2021 INSC  0671
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION 
CIVIL APPEAL NO. 6469 OF 2021
[Arising out of Special Leave Petition (Civil) No.14165 of
2015]
V. ANANTHA RAJU & ANR.  ...APPELLANT(S)
    VERSUS
T.M. NARASIMHAN & ORS.         .... RESPONDENT(S)
J U D G M E N T 
B.R. GAVAI, J. 
1. Leave granted.
2. The   present   appeal   challenges   the   judgment   and
order   passed   by   the   Division   Bench   of   the   High   Court   of
Karnataka   at   Bengaluru   dated   27.2.2015,   thereby,
dismissing   the   first   appeal   being   R.F.A.   No.1111   of   2008,
filed   by   the   appellants   and   confirming   the   judgment   and
decree passed by the XXXIII Additional City Civil & Sessions
Judge, Bangalore city  dated 18.8.2008, vide which the  suit

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being   O.S.   No.5622   of   2004   (hereinafter   referred   to   as   “the
said   suit”)   filed   by   the   appellants/plaintiffs   came   to   be
partly decreed. 
3. The   facts,   in   brief,   giving   rise   to   the   present
appeal are as under.  
The   parties   hereinafter   will   be   referred   to   as   per
their status in the said suit.  
A partnership firm, namely, M/s Selwel Combines
(hereinafter referred to as “the partnership firm”) came to be
constituted in the year 1986.   Vide Partnership Deed dated
30.10.1992 (hereinafter referred to as “the 1992 Deed”), the
partnership   firm   was   re­constituted   and   the   plaintiff   No.1
(Appellant   No.1   herein)   was   inducted   as   a   partner   along
with   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   the   partnership   firm.     It   was
however provided in the 1992 Deed, that if the plaintiff No.1
fails to bring in an amount of Rs.50,00,000/­ (Rupees Fifty
lakh)  as his  capital contribution  to  the  partnership  firm  on
or   before   31.3.1993,   his   share   in   the   profits   and   losses   of
the partnership firm would be only to the extent of 10%.  

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On   2.11.1992,   the   partnership   firm   obtained   a
property   on   lease   for   99   years   and   constructed   a
commercial building thereon.   The building was 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   was   again   reconstituted,
whereby   the   plaintiff   No.2,   son   of   the   plaintiff   No.1,   and
defendant   Nos.   6   to   11   were   inducted   as   partners   and
defendant Nos. 12 to 16 were admitted to the benefit of the
partnership   firm.     As   per   the   1995   Deed,   the   share   of   the
plaintiff   Nos.   1   and   2   in   the   profits   and   losses   of   the
partnership firm was to be 25% each. 
It   is   the   contention   of   the   plaintiffs   that   vide
another   Deed   of   Amendment   of   Partnership   dated
22.05.1996,   the   partnership   firm   was   reconstituted,
whereby the defendant No.12 was inducted as a partner and
the   defendant   Nos.   13   to   16   were   continued   to   be   entitled

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for  the  benefits  of   the   partnership   firm.     However,  this   fact
is disputed by the contesting respondents. 
It appears that in the year 2004, differences arose
between the plaintiffs and the defendants with regard to the
affairs   of   the   partnership   firm.     On   8.5.2004,   the   plaintiffs
issued a legal notice to the defendants/partners, demanding
accounts   right   from   the   inception   of   the   partnership   firm
and their share of profits.  
Defendant   No.1   replied   to   the   plaintiffs’   notice
dated 8.5.2004 by communication dated 12.5.2004.   It was
stated   in   the   said   reply   that   the   plaintiffs   together   were
entitled   only   to   10%   share   in   the   profits   and   losses   of   the
partnership firm and that mentioning of 25% share each in
the 1995 Deed was only a mistake of record. 
In   turn,   a   show   cause   notice   was   issued   by   the
defendants/partners   to   the   plaintiffs   on   8.6.2004   with
regard to the acts and omissions on the part of the plaintiffs
being   contrary   to   the   interests   of   the   partnership   firm   and
other partners.  

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Thereafter,   again,   there   was   exchange   of
communication   between   the   plaintiffs   and   the   defendants.
According   to   the   plaintiffs,   in   the   meeting   of   the   partners,
held   on   18.6.2004,   it   was   resolved   to   expel   the   defendant
No.1   from   the   partnership   firm.     However,   as   per   the
defendants,   a   resolution   was   passed   on   the   same   day,   i.e.,
18.6.2004,   resolving   expulsion   of   the   plaintiffs   from   the
partnership firm.  
In this background, the said suit came to be filed
by   the   plaintiffs   for   rendition   of   accounts   with   effect   from
30.10.1992   and   for   releasing   a   sum   of   Rs.5,48,06,729/­
being their 50% share in the profits of the partnership firm.
The   claim   of   the   plaintiffs   was   resisted   by   the   defendant
No.1 by filing a written statement dated 9.9.2005; defendant
Nos.   2,   3,   7   to   12   by   filing   their   joint   written   statement
dated   21.10.2005;   and   defendant   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.  

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“17. On the above pleadings of the parties,
the   following   issues   have   been   framed   for
consideration:
1. Whether   the   suit   of   plaintiffs   is   bad   for
non­joinder   of   necessary   party   that   is
M/s Selwel Combines?
2. Whether   the   suit   of   plaintiffs   is   bad   for
mis­joinder  namely  defendant  No. 17 to
19?
3. Whether   the   suit   of   plaintiffs   is   barred
by limitation?
4. Whether   the   plaintiffs   prove   that   they
have   got   25%   share   each   in   the   M/s
Selwel Combines?
5. Whether the plaintiffs are entitled to the
relief of Rs.5,48,06,729/­?
6. Whether   the   defendant   No.   1,   2   and   5
proves   that   the   expelled   plaintiffs   have
no   locus­standi   to   seek   accounts   of   the
said firm?
7. What order or decree? 
19. My   findings   on   the   above   issues   are
as under:
Issue No.1: In the negative.
Issue No.2: In the negative,
Issue No.3: In the negative
Issue No.4: In   the   negative,   the
plaintiffs   have   got   10%

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share   together   in   M/s
Selwel Combines.
Issue No.5: See order below
Issue No.6: Plaintiff   No.   1   and   2   were
expelled   from   the   date
18/6/2004   and   can   seek
for accounts.
Issue No.7 As per final order.”
While   partly   decreeing   the   suit,   holding   that   the
plaintiffs   together   are   entitled   to   10%   share   in   the   profits
and   losses   of   the   partnership   firm   till   18.6.2004,   and   that
from   18.6.2004,   they   were   expelled   partners   of   the
partnership   firm,   the   trial   court   vide   the   judgment   and
order   dated   18.8.2008   directed   that   the   partnership   firm
had   to   be   made   as   party   in   the   final   decree   proceedings.
The   other   defendants­partners   were   also   granted   liberty   to
apply to the Court during final decree proceedings for their
declaration   of   profit   and   loss   share   by   paying   necessary
court   fee.     The   trial   court   further   directed   the   partnership
firm   and   the   defendant   No.1   to   produce   all   the   accounts,
balance   sheets,   returns   filed   before   Income   Tax   authorities
and the bank documents and such other documents for the
period   from   30.10.1992   till   18.6.2004,   before   an

