PARTNERSHIP DEED & DISPUTE OF PROFIT BETWEEN PARTNERS
PARTNERSHIP DEED & DISPUTE OF PROFIT BETWEEN PARTNERS
Shubham Budhiraja[1]
A partnership deed constituted in year 1986 which was re-constituted
via deed dated 1992 and it was stated in 1992 deed that if plaintiff failed to
maintain 50,000 capital in firm then his profit would reduce from 50% to 10% In
year 1995, the deed was again re-constituted and some other partners stating
that plaintiff 1 & 2 entitle to 25% each which again makes them 50% each. In
2004, dispute arose between the partners whereby defendant denied the 25% each
share of plaintiff’s as a mistake and resolution passed by firm to expel the
plaintiff’s from the firm
Thus, plaintiff filed suit for rendition of accounts and claiming 50%
of share in partnership firm whereas trial court held that plaintiff entitled
only to 10% of accounts and plaintiff should also add partnership firm as
necessary party for final decree. The HC dismissed the RFA under section 96 and
thus SLP. The Supreme Court has held that the defendants
have admitted in their affidavit given in lieu of examination in chief as well
as in cross examination that 1995 deed is re-constituted and thus Section 91
applies and Section 92 states that party can contradict the terms of written
document by oral evidence but only in limited cases such as contract is void or
voidable. The defendant attempted to bring the case within ambit of proviso 1
Section 92 by stating that 25% mentioning in 1995 deed is a mistake of fact. There
is no mentioning of 50,000 capital fund in 1995 deed and what happened between
1992 and 1995 is within knowledge of parties and not of court. If 1995 deed
fact was mistake then nothing would prevented the defendant to get it rectify between
1995 till 2004 but nothing such was done
Hence, trial court as well as HC failed to look into the fact that documentary
evidence is admitted by defendant and they failed to bring oral testimony to
vary the terms of written document. Hence, plaintiff entitled to 50% share in
firm[2].
(I)
Sections 91 and 92 in effect supplement each other.
Section 91 would be inoperative without the aid of Section 92, and similarly Section
92 would be inoperative without the aid of Section 91.
(II)
The two sections, however, differ in some material
particulars. Section 91 applies to all documents, whether they purport to
dispose of rights or not, whereas Section 92 applies to documents which can be
described as dispositive. Section 91 applies to documents which are both
bilateral and unilateral, unlike Section 92 the application of which is
confined to only bilateral documents.
(III)
It is permissible to a party to a deed to
contend that the deed was not intended to be acted upon, but was only a sham
document. The bar arises only when the document is relied upon and its terms are
sought to be varied and contradicted. Oral evidence is admissible to show that document
executed was never intended to operate as an agreement but that some other
agreement altogether, not recorded in the document, was entered into between
the parties.
(IV)
Written contracts presume deliberation on the
part of the contracting parties and it is natural that they should be treated
with careful consideration by the courts and with a disinclination to disturb the
conditions of matters as embodied in them by the act of the parties. It has
been held that the written instruments are entitled to a much higher degree of
credit than parol evidence.
(V)
Sections 91 and 92 of the Evidence Act would
apply only when the document on the face of it contains or appears to contain
all the terms of the contract. It has been held that after the document has
been produced to prove its terms under Section 91, the provisions of Section 92
come into operation for the purpose of excluding evidence of any oral agreement
or statement for the purpose of contradicting, varying, adding or subtracting from
its terms. It has been held that it would be inconvenient that matters in
writing made by advice and on consideration, and which finally import the
certain truth of the agreement of parties should be controlled by averment of the
parties to be proved by the uncertain testimony of slippery memory. It has been
held that when parties deliberately put their agreement into writing, it is
conclusively presumed, between themselves and their privies, that they in- tended
the writing to form a full and final statement of their intentions, and one which
should be placed beyond the reach of future controversy, bad faith and
treacherous memory.
(VI)
It is permissible for a party to a deed to
contend that the deed was not intended to be acted upon, but was only a sham document,
it would be necessary to lead oral evidence to show that the document executed
was never intended to operate as an agreement but that some other agreement
altogether, not recorded in the document, was entered into between the parties.
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