 of the Evidence Act, anyevidence with regard to oral agreement for the purpose ofcontradicting, varying, adding to, or subtracting from the termsof the written contract, would be excluded unless the case fallswithin any of the provisos provided in Section 92. The defendantshave attempted to bring their case within the first proviso toH

Section 92 of the Evidence Act, by contending that mentioning of25% share to each of the plaintiffs in the profits and losses of thepartnership firm was a mistake in fact. [Para 25][883-F-G;884-A]

4. Comparison of these two clauses 13 and 22 would revealthat in the 1992 Deed, though the share of the defendant Nos. 1to 5 in the profits and losses of the partnership firm was specifiedas 10%, the share of plaintiff No.1 was specified as 50%.However, it is specifically mentioned in the 1992 Deed, that inthe event, the plaintiff No.1 fails to bring in an amount ofRs.50,00,000/- (Rupees Fifty lakh) as his capital contribution tothe partnership firm on or before 31.3.1993, the share in the profitsand losses of the partnership firm of defendant Nos. 1 to 4 wouldbe 20% each and that of the plaintiff No.1 and the defendant No.5would be 10% each. [Para 35][888-A-C]

5. In the amended deed, i.e., the 1995 Deed, there is nomention regarding such contingency upon the plaintiff No.1depositing or not depositing an amount of Rs.50,00,000/- (RupeesFifty lakh). [Para 36][888-C]

6. What has happened between 1992 and 1995 isexclusively within the knowledge of the parties. Though theplaintiffs have averred that an amount of Rs.50,00,000/ (RupeesFifty lakh) was invested by the plaintiff No.1 in the interveningperiod, the same is denied by the defendants. However, in viewof Section 91 of the Evidence Act, the evidentiary value of the1995 Deed would stand on a much higher pedestal, as againstthe oral testimony of the parties. The 1995 Deed clearly showsthat it is executed after due deliberations, negotiations and mutualconsensus on the terms and conditions to be incorporated therein.By the 1995 Deed, 6 new partners have been admitted to thepartnership firm, whereas 5 minors have been admitted to thebenefit of the partnership firm. The contention of the defendants,that the share of the plaintiff Nos. 1 and 2 in the profits and lossesof the partnership firm, mentioned as 25% each, is by mistakeand, in fact, is only 5% each, does not sound logical and reasoned.If it was by mistake or inadvertence, nothing precluded thedefendants from rectifying the same between 1995 and 2004.[Para 37][888-D-F]

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A7. In this factual background, this Court of the consideredview that the trial court as well as the High Court have erred inholding that the plaintiffs together were entitled to only 10% sharein the profits and losses of the partnership firm till 18.6.2004.The judgment and decree passed by the trial court, as affirmedby the High Court, holding that the plaintiffs together have 10%Bshare in the profits and losses of the partnership firm is modified.It is declared and decreed that the plaintiffs together are entitledto 50% share in the profits and losses of the partnership firm till18.6.2004. [Paras 39 and 43][889-E-F; 890-B-C]

Roop Kumar v. Mohan Thedani (2003) 6 SCC 595 :C[2003] 3 SCR 292 – relied on.

Gangabai w/o Rambilas Gilda (Smt.) v. Chhabubai w/oPukharajji Gandhi (Smt.) (1982) 1 SCC 4 : [1982] 1SCR 1176; Ishwar Dass Jain (Dead) Through Lrs. v.Sohan Lal (Dead) by Lrs. (2000) 1 SCC 434 : [1999] 5DSuppl. SCR 24 – referred to.

Case Law Referecne

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6469of 2021.

From the Judgment and Order dated 27.02.2015 of the High Courtof Karnataka at Bengaluru in R.F.A. No.1111 of 2008.

FR. Basant, Sr. Adv., Jay Kishor Singh, Manu Krishnan G., MohitRaj, Advs. for the Appellants.

Balaji Srinivasan, Adv. for the Respondents.

The Judgment of the Court was delivered by GB. R. GAVAI, J.

1. Leave granted.

2. The present appeal challenges the judgment and order passedby the Division Bench of the High Court of Karnataka at Bengalurudated 27.2.2015, thereby, dismissing the first appeal being R.F.A. No.1111

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of 2008, filed by the appellants and confirming the judgment and decreepassed by the XXXIII Additional City Civil & Sessions Judge, Bangalorecity dated 18.8.2008, vide which the suit being O.S. No.5622 of 2004(hereinafter referred to as “the said suit”) filed by the appellants/plaintiffscame to be partly decreed.

3. The facts, in brief, giving rise to the present appeal are asunder.

The parties hereinafter will be referred to as per their status inthe said suit.

A partnership firm, namely, M/s Selwel Combines (hereinafterreferred to as “the partnership firm”) came to be constituted in the year1986. Vide Partnership Deed dated 30.10.1992 (hereinafter referred toas “the 1992 Deed”), the partnership firm was re-constituted and theplaintiff No.1 (Appellant No.1 herein) was inducted as a partner alongwith original partners, i.e., defendant Nos. 1 to 5. As per the 1992 Deed,the plaintiff No.1 was to have 50% share in the profits and losses of thepartnership firm. It was however provided in the 1992 Deed, that if theplaintiff No.1 fails to bring in an amount of Rs.50,00,000/- (Rupees Fiftylakh) as his capital contribution to the partnership firm on or before31.3.1993, his share in the profits and losses of the partnership firmwould be only to the extent of 10%.

On 2.11.1992, the partnership firm obtained a property on leasefor 99 years and constructed a commercial building thereon. The buildingwas leased out, which fetched a monthly rent of Rs.22,05,532/-approximately.

Vide the Deed of Amendment of Partnership dated 18.8.1995(hereinafter referred to as “the 1995 Deed”), the partnership firm wasagain reconstituted, whereby the plaintiff No.2, son of the plaintiff No.1,and defendant Nos. 6 to 11 were inducted as partners and defendantNos. 12 to 16 were admitted to the benefit of the partnership firm. Asper the 1995 Deed, the share of the plaintiff Nos. 1 and 2 in the profitsand losses of the partnership firm was to be 25% each.

It is the contention of the plaintiffs that vide another Deed ofAmendment of Partnership dated 22.05.1996, the partnership firm wasreconstituted, whereby the defendant No.12 was inducted as a partnerand the defendant Nos. 13 to 16 were continued to be entitled for thebenefits of the partnership firm. However, this fact is disputed by thecontesting respondents.