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independent   and   impartial   auditor   for   drawing   the   final
decree.  
Being   aggrieved   thereby,   the   plaintiffs   preferred
an   appeal   being   R.F.A.   No.1111   of   2008   before   the   High
Court   of   Karnataka   at   Bengaluru.     The   Division   Bench   of
the   Karnataka   High   Court,  by   the   impugned  judgment   and
order   dated   27.2.2015,   dismissed   the   said   appeal.     Being
aggrieved thereby, the plaintiffs have approached this Court
by way of present appeal by special leave. 
4. We   have   heard   Shri   R.   Basant,   learned   Senior
Counsel appearing on behalf of the plaintiffs/appellants and
Shri Balaji Srinivasan, learned 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   of   the   appellants,   submitted   that   both
the   trial   court   and   the   High   Court   have   grossly   erred   in
holding   that   the   plaintiffs   will   have   only   10%   share   in   the
profits   and   losses   of   the   partnership   firm.     He   submitted

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that the finding, that since the plaintiffs failed to prove that
they   have   invested   an   amount   of   Rs.50,00,000/­   (Rupees
Fifty  lakh)  and as such,  they  are not  entitled to 50% share
but   only   10%   share   in   the   profits   and   losses   of   the
partnership   firm,   is   totally   erroneous.     Learned   Senior
Counsel   submits   that   the   1992   Deed   was   drastically
amended vide the 1995 Deed.   He submits that, though the
1992 Deed had provided that the share of the plaintiff 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   not   contribute   an   amount   of   Rs.50,00,000/­   (Rupees
Fifty lakh) towards capital of the partnership firm, there was
no   such   stipulation   in   the   1995   Deed.     The   learned   Senior
Counsel submits that, as a matter of fact, the plaintiffs had
invested   the   said   amount   of   Rs.50,00,000/­   (Rupees   Fifty
lakh).   He submits that, in any case, the 1995 Deed clearly
provides   that   the   plaintiff   No.1   and   the   plaintiff   No.2,   who
was   inducted   into   the   partnership   firm   by   the   1995   Deed,
would   be   entitled   to   25%   share   each   in   the   profits   and
losses   of   the   partnership   firm.     He   submits   that   the   same
cannot be a mistake or error.   He submits that if the share

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of   all   the   partners   as   specified   in   the   1995   Deed   is
calculated,   it   would   clearly   reveal   that   it   provided   for   25%
share for each of the plaintiffs.  The learned Senior Counsel,
therefore,   submits   that   both   the   trial   court   and   the   High
Court   have   grossly   erred   in   totally   ignoring   the   specific
provision contained in the 1995 Deed. 
6. Shri   Balaji   Srinivasan,   learned   counsel,
appearing   on   behalf   of   the   respondent   Nos.   1   and   2,
submitted   that   the   finding   of   fact,   on   the   basis   of   the
appreciation   of   evidence,   by   the   trial   court   as   well   as   the
High   Court   warrants   no   interference.     He   submits   that   the
perusal   of   the   1992   Deed   as   well   as   the   1995   Deed   would
clearly   show   that   the   plaintiff   No.1   could   not   have   50%
share   in   the   profits   and   losses   of   the   partnership   firm
unless   he   invested   an   amount   of   Rs.50,00,000/­   (Rupees
Fifty lakh).  He submits that the evidence of plaintiff No.2 as
PW­1 would itself show that he has admitted that he had no
material   to   establish   that   an   amount   of   Rs.50,00,000/­
(Rupees Fifty lakh) was invested by the plaintiff No.1 in the
partnership firm.  Learned counsel further submits that the
plaintiff No.1 has failed to step into the witness box and as

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such,   an   adverse   inference   has   to   be   drawn   against   him.
Learned counsel further submits that as per the 1992 Deed,
the   plaintiff   No.1   was   entitled   only   to   10%   share   in   the
profits and  losses of  the partnership firm   since he  failed  to
invest an amount of Rs.50,00,000/­ (Rupees Fifty lakh).  By
the 1995 Deed, the plaintiff No.2, who is son of the plaintiff
No.1, came to be inducted and the 10% share of the plaintiff
No.1   was   to   be   divided   amongst   them.     However,
inadvertently,   it   came   to   be   mentioned   in   the   1995   Deed
that   the   plaintiffs   will   have   25%   share   each.     Learned
counsel,   therefore,   submits   that   no   interference   is
warranted and the appeal deserves to be dismissed. 
7. In   the   present   case,   most   of   the   facts   are
undisputed.     It   is   not   in   dispute   that   vide   the   1992   Deed
(Exhibit   D­3),   the   partnership   firm   was   reconstituted   and
the  plaintiff  No.1  was inducted  as a partner  along  with  the
original   partners,   i.e.,   the   defendant   Nos.   1   to   5.     As   per
clause   4   of   the   1992   Deed,   the   plaintiff   No.1,   i.e.,   the
incoming   partner,   was   to   contribute   an   amount   of
Rs.50,00,000/­   (Rupees   Fifty   lakh)   towards   capital,   on   or
before   31.3.1993.     As   per   clause   22   of   the   1992   Deed,   the

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share   of   the   plaintiff   No.1   in   the   profits   and   losses   of   the
partnership firm was to be 50% if he contributed an amount
of   Rs.50,00,000/­   (Rupees   Fifty   lakh)   on   or   before
31.3.1993.  Failing which, the same was to be only 10%.  
8. It   is   also   not   in   dispute   that   on   2.11.1992,   the
partnership firm obtained a property on lease for a period of
99 years and constructed a commercial building, which was
leased   out,   and   the   monthly   rent   of   which   was
Rs.22,05,532/­ approximately.
9. It will  be relevant  to  refer  to  paragraphs 2  and 4
of   the   plaint   in   the   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   the   year   1986   and   the
same was registered in 1990. By means of
Reconstitution/Partnership   Amendment
Deed   dated   30th   of   October   1992,   the
partnership   firm   was   reconstituted
consisting   of   the   first   plaintiff   and
defendant   1   to   5   as   the   partners   of   the
firm.   The   capital   as   invested   under   the
partnership   Deed   was   to   an   extent   of   Rs.
25,000/­   each   by   each   one   of   the
defendants   1   to   5   and   a   sum   of   Rs.
50,00,000/­   (Rupees   Fifty   Lakh   only)   was
invested by the first plaintiff alone. For the
purposes   of   operation   of   the   Bank
Accounts,   the   first   defendant   was

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constituted   as   the   Managing   Partner   who
was entrusted with the duty to operate the
bank   Accounts.   The   first   plaintiff   was
entitled  to   a   profit  share   of   50%   and   each
one defendants 1 to 5 were entitled to 10%
each. A copy of the Partnership Deed dated
30.10.1992   is   produced   herewith   and
marked as DOCUMENT NO. 1.
4. The Partnership was again reconstituted
by the Partnership Amendment Deed dated
18.8.1995   by   virtue   of   which   the   second
plaintiff and defendants 6 to 11 were to 16
who were them minors were also admitted
to   the   benefit   of   the   partnership   firm.   The
firm   was   constituted   to   carry   out   the
activities   of   building   and   development.   As
per the Reconstitution Deed, the capital of
the   firm   was   the   contribution   which   were
already made by the existing partners and
each   one   of   the   incoming   partners   had   to
contribute   a   sum   of   Rs.   10,000/­.   To
reconstitute   it   further   it   is   provided   that
the first plaintiff was entitled to 25% of the
profit share and the second plaintiff who is
none   other   than   the   some   of   the   first
plaintiff   was   also   entitled   to   25%   of   the
profit   share.   The   other   partners   were
entitled   to   various   extent   of   shares   as
contained   in   the   Reconstitution   Deed
dated   18.08.1995.   For   the   purposes   of
operation   of   the   Bank   Accounts,   the   first
defendant   was   constituted   as   a   Managing
Partner who was entrusted with the duties
of   operation   of   the   Bank   Accounts.   The
construction   activities   had   to   be   looked
after   by   the   first  plaintiff.  The   Partnership
Deed   further   provided   that   the   partners
could withdraw the amounts only if agreed
mutually   between   the   partners   from   time
to   time.   Clause   10   of   the   agreement

