Shree Gomathy Shankar Transports v. The State of Karnataka & Ors.

directing them to pay the Appellant/Plaintiff a sum ofRs.7,70,957.06/- along with interest at 24% p.a. on the principalsum of Rs.4,46,957.06/- from the date of plaint till the date ofrealisation in full with costs.3. On the basis of the pleadings, the Trial Court framed inall six issues. On the side of the Appellant/Plaintiff, witnessP.W.1 was examined and Exs.A1 to A25 were marked. On the side ofthe Respondents/Defendants, D.Ws.1 and 2 were examined and Exs.B1 toB3 were marked.4. On an appreciation of oral and documentary evidenceavailable on record, the trial Court while passing the Judgment hadamong other things opined that 'the Appellant/Plaintiff was notentitled to claim the transportation charges of Rs.4,46,957.06/-along with interest Rs.3,24,000/- and further that as per Ex.B1Agreement dated 24.10.1990, the contract was only between theAppellant/Transport Company Partnership Firm and the SecondRespondent/Second Defendant, the Executive Engineer and inasmuch asthere was no agreement entered into between the Appellant/Plaintiffand that of the Second Respondent/Second Defendant, the ExecutiveEngineer, the suit filed by the Appellant/Plaintiff as ProprietaryConcern, was not maintainable and resultantly dismissed the suitwith costs.5. The points that arise for consideration in this appealare:- (i) Whether the Appellant/Plaintiff (aProprietary Concern) is entitled to claim a sum ofRs.7,70,957.06/- with interest at 24 % p.a. on theprincipal of Rs.4,46,957.06 from the date of plainttill the date of realisation etc., from theRespondents/Defendants?(ii) Whether there was any privity ofcontract between the Appellant/Plaintiff and theSecond Respondent/Second Defendant?6. According to the learned counsel for theAppellant/Plaintiff, the Trial Court had not taken note of the factthat at the time of transporting the Bitumen from Chennai toChitradurga in Karnataka State, the Appellant/Plaintiff was aPartnership Firm, consisting of two partners and in fact as perEx.A4, (series) Xerox copy of Bills dated 19.09.1992, etc., andEx.A5 Xerox copy of Bills (Series) dated 21.08.1992, etc., the Goodsviz., Bitumen were transported from Chennai to Chitradurga onvarious dates and therefore, the Appellant/Plaintiff had claimed asum of Rs.4,46,957.06/- as Transportation charges and in thisregard, the Appellant/Plaintiff made a demand on theRespondents/Defendants as per Ex.A6 Letter dated 26.05.1993, Ex.A9 https://hcservices.ecourts.gov.in/hcservices/ Letter dated 04.10.1993, Ex.A10 Letter dated 19.11.1993 and Ex.A13Letter dated 02.01.1995 requiring them to pay the amount andmoreover, the Appellant/Plaintiff sent a Lawyer's Notice Ex.A15dated 18.12.1993 by calling upon the Respondents/Defendants to paythe amounts due to it and the Second Respondent/Second Defendantaddressed a reply Ex.A16 dated 27.01.1994.7. The further contention on the side of theAppellant/Plaintiff is that the trial Court came to the wrongconclusion that Exs.A4 and A5 (series) were xerox copies of theBills and the Store Keeper who received and acknowledged the goodswas not authorised to receive the same and therefore, the goods werenot delivered and such a finding was a perverse one in the eye ofLaw.8. Continuing further, the Learned counsel for theAppellant/Plaintiff submits that as against the Appellant/Plaintiffno case was filed and indeed, the Appellant/Plaintiff could not bepenalised by depriving the transportation charges due to it inregard to the Goods Delivered because of the reasons that someofficials of the Respondents/Defendants committed malpractices inthe collection of Bitumen and there was some investigation, etc.,9. Also that, even though Ex.B1 Agreement dated 24.10.1990was entered into between the Appellant/Plaintiff and the SecondRespondent/Second Defendant, when the Appellant/PlaintiffPartnership Firm was converted into a Proprietorship Concern, itcould not be said that the Appellant/Plaintiff had no right toclaim the amounts due from the Respondents/Defendants in the eye oflaw.10. Lastly, the learned counsel for the Appellant/Plaintiffcontends that there was absolutely no denial of receipt ofmaterials by the Respondents/Defendants at any point of time and assuch, the Appellant/Plaintiff was entitled to claim the suit amountand whatever may the constitution of the Appellant/Plaintiff, asone of the partners in the former Partnership Firm and as thepresent Proprietary of the Appellant/Plaintiff Concern, the suitfiled by the Plaintiff is the valid one and a Decree will have to bepassed in its favour.11. The gist of the contention of the learned counsel for theAppellant/Plaintiff is that the factual and legal issues involved inthe matter were not adverted to by the trial Court in a realperspective and in a pragmatic manner which had resulted inmiscarriage of justice and therefore prays for allowing the appealto sub serve the ends of Justice. https://hcservices.ecourts.gov.in/hcservices/