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AIt appears that in the year 2004, differences arose between theplaintiffs and the defendants with regard to the affairs of the partnershipfirm. On 8.5.2004, the plaintiffs issued a legal notice to the defendants/partners, demanding accounts right from the inception of the partnershipfirm and their share of profits.BDefendant No.1 replied to the plaintiffs’ notice dated 8.5.2004 bycommunication dated 12.5.2004. It was stated in the said reply that theplaintiffs together were entitled only to 10% share in the profits andlosses of the partnership firm and that mentioning of 25% share each inthe 1995 Deed was only a mistake of record.

CIn turn, a show cause notice was issued by the defendants/partnersto the plaintiffs on 8.6.2004 with regard to the acts and omissions on thepart of the plaintiffs being contrary to the interests of the partnershipfirm and other partners.

Thereafter, again, there was exchange of communication betweenDthe plaintiffs and the defendants. According to the plaintiffs, in the meetingof the partners, held on 18.6.2004, it was resolved to expel the defendantNo.1 from the partnership firm. However, as per the defendants, aresolution was passed on the same day, i.e., 18.6.2004, resolving expulsionof the plaintiffs from the partnership firm.

In this background, the said suit came to be filed by the plaintiffsEfor rendition of accounts with effect from 30.10.1992 and for releasinga sum of Rs.5,48,06,729/- being their 50% share in the profits of thepartnership firm. The claim of the plaintiffs was resisted by the defendantNo.1 by filing a written statement dated 9.9.2005; defendant Nos. 2, 3, 7to 12 by filing their joint written statement dated 21.10.2005; andFdefendant No. 5 by filing written statement dated 29.10.2007.

The XXXIII Additional City Civil & Sessions Judge, Bangalore,framed the following issues and answered them as such.

“17. On the above pleadings of the parties, the following issueshave been framed for consideration:G

1. Whether the suit of plaintiffs is bad for non-joinder ofnecessary party that is M/s Selwel Combines?

2. Whether the suit of plaintiffs is bad for mis-joinder namelydefendant No. 17 to 19?

H3.Whether the suit of plaintiffs is barred by limitation?

4. Whether the plaintiffs prove that they have got 25% shareAeach in the M/s Selwel Combines?

5. Whether the plaintiffs are entitled to the relief ofRs.5,48,06,729/-?

6. Whether the defendant No. 1, 2 and 5 proves that theBexpelled plaintiffs have no locus-standi to seek accounts ofthe said firm?

7. What order or decree?

19. My findings on the above issues are as under:

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Issue No.7As per final order.”

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While partly decreeing the suit, holding that the plaintiffs togetherare entitled to 10% share in the profits and losses of the partnership firmtill 18.6.2004, and that from 18.6.2004, they were expelled partners ofthe partnership firm, the trial court vide the judgment and order dated18.8.2008 directed that the partnership firm had to be made as party inthe final decree proceedings. The other defendants-partners were alsogranted liberty to apply to the Court during final decree proceedings fortheir declaration of profit and loss share by paying necessary court fee.The trial court further directed the partnership firm and the defendantNo.1 to produce all the accounts, balance sheets, returns filed beforeIncome Tax authorities and the bank documents and such otherdocuments for the period from 30.10.1992 till 18.6.2004, before anindependent and impartial auditor for drawing the final decree.

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Being aggrieved thereby, the plaintiffs preferred an appeal beingR.F.A. No.1111 of 2008 before the High Court of Karnataka atBengaluru. The Division Bench of the Karnataka High Court, by the H

Aimpugned judgment and order dated 27.2.2015, dismissed the said appeal.Being aggrieved thereby, the plaintiffs have approached this Court byway of present appeal by special leave.

4. We have heard Shri R. Basant, learned Senior Counselappearing on behalf of the plaintiffs/appellants and Shri Balaji Srinivasan,Blearned counsel appearing on behalf of the defendants/respondent Nos.1 and 2. Though service of notice is complete on the other respondents,no one has entered appearance on their behalf.

5. Shri R. Basant, learned Senior Counsel, appearing on behalf ofthe appellants, submitted that both the trial court and the High CourtChave grossly erred in holding that the plaintiffs will have only 10% sharein the profits and losses of the partnership firm. He submitted that thefinding, that since the plaintiffs failed to prove that they have invested anamount of Rs.50,00,000/- (Rupees Fifty lakh) and as such, they are notentitled to 50% share but only 10% share in the profits and losses of thepartnership firm, is totally erroneous. Learned Senior Counsel submitsDthat the 1992 Deed was drastically amended vide the 1995 Deed. Hesubmits that, though the 1992 Deed had provided that the share of theplaintiff No.1 in the profits and losses of the partnership firm was 50%and it will be reduced to 10% in the event the plaintiff No.1 does notcontribute an amount of Rs.50,00,000/- (Rupees Fifty lakh) towards capitalEof the partnership firm, there was no such stipulation in the 1995 Deed.The learned Senior Counsel submits that, as a matter of fact, the plaintiffshad invested the said amount of Rs.50,00,000/- (Rupees Fifty lakh). Hesubmits that, in any case, the 1995 Deed clearly provides that the plaintiffNo.1 and the plaintiff No.2, who was inducted into the partnership firmby the 1995 Deed, would be entitled to 25% share each in the profits andFlosses of the partnership firm. He submits that the same cannot be amistake or error. He submits that if the share of all the partners asspecified in the 1995 Deed is calculated, it would clearly reveal that itprovided for 25% share for each of the plaintiffs. The learned SeniorCounsel, therefore, submits that both the trial court and the High CourtGhave grossly erred in totally ignoring the specific provision contained inthe 1995 Deed.

6. Shri Balaji Srinivasan, learned counsel, appearing on behalf ofthe respondent Nos. 1 and 2, submitted that the finding of fact, on thebasis of the appreciation of evidence, by the trial court as well as theHHigh Court warrants no interference. He submits that the perusal of the 1992 Deed as well as the 1995 Deed would clearly show that the plaintiffNo.1 could not have 50% share in the profits and losses of the partnershipfirm unless he invested an amount of Rs.50,00,000/- (Rupees Fifty lakh).He submits that the evidence of plaintiff No.2 as PW-1 would itselfshow that he has admitted that he had no material to establish that anamount of Rs.50,00,000/- (Rupees Fifty lakh) was invested by the plaintiffNo.1 in the partnership firm. Learned counsel further submits that theplaintiff No.1 has failed to step into the witness box and as such, anadverse inference has to be drawn against him. Learned counsel furthersubmits that as per the 1992 Deed, the plaintiff No.1 was entitled only to10% share in the profits and losses of the partnership firm since hefailed to invest an amount of Rs.50,00,000/- (Rupees Fifty lakh). By the1995 Deed, the plaintiff No.2, who is son of the plaintiff No.1, came tobe inducted and the 10% share of the plaintiff No.1 was to be dividedamongst them. However, inadvertently, it came to be mentioned in the1995 Deed that the plaintiffs will have 25% share each. Learned counsel,therefore, submits that no interference is warranted and the appealdeserves to be dismissed.