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provided that any of the partner as per the
Reconstitution   Deed   were   entitled   to
appear   in   person   or   could   authorize   any
person   to   appear   on   behalf   of   the   firm
before   any   judicial   or   quasi­judicial
authority. Therefore as per the terms of the
Reconstitution Deed, the plaintiffs together
are   entitled   to   a   profit   share   up   to   50%.
Copy   of   the   Reconstitution   Deed   dated
18.08.1995   is   produced   and   marked   as
DOCUMENT NO. 2.”
10. Perusal  of  the  aforesaid paragraphs  would  reveal
that the plaintiffs have specifically stated that, in pursuance
of   the   1992   Deed,   a   sum   of   Rs.50,00,000/­   (Rupees   Fifty
lakh)   was   invested   by  the   plaintiff   No.1   alone.     It   has  been
further averred that the plaintiff No.1 was entitled to a share
of   50%   and   each   one   of   the   defendant   Nos.   1   to   5   were
entitled to share of 10% each in the profits and losses of the
partnership   firm.     The   plaintiffs   have   further   averred   that
the   partnership   firm   was   again   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 as partners in
the   partnership   firm.     Vide   the   1995   Deed,   the   defendant
Nos. 12 to 16, who were then minors, were also admitted to
the benefit of the partnership firm.  It has been averred that

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after   the   reconstitution   of   the   partnership   firm   as   per   the
1995   Deed,   it   was   provided   that   the   plaintiff   No.1   was
entitled   to   25%   share   in   the   profits   and   losses   of   the
partnership firm, so  also, the plaintiff No.2, who is the son
of the plaintiff No.1, was entitled to 25% share in the profits
and   losses   of   the   partnership   firm.     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
partnership   firm   is   as   mentioned   in   clause   13   of   the   1995
Deed, whereas the defendant Nos. 12 to 16 were entitled to
2% share in the profits of the partnership firm.  
11. It is the specific case of the plaintiffs in the plaint
that   the   partnership   firm   on   2.11.1992   had   obtained   a
property   bearing   No.30,   situated   at   Cunningham   Road,
Bangalore­560   052,   admeasuring   an   extent   of   about   2972
sq.   mtrs.   on   lease,   for   a   period   of   99   years.     It   is   further
averred   in   the   plaint   that   subsequent   to   the   acquisition   of
the   leasehold   rights,   the   partnership   firm   undertook   the
construction   activities   with   the   investments,   which   were
made   according   to   the   terms   of   the   partnership   deed.   It   is
the   case   of   the   plaintiffs   that   after   the   construction   of   the

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building was complete, the entire building was leased out in
favour   of   the   defendant   No.17.     It   is   averred   that   the
defendant Nos. 18 and 19 were made parties to the said suit
since  the  current   account   of  the  partnership  firm  was  with
the   respondent   No.18   ­   Bank,   of   which,   the   respondent
No.19   was   the   Manager.     It   is   further   averred   by   the
plaintiffs   in   the   plaint   that   in   the   returns   filed   before   the
Income   Tax   Authorities,   the   share   of   the   plaintiffs   in   the
profits and losses of the partnership firm was shown as 25%
each.
12. It will further be relevant to reproduce paragraph
9   of   the   written  statement,   filed   on   behalf   of   the   defendant
No.1, in the said suit:  
“9.   It   is   true   that   the   firm   was
reconstituted   in   the   year   1995   and   the
Defendants   No.   6   to   11   are   admitted   as
partners and further Defendants No. 12 to
16 are admitted for the benefit of the firm.
They   number   of   partners   of   the   firm,
nature   of   activities   of   the   firm   and   other
details   pertaining   to   the   partnership   deed
is   duly   recorded   in   the   partnership   deed
and   subsequent   reconstitution   deeds.   In
the   light   of   the   facts   stated   supra,   the   1 st
plaintiff   was   not   entitled   to   25%   share   in
the   profits.   Accordingly,   at   the   time   of
induction of 2 nd
 plaintiff as a partner to the

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firm,   it   was   agreed   between   the   partners
that   the   1 st
  plaintiff   would   be   entitled   to
pass on 50% of his right to the 2 nd
 plaintiff.
Accordingly,   the   plaintiffs   No.1   and   2   are
only   entitled   to   10%   share.   The   condition
incorporated in the partnership deed dated
30­10­1992   had   not   been   rectified   or
varied in any manner. The reference to the
share   of   the   party   has   come   into
documentation   of   the   subsequent   deeds
based   on   the   preceding   document,   but
without   specific   noting   of   the
noncompliance   of   the   condition   precedent
to   be   performed   by   the   1st   plaintiff.
However,   due   to   proximate   relationship
between   the   partners,   the   same   was
agreed   to   be   understood   between   the
parties as per the original terms.”
13. It   will   also   be   relevant   to   refer   to   paragraph   4   of
the written statement, filed on behalf of the defendant No.2,
in the said suit:
“4.   The   facts   regarding   the   constitution
and re­constitution of the firm M/s. Selwel
Combines   is   a   matter   of   record   similarly,
the accounts of the firm is also a matter of
record.   In   this   context,   it   is   relevant   to
mention   that   the   Plaintiff   No.1   was
inducted into the firm as a partner and he
had   assured   to   invest   Rs.   50,00,000/­   on
or   before   31.03.1993.   Under   that
circumstance,   he   was   entitled   to   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   has
been   transferred   to   the   Plaintiff   No.2.   By
inadvertence by share ratio of the Plaintiffs

18
has   been   reflected   as   50%   in   some
documents   and   the   same   is   subject   to
rectification.   The   same   was   not
immediately   rectified   or   altered   due   to   the
cordial   relationship   between   the   parties
and since there was no actual distribution
of funds in that ratio. Any statement made
contrary   to   the   same   is   hereby   denied.   In
fact,   the   Plaintiffs   in   the   presence   of   the
other partners have accepted and admitted
this   fact.  They   are  estopped  from   pleading
anything to the contrary.”
14. The  stand taken  by  the  rest of  the  defendants in
their   written   statements   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 disputed the fact with regard to the reconstitution of the
partnership firm in the year 1995 vide the 1995 Deed.  They
have also not disputed the fact that the defendant Nos. 6 to
11   were   inducted   as   partners   in   the   partnership   firm   and
that the defendant Nos. 12 to 16 were admitted to the share
in the 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 profits and losses of the partnership firm,
only   if   he   invested   an   amount   of   Rs.50,00,000/­   (Rupees
Fifty   lakh)   on   or   before   31.3.1993.     It   is   their   case   that,   if

19
the   same   was   not   complied   with,   he   was   entitled   to   only
10% share in the profits and losses of the partnership firm.
It   is   their   stand   that,   by   inadvertence,   the   profit   and   loss
share   ratio   of   the   plaintiffs   had   been   reflected   as   50%   in
some documents and the same was subject to rectification.
It   is   their   further   case   that   the   same   was   not   immediately
rectified   or   altered   due   to   the   cordial   relationship   between
the parties. 
16. It   could   thus   be   seen   that   the   defendants   have
not   disputed   about   the   reconstitution   of   the   partnership
firm by the 1995 Deed.  They have 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   as
25%   each.     However,   it   is   their   case   that,   since   in
pursuance   of   the   1992   Deed,   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 which was given
to his son, i.e., the plaintiff No.2, vide the 1995 Deed.   It is
their   case   that   the   plaintiffs’   share   of   25%   each,   as
mentioned   in   the   1995   Deed,   is   by   inadvertence   or   a
mistake in fact, and the same was subject to rectification.  