12. In support of the contention that a Partnership in Lawmay be dissolved by the Agreement of the partners, the learnedcounsel for the Appellant/Plaintiff cites the decision KANIRAMGANPATRAI V. COMMISSIONER OF INCOME TAX, AIR 1953 PATNA 271 (VOL.40,C.N.96), wherein it is laid down as follows:-"Under S.40, a partnership may be dissolvedby the Agreement of the partners. It is not notnecessary in very case that the fact of dissolutionshould be evidenced by a document but thedissolution of the partnership may be inferred fromthe circumstances of the case and the conduct of theparties. 36 Mad 185 Re.on."13. He also invites the attention of this Court to thedecision of the Hon'ble Supreme Court ERACH F.D.MEHTA V. MINOOF.D.MEHTA, 1970 (2) SUPREME COURT CASES 724 at page 727 wherein atparagraph No.7, it is observed thus:"We are not concerned at this stage todetermine whether the agreement set up by therespondent was in fact reached between the partnerson January 17, 1968; that is a matter to be decidedby the arbitrators. A dispute whether thepartnership was dissolved by mutual agreement wasclearly a dispute to agree with counsel for theappellant that the agreement set up by therespondent did not stipulate dissolution of thepartnership. It is the case of the respondent whichhe had set up in the correspondence, that it wasagreed between him and the appellant that the latterwas to retire from the partnership. When thepartnership consisted of only two partners and onepartner agreed to retire there can be no doubt thatthe agreement that one of the partners will retireamounts to dissolution of the partnership."14. Contending contra, the Learned Special GovernmentPleader appearing for the Respondents 1 and 2 submits that the suitwas filed by the Appellant/Plaintiff as a Proprietary Concern andreally speaking, there was no privity of contract as per Section 2and Section 37 of the Indian Contract Act 1872, between theAppellant/Plaintiff and the Respondents/Defendants and as a matterof fact, the Respondents/Defendants had not received the stockmentioned in the Delivery Chellan, etc.,15. Expatiating his arguments, the Learned Special GovernmentPleader appearing for the Respondents 1 and 2 draws the attention ofthis Court to Ex.A16 Reply dated 27.01.1994 issued by the Second https://hcservices.ecourts.gov.in/hcservices/ Respondent/Second Defendant to the Appellant/Plaintiff for theNotice Ex.A15 dated 18.12.1993 in and by which, it was inter aliamentioned that 'the Appellant/Plaintiff had transported the bulk andpacked Bitumen to Holalkere Sub-Division but the materialsphysically were not received completely by the Sub Division and asper the verifications made, it was found that nearly 700 MT. ofBitumen was short for the period of transportations made by theAppellant/Plaintiff, M/s.Shree Gomathi Shankar Transport Contractor,Madras and that the Vigilance Squad of P.W.D., Bangalore had seizedall the connected documents and report was submitted to the FirstRespondent/First Defendant. Further, there was a suspicion about theinvolvement of the said Transport Contractor i.e., M/s. ShreeGomathi Shankar Transport Contractor, Madras' and to escape from theproposed action, the Partnership Firm was dissolved and later, aProprietary Concern had come into existence without the knowledgeand consent of the Respondents/Defendants.16. That apart, it is the contention of the learned SpecialGovernment Pleader appearing for the Respondents 1 and 2 that thePartnership Firm viz., Shree Gomathi Shankar Transport came intoexistence as per Ex.A1 Partnership Deed dated 13.03.1990 (xeroxcopy) with two partners, S.Mohan and S.Venkatesan are possessing 50%share and later, on 24.04.1995, the Partnership was dissolved as perEx.A2 Dissolution Deed dated 24.04.1995 and the said Deed made itclear that the Dissolution of the Firm would come into effect from01.04.1995. Significantly, Ex.A24 another Dissolution Deed dated18.12.1998 of the same Partnership was entered into between the samepersons, S.Mohan and S.Venkatesan.17. At this juncture, it is to be pointed out pertinentlythat there was no satisfactory explanation on the side of theAppellant/Plaintiff as to why there was a second Dissolution of theFirm when admittedly it was dissolved in the year 1995. Furthermore, the second Dissolution Deed Ex.A24 dated 18.12.1998 wasregistered as Document No.27/98 on 16.02.1999.18. The next limb of the argument of the Learned SpecialGovernment Pleader appearing for the respondents 1 and 2 is that theactual delivery of the stocks in accordance with the Agreement wasnot made and that the signature shown in the Delivery Challan markedas Additional Evidence before this Court as well as before the trialCourt are all false documents and in fact, the Divisional StoreKeeper was not the Authorised Officer to receive the stock asmentioned in Ex.B1 Agreement dated 24.10.1990, Ex.B2 Stores ManualBook and Ex.B3, P.W.D. Code Book (vol.I). In short, the seal of theExecutive Engineer P.W.D., Chitradurga was misused and the signedperson was not the Executive Engineer. https://hcservices.ecourts.gov.in/hcservices/

19. The substance of the stand of the Respondents/Defendantsis that 734.345 Metric Tons of Bitumen was not delivered by thePartnership Firm and when 5 bills were presented bogus, LokayukthaEnquiry was ordered and after the Lokayuktha Report, furtherinvestigation was made by the P.W.D. Department officials and Ex.B4Investigation Report was given.20. It is quite necessary and useful for this Court to referto the evidence of witnesses P.W.1 (Proprietor of theAppellant/Plaintiff), D.W.1 and D.W.2, for better appreciation ofthe contentions projected by respective sides.21. It is the evidence of P.W.1 (Proprietor of theAppellant/Plaintiff) that the Second Respondent/Second Defendant asper his letter dated 19.01.1993 had informed the M/s. GomathiShankar Transport Contractor, Nungambakkam, Madras to lift theBitumen Thar through transportation and that the original bills weresubmitted to the Second Respondent/Second Defendant for settling theamount and the xerox copies of 11 bills and Ex.A4 (series) and Ex.A5series (30) Acknowledgements are for the respective goods andinspite of the bills presented, the Respondents/Defendants had noteffected the payment.22. In his further evidence, P.W.1 has deposed that theAppellant/Plaintiff was earlier a Partnership Firm and from01.04.1995, it became a Proprietary Concern and on 31.03.1995, thePartnership Firm was dissolved and the Dissolution Deed is Ex.A23dated 18.12.1998 and that Ex.A15 the Appellant/Plaintiff's LawyerNotice dated 18.12.1993 was issued to the Respondents/Defendantsdemanding a sum of Rs.4,46,957.97/- from them and theRespondents/Defendants sent a Reply Ex.A16 