IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 04TH DAY OF SEPTEMBER, 2025 PRESENT THE HON'BLE MRS. JUSTICE ANU SIVARAMAN AND THE HON'BLE DR. JUSTICE K.MANMADHA RAO COMMERCIAL APPEAL NO.272 OF 2022 BETWEEN: 1 . M/S. CHEERS GARDEN PARADISE BAR AND RESTAURANT, PARTNERSHIP FIRM ITS BUSINESS OFFICE SITUATED AT D No.6 GOKULAM, 4TH STAGE K.R.S. ROAD MYSURU-570 001 REP. BY ITS MANAGING PARTNERS MR. G.R. CHANNAKESHAVA S/O SRI. RANGEGOWDA NOW AGED ABOUT