7. In the present case, most of the facts are undisputed. It is not indispute that vide the 1992 Deed (Exhibit D-3), the partnership firm wasreconstituted and the plaintiff No.1 was inducted as a partner along withthe original partners, i.e., the defendant Nos. 1 to 5. As per clause 4 ofthe 1992 Deed, the plaintiff No.1, i.e., the incoming partner, was tocontribute an amount of Rs.50,00,000/- (Rupees Fifty lakh) towardscapital, on or before 31.3.1993. As per clause 22 of the 1992 Deed, theshare of the plaintiff No.1 in the profits and losses of the partnershipfirm was to be 50% if he contributed an amount of Rs.50,00,000/- (RupeesFifty lakh) on or before 31.3.1993. Failing which, the same was to beonly 10%.

8. It is also not in dispute that on 2.11.1992, the partnership firmobtained a property on lease for a period of 99 years and constructed acommercial building, which was leased out, and the monthly rent of whichwas Rs.22,05,532/- approximately.

9. It will be relevant to refer to paragraphs 2 and 4 of the plaint inthe said suit, filed by the plaintiffs, in the City Civil Court at Bangalore:

“2. A firm by name M/s Selwel Combines was constituted in theyear 1986 and the same was registered in 1990. By means ofReconstitution/Partnership Amendment Deed dated 30th of AB

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October 1992, the partnership firm was reconstituted consistingof the first plaintiff and defendant 1 to 5 as the partners of thefirm. The capital as invested under the partnership Deed was toan extent of Rs. 25,000/- each by each one of the defendants 1 to5 and a sum of Rs. 50,00,000/- (Rupees Fifty Lakh only) wasinvested by the first plaintiff alone. For the purposes of operationof the Bank Accounts, the first defendant was constituted as theManaging Partner who was entrusted with the duty to operatethe bank Accounts. The first plaintiff was entitled to a profit shareof 50% and each one defendants 1 to 5 were entitled to 10%each. A copy of the Partnership Deed dated 30.10.1992 isproduced herewith and marked as DOCUMENT NO. 1.

4. The Partnership was again reconstituted by the PartnershipAmendment Deed dated 18.8.1995 by virtue of which the secondplaintiff and defendants 6 to 11 were to 16 who were them minorswere also admitted to the benefit of the partnership firm. Thefirm was constituted to carry out the activities of building anddevelopment. As per the Reconstitution Deed, the capital of thefirm was the contribution which were already made by the existingpartners and each one of the incoming partners had to contributea sum of Rs. 10,000/-. To reconstitute it further it is provided thatthe first plaintiff was entitled to 25% of the profit share and thesecond plaintiff who is none other than the some of the first plaintiffwas also entitled to 25% of the profit share. The other partnerswere entitled to various extent of shares as contained in theReconstitution Deed dated 18.08.1995. For the purposes ofoperation of the Bank Accounts, the first defendant was constitutedas a Managing Partner who was entrusted with the duties ofoperation of the Bank Accounts. The construction activities hadto be looked after by the first plaintiff. The Partnership Deedfurther provided that the partners could withdraw the amountsonly if agreed mutually between the partners from time to time.Clause 10 of the agreement provided that any of the partner asper the Reconstitution Deed were entitled to appear in person orcould authorize any person to appear on behalf of the firm beforeany judicial or quasi-judicial authority. Therefore as per the termsof the Reconstitution Deed, the plaintiffs together are entitled to aprofit share up to 50%. Copy of the Reconstitution Deed dated18.08.1995 is produced and marked as DOCUMENT NO. 2.”

10. Perusal of the aforesaid paragraphs would reveal that theplaintiffs have specifically stated that, in pursuance of the 1992 Deed, asum of Rs.50,00,000/- (Rupees Fifty lakh) was invested by the plaintiffNo.1 alone. It has been further averred that the plaintiff No.1 was entitledto a share of 50% and each one of the defendant Nos. 1 to 5 wereentitled to share of 10% each in the profits and losses of the partnershipfirm. The plaintiffs have further averred that the partnership firm wasagain reconstituted on 18.8.1995 by the 1995 Deed, by virtue of which,the plaintiff No.2 as well as defendant Nos. 6 to 11 were inducted aspartners in the partnership firm. Vide the 1995 Deed, the defendantNos. 12 to 16, who were then minors, were also admitted to the benefitof the partnership firm. It has been averred that after the reconstitutionof the partnership firm as per the 1995 Deed, it was provided that theplaintiff No.1 was entitled to 25% share in the profits and losses of thepartnership firm, so also, the plaintiff No.2, who is the son of the plaintiffNo.1, was entitled to 25% share in the profits and losses of the partnershipfirm. It has further been averred that the share of the rest of the partners,i.e., the defendant Nos. 1 to 11, in the profits and losses of the partnershipfirm is as mentioned in clause 13 of the 1995 Deed, whereas the defendantNos. 12 to 16 were entitled to 2% share in the profits of the partnershipfirm.

11. It is the specific case of the plaintiffs in the plaint that thepartnership firm on 2.11.1992 had obtained a property bearing No.30,situated at Cunningham Road, Bangalore-560 052, admeasuring an extentof about 2972 sq. mtrs. on lease, for a period of 99 years. It is furtheraverred in the plaint that subsequent to the acquisition of the leaseholdrights, the partnership firm undertook the construction activities with theinvestments, which were made according to the terms of the partnershipdeed. It is the case of the plaintiffs that after the construction of thebuilding was complete, the entire building was leased out in favour of thedefendant No.17. It is averred that the defendant Nos. 18 and 19 weremade parties to the said suit since the current account of the partnershipfirm was with the respondent No.18 - Bank, of which, the respondentNo.19 was the Manager. It is further averred by the plaintiffs in theplaint that in the returns filed before the Income Tax Authorities, theshare of the plaintiffs in the profits and losses of the partnership firmwas shown as 25% each.

12. It will further be relevant to reproduce paragraph 9 of thewritten statement, filed on behalf of the defendant No.1, in the said suit:

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SUPREME COURT REPORTS

A“9. It is true that the firm was reconstituted in the year 1995 andthe Defendants No. 6 to 11 are admitted as partners and furtherDefendants No. 12 to 16 are admitted for the benefit of the firm.They number of partners of the firm, nature of activities of thefirm and other details pertaining to the partnership deed is dulyrecorded in the partnership deed and subsequent reconstitutionBdeeds. In the light of the facts stated supra, the 1[st] plaintiff wasnot entitled to 25% share in the profits. Accordingly, at the time ofinduction of 2[nd] plaintiff as a partner to the firm, it was agreedbetween the partners that the 1[st] plaintiff would be entitled topass on 50% of his right to the 2[nd] plaintiff. Accordingly, theCplaintiffs No.1 and 2 are only entitled to 10% share. The conditionincorporated in the partnership deed dated 30-10-1992 had notbeen rectified or varied in any manner. The reference to the shareof the party has come into documentation of the subsequent deedsbased on the preceding document, but without specific noting ofthe noncompliance of the condition precedent to be performed byDthe 1st plaintiff. However, due to proximate relationship betweenthe partners, the same was agreed to be understood between theparties as per the original terms.”