dated 27.01.1994 statingthat in regard to Bitumen, some malpractices were committed and thatafter enquiry, they would settle the amount.23. At this stage, it is not out of place for this Court tomake a relevant mention that it is the categorical evidence of P.W.1that it was not correct to state that they had not delivered 700Metric Tonne of Bitumen at the proper destination.24. It is the evidence of P.W.1 in his cross-examination thatin Ex.B1 Agreement dated 24.10.1990, he signed as a Partner of ShreeGomathi Shankar Transport and that the Defendants were not informedabout their partnership being dissolved.25. D.W.1 (Account Superintendent) in his evidence hasdeposed that Ex.B1 Agreement dated 24.10.1990 was executed atChitradurga, Karnataka and one S.Mohan, one of the partners of ShreeGomathy Shankar Transports signed in the said Agreement and theAppellant/Plaintiff had not transported any Bitumen or any material https://hcservices.ecourts.gov.in/hcservices/ for the Respondents/Defendants Departments and the Shree GomathiShankar Transport, a Partnership alone transported the Bitumen andthey were so irregular and further, they had not delivered 700 M.T.of Bitumen amounting to Rs.38 lakhs and the amount involved waspublic money and the criminal investigation was going on inKarnataka in Lokayuktha and C.O.D. of Karnataka. The evidence ofD.W.1 is also to the effect that the Divisional Store Keeper was notauthorised to sign the invoices and the endorsement in Ex.A5 serieswere manipulated and they were not signed by the Executive Engineeror the Assistant Engineer and moreover, the Store Keeper was notauthorised to sign the invoices except the Executive Engineer andthe Assistant Engineer, no other person was authorised to sign inthe invoices.26. It is the evidence of D.W.1 (in cross-examination) thatwhenever the consignment was transported by Shree Gomathi ShankarTransport, it should be received by the Divisional Office alone orthe Sub Division Office as per Clause 3 of Ex.B1 Agreement dated24.10.1990, the load should be delivered to his Stores during theoffice hours and in Ex.A5 series, seal alone belonged to theiroffice and behalf every seal in Ex.A5, there was Acknowledgement bythe Store Keeper and they were authorised.27. D.W.2 in his evidence has stated that in Ex.B2 StoresManual Book at page 5 in paragraph 7, the powers of the StoreKeepers are mentioned and also in Ex.B3 P.W.D Code Book (Vo.I) atpage 201 in paragraph 317A, the powers of the Store Keepers are mademention of and Ex.A4 and Ex.A5 are fake ones and in Ex.A4 and Ex.A5Documents, the Executive Engineer's signatures were not found.28. In his cross-examination, D.W.2 has stated that theAppellant/Plaintiff had not supplied Bitumen to the Public WorksDepartment and therefore, they had not returned letter to theAppellant/Plaintiff and Exs.A4 and A5 are not the documents of thePublic Works Department.29. It is not out of place for this Court to make a relevantmention that a perusal of Section 39 of the Indian Partnership Act,1932 candidly points out that even after the dissolution of theFirm, the partners are called partners though they are partners ofthe dissolved firm as per decision SUNDARLAL HAVELIWALA V. SMT.BHAGWATI DEVI AND OTHERS, AIR 1967 ALLAHABAD 400 [V 54 C 119)].30. Also, in RADHA SOAMI SATSANGH SABHA V. PAWAN ELECTRICREFRIGERATING CO. AND ANOTHER, AIR 1967 ALLAHABAD 9 (V 54 CC3), itis held that 'transfer of running business by itself will not bringabout dissolution of a Firm'. https://hcservices.ecourts.gov.in/hcservices/

31. Moreover, in COMMISSIONER OF INCOME TAX, WEST BENGAL-IIIV M/S.PIGOT CHAMPAN AND COMPANY, AIR 1982 SUPREME COURT 1085, theHon'ble Supreme Court at page 1089 in paragraph No.9 has among otherthings observed as follows:-"......It cannot be disputed that'dissolution' and re-constitution' are two distinctlegal concepts, for, a dissolution a reconstitutionmeans the continuation of the partnership underaltered circumstances but in our view in law therewould be no difficulty in a dissolution of a firmbeing followed by the constitution of a new firm bysome of the erstwhile partners who may take over theassets and liabilities of the dissolved firm. Inother words it is not possible to accept thecontention of counsel for the appellant that upon adissolution of a firm succession to the old businessby another person would only arise if a solitarypartner takes over assets and liabilities andcarries on the business as a sole proprietor thereofor if some of the erstwhile partners along with somestrangers take over the assets and liabilities ofthe old firm and carry on the business. The twoinstances mentioned by counsel for the appellant areundoubtedly clear cases of succession to the oldbusiness by another person or entity but successionto the old business contemplated under Section 25(4)need not be and cannot be confined to the instancesmentioned by counsel for the appellant. UnderSection 40 of the Partnership Act, 1932 a firm canbe dissolved with the consent of all the partners orin accordance with the contract between thepartners; under Section 43 a partnership at will canbe dissolved by any partner giving notice in writingto all the other partners of his intention todissolve the firm and upon such notice being giventhe firm gets dissolved as from the date mentionedin the notice as the date of dissolution and if nodate is so mentioned as from the date of thecommunication of the notice, while Section 44contemplates dissolution of a firm by and underorders of the Court in certain contingenciesmentioned therein. It is quite conceivable that incases of dissolution of the firm brought about by anotice under Section 43 or by an order of the Courtunder Section 44 some of the erstwhile partners maytake over the assets and liabilities and carry onthe same business by constituting a new firm andeven such