20
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   of   Civil   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,   a   deed   for
reconstitution   of   partnership   was
entered   into   thereby   admitting   the
plaintiff   No.2   as   an   additional   partner.
At the time of induction of plaintiff No.2,
the   plaintiff   No.1   had   proposed
admission   of   plaintiff   No.2   with   an
intention   to   bifurcate   his   share   in   the
firm   by   transferring   half   of   his   share   to
his   son   who   is   plaintiff   No.2.   The
plaintiff   No.1   in   terms   of   the   agreement
failed   to   pay   towards   capital   of   the   firm
the sum of Rs.50 lakhs within 31.3.1993
and   also   until   this   day.   Under   such
circumstances,   in   reality,   the   plaintiff
No.1 was  holding   only   10%  share  in the
firm   and   consequently   by   virtue   of
transfer   of   his   half   share   the   5%   was
transferred in favour of plaintiff No.2.
6.   I   state   that   on   account   of   failure   of
plaintiff   No.1   to   contribute   Rs.50   lakhs
before 31.3.1993 having not been noted,
an error  had crept in the account of the
firm   initially   reflecting   the   share   of
plaintiff   No.   1   as   50%   and   thereafter
reflecting   the   share   of   plaintiffs   @   25%
each subsequent to induction of plaintiff
No.2.”

21
18. It could thus be seen that even in his affidavit in
lieu   of   examination­in­chief,   the   defendant   No.1   admits
about the execution of the 1995 Deed.
19. At   this   stage,   it   will   be   relevant   to   refer   to
Sections   17,   91   and   92   of   the   Indian   Evidence   Act,   1872
(hereinafter referred to as ‘the Evidence Act’):
“ 17.   Admission   defined .— An   admission   is
a   statement,   oral   or   documentary   or
contained in electronic form, which suggests
any   inference   as   to   any   fact   in   issue   or
relevant   fact,   and   which   is   made   by   any   of
the   persons,   and   under   the   circumstances,
hereinafter mentioned.
91.   Evidence   of   terms   of   contracts,
grants and other dispositions of property
reduced   to   form   of   document .— When   the
terms of a contract, or  of a grant, or of any
other   disposition   of   property,   have   been
reduced   to   the   form   of   a   document,   and   in
all cases in which any matter is required by
law   to   be   reduced   to   the   form   of   a
document,   no   evidence   shall   be   given   in
proof of the terms of such contract, grant or
other   disposition   of   property,   or   of   such
matter,   except   the   document   itself,   or
secondary   evidence   of   its   contents   in   cases
in   which   secondary   evidence   is   admissible
under   the   provisions   hereinbefore
contained.
Exception   1 .—When   a   public   officer   is
required   by   law   to   be   appointed   in   writing,
and   when   it   is   shown   that   any   particular

22
person has acted as such officer, the writing
by   which   he   is   appointed   need   not   be
proved.
Exception   2 .—Wills   admitted   to   probate
in   India may be proved by the probate.
Explanation   1 .—This   section   applies
equally   to   cases   in   which   the   contracts,
grants or dispositions of property referred to
are   contained   in   one   document,   and   to
cases   in   which   they   are   contained   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
document whatever, of a fact other than the
facts   referred   to   in   this   section,   shall   not
preclude   the   admission   of   oral   evidence   as
to the same fact.
Illustrations
( a )   If   a   contract   be   contained   in   several
letters,   all   the   letters   in   which   it   is   con ­
tained must be proved.
( b )   If   a   contract   is   contained   in   a   bill   of
exchange,   the   bill   of   exchange   must   be
proved.
( c ) If a bill of exchange is drawn in a set of
three, one only need be proved.
( d )   A   contracts, in writing, with   B , for the
delivery   of   indigo   upon   certain   terms.   The
contract   mentions   the   fact   that   B   had
paid   A   the   price   of   other   indigo   contracted
for verbally on another occasion.
Oral   evidence   is   offered   that   no   payment
was made for the other indigo. The evidence
is admissible.

23
( e )   A   gives   B   a   receipt   for   money   paid
by   B .
Oral   evidence   is   offered   of   the   payment.
The evidence is admissible.
92.   Exclusion   of   evidence   of   oral
agreement .— When   the   terms   of   any   such
contract,   grant   or   other   disposition   of
property,   or   any   matter   required   by   law   to
be reduced to the form of a document, have
been   proved   according   to   the   last   section,
no   evidence   of   any   oral   agreement   or
statement shall be admitted, as between the
parties   to   any   such   instrument   or   their
representatives   in   interest,   for   the   purpose
of   contradicting,   varying,   adding   to,   or
subtracting from, its terms:
Proviso   (1) .—Any   fact   may   be   proved
which   would   invalidate   any   document,   or
which   would   entitle   any   person   to   any
decree   or   order   relating   thereto;   such   as
fraud,   intimidation,   illegality,   want   of   due
execution,   want   of   capacity   in   any
contracting   party,   want   or   failure   of
consideration, or mistake in fact or law.
Proviso   (2) .—The   existence   of   any
separate oral agreement as to any matter on
which   a   document   is   silent,   and   which   is
not   inconsistent   with   its   terms,   may   be
proved.   In   considering   whether   or   not   this
proviso applies, the Court shall have regard
to the degree of formality of the document.
Proviso   (3) .—The   existence   of   any
separate   oral   agreement,   constituting   a
condition   precedent   to   the   attaching   of   any
obligation under any such contract, grant or
disposition of property, may be proved.
Proviso  (4) .—The existence of any distinct
subsequent   oral   agreement   to   rescind   or

24
modify   any   such   contract,   grant   or
disposition   of   property,   may   be   proved,
except   in   cases   in   which   such   contract,
grant   or   disposition   of   property   is   by   law
required   to   be   in   writing,   or   has   been
registered   according   to   the   law   in   force   for
the   time   being   as   to   the   registration   of
documents.
Proviso   (5) .—Any   usage   or   custom   by
which   incidents   not   expressly   mentioned   in
any   contract   are   usually   annexed   to
contracts   of   that   description,   may   be
proved:
Provided   that   the   annexing   of   such
incident   would   not   be   repugnant   to,   or
inconsistent   with,   the   express   terms   of   the
contract.
Proviso   (6) .—Any   fact   may   be   proved
which   shows   in   what   manner   the   language
of a document is related to existing facts.
Illustrations
( a )   A   policy   of   insurance   is   effected   on
goods   “in   ships   from   Calcutta   to   London”.
The   goods   are   shipped   in   a   particular   ship
which   is   lost.   The   fact   that   that   particular
ship   was   orally   excepted   from   the   policy,
cannot be proved.
( b )   A   agrees   absolutely   in   writing   to
pay   B   Rs 1000 on the 1st March, 1873. The
fact   that,   at   the   same   time,   an   oral   agree ­
ment   was   made   that   the   money   should   not
be paid till the thirty­first March, cannot be
proved.
( c )   An   estate   called   “the   Rampur   tea   es ­
tate” is sold by a deed which contains a map
of   the   property   sold.   The   fact   that   land   not
included   in   the   map   had   always   been   re ­