13. It will also be relevant to refer to paragraph 4 of the writtenstatement, filed on behalf of the defendant No.2, in the said suit:

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“4. The facts regarding the constitution and re-constitution of thefirm M/s. Selwel Combines is a matter of record similarly, theaccounts of the firm is also a matter of record. In this context, it isrelevant to mention that the Plaintiff No.1 was inducted into thefirm as a partner and he had assured to invest Rs. 50,00,000/- onFor before 31.03.1993. Under that circumstance, he was entitledto 50% of the share in firm. If he failed to comply with the same,he is only entitled to 10% share. Subsequently his; half share hasbeen transferred to the Plaintiff No.2. By inadvertence by shareratio of the Plaintiffs has been reflected as 50% in someGdocuments and the same is subject to rectification. The samewas not immediately rectified or altered due to the cordialrelationship between the parties and since there was no actualdistribution of funds in that ratio. Any statement made contrary tothe same is hereby denied. In fact, the Plaintiffs in the presenceof the other partners have accepted and admitted this fact. TheyHare estopped from pleading anything to the contrary.”

14. The stand taken by the rest of the defendants in their writtenstatements is on the same lines as taken by the defendant Nos. 1 and 2.

15. It could thus be seen that the defendants have not disputedthe fact with regard to the reconstitution of the partnership firm in theyear 1995 vide the 1995 Deed. They have also not disputed the fact thatthe defendant Nos. 6 to 11 were inducted as partners in the partnershipfirm and that the defendant Nos. 12 to 16 were admitted to the share inthe profits of the partnership firm vide the 1995 Deed. It is however,their case that the plaintiff No.1 was entitled to 50% share in the profitsand losses of the partnership firm, only if he invested an amount ofRs.50,00,000/- (Rupees Fifty lakh) on or before 31.3.1993. It is theircase that, if the same was not complied with, he was entitled to only10% share in the profits and losses of the partnership firm. It is theirstand that, by inadvertence, the profit and loss share ratio of the plaintiffshad been reflected as 50% in some documents and the same was subjectto rectification. It is their further case that the same was not immediatelyrectified or altered due to the cordial relationship between the parties.

16. It could thus be seen that the defendants have not disputedabout the reconstitution of the partnership firm by the 1995 Deed. Theyhave also not disputed that in the 1995 Deed, the share of plaintiff Nos.1 and 2 in the profits and losses of the partnership firm is mentioned as25% each. However, it is their case that, since in pursuance of the 1992Deed, the plaintiff No.1 had not invested an amount of Rs.50,00,000/-(Rupees Fifty lakh), his share remained to be only 10%, half of whichwas given to his son, i.e., the plaintiff No.2, vide the 1995 Deed. It istheir case that the plaintiffs’ share of 25% each, as mentioned in the1995 Deed, is by inadvertence or a mistake in fact, and the same wassubject to rectification.

17. It will be apposite to refer to relevant part of the affidavit,filed by the defendant No.1 under Order XVIII Rule 4 of the Code ofCivil Procedure, 1908, in the court of the City Civil Judge at Bangalore,in the said suit:

“5. …In this context, it is pertinent to mention that on 18.8.1995, adeed for reconstitution of partnership was entered into therebyadmitting the plaintiff No.2 as an additional partner. At the time ofinduction of plaintiff No.2, the plaintiff No.1 had proposedadmission of plaintiff No.2 with an intention to bifurcate his sharein the firm by transferring half of his share to his son who is A

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plaintiff No.2. The plaintiff No.1 in terms of the agreement failedto pay towards capital of the firm the sum of Rs.50 lakhs within31.3.1993 and also until this day. Under such circumstances, inreality, the plaintiff No.1 was holding only 10% share in the firmand consequently by virtue of transfer of his half share the 5%was transferred in favour of plaintiff No.2.

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6. I state that on account of failure of plaintiff No.1 to contributeRs.50 lakhs before 31.3.1993 having not been noted, an error hadcrept in the account of the firm initially reflecting the share ofplaintiff No. 1 as 50% and thereafter reflecting the share ofplaintiffs @ 25% each subsequent to induction of plaintiff No.2.”

C18. It could thus be seen that even in his affidavit in lieu ofexamination-in-chief, the defendant No.1 admits about the execution ofthe 1995 Deed.

19. At this stage, it will be relevant to refer to Sections 17, 91 andD92 of the Indian Evidence Act, 1872 (hereinafter referred to as ‘theEvidence Act’):

“17. Admission defined.—An admission is a statement, oral ordocumentary or contained in electronic form, which suggests anyinference as to any fact in issue or relevant fact, and which isEmade by any of the persons, and under the circumstances,hereinafter mentioned.

91. Evidence of terms of contracts, grants and otherdispositions of property reduced to form of document.—

When the terms of a contract, or of a grant, or of any otherFdisposition of property, have been reduced to the form of adocument, and in all cases in which any matter is required by lawto be reduced to the form of a document, no evidence shall begiven in proof of the terms of such contract, grant or otherdisposition of property, or of such matter, except the documentitself, or secondary evidence of its contents in cases in whichGsecondary evidence is admissible under the provisions hereinbeforecontained.

Exception 1.—When a public officer is required by law tobe appointed in writing, and when it is shown that any particularperson has acted as such officer, the writing by which he isHappointed need not be proved.

Exception 2.—Wills admitted to probate in India may beproved by the probate.

Explanation 1.—This section applies equally to cases inwhich the contracts, grants or dispositions of property referred toare contained in one document, and to cases in which they arecontained in more documents than one.

Explanation 2.—Where there are more originals than one,one original only need be proved.

Explanation 3.—The statement, in any documentwhatever, of a fact other than the facts referred to in this section,shall not preclude the admission of oral evidence as to the samefact.

Illustrations

(a) If a contract be contained in several letters, all the lettersin which it is contained must be proved.

(b) If a contract is contained in a bill of exchange, the bill ofexchange must be proved.

(c) If a bill of exchange is drawn in a set of three, one onlyneed be proved.

(d) A contracts, in writing, with B, for the delivery of indigoupon certain terms. The contract mentions the fact that B hadpaid A the price of other indigo contracted for verbally on anotheroccasion.