cases would be cases of succession to the https://hcservices.ecourts.gov.in/hcservices/ old business within the meaning of Section 25(4) ofthe 1922 Act. In our view the question whetherthere has been a dissolution of the firm and uponsuch dissolution a new firm has succeeded to thebusiness of the old firm is a question which dependsupon the intention of the parties to be gatheredfrom the document or documents, if any, executed byand between the partners and other facts andsurrounding circumstances of the case."32. We recall the observations of the Hon'ble Supreme Courtin PURUSHOTTAM AND ANOTHER V. SHIVRAJ FINE ART LITHO WORKS ANDOTHERS, (2007) 1 MLJ 623 (SC), at page 624 wherein it is held asfollows:-"If a person transferred to a partnership (of whichhe was also a partner), all his assets andliabilities of his proprietary concern, he wouldhave no subsisting exclusive right to enforce anyliability against the defendants since such rightsas he had as the proprietor vested in thepartnership and he could not therefore either file asuit or claim any relief in the suit filed by thepartnership, asserting his right as the erstwhileproprietor.' 33. In MULTICHANNEL (INDIA) LIMITED, REP. BY ITS DIRECTOR,MUMBAI V. KAVITALAYA PRODUCTIONS PRIVATE LIMITED AND OTHERS, 1998(VOL.III) MLJ 708, at page 709, the Hon'ble Supreme Court hasobserved thus:-"The question whether the contract wasrescinded or varied with the consent of both theparties, treated as incomplete or inconclusive,depends upon the intention of the parties and thespecial circumstances of each particular case. Itis not proper or permissible to look at oneparticular point and say that there was a concludedcontract. For proper appreciation of the existenceor rescission of the contract, as a matter of fact,of the intactness of the negative covenant in theagreement and its binding nature, the conduct andthe correspondence as a whole has to be looked into.In the instant case, under the Letter of Intent,dated 30.5.1997, the parties expressed their desireto participate in the production and marketing ofthe tele-serials, by a joint venture arrangement,which proposal was accepted by the respondents.This is not a case where the terms are settledcompletely, area of operation defined under theLetter of Intent of the cash flow quantified, all https://hcservices.ecourts.gov.in/hcservices/ these things are yet to be worked out. Thesubsequent agreement is not a formal document inthis context. Several mutual duties and obligationsare to be settled. In such an event, it cannot besaid that it is concluded concluded contract. Onlywhen the contract was concluded earlier, nothingmore to be added except formal execution of adocument, negative covenant has to be enforced andnon-execution of a formal agreement will not takeaway the right conferred under the negativecovenant, Again in the instant case, where thereference to a future contract is made in such termsas to show that the parties did not intend to bebound until a formal contract is signed. It cannotbe said that it is a concluded contract." 34. In KATTA GUNDAIYA AND OTHERS V. KATTA SIDDAPPA ANDOTHERS, AIR 1937 MAD 599, at page 600, this Court has held that 'themere fact that after a particular date no further business was donewill not amount to dissolution of the partnership.35. Added further, 'Dissolution does not necessarily followbecause the partners has ceased to do business for the partnershipmay continue for the purpose of realising the assets' as perdecisions AIR 1927 PRIVY COUNCIL 70, SAHAPPA CHETTY AND OTHERS V.S.N.SUBRAHMANYAN CHETTY AND OTHERS and (1925) MAD 48 795 : AIR 1925MAD 1249, GOKALDOSS V. PARRY AND CO.,36. The Appellant/Plaintiff in Ex.A15, Lawyer's Noticeaddressed to the Second Respondent/Second Defendant had among otherthings mentioned that 'during the course of business, their clientshad supplied bulk and packed Bitumen after adopting usual practiseto various destinations under his jurisdiction in respect of whicheleven Bills commencing from 28th July 1992, in all amounting toRs.4,46,957-96/- was not paid inspite of making various personalvisits besides sending reminders and the loss incurred would bemore than Rs.3,00,000/- since the entire business became a standstill and one of the most reputed Transporters in South India, theirname, goodwill and image was tarnished for no fault of theirs andtherefore, demanded a sum of Rs.4,46,957.96/- along with interest at24% p.a. till the date of realisation besides damages amounting toRs.3,00,000/- within ten days from the date of receipt of thenotice, etc., '37. The Second Respondent/Second Defendant by his ReplyEx.A16 dated 27.01.1994 addressed to the Appellant/Plaintiff'sLawyer had inter alia stated that 'it was found that nearly 700 MT.Of Bitumen was short for the period of transportation made by https://hcservices.ecourts.gov.in/hcservices/ M/s.Sree Gomathi Shankar Transportation Contractor, Madras and theVigilance Squad of P.W.D., Bangalore had seized all the connecteddocuments and report was submitted to the Government of Karnatakaand there was a suspicion about the involvement of the saidTransport Contractor, etc.,'38. A scrutiny of Ex.B1 Agreement dated 24.10.1990 clause 3clearly mentioned that 'the load should be delivered to Storesduring office hours only.'39. In Ex.B2, Source Manual Chapter-1, General Rules, Rule 2mentioned about the Duties and Responsibilities of the StoreManager Stores Superintendent and Store Keeper, which runs asfollows:"6.The Stores Manager or StoresSuperintendent to Store Keeper will be in directcharge of all the items of Divisions, the custodyand maintenance of which is entrusted to therespective Sub-Divisional Officers. He will bepersonally responsible, in particular for the bookedquantities of the Stores in his charges and ingeneral for the entire Stores in his charges and ingeneral for the