25
garded as part of the estate and was meant
to pass by the deed, cannot be proved.
( d )   A   enters   into   a   written   contract
with   B   to   work   certain   mines,   the   property
of   B ,   upon   certain   terms.   A   was   induced   to
do   so   by   a   misrepresentation   of   B 's   as   to
their value. This fact may be proved.
( e )   A   institutes   a   suit   against   B   for   the
specific performance of a contract, and also
prays that the contract may be reformed as
to   one   of   its   provisions,   as   that   provision
was   inserted   in   it   by   mistake.   A   may   prove
that such a mistake was made as would by
law   entitle   him   to   have   the   contract   re ­
formed.
( f )   A   orders goods of   B   by a letter in which
nothing   is   said   as   to   the   time   of   payment,
and   accepts   the   goods   on   deliv ­
ery.   B   sues   A   for the price.   A   may show that
the goods were supplied on credit for a term
still unexpired.
( g )   A   sells   B   a   horse   and   verbally   war ­
rants him sound.   A   gives   B   a paper in these
words   “Bought   of   A   a   horse   for   Rs
500”.   B   may prove the verbal warranty.
( h )   A   hires   lodgings   of   B ,   and   gives   B   a
card on which is written—“Rooms, Rs 200 a
month”.   A   may   prove   a   verbal   agreement
that   these   terms   were   to   include   partial
board.
A   hires   lodgings   of   B   for   a   year,   and   a
regularly   stamped   agreement,   drawn   up   by
an   attorney,   is   made   between   them.   It   is
silent   on   the   subject   of   board.   A   may   not
prove that  board was included in the terms
verbally.

26
( i )   A   applies   to   B   for   a   debt   due   to   A   by
sending a receipt for 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   upon   the   happening   of   a   certain
contingency.   The   writing   is   left   with   B ,   who
sues   A   upon   it.   A   may   show   the   circum ­
stances under which it was delivered.”
20. It could thus be seen that the admission given by
the defendant No.1 in his written statement as well as in his
affidavit   in   lieu   of   examination­in­chief,   that   the   partners
have executed the 1995 Deed, is unambiguous and clear. In
the   light   of  this  admission   by  the  defendant  Nos.  1, 5,  and
2,   3,   7   to   12,   it   will   be   relevant   to   consider   the   effect   of
Sections 91 and 92 of the Evidence Act in the present case.
  
21. This Court in the case of  Roop Kumar v. Mohan
Thedani 1
  has   elaborately   considered   the   earlier   judgments
of this Court on the issue in hand and has held as under:
“ 12.   Before we deal with the factual aspects,
it   would   be   proper   to   deal  with   the   plea  re ­
lating to scope and ambit of Sections 91 and
92 of the Evidence Act.
13.   Section   91   relates   to   evidence   of   terms
of   contract,   grants   and   other   disposition   of
1   (2003) 6 SCC 595

27
properties   reduced   to   form   of   document.
This section merely forbids proving the con ­
tents   of   a  writing  otherwise  than  by   writing
itself;   it   is   covered   by   the   ordinary   rule   of
law   of   evidence,   applicable   not   merely   to
solemn   writings   of   the   sort   named   but   to
others   known   sometimes   as   the   “best­evi ­
dence   rule”.   It   is   in   reality   declaring   a   doc ­
trine   of   the   substantive   law,   namely,   in   the
case   of   a   written   contract,   that   all   proceed ­
ings and contemporaneous oral expressions
of the thing are merged in the writing or dis ­
placed   by   it.   (See   Thayer's   Preliminary   Law
on   Evidence ,   p.   397   and   p.   398;   Phipson's
Evidence ,   7th   Edn.,   p.   546;   Wigmore's   Evi ­
dence ,   p.   2406.)   It   has   been   best   described
by   Wigmore   stating   that   the   rule   is   in   no
sense   a   rule   of   evidence   but   a   rule   of   sub ­
stantive   law.   It   does   not   exclude   certain
data   because   they   are   for   one   or   another
reason untrustworthy or undesirable means
of evidencing some fact to be proved. It does
not   concern   a   probative   mental   process   —
the process of believing one fact on the faith
of another. What the rule does is to declare
that certain kinds of facts are legally ineffec ­
tive   in   the   substantive   law;   and   this   of
course   (like   any   other   ruling   of   substantive
law)   results   in   forbidding   the   fact   to   be
proved at all. But this prohibition of proving
it   is   merely   that   dramatic   aspect   of   the
process   of   applying   the   rule   of   substantive
law. When a thing is not to be proved at all
the   rule   of   prohibition   does   not   become   a
rule   of   evidence   merely   because   it   comes
into play when the counsel offers to “prove”
it or “give evidence” of it; otherwise, any rule
of   law   whatever   might   be   reduced   to   a   rule

28
of   evidence.   It   would   become   the   legitimate
progeny of the law of evidence. For the pur ­
pose   of   specific   varieties   of   jural   effects   —
sale, contract etc. there are specific require ­
ments   varying   according   to   the   subject.   On
the   contrary   there   are   also   certain   funda ­
mental elements common to all and capable
of   being   generalised.   Every   jural   act   may
have the following four elements:
( a ) the enaction or creation of the act;
( b )   its   integration   or   embodiment   in   a
single memorial when desired;
( c ) its solemnization or fulfilment of the
prescribed forms, if any; and
( d )   the   interpretation   or   application   of
the act to the external objects affected by
it.
14.   The   first   and   fourth   are   necessarily   in ­
volved   in   every   jural   act,   and   second   and
third may or may not become practically im ­
portant, but are always possible elements.
15.   The   enaction   or   creation   of   an   act   is
concerned   with   the   question   whether   any
jural   act   of   the  alleged  tenor   has   been   con ­
summated; or, if consummated, whether the
circumstances  attending   its creation  autho ­
rise   its   avoidance   or   annulment.   The   inte ­
gration of the act consists in embodying it in
a   single   utterance   or   memorial   —   com ­
monly,   of   course,   a   written   one.   This
process   of   integration   may   be   required   by
law, or it may be adopted voluntarily by the
actor or actors and in the latter case, either
wholly or partially. Thus, the question in its
usual   form   is   whether   the   particular   docu ­