Oral evidence is offered that no payment was made for theother indigo. The evidence is admissible.

(e) A gives B a receipt for money paid by B.

Oral evidence is offered of the payment. The evidence isadmissible.

92. Exclusion of evidence of oral agreement.—When theterms of any such contract, grant or other disposition of property,or any matter required by law to be reduced to the form of adocument, have been proved according to the last section, noevidence of any oral agreement or statement shall be admitted, asbetween the parties to any such instrument or their representativesin interest, for the purpose of contradicting, varying, adding to, orsubtracting from, its terms:

A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

Proviso (1).—Any fact may be proved which wouldinvalidate any document, or which would entitle any person toany decree or order relating thereto; such as fraud, intimidation,illegality, want of due execution, want of capacity in any contractingparty, want or failure of consideration, or mistake in fact or law.

Proviso (2).—The existence of any separate oral agreementas to any matter on which a document is silent, and which is notinconsistent with its terms, may be proved. In considering whetheror not this proviso applies, the Court shall have regard to the degreeof formality of the document.

Proviso (3).—The existence of any separate oralagreement, constituting a condition precedent to the attaching ofany obligation under any such contract, grant or disposition ofproperty, may be proved.

Proviso (4).—The existence of any distinct subsequent oralagreement to rescind or modify any such contract, grant ordisposition of property, may be proved, except in cases in whichsuch contract, grant or disposition of property is by law requiredto be in writing, or has been registered according to the law inforce for the time being as to the registration of documents.

Proviso (5).—Any usage or custom by which incidents notexpressly mentioned in any contract are usually annexed tocontracts of that description, may be proved:

Provided that the annexing of such incident would not berepugnant to, or inconsistent with, the express terms of the contract.

Proviso (6).—Any fact may be proved which shows inwhat manner the language of a document is related to existingfacts.

Illustrations

(a) A policy of insurance is effected on goods “in shipsfrom Calcutta to London”. The goods are shipped in a particularship which is lost. The fact that that particular ship was orallyexcepted from the policy, cannot be proved.

(b) A agrees absolutely in writing to pay B Rs 1000 on the1st March, 1873. The fact that, at the same time, an oral agreement was made that the money should not be paid till the thirty-firstMarch, cannot be proved.

(c) An estate called “the Rampur tea estate” is sold by adeed which contains a map of the property sold. The fact thatland not included in the map had always been regarded as part ofthe estate and was meant to pass by the deed, cannot be proved.

(d) A enters into a written contract with B to work certainmines, the property of B, upon certain terms. A was induced todo so by a misrepresentation of B’s as to their value. This factmay be proved.

(e) A institutes a suit against B for the specific performanceof a contract, and also prays that the contract may be reformedas to one of its provisions, as that provision was inserted in it bymistake. A may prove that such a mistake was made as would bylaw entitle him to have the contract reformed.

(f) A orders goods of B by a letter in which nothing is saidas to the time of payment, and accepts the goods ondelivery. B sues A for the price. A may show that the goods weresupplied on credit for a term still unexpired.

(g) A sells B a horse and verbally warrants himsound. A gives B a paper in these words “Bought of A a horsefor Rs 500”. B may prove the verbal warranty.

(h) A hires lodgings of B, and gives B a card on which iswritten—”Rooms, Rs 200 a month”. A may prove a verbalagreement that these terms were to include partial board.

A hires lodgings of B for a year, and a regularly stampedagreement, drawn up by an attorney, is made between them. It issilent on the subject of board. A may not prove that board wasincluded in the terms verbally.

(i) A applies to B for a debt due to A by sending a receiptfor the money. B keeps the receipt and does not send the money.In a suit for the amount, A may prove this.

(j) A and B make a contract in writing to take effect uponthe happening of a certain contingency. The writing is left with B,who sues A upon it. A may show the circumstances under whichit was delivered.”

AB

C

D

E

F

G

H

A20. It could thus be seen that the admission given by the defendantNo.1 in his written statement as well as in his affidavit in lieu ofexamination-in-chief, that the partners have executed the 1995 Deed, isunambiguous and clear. In the light of this admission by the defendantNos. 1, 5, and 2, 3, 7 to 12, it will be relevant to consider the effect ofSections 91 and 92 of the Evidence Act in the present case.B

A

21. This Court in the case of Roop Kumar v. Mohan Thedani[1]has elaborately considered the earlier judgments of this Court on theissue in hand and has held as under:

“12. Before we deal with the factual aspects, it would be properCto deal with the plea relating to scope and ambit of Sections 91and 92 of the Evidence Act.

13. Section 91 relates to evidence of terms of contract, grantsand other disposition of properties reduced to form of document.This section merely forbids proving the contents of a writingDotherwise than by writing itself; it is covered by the ordinary ruleof law of evidence, applicable not merely to solemn writings ofthe sort named but to others known sometimes as the “best-evidence rule”. It is in reality declaring a doctrine of the substantivelaw, namely, in the case of a written contract, that all proceedingsand contemporaneous oral expressions of the thing are merged inEthe writing or displaced by it. (See Thayer’s Preliminary Lawon Evidence, p. 397 and p. 398; Phipson’s Evidence, 7th Edn.,p. 546; Wigmore’s Evidence, p. 2406.) It has been best describedby Wigmore stating that the rule is in no sense a rule of evidencebut a rule of substantive law. It does not exclude certain dataFbecause they are for one or another reason untrustworthy orundesirable means of evidencing some fact to be proved. It doesnot concern a probative mental process — the process of believingone fact on the faith of another. What the rule does is to declarethat certain kinds of facts are legally ineffective in the substantivelaw; and this of course (like any other ruling of substantive law)Gresults in forbidding the fact to be proved at all. But this prohibitionof proving it is merely that dramatic aspect of the process ofapplying the rule of substantive law. When a thing is not to beproved at all the rule of prohibition does not become a rule of

evidence merely because it comes into play when the counseloffers to “prove” it or “give evidence” of it; otherwise, any rule oflaw whatever might be reduced to a rule of evidence. It wouldbecome the legitimate progeny of the law of evidence. For thepurpose of specific varieties of jural effects — sale, contract etc.there are specific requirements varying according to the subject.On the contrary there are also certain fundamental elementscommon to all and capable of being generalised. Every jural actmay have the following four elements:

A

B

(a) the enaction or creation of the act;

(b) its integration or embodiment in a single memorial whenCdesired;

(c) its solemnization or fulfilment of the prescribed forms, ifany; and (d)the interpretation or application of the act to the externalobjects affected by it.

D

14. The first and fourth are necessarily involved in every juralact, and second and third may or may not become practicallyimportant, but are always possible elements.