entire Stores under his supervision,stock of famine tools and the tools and plants inuse in the Public Works Stores. He will be assistedby all Division Stores in his custody and in regardto the storage, handling and upkeep of heavy plantand machinery.The Stores Manager or Stores Superintendentor Store Keeper is directly responsible to theExecutive Engineer for the efficient and economicalkeeping of Stores in all sections and for excessesand deficits found. He is responsible for theprompt carrying out of the current work of complyingindents and replenishing of stock-for this end, hewill frequently inspect the records of his sectionand a certain what arrears, if any exists andarrange for clearing them. If he finds anydifficulty in doing so, he will report the matter tothe Executive Engineer for orders.7. The principal duties of the StoresManagers or Stores Superintendents or the StoreKeepers are :a) To dispose of as much business as possiblewith the help of II Division Store Keeper. Heshould bring to the notice of the Executive Engineerany important matters which cannot be disposed of byhim for his order." https://hcservices.ecourts.gov.in/hcservices/

40. In Ex.B2, Source Manual Chapter-1 under the captionController, Central Stores in Rule 5, it was stated as follows:-"5(a) When the Stores are sufficientlyextensive, a Stores Manager or Superintendent orStore Keepers will be appointed to be in charge ofthe Stores of the Division. The Store Keeper willhave nothing to do with the disbursement of cash orthe supply of materials. His duty will be confinedof the custody, preservation and issue of the Storesunder his charge keeping the required returnsrelating to them. He will also arrange for thereceipt and issue of Stores and materials indentedfor the works in the Division. He may record themeasurements for such Stores as are received by himon behalf of the Executive Engineer.b) Except in case of petty supplies costingRs.25 of less measurements entered by the StoreKeeper should be accepted for purposes of paymentsunless they have been duly verified by a Sub-Divisional Officer or Executive Engineer.c) Stores Manager, Stores Superintendents andFirst Division Store Keepers of Divisional Officerscan make urgent payments of Stores received out ofOffice hours from the Sub-imprests granted to them.For making such emergent payments DivisionalOfficers are authorised to grant imprests notexceeding Rs.10 to then Store Keepers."41.In Ex.B3, P.W.D. Code Book, Volume I, Chapter VII underthe head 'Stores' in 370(a), it was stated as follows:"Store Keeper will have nothing to do withdisbursement of cash or the supply of materials.His duty will be confined to the custody,preservation and issue of the Stores under hischarge and to keeping the required returns relatingto them." 42. During the pendency of appeal, the Appellant/Plaintiffas Petitioner filed C.M.P.No.1065 of 2009 under Order 41 Rule 27 ofCivil Procedure Code, seeking permission of this Court to fileadditional documents and if necessary to permit it to adduceevidence. Since additionals were relevant on being satisfied withthe records stated for non-production of the same in the trialCourt, the additional documents were ordered to be received asExs.A6 to A44 (Series) subject to Proof and Relevancy as per orderdated 10.03.2010.43. Also, on behalf of the Respondents/Defendants,C.M.P.No.1471 of 2009 was filed before this Court under Order 41 https://hcservices.ecourts.gov.in/hcservices/ Rule 27 of the Civil Procedure Code, praying permission of thisCourt to mark the documents being relevant as additional evidenceand the additional documents were ordered to be received as Exs.B4to B6 subject to Proof and Relevancy.44. In Ex.B4, Investigation Report in Ref.No.PWD.13:1.V.C:93dated 08.09.1993 on the complaint of alleged shortages in theAsphalt in the Stores of PWD Division, Chitradurga in paragraphNo.2, it was observed as follows:-"To begin with discussions were had with theEE, PWD Division Chitradurga Sri.C.Raghava Reddy.The EE stated that is the misappropriation of bulkasphalt being transported to PWD Sub-Division No.4Holakere, come to light when five transportationbills pertaining to M/s GomathiShankar Transport,Madras for having transported 56.45 MT of bulkasphalt to PWD Sub-Division Holalkere were put up tohim for payment. The EE further stated that he gotdoubt about misuse of asphalt since in six deliverychallans in respect of two transportation bills thestore keeper of the sub-division Sri.Kotrabasappahas signed as for AEE for having received thecontent on 2.10.1992 and the Assistant Store Keeperof the division Sri.Krishnamurthy has signed as EE,under the seal of EE. The above quantity of bulkasphalt of 56.45 MT has been shown as transferred tothe Sub-division by the Assistant Store Keeper ofthe division Office without bringing to the noticeof the Store Keeper of the division the T.A. and theE.E. Without raising the invoice and without takinginto account of the stock of the division. The EEfurther stated that because of detection of themalpractice, he got prepared the year wise statementof stock balance of bulk asphalt starting from July1987 i.e., since the PWD Sub-division Holakere cameto the control of PWD Division Chitradurga from onPWD Division, Davangere., etc.," 45. Further, in paragraph No.2.1 of Ex.B4 InvestigationReport, it was stated thus:" The EE further stated that consequent todetection of the above malpractice, the payment ofthe following five transportation bills of M/sGomathishankar Transport, Madras totalling toRs.2.05 lakhs has been withheld. https://hcservices.ecourts.gov.in/hcservices/ SI.NO.BILL NO. & DATEQUNTY OF ASPHALTTRANSPORTEDAMOUNT OF THEBILL133 Dt:30-10-199219.90 MT(packed)8,262-54241 Dt:04-11-199228.25 (Bulk)36,918-53342 Dt:04-11-199218.961 (packed)37,047-87444 Dt:16-11-199228.459 (packed)68,069-92543 