29
ment   was   intended   by   the   parties   to   cover
certain   subjects   of   transaction   between
them and, therefore, to deprive of legal effect
all other utterances.
16.   The practical consequence of integration
is   that   its   scattered   parts,   in   their   former
and inchoate shape, have no longer  any ju ­
ral  effect;  they   are  replaced  by  a  single  em ­
bodiment of the act. In other words, when a
jural   act   is   embodied   in   a   single   memorial
all   other   utterances   of   the   parties   on   the
topic   are   legally   immaterial   for   the   purpose
of   determining   what   are   the   terms   of   their
act. This rule is based upon an assumed in ­
tention   on   the   part   of   the   contracting   par ­
ties,   evidenced   by   the  existence  of  the   writ ­
ten   contract,   to   place   themselves   above   the
uncertainties of oral evidence and on  a dis ­
inclination   of   the   courts   to   defeat   this   ob ­
ject.   When   persons   express   their   agree ­
ments   in   writing,   it   is   for   the   express   pur ­
pose of getting rid of any indefiniteness and
to   put   their   ideas   in   such   shape   that   there
can be no misunderstanding, which so often
occurs   when   reliance   is   placed   upon   oral
statements.   Written   contracts   presume   de ­
liberation on the part of the contracting par ­
ties and it is natural they should be treated
with careful consideration by the courts and
with   a   disinclination   to   disturb   the   condi ­
tions of matters as embodied in them by the
act of the parties. (See   McKelvey's Evidence ,
p.   294.)   As   observed   in   Greenlear's   Evi ­
dence , p. 563, one of the most common and
important   of   the   concrete   rules   presumed
under   the   general   notion   that   the   best   evi ­
dence   must  be   produced   and  that   one   with

30
which the phrase “best evidence” is now ex ­
clusively   associated   is   the   rule   that   when
the   contents   of   a   writing   are   to   be   proved,
the   writing   itself   must   be   produced   before
the   court   or   its   absence   accounted   for   be ­
fore testimony to its contents is admitted.
17.   It is likewise a general and most inflexi ­
ble   rule   that   wherever   written   instruments
are   appointed,   either   by   the   requirement   of
law,   or   by  the   contract   of   the  parties,  to   be
the repositories and memorials of truth, any
other   evidence   is   excluded   from   being   used
either as a substitute for such instruments,
or to contradict or alter them. This is a mat ­
ter both of principle and policy. It is of prin ­
ciple because such instruments are in their
own   nature   and   origin,   entitled   to   a   much
higher   degree   of   credit   than   parol   evidence.
It   is   of   policy   because   it   would   be   attended
with   great   mischief   if   those   instruments,
upon which men's rights depended, were li ­
able to be impeached by loose collateral evi ­
dence. (See   Starkie on Evidence , p. 648.)
18.   In   Section   92   the   legislature   has   pre ­
vented   oral   evidence   being   adduced   for   the
purpose   of   varying   the   contract   as   between
the   parties   to   the   contract;   but,   no   such
limitations   are   imposed   under   Section   91.
Having   regard   to   the   jural   position   of   Sec ­
tions 91 and 92 and the deliberate omission
from Section 91 of such words of limitation,
it   must   be   taken   note   of   that   even   a   third
party   if   he   wants   to   establish   a   particular
contract   between   certain   others,   either
when such contract has been reduced to in
a   document   or   where   under   the   law   such

31
contract has to be in writing, can only prove
such   contract   by   the   production   of   such
writing.
19.   Sections 91 and 92 apply only when the
document   on   the   face   of   it   contains   or   ap ­
pears   to   contain   all   the   terms   of   the   con ­
tract.   Section   91   is   concerned   solely   with
the mode of proof of a document with limita ­
tion   imposed   by   Section   92   relates   only   to
the parties to the document. If after the doc ­
ument has been produced to prove its terms
under   Section   91,   provisions   of   Section   92
come   into   operation   for   the   purpose   of   ex ­
cluding   evidence   of   any   oral   agreement   or
statement   for   the   purpose   of   contradicting,
varying,   adding   or   subtracting   from   its
terms.   Sections   91   and   92   in   effect   supple ­
ment each other. Section 91 would be inop ­
erative   without   the   aid   of   Section   92,   and
similarly   Section   92   would   be   inoperative
without the aid of Section 91.
20.   The   two   sections,   however,   differ   in
some   material   particulars.   Section   91   ap ­
plies to all documents, whether they purport
to   dispose  of  rights   or  not,  whereas  Section
92   applies   to   documents   which   can   be   de ­
scribed 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   docu ­
ments.   (See:   Bai   Hira   Devi   v.   Official   As ­
signee of Bombay   [AIR 1958 SC 448] .) Both
these provisions are based on “best­evidence
rule”.  In   Bacon's   Maxim   Regulation   23 ,  Lord
Bacon   said   “The   law   will   not   couple   and
mingle   matters   of   specialty,   which   is   of   the

32
higher   account,   with   matter   of   averment
which is of inferior account in law.” 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.
21.   The grounds of exclusion of extrinsic ev ­
idence   are:   ( i )   to   admit   inferior   evidence
when   law   requires   superior   would   amount
to   nullifying   the   law,   and   ( ii )   when   parties
have   deliberately   put   their   agreement   into
writing,   it   is   conclusively   presumed,   be ­
tween   themselves   and   their   privies,   that
they intended 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   treacher ­
ous memory.
22.   This   Court   in   Gangabai     v.     Chhabubai
[(1982)   1   SCC   4:   AIR   1982   SC   20]   and   Ish ­
war   Dass   Jain   v.   Sohan   Lal   [(2000)   1   SCC
434:   AIR   2000   SC   426]   with   reference   to
Section 92(1) held that 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.”

33
22. It   could   thus   be   seen   that   this   Court   has   held
that the   integration of the act consists in embodying it in a
single   utterance   or   memorial   —   commonly,   a   written   one.
This   process   of   integration   may   be   required   by   law,   or   it
may be adopted voluntarily by the actor or actors and in the
latter case, either wholly or partially.   It has been held that
the question that is required to be considered is whether the
particular   document   was   intended   by   the   parties   to   cover
certain   subjects   of   transaction   between   them   to   deprive   of
legal effect of all other utterances.   It has been further held
that  t he practical consequence of integration is that its scat ­
tered   parts,   in   their   former   and   inchoate   shape,   have   no
longer any jural effect and they are replaced by a single em ­
bodiment of the act.  It has been held that when a jural act
is embodied in a single memorial, all other utterances of the
parties on the topic are legally immaterial for the purpose of
determining   what   are   the   terms   of   their   act.     It   has   been
held that when persons express their agreements in writing,
it is for the express purpose of getting rid of any indefinite ­
ness and to put their ideas in such shape that there can be

34
no   misunderstanding,   which   so   often   occurs   when   reliance
is   placed   upon   oral   statements.   It   has   been   observed   that
the   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   em ­
bodied   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. 
23. This Court has further held that 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   inconve ­
nient that matters in writing made by advice and on consid ­
eration,   and   which   finally   import   the   certain   truth   of   the
agreement   of   parties   should   be   controlled   by   averment   of

35
the parties to be proved by the uncertain testimony of slip ­
pery   memory.     It   has   been   held   that   when   parties   deliber ­
ately put their agreement into writing, it is conclusively pre ­
sumed,   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.  
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   held   that   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 op ­
erate as an agreement but that some other agreement alto ­
gether, not recorded in the document, was entered into be ­
tween the parties.
2   (1982) 1 SCC 4
3   (2000) 1 SCC 434

36
25. It could thus be seen that once the plaintiffs had
specifically contended that the terms of the 1992 Deed were
amended/modified   by   the   1995   Deed,   and   the   defendants
admitted about the execution of the said document, i.e., the
1995   Deed,   if   it   was   the   case   of   the   defendants   that   the
terms   mentioned   in   the   1995   Deed   were   inadvertent   or   a
mistake   in   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   to   oral   agreement   for   the
purpose of contradicting, varying, adding  to,  or  subtracting
from   the   terms   of   the   written   contract,   would   be   excluded
unless  the case falls  within  any   of the  provisos  provided  in
Section   92.     The   defendants   have   attempted   to   bring   their
case   within   the   first   proviso   to   Section   92   of   the   Evidence
Act, by contending that mentioning of 25% share to each of
the   plaintiffs   in   the   profits   and   losses   of   the   partnership
firm was a mistake in fact.  
26. It will also be relevant to examine the contention
of   the   defendants,   as   to   whether   the   share   of   the   plaintiffs
in the profits and losses of the partnership firm, mentioned

37
in the 1995 Deed, was due to inadvertence or was a mistake
in fact.  
27. It   will   be   relevant   to   refer   to   the   preamble   of   the
1995 Deed:
“Whereas the Parties 1 to 6, hereto
in   pursuance   of   Deed   of   Partnership
among   themselves   dated   30 th
  October,
1992, have been carrying on business at
31/1.1   Cunningham   Road   Bangalore   ­
360052   as   Builders   and   Developers
under   the   name   and   style   of   "SELWEL
COMBINES".
AND   the   Parties   of   Seventh,   Eight,
Ninth,   Tenth,   Eleventh,   Twelfth,
Thirteenth   parties  have  after   negotiation
agreed   to   join   the   partnership   firm   M/s
Selwel   Combines   as   Partners   with   effect
from   18 th
  August, 1995  and  are  referred
tb as the Incoming Partners. 
And the Parties hereto have decided
to   admitted   V.   Vijaylakshmi   Kumari   R.
Poornima,   Master   R.   Manjunath   Master
S.   Ragavendra,   Master   S.   Badrinath   to
the benefit of this partnership 
AND   whereas   the   parties   of   the
First,   Second,   Third,   Fourth,   Fifth   and
Sixth parts have decided to continue∙ the
business   of   the   Firm   "SELWEL
COMBINES"   after   admitting   parts   of   the
Seventh,   Eight,   Ninth,   Tenth,   Eleventh,
Twelth, Thirteenth parts as Partners and
are referred to as continuing partners. 

38
And   whereas   the   Parties   hereto
after   negotiations   amount   themselves
have   decided   to   amend   the   terms   of
partnership   of   the   Firm   M/s   "SELWEL
COMBINES"   with   effect   from
18.08.1995. 
And   whereas   the   parties   hereto
have   decided   to   admit   the   following
minors to the benefit of Partnership as:
1 Kum. v. 
Vijayalakshmi Daughter of­ Sri 
R Venkateshan 22.05.78
2 Kum. R. 
Poornima Daughter of Sri. 
Rajanna 07.10.87
3 Master R. 
Manjunath Son of Sri. 
Rajanna 07.10.86
4 Master R. 
Raghavendra Son of Sri. 
Somashekar 20.05.86
5 Master S. 
Lokanath Son of Sri. 
Somashelar 13.08.90
And   whereas   parties   hereto   are
desirous   of   reducing   the   terms   and
conditions   of   the   Agreement   of
Amendment of Partnership into writing.”
28. It could  thus  clearly  be seen that  the 1995 Deed
specifically refers to the 1992 Deed between the party Nos. 1
to   6,   i.e.,   plaintiff   No.1   and   the   defendant   Nos.   1   to   5.     It
further states that the party Nos. 7 to 13, i.e., the defendant

39
Nos.   6  to   11  and   the   plaintiff   No.2,   have,   after   negotiation,
agreed   to   join   the   partnership   firm   with   effect   from
18.8.1995.  It further states that it has been agreed between
the   parties   that   the   defendant   Nos.   12   to   16   have   been
admitted   to   the   benefit   of   the   partnership   firm.     The
preamble   specifically   states   that   after   negotiation   amongst
themselves, the parties have decided to amend the terms of
the   partnership   firm   with   effect   from   18.8.1995   and
thereafter   have   reduced   the   terms   and   conditions   of   the
agreement of amendment of partnership into writing. 
29. It will be apposite to refer to clause 4 of the 1995
Deed, which reads thus:
“4.  Capital of the Firm 
The capital of the firm shall consist
of Capital already contributed by parties
of First, Second, Third, Fourth, Fifth and
Sixth   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   Deed   specifically   provides   that   the   capital   of   the
partnership firm shall be the capital already contributed by
parties   of   First,   Second,   Third,   Fourth,   Fifth   and   Sixth

40
parts, and the capital contributed by the incoming partners
of Rs.10,000/­ each.  
31. In contrast, it will be relevant to refer to clause 4
of the 1992 Deed, which reads thus:
“4. Capital  of the firm:         Capital  of the
firm   shall   consist   of   capitals   already
contributed by partners of First, Second,
Third, Fourth & Fifth as below: 
First Partner  25,000 
Second Partner   25,000 
Third Partner  25,000 
Fourth Partner  25,000 
Fifth Partner  25,000 
Sixth   Partner   is   all   of   that
contribute Rs. 50,00,000 (Fifty Lakhs) as
his   contribution   the   capital   of   the   firm
and he shall contribute his capital of Rs.
50,00,000   on   or   before   31 st
  December
1993.”
32.   It   could   thus   be   seen   that   clause   4   of   the   1992
Deed,   provides   that   though   the   capital   of   the   partnership
firm was capital already contributed by the defendants Nos.
1   to   5,   i.e.,   Rs.25,000/­   each,   the   plaintiff   No.1   was   to
contribute an amount of Rs.50,00,000/­ (Rupees Fifty lakh)
to the capital of the firm.

41
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   providing   for   interest
paid or payable of this firm to any of the
partners;   out   of   the   balance,   salary
payable   to   any   of   them   shall   be
allocated. After this, balance of Profits or
Losses shall be shared as below: 
Profit Loss
1 T.M. Narasimhan 18% 28%
2 V. Srinivas 2% 2%
3 V. Umashankar 2% 2%
4 E. Ravi Kumar 2% 2%
5 H. Shamanna 4% 4%
6 Anantha Raju 25% 25%
7 V. Bahgyalakshmi 2% 2%
8 V. Shakuntaia 2% 2%
9 Padma 2% 2%
10 Varalakshmi 2% 2%
11 V. Badari 2% 2%
12 Lakshmi 2% 2%
13 S.A.L. Vinay 25% 25%
The   following   persons   are   admitted
to the benefits of Partnership only: 
%   of
share
in   the
firm
profits
1 Kum. V. 
Vijayalakshmi
2% D/o   Sri.   R.
Venkatesan 22.05.78 2%

42
2 Kum. R. 
Poornima
2% D/o   Sri
Rajanna 07.10.87 2%
3 Master R. 
manjunath
2% S/o   Sri
Rajanna 07.10.88 2%
4 Master S. 
Raghavendra
2% S/o   Sri.
Somasekar 20.05.86 2%
5 Master S. 
Lokanath
2% S/o   Sri.
Somasekar 13.08.90 2%”
34. In contrast, it will be relevant to refer to clause 22
of the 1992 Deed, which reads thus:
“22.   Sharing   of   Profit   &   Losses:   Book
profits   of   the   firm   shall   be   arrived   at
after   providing   for   interest   paid/payable
to   partner   on   their   capital   account
balances   as   in   para   22.   Out   of   book
profits first salary allowable to any of the
partners   will   be   allocated.   Balance
profits   or   losses   shall   be   shared   as
below: 
Sri T. M. Narashimhan  10%
Sri. V. Srinivas  10%
Sri. V. Uma Shankar  10%
Sri. E. Ravi Kumar  10%
Sri. H. Shamanna  10%
Sri. V. Anantha Raju  50%
If Sri V. Anantha Raju fails to bring
in   Rs.   50,00,000   as   his   capital
contribution to the firm on or before 31 st
March   1993   he   shall   be   entitled   to   only
10%   of   the   profits   of   the   firm   and   liable
to   share   losses   also   at   10%   of   total
losses.  On   that   event,  profits  and  losses

43
shall   be   shared   or   borne   an   the   case
may be as follows: 
Sri T. M. Narashimhan  20% 
Sri. V. Srinivas  20% 
Sri. V. Uma Shankar  20%
Sri. E. Ravi Kumar  20%
Sri. H. Shamanna  10%
Sri. V. Anantha Raju  10%”
35. Comparison   of   these   two   clauses   would   reveal
that   in   the   1992   Deed,   though   the   share   of   the   defendant
Nos. 1 to 5 in the profits and losses of the partnership firm
was   specified   as   10%,   the   share   of   plaintiff   No.1   was
specified   as   50%.     However,   it   is   specifically   mentioned   in
the   1992   Deed,   that   in   the   event,   the   plaintiff   No.1   fails   to
bring in an amount of Rs.50,00,000/­ (Rupees Fifty lakh) as
his capital contribution to the partnership firm on or before
31.3.1993,   the   share   in   the   profits   and   losses   of   the
partnership   firm   of   defendant   Nos.   1   to   4   would   be   20%
each   and   that   of   the   plaintiff   No.1   and   the   defendant   No.5
would be 10% each. 
36. In the amended deed, i.e., the 1995 Deed, there is
no   mention   regarding   such   contingency   upon   the   plaintiff
No.1   depositing   or   not   depositing   an   amount   of
Rs.50,00,000/­ (Rupees Fifty lakh).

44
37. What   has   happened   between   1992   and   1995   is
exclusively within the knowledge of the parties.  Though the
plaintiffs   have   averred   that   an   amount   of   Rs.50,00,000/­
(Rupees Fifty lakh) was invested by the plaintiff No.1 in the
intervening   period,   the   same   is   denied   by   the   defendants.
However,   in   view   of   Section   91   of   the   Evidence   Act,   the
evidentiary value of the 1995 Deed would stand on a much
higher pedestal, as against the oral testimony of the parties.
The   1995   Deed   clearly   shows   that   it   is   executed   after   due
deliberations,   negotiations   and   mutual   consensus   on   the
terms   and   conditions   to   be   incorporated   therein.     By   the
1995   Deed,   6   new   partners   have   been   admitted   to   the
partnership   firm,   whereas   5   minors   have   been   admitted   to
the   benefit   of   the   partnership   firm.     The   contention   of   the
defendants,   that   the   share   of   the   plaintiff   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, does
not   sound   logical   and   reasoned.     If   it   was   by   mistake   or
inadvertence,   nothing   precluded   the   defendants   from
rectifying   the   same   between   1995   and   2004.   The

45
arithmetical calculations would also show that the share in
the   profits   and   losses   of   the   partnership   firm   has   been
mentioned   in   the   1995   Deed   after   due   deliberations   and
negotiations.  It could be seen that, 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 in the
profits   is   only   18%.     The   10%   difference   of   share   in   the
profits  and  losses  of  the  defendant  No.1  has  been   adjusted
towards   the   2%   share   in   the   profits   given   to   the   defendant
Nos.   12   to   16   each.     As   such,   we   are   unable   to   accept   the
contention   of   the   defendants   that   the   share   in   the   profits
and losses of the partnership firm as mentioned in the 1995
Deed is inadvertent or a mistake in fact.  In any case, if that
was so, the burden was on the defendants to establish that
the   1995   Deed   did   not   reflect   the   mutual   intention   of   the
parties   and   the   terms   and   conditions   agreed   between   the
parties   were   different   than   those   reduced   in   writing   by   the
1995 Deed.
38. We   find   that   the   following   observations   by   the
trial   court   in   its   judgment   and   order   dated   18.8.2008   are

46
not   sustainable   in   law,   in   the   light   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 plaintiff No.1 had given or deposited
Rs.50,00,000/­   towards   his   share   to
claim 50% of profit share. It is only mere
assertions   the   plaintiffs   are   asking
before the court that "we are entitled for
50%   share"   they   are   not   saying   before
the court why and for what reasons that
they   are   entitled   to   50%   share   ­   and
other   partners   are   entitled   to   a   lesser
share.   Merely   because   share   of   the
plaintiffs  have  been  shown  as  25% each
either   in   the   partnership   deed   dated
18/8/1995   or   subsequent   returns   filed
before the income tax authorities is of no
avail because those documents have not
been acted upon to distribute the profits
between   the   partners   to   show   that
plaintiff   Nos.   I   and   2   were   given   profit
share at any time.”
39. In   this   factual   background,   we   are   of   the
considered   view   that   the   trial   court   as   well   as   the   High
Court have erred in holding that the plaintiffs together were
entitled   to   only   10%   share   in   the   profits   and   losses   of   the
partnership firm till 18.6.2004. 
40. Insofar as the challenge of the appellants to their
expulsion from the partnership firm is concerned, we do not

47
find any merit in the contention of the appellants.  It will be
relevant to refer to clause 17 of the 1992 Deed:
“17. The Partners have right  to expel an
erring partner/partners or a partner who
prevents the other partner from carrying
on   business   effectively   and   profitable   or
the   partner/partners   who   causes
damage   to   the   interest   of   the   firm   of
his/their   acts,   after   him/them
reasonable opportunity of being hard.”
41. Perusal   of   clause   17   of   the   1992   deed   would
reveal   that   the   partners   have   right   to   expel   an   erring
partner/partners   on   the   grounds   specified   therein.     The
1995   Deed   does   not   have   any   conflicting   provision.     The
clauses in the 1992 Deed, which are not superseded by the
1995 Deed, would still continue to operate.   The trial court
has   given   sound   reasons,   while   upholding   the   expulsion   of
the plaintiffs. We see no reason to interfere with the same.
 
42. In the result, the appeal is partly allowed. 
43. The   judgment   and   decree   passed   by   the   trial
court,   as   affirmed   by   the   High   Court,   holding   that   the
plaintiffs together have 10% share in the profits and losses
of   the   partnership   firm   is   modified.   It   is   declared   and
decreed that the plaintiffs together are entitled to 50% share

48
in   the   profits   and   losses   of   the   partnership   firm   till
18.6.2004. 
44. The   judgment   and   decree   passed   by   the   trial
court,   as   affirmed   by   the   High   Court,   to   the   effect   that   the
plaintiffs   are   expelled   from   the   partnership   firm   with   effect
from 18.6.2004 is maintained.   Rest of the directions of the
trial   court   in   paragraphs   2   to   6   of   the   operative   part   in   its
judgment are also maintained. 
45. The   appeal   is   disposed   of   in   the   above   terms.
There shall be no order as to costs.  Pending applications, if
any, shall stand disposed of. 
…….…....................., J.
                             [L. NAGESWARA RAO]
…….…....................., J.
                                            [SANJIV KHANNA]
…….…....................., J.
                                                 [B.R. GAVAI]
NEW DELHI;
OCTOBER 26, 2021