15. The enaction or creation of an act is concerned with thequestion whether any jural act of the alleged tenor has beenconsummated; or, if consummated, whether the circumstancesattending its creation authorise its avoidance or annulment. Theintegration of the act consists in embodying it in a single utteranceor memorial — commonly, of course, a written one. This processof integration may be required by law, or it may be adoptedvoluntarily by the actor or actors and in the latter case, eitherwholly or partially. Thus, the question in its usual form is whetherthe particular document was intended by the parties to cover certainsubjects of transaction between them and, therefore, to depriveof legal effect all other utterances.

E

F

G

16. The practical consequence of integration is that its scatteredparts, in their former and inchoate shape, have no longer any juraleffect; they are replaced by a single embodiment of the act. Inother words, when a jural act is embodied in a single memorial allother utterances of the parties on the topic are legally immaterial H

Afor the purpose of determining what are the terms of their act.This rule is based upon an assumed intention on the part of thecontracting parties, evidenced by the existence of the writtencontract, to place themselves above the uncertainties of oralevidence and on a disinclination of the courts to defeat this object.When persons express their agreements in writing, it is for theBexpress purpose of getting rid of any indefiniteness and to puttheir ideas in such shape that there can be no misunderstanding,which so often occurs when reliance is placed upon oral statements.Written contracts presume deliberation on the part of thecontracting parties and it is natural they should be treated withCcareful consideration by the courts and with a disinclination todisturb the conditions of matters as embodied in them by the actof the parties. (See McKelvey’s Evidence, p. 294.) As observedin Greenlear’s Evidence, p. 563, one of the most common andimportant of the concrete rules presumed under the general notionthat the best evidence must be produced and that one with whichDthe phrase “best evidence” is now exclusively associated is therule that when the contents of a writing are to be proved, thewriting itself must be produced before the court or its absenceaccounted for before testimony to its contents is admitted.

17. It is likewise a general and most inflexible rule that whereverEwritten instruments are appointed, either by the requirement oflaw, or by the contract of the parties, to be the repositories andmemorials of truth, any other evidence is excluded from beingused either as a substitute for such instruments, or to contradictor alter them. This is a matter both of principle and policy. It is ofFprinciple because such instruments are in their own nature andorigin, entitled to a much higher degree of credit than parolevidence. It is of policy because it would be attended with greatmischief if those instruments, upon which men’s rights depended,were liable to be impeached by loose collateral evidence.(See Starkie on Evidence, p. 648.)

E

G

18. In Section 92 the legislature has prevented oral evidence beingadduced for the purpose of varying the contract as between theparties to the contract; but, no such limitations are imposed underSection 91. Having regard to the jural position of Sections 91 and92 and the deliberate omission from Section 91 of such words of H

limitation, it must be taken note of that even a third party if hewants to establish a particular contract between certain others,either when such contract has been reduced to in a document orwhere under the law such contract has to be in writing, can onlyprove such contract by the production of such writing.

19. Sections 91 and 92 apply only when the document on theface of it contains or appears to contain all the terms of thecontract. Section 91 is concerned solely with the mode of proofof a document with limitation imposed by Section 92 relates onlyto the parties to the document. If after the document has beenproduced to prove its terms under Section 91, provisions of Section92 come into operation for the purpose of excluding evidence ofany oral agreement or statement for the purpose of contradicting,varying, adding or subtracting from its terms. Sections 91 and 92in effect supplement each other. Section 91 would be inoperativewithout the aid of Section 92, and similarly Section 92 would beinoperative without the aid of Section 91.

20. The two sections, however, differ in some material particulars.Section 91 applies to all documents, whether they purport to disposeof rights or not, whereas Section 92 applies to documents whichcan be described as dispositive. Section 91 applies to documentswhich are both bilateral and unilateral, unlike Section 92 theapplication of which is confined to only bilateral documents.(See: Bai Hira Devi v. Official Assignee of Bombay [AIR 1958SC 448] .) Both these provisions are based on “best-evidencerule”. In Bacon’s Maxim Regulation 23, Lord Bacon said “Thelaw will not couple and mingle matters of specialty, which is ofthe higher account, with matter of averment which is of inferioraccount in law.” It would be inconvenient that matters in writingmade by advice and on consideration, and which finally importthe certain truth of the agreement of parties should be controlledby averment of the parties to be proved by the uncertain testimonyof slippery memory.

21. The grounds of exclusion of extrinsic evidence are: (i) to admitinferior evidence when law requires superior would amount tonullifying the law, and (ii) when parties have deliberately put theiragreement into writing, it is conclusively presumed, betweenthemselves and their privies, that they intended the writing to form A

B

C

D

E

F

G

H

Aa full and final statement of their intentions, and one which shouldbe placed beyond the reach of future controversy, bad faith andtreacherous memory.

22. This Court in Gangabai v. Chhabubai [(1982) 1 SCC 4:AIR 1982 SC 20] and Ishwar Dass Jain v. Sohan Lal [(2000) 1BSCC 434: AIR 2000 SC 426] with reference to Section 92(1) heldthat it is permissible to a party to a deed to contend that the deedwas not intended to be acted upon, but was only a sham document.The bar arises only when the document is relied upon and itsterms are sought to be varied and contradicted. Oral evidence isadmissible to show that document executed was never intendedCto operate as an agreement but that some other agreementaltogether, not recorded in the document, was entered into betweenthe parties.”

22. It could thus be seen that this Court has held that the integrationof the act consists in embodying it in a single utterance or memorial —Dcommonly, a written one. This process of integration may be required bylaw, or it may be adopted voluntarily by the actor or actors and in thelatter case, either wholly or partially. It has been held that the questionthat is required to be considered is whether the particular document wasintended by the parties to cover certain subjects of transaction betweenEthem to deprive of legal effect of all other utterances. It has been furtherheld that the practical consequence of integration is that its scatteredparts, in their former and inchoate shape, have no longer any jural effectand they are replaced by a single embodiment of the act. It has beenheld that when a jural act is embodied in a single memorial, all otherutterances of the parties on the topic are legally immaterial for the purposeFof determining what are the terms of their act. It has been held thatwhen persons express their agreements in writing, it is for the expresspurpose of getting rid of any indefiniteness and to put their ideas in suchshape that there can be no misunderstanding, which so often occurswhen reliance is placed upon oral statements. It has been observed thatGthe written contracts presume deliberation on the part of the contractingparties and it is natural that they should be treated with carefulconsideration by the courts and with a disinclination to disturb theconditions of matters as embodied in them by the act of the parties. Ithas been held that the written instruments are entitled to a much higherdegree of credit than parol evidence.H

23. This Court has further held that Sections 91 and 92 of theEvidence Act would apply only when the document on the face of itcontains or appears to contain all the terms of the contract. It has beenheld that after the document has been produced to prove its terms underSection 91, the provisions of Section 92 come into operation for thepurpose of excluding evidence of any oral agreement or statement forthe purpose of contradicting, varying, adding or subtracting from its terms.It has been held that it would be inconvenient that matters in writingmade by advice and on consideration, and which finally import the certaintruth of the agreement of parties should be controlled by averment ofthe parties to be proved by the uncertain testimony of slippery memory.It has been held that when parties deliberately put their agreement intowriting, it is conclusively presumed, between themselves and their privies,that they intended the writing to form a full and final statement of theirintentions, and one which should be placed beyond the reach of futurecontroversy, bad faith and treacherous memory.

24. Though referring to Gangabai w/o Rambilas Gilda (Smt.)v.Chhabubai w/o Pukharajji Gandhi (Smt.)[2] and Ishwar Dass Jain(Dead) Through Lrs. v. Sohan Lal (Dead) by Lrs.[3], it has been heldthat it is permissible for a party to a deed to contend that the deed wasnot intended to be acted upon, but was only a sham document, it wouldbe necessary to lead oral evidence to show that the document executedwas never intended to operate as an agreement but that some otheragreement altogether, not recorded in the document, was entered intobetween the parties.

25. It could thus be seen that once the plaintiffs had specificallycontended that the terms of the 1992 Deed were amended/modified bythe 1995 Deed, and the defendants admitted about the execution of thesaid document, i.e., the 1995 Deed, if it was the case of the defendantsthat the terms mentioned in the 1995 Deed were inadvertent or a mistakein fact, then the burden to prove the same shifted upon the defendants.In view of Section 92 of the Evidence Act, any evidence with regard tooral agreement for the purpose of contradicting, varying, adding to, orsubtracting from the terms of the written contract, would be excludedunless the case falls within any of the provisos provided in Section 92.The 2 (1982) 1 SCC 4

3 (2000) 1 SCC 434

A

B

C

D

E

F

G

H

Adefendants have attempted to bring their case within the first proviso toSection 92 of the Evidence Act, by contending that mentioning of 25%share to each of the plaintiffs in the profits and losses of the partnershipfirm was a mistake in fact.

26. It will also be relevant to examine the contention of theBdefendants, as to whether the share of the plaintiffs in the profits andlosses of the partnership firm, mentioned in the 1995 Deed, was due toinadvertence or was a mistake in fact.

27. It will be relevant to refer to the preamble of the 1995 Deed:

C“Whereas the Parties 1 to 6, hereto in pursuance of Deedof Partnership among themselves dated 30[th] October, 1992, havebeen carrying on business at 31/1.1 Cunningham Road Bangalore- 360052 as Builders and Developers under the name and style of“SELWEL COMBINES”.

D

AND the Parties of Seventh, Eight, Ninth, Tenth, Eleventh,Twelfth, Thirteenth parties have after negotiation agreed to jointhe partnership firm M/s Selwel Combines as Partners with effectfrom 18[th] August, 1995 and are referred tb as the IncomingPartners.

EAnd the Parties hereto have decided to admitted V.Vijaylakshmi Kumari R. Poornima, Master R. Manjunath MasterS. Ragavendra, Master S. Badrinath to the benefit of thispartnership AND whereas the parties of the First, Second, Third, Fourth,FFifth and Sixth parts have decided to continue· the business of theFirm “SELWEL COMBINES” after admitting parts of theSeventh, Eight, Ninth, Tenth, Eleventh, Twelth, Thirteenth partsas Partners and are referred to as continuing partners.

And whereas the Parties hereto after negotiations amountGthemselves have decided to amend the terms of partnership ofthe Firm M/s “SELWEL COMBINES” with effect from18.08.1995.

And whereas the parties hereto have decided to admit thefollowing minors to the benefit of Partnership as:H

And whereas parties hereto are desirous of reducing theterms and conditions of the Agreement of Amendment ofPartnership into writing.”

28. It could thus clearly be seen that the 1995 Deed specificallyrefers to the 1992 Deed between the party Nos. 1 to 6, i.e., plaintiffNo.1 and the defendant Nos. 1 to 5. It further states that the party Nos.7 to 13, i.e., the defendant Nos. 6 to 11 and the plaintiff No.2, have, afternegotiation, agreed to join the partnership firm with effect from 18.8.1995.It further states that it has been agreed between the parties that thedefendant Nos. 12 to 16 have been admitted to the benefit of thepartnership firm. The preamble specifically states that after negotiationamongst themselves, the parties have decided to amend the terms of thepartnership firm with effect from 18.8.1995 and thereafter have reducedthe terms and conditions of the agreement of amendment of partnershipinto writing.

29. It will be apposite to refer to clause 4 of the 1995 Deed, whichreads thus:

“4. Capital of the Firm

The capital of the firm shall consist of Capital alreadycontributed by parties of First, Second, Third, Fourth, Fifth andSixth parts and capital contributed by incoming partners of Rs.10,000/- each.”

30. It could thus clearly be seen that clause 4 of the 1995 Deedspecifically provides that the capital of the partnership firm shall be thecapital already contributed by parties of First, Second, Third, Fourth,Fifth and Sixth parts, and the capital contributed by the incoming partnersof Rs.10,000/- each.

31. In contrast, it will be relevant to refer to clause 4 of the 1992Deed, which reads thus:

A

B

C

D

E

F

G

H

A“4. Capital of the firm: Capital of the firm shall consist of capitalsalready contributed by partners of First, Second, Third, Fourth &Fifth as below:

First Partner25,000Second Partner25,000BThird Partner25,000Fourth Partner25,000Fifth Partner25,000

Sixth Partner is all of that contribute Rs. 50,00,000 (FiftyLakhs) as his contribution the capital of the firm and he shallCcontribute his capital of Rs. 50,00,000 on or before 31[st] December1993.”

32. It could thus be seen that clause 4 of the 1992 Deed, providesthat though the capital of the partnership firm was capital alreadycontributed by the defendants Nos. 1 to 5, i.e., Rs.25,000/- each, theplaintiff No.1 was to contribute an amount of Rs.50,00,000/- (RupeesDFifty lakh) to the capital of the firm.

33. It will also be relevant to refer to clause 13 of the 1995 Deed,which deals with ‘sharing of profits or losses’ of the partnership firm:

“13. Sharing of Profits or Losses:The book profits or losses shall be arrived at after providingEfor interest paid or payable of this firm to any of the partners; outof the balance, salary payable to any of them shall be allocated.After this, balance of Profits or Losses shall be shared as below:

F

G

H

The following persons are admitted to the benefits ofAPartnership only:

B

C

34. In contrast, it will be relevant to refer to clause 22 of the 1992Deed, which reads thus:

“22. Sharing of Profit & Losses: Book profits of the firm shall bearrived at after providing for interest paid/payable to partner ontheir capital account balances as in para 22. Out of book profitsfirst salary allowable to any of the partners will be allocated.Balance profits or losses shall be shared as below:

D

Sri T. M. Narashimhan10%Sri. V. Srinivas10%Sri. V. Uma Shankar10%

E

Sri. E. Ravi Kumar

10%10%50%

Sri. H. Shamanna

Sri. V. Anantha Raju

If Sri V. Anantha Raju fails to bring in Rs. 50,00,000 as hiscapital contribution to the firm on or before 31[st] March 1993 heshall be entitled to only 10% of the profits of the firm and liable toshare losses also at 10% of total losses. On that event, profits andlosses shall be shared or borne an the case may be as follows:

F

Sri T. M. Narashimhan20%

G

Sri. V. Srinivas20%

Sri. V. Uma Shankar20%Sri. E. Ravi Kumar20%Sri. H. Shamanna10%Sri. V. Anantha Raju10%”

H

A35. Comparison of these two clauses would reveal that in the1992 Deed, though the share of the defendant Nos. 1 to 5 in the profitsand losses of the partnership firm was specified as 10%, the share ofplaintiff No.1 was specified as 50%. However, it is specifically mentionedin the 1992 Deed, that in the event, the plaintiff No.1 fails to bring in anamount of Rs.50,00,000/- (Rupees Fifty lakh) as his capital contributionBto the partnership firm on or before 31.3.1993, the share in the profitsand losses of the partnership firm of defendant Nos. 1 to 4 would be20% each and that of the plaintiff No.1 and the defendant No.5 wouldbe 10% each.

A

36. In the amended deed, i.e., the 1995 Deed, there is no mentionCregarding such contingency upon the plaintiff No.1 depositing or notdepositing an amount of Rs.50,00,000/- (Rupees Fifty lakh).

37. What has happened between 1992 and 1995 is exclusivelywithin the knowledge of the parties. Though the plaintiffs have averredthat an amount of Rs.50,00,000/- (Rupees Fifty lakh) was invested byDthe plaintiff No.1 in the intervening period, the same is denied by thedefendants. However, in view of Section 91 of the Evidence Act, theevidentiary value of the 1995 Deed would stand on a much higher pedestal,as against the oral testimony of the parties. The 1995 Deed clearly showsthat it is executed after due deliberations, negotiations and mutualEconsensus on the terms and conditions to be incorporated therein. Bythe 1995 Deed, 6 new partners have been admitted to the partnershipfirm, whereas 5 minors have been admitted to the benefit of thepartnership firm. The contention of the defendants, that the share of theplaintiff Nos. 1 and 2 in the profits and losses of the partnership firm,mentioned as 25% each, is by mistake and, in fact, is only 5% each, doesFnot sound logical and reasoned. If it was by mistake or inadvertence,nothing precluded the defendants from rectifying the same between 1995and 2004. The arithmetical calculations would also show that the sharein the profits and losses of the partnership firm has been mentioned inthe 1995 Deed after due deliberations and negotiations. It could be seenGthat, though the share of the defendant No.1, as per the agreement, i.e.,the 1995 Deed, in the losses of the partnership firm is 28%, his share inthe profits is only 18%. The 10% difference of share in the profits andlosses of the defendant No.1 has been adjusted towards the 2% share inthe profits given to the defendant Nos. 12 to 16 each. As such, we areunable to accept the contention of the defendants that the share in theH

profits and losses of the partnership firm as mentioned in the 1995 Deedis inadvertent or a mistake in fact. In any case, if that was so, the burdenwas on the defendants to establish that the 1995 Deed did not reflect themutual intention of the parties and the terms and conditions agreedbetween the parties were different than those reduced in writing by the1995 Deed.

38. We find that the following observations by the trial court in itsjudgment and order dated 18.8.2008 are not sustainable in law, in thelight of the provisions as contained in Section 91 of the Evidence Act.

“…Therefore if we read the plaint and evidence of plaintiff No.2,the plaintiffs have not produced any scrap of paper that plaintiffNo.1 had given or deposited Rs.50,00,000/- towards his share toclaim 50% of profit share. It is only mere assertions the plaintiffsare asking before the court that “we are entitled for 50% share”they are not saying before the court why and for what reasonsthat they are entitled to 50% share - and other partners are entitledto a lesser share. Merely because share of the plaintiffs havebeen shown as 25% each either in the partnership deed dated 18/8/1995 or subsequent returns filed before the income tax authoritiesis of no avail because those documents have not been acted uponto distribute the profits between the partners to show that plaintiffNos. I and 2 were given profit share at any time.”

39. In this factual background, we are of the considered view thatthe trial court as well as the High Court have erred in holding that theplaintiffs together were entitled to only 10% share in the profits andlosses of the partnership firm till 18.6.2004.

40. Insofar as the challenge of the appellants to their expulsionfrom the partnership firm is concerned, we do not find any merit in thecontention of the appellants. It will be relevant to refer to clause 17 ofthe 1992 Deed:

“17. The Partners have right to expel an erring partner/partnersor a partner who prevents the other partner from carrying onbusiness effectively and profitable or the partner/partners whocauses damage to the interest of the firm of his/their acts, afterhim/them reasonable opportunity of being hard.”

41. Perusal of clause 17 of the 1992 deed would reveal that thepartners have right to expel an erring partner/partners on the grounds A

B

C

D

E

F

G

H

Aspecified therein. The 1995 Deed does not have any conflicting provision.The clauses in the 1992 Deed, which are not superseded by the 1995Deed, would still continue to operate. The trial court has given soundreasons, while upholding the expulsion of the plaintiffs. We see no reasonto interfere with the same.

B42. In the result, the appeal is partly allowed.

43. The judgment and decree passed by the trial court, as affirmedby the High Court, holding that the plaintiffs together have 10% share inthe profits and losses of the partnership firm is modified. It is declaredand decreed that the plaintiffs together are entitled to 50% share in theCprofits and losses of the partnership firm till 18.6.2004.

44. The judgment and decree passed by the trial court, as affirmedby the High Court, to the effect that the plaintiffs are expelled from thepartnership firm with effect from 18.6.2004 is maintained. Rest of thedirections of the trial court in paragraphs 2 to 6 of the operative part inDits judgment are also maintained.

45. The appeal is disposed of in the above terms. There shall beno order as to costs. Pending applications, if any, shall stand disposed of.

E

Ankiit Gyan

Appeal partly allowed.

F

G

H