Dt:16-11-199245.500 (Bulk)55,686-70 Total2,05,984-5646. Added further, in paragraph No.3 of Ex.B4, theInvestigation Report, it was mentioned as below:-" Detection of Short accounting of Bulkasphalt in the stock Registers of PWD sub-divisionHolakere for Oct-1992:- It was seen from thecorrespondence file of the division that the EE hadnoticed malpractice in the case of following sixdelivery challans in the case of six tanker loads ofbulk maxphalt transported by M/s.Gomathisankartransport Madras from HPC Bombay to PWD DivisionChitradurga.SI.NO.GOODS CONSIGNMENTNOTE NO. OR DELEVERYCHALLAN NO.G.C.DateQUANTITY OF BULKASPHALT (IN MT)112328-9-19929.600212428-9-19929.450326315-10-19929.280426315-10-19929.440526416-10-19929.460626516-10-19929.220Total56.450It was also seen that out of the above sixdelivery challans (G.C.Note) D.C.No.123 and 124figures in the transportation bill no 41 dated14.11.1992 and the remaining 4 delivery challans inbill no 43 dtd 16.11.1992 referred to above. The EEproduced six delivery challans of the transportcompany in respect of six consignments. It wasrevealed from the above that on the back of thedelivery challans, Sri S.Kotrabasappa, Second https://hcservices.ecourts.gov.in/hcservices/ Division Assistant in charge of Stores of the sub-division has signed as for AEE with the certificatethat "the contents received correctly and taken tostock account for 10/1992. Extra km fromChitradurga to Holalkere 64km". One more signatureabove the seal of the EE, PWD Chitradurga was alsoseen by the side of the signature of Kotrabasappa.The EE stated that it is the signature ofSri.B.Krishnamurthy SDA store keeper of the Divisionwho had signed as EE without his or S.K's knowledge.The S.K. of the division during the above period wasstated to be Sri.S.S.Kadathi. The six deliverychallans mentioned above are taken as Exh-II."47. In Ex.B4, in paragraph No.4, the relevant portion wasmentioned as below:- "Since the monthly account furnishedby the sub-division is he extract of the stockregister for the particular month, it is evidentthat there should not be any differenced in thequantity YearBalanceQuantity asper stockRegisterBalancequantity aspertransportation billTotalShortageShortage forthe year1990-9136.137240.538204.401204.4011991-92139.791827.34687.549483.1481992-93317.8431043.46725.62138.072 Total725.62 725.621 MT arrived from the above two sources.and also, it was mentioned of that the shortage of bulk asphalt dueto the above discrepancy had occurred since 9/90.48. Significantly, in Ex.B4, Investigation Report paragraphNo.5.1, the following were mentioned:-"Discrepancy during 9/1990:- As per the stockreceipt register of the sub-division the bulk asphaltreceived is nil. It has been signed bySri.T.Venkateshwara AEE of PWD sub-division Holalkere.In the Division stock register also, there is no entryfor having issued bulk asphalt to the sub-divisionduring the month. The monthly account of stock receipt https://hcservices.ecourts.gov.in/hcservices/ of the sub-division however revealed four additionalentries in the last column without the column heading,the total quantity of which is 47.305 which is state tobe that of bulk asphalt. The other columns were foundto be the same as that of the stock receipt register.The half yearly return submitted by the AEE did notreveal receipt of bulk asphalt during 9/1990. Thedelivery chellan and the paid voucher of transportationbill were not made available. It therefore appearedfrom the above. That the above four entries in the lastcolumn of the monthly account is an insertion. Thehandwriting of these four entries appeared to resemblethe handwriting of other entries, which is stated to bethat of Sri Kotrabasappa SDA of the Sub-division." 49. Added further, in Ex.B4 in paragraph No.5.10, theDiscrepancy No.8/92 and 9/92 was mentioned thus:"Discrepancy during 8/92 and 9/92: As per thestock receipt register of the sub-division, thereceipt of bulk asphalt during the month of 8/92 is67.740 MT which consists of four entries viz 15.150,28.580, 14.440 and 9.570 MT. The consignments of28.580 and 14.440 have been shown as receiveddirectly from the Firm and the rest from theDivision Office. It was however seen from thedivision stock register that 28.580 MT has also beenissued from the Division Stores on 30.08.1992,consisting of three tanker loads of 9.480, 9.420 and9.680 MT. Further, the stock receipt register forthe month of 9/93 showed the receipt of 37.893 MT ofbulk asphalt consisting of two entries viz 28.580and 9.313 both shown as received from the divisionStores. The division stoke issue register showsissue of 9.310 Mt on 23-9-1992 and 28.580 alreadyissued on 30.08.1992. It is therefore evident that28.580 MT shown as receive directly from the firmduring 8/92 has been again shown as received fromthe division Stores during 9/92. As such there hasbeen double accounting in respect of the consignmentof 28.580 MT. However in the monthly account for8/92, the receipt of 39.120 MT has been shownexcluding the receipt of 28.580 and the receipt of28.580 MT has been shown in the monthly account for9/92. The above discrepancy shows negligence on thepart of the store clerk and the AEE of the sub-division in the properly accounting the receipt ofasphalt in the sub-division Stores. The doubleaccounting of 28.580 made in the stock register of https://hcservices.ecourts.gov.in/hcservices/ the sub-division has however been rectified in themonthly accounts of the sub-division."50. That apart, in Ex.B4, in paragraph Nos.5.12 and 6, thefollowing were stated:"5.12.As already explained in para 3 supra,malpractice in the records had been notice by the EEin respect of delivery challens of six tanker loadsof asphalt received during October-1992, included intwo transpiration bills of M/s. GomathishankarTransport and these consignments are 9.600, 9.450,9.280, 9.440, 9.460 and 9.220 totaling to 56.450 MT.It can be seen from the details furnished in para5.11 above that the consignments have been accountedin the stock receipt register of the sub-division as18.680. It is also seen from the details givenabove that the remaining four consignments which hadnot been included in the stock register, have beenincluded in the monthly account as 19.05 (i.e.9.600, 9.450) and 18.720 (9.280, 9.440) probablywith the intention of tallying with thetransportation bills of the contractor. It waspleaded by the store clerk of the sub-division thatthe above four tanker loads had been issued to theexecutive subordinates of the sub-division. Howeverthe invoice book of the sub-division did not revealany invoice raise against the section officers inrespect of the above during October-1992 or in thesubsequent months. The delivery challans in respectof the above consignments also did not reveal anyacknowledgment of the section officers. Further theMAS account of the Section Officer vide Exh-IX didnot reveal concluded that the above quantity of37.770 MT of bulk asphalt consisting of four tankerloads had not been accounted in the sub-division inany form. As already explained above, though theshort accounting of bulk asphalt on account of theabove malpractice comes to 37.770 MT, the actualshortage is to the extent of 18.110 MT on account ofdouble accounting of one consignment of 19.660 MT.6. Shortage of bulk asphalt on account ofmanipulation of records:- As explained in theforegoing paras there has been shortage of bulkasphalt in the accounts of sub-division since Sept-1990 by not taking the bulk asphalt received in thesub-division to stock and by showing such left outconsignments only in the monthly account of the sub-division as to tally them with the transpiration https://hcservices.ecourts.gov.in/hcservices/ bills of contractors. The month wise shortage ofbulk asphalt as discussed above after taking intoaccount double accounting of some consignmentsdiscussed earlier is as given below:MONTH YEARSHORTAGE OF BULKASPHALTI (IN MT)9/199047.30511/199017.42012/199049.7202/199172.4803/199127.3201991-92214.2454/199145.3805/199146.7006/199118.6307/199137.8508/199156.9209/199156.92011/199165.23012/199172.8501/199219.3002/199219.1003/199247.2501992-93482.0304/199219.96010/199218.11038.070To sump up the year wise shortage of bulk asphaltcomes to, as under:1990-91214.245 MT 1991-92482.03 1992-9338.07 734.345 MTFurther, as discussed in the succeeding para10 the physical verification of the sub-divisionStores revealed that the physical balance of bulk https://hcservices.ecourts.gov.in/hcservices/ asphalt in the Stores was even less than thataccounted in the stock register and as such theabove quantity of bulk asphalt due to shortagecounting was not physically excise in the Stores.51. In short, Ex.B4 Investigation Report concluded that thetotal cost of shortage of Rs.38.02,590/- say Rs.38.026 lakhs andfound that 8 officials were responsible for the fullshortage/shortage relating to the period 9/1990 to 6/1991, 7/1991 to4/1992, 9/1990 to 4/1992, 9/1991 to 4/1992 and 10/1992 and there wasshortage of asphalt in the stock blance of PWD sub-division,Holalkere as mentioned hereunder:QUANTITYAMOUNTPacked Asphalt10 barrels10,280-00Bulk asphalt300 MT14,76,000-00Total14,86,280-00and the Officers/Officials viz., i) S.Kotrabasappa, SDA in charge ofStores ii) T.Venkateshwar, AEE were jointly responsible for theabove shortage.52. In Ex.B5, Recovery of Shortage amount, it was mentionedthat from T.Venkateshwara, Executive Engineer (Retired), totalamount of store shortage recovered was Rs.6,21,300/- and the balanceamount due from the officials was mentioned as Rs.78,700/-. Also inEx.B5, Recovery of Shortage amount pertaining to Sri Kotrabassappa,the then S.D.A., it was mentioned that the store shortage recoveredwas Rs.2,46,612.00/- and the balance of Rs.5,39,668.00/- wasrecovered.53.In Ex.B6, the Proceedings of Government of Karnataka, itwas mentioned that regarding shortage of asphalt noticed inHolalkere Sub Division, Chitradurga Division Lokayuktha submitted areport to the Government and a detail enquiry was conducted and inthe Enquiry Report, recommendations were made by the Hon'bleLokyuktha for financial loss of Rs.14.86 lakhs to the Government wasproved and hence the said sum was to be recovered from theGovernment Officials and two officials i) Sri T.Venkateshwara, thethen Assistant Executive Engineer and ii) Sri S.Kotrabasappa, thethen Second Division Assistant were dismissed from service as perRule 8 (VIII) K.C.S.(C.C.A.)54. Further, in Ex.B6 Proceedings of the Government ofKarnataka, it was mentioned that '.....Sri S.Kotra Basappa wasdirectly responsible for sub division store materials especially inbulk tar shortage and also said that sub division Head A.E.E. wasresponsible for shortage, since he had not maintained sub divisionstore account properly.' https://hcservices.ecourts.gov.in/hcservices/

55. The Learned Special Government Pleader appearing for therespondents also brings it to the notice of this Court that theAppellant/Plaintiff represented by its Proprietor S.Mohan filed acomplaint against the Second Respondent/Second Defendant on01.03.1994 before the State Consumer Dispute Reddressal Commissionand sought a relief for the payment of Rs.11,04,527.60/- withinterest at 24% p.a. and the said complaint was rejected by theCommission on 28.09.1994 as not maintainable under the Consumer'sAct and later only, the present suit was initiated on 20.08.1995 bythe Appellant/Plaintiff.56. A perusal of Ex.A5 series indicates that for theExecutive Engineer, P.W.D Division, someone had received the bulkTar and the Divisional Store Keeper, P.W.D. Division, Chitradurgahad received on different dates. 57. As far as the present case is concerned, it is candidlyclear that the Store Keeper of the Second Respondent/SecondDefendant, P.W.D. Division, Chitradurga was not authorised toreceive the stock as per the Procedure enjoined in Exs.B1 to B3Documents and in fact, Ex.B4, Investigation Report clearly spelt outthat instead of one S.S.Kadathi of S.K.Division one Krishnamoorthy,SDA Store Keeper had signed as the Executive Engineer without his ofS.K's knowledge. The specific case of the Respondents/Defendants isthat 735.345 MT. Of Bitumen was not delivered by Shree GomathiShankar Transport (Partnership Firm). As seen from Ex.B4Investigation Report, there was shortage in the asphalt in theStores of P.W.D. Division, Chitradurga, Bitumen amounting toRs.14,86,280.00/-. Per contra, the Appellant/Plaintiff had notproved to the satisfaction of this Court that it had delivered theBitumen in issue and therefore, it was entitled to receive theamount of Rs.4,46,957.06/- towards Transportation charges and assuch, the Respondents/Defendants were liable to pay a total sum ofRs.7,70,957.06/- together with interest at the rate of 24% p.a. onthe principal of Rs.4,46,957.06/-, etc., 58. In this connection, it is not out of place for this Courtto make a mention that though the Partnership Firm came intoexistence as per Ex.A1 Partnership Deed dated 13.03.1990 with twopartners i) S.Mohan and ii) S.Venkatesan. Each possessing 50% shareon13.03.1990. Later, the Partnership came to be dissolved as perEx.A2, Dissolution Deed dated 24.04.1990 and significantly, Ex.A2Dissolution Deed referred to coming into effect of the dissolutionfrom 01.04.1995 and in short, the dissolved partnership in 1995 andagain in the year 1999, were all not a favourable circumstance infavour of the Appellant/Plaintiff, moreso, when the contention ofthe Learned Special Government Pleader for theRespondents/Defendants was to the effect that the Dissolution of the https://hcservices.ecourts.gov.in/hcservices/ Firm was only to escape from the predicament in which the partnersof the Transport Firm were in, in regard to the non supply of734.345 MT. of Bitumen.59. Also, a perusal of Section 39 of the Indian PartnershipAct, 1932 relating to Dissolution of a Firm makes it clear that evenafter the Dissolution, the Partners in Law are called the Partnersnotwithstanding the fact that they are partners of the dissolvedFirm and moreover, a Dissolution does not necessarily follow becausethe Partners had ceased to do business for the partnership maycontinue for the purpose of realising the assets but in the instantcase on hand, the Appellant/Plaintiff had not filed the suitincluding the partner of the dissolved Firm but filed the suit asthe Appellant/Plaintiff in the capacity as Proprietary Concern andtherefore, we are of the considered view that the suit filed by theAppellant/Plaintiff against the Respondents/Defendants for recoveryof a sum of Rs.7,70,957.06/- with interest at 24% p.a., etc., asProprietary Concern is not per se maintainable in the eye of Law andas such, not entitled to claim the suit amount and as a matter offact, there was no privity of contract between theAppellant/Plaintiff (as Proprietary Concern) and the SecondRespondent/Second Defendant and accordingly, the two points are soanswered decided against the Appellant/Plaintiff.60. For the foregoing reasons, the Appeal filed by theAppellant/Plaintiff fails and the same is hereby dismissed. Havingregard to the facts and circumstances of the case, the parties aredirected to bear their own costs.Additional documents ordered to be received as per orderdated 10.03.2010 in C.M.P.No.1064 of 2009 in A.S.No.1 of 2004 andmarked as Exhibits as follows:Exhibits &DateDescriptionRemarksEx.A26/20.10.1990Requisition letter of the Contractor forTransportationCertifiedcopyEx.A27/24.10.1990Reply Letter sent by the RespondentCertifiedcopyEx.A28/24.10.1990Agreement between the Appellant andRespondentCertifiedcopyEx.A29/13.12.1990Reply letter sent by the RespondentCertifiedcopyEx.A30/14.03.1991Quotation Certifiedcopy https://hcservices.ecourts.gov.in/hcservices/ Exhibits &DateDescriptionRemarksEx.A31/29.03.1991Letter sent by the Appellant regardingquotationCertifiedcopyEx.A32/24.04.1991Reply Letter sent by the Respondent regardingagreement for transportation workCertifiedcopyEx.A33/26.04.1991Agreement between the Appellant and theRespondentCertifiedcopyEx.A34/21.12.1991Reply letter sent by the RespondentCertifiedcopyEx.A35/28.12.1991Letter of Authority issued by the Respondentto HPCCertifiedcopyEx.A36/28.12.1991Letter of Authority issued by Respondent toIOCCertifiedcopyEx.A37/18.03.1992Requisition Letter to increase the transportcharges CertifiedcopyEx.A38/01.04.1992Letter regarding Revised rate for packedtransportationCertifiedcopyEx.A39/01.04.1992Agreement between the Appellant and theRespondentCertifiedcopyEx.A40/20.06.1992Letter of Authority issued by the Respondentto HPCCertifiedcopyEx.A41/14.09.1992Letter of Authority issued By Respondent toHPCCertifiedcopyEx.A42/-Letter of Authority issued By Respondent toIOCCertifiedcopyEx.A43/28.10.1992Letter Regarding Transportation of BulkBitumen/Packed BitumenCertifiedcopyEx.A44/-Copies of Goods Consignment Delivery Receipts(28 numbers)CertifiedcopyAdditional documents ordered to be received as per orderdated 10.03.2010 in C.M.P.No. 1471 of 2009 in A.S.No.1 of 2004 andmarked as Exhibits as follows: https://hcservices.ecourts.gov.in/hcservices/ Exhibits &DateDescriptionRemarksEx.B4/08.09.1993Investigation Report on the Complaint ofalleged shortage in PWD Division, ChitradurgaCertifiedCopyEx.B5/22.06.2006Recovery of Shortage AmountCertifiedcopyEx.B6/10.08.2009Proceedings of Government of KarnatakaCertifiedcopySd/Asst.Registrar/true copy/Sub Asst.RegistrarvriTo1.The Registrar,VII Additional City Civil Court,Chennai.2.The Section Officer,VR Section, High Court,Madras.+1cc to Mr.S.Udayakumar, Advocate Sr 27887+1cc to Govt. Pleader Sr 27621PUR(CO)km/2.6.A.S.NO.1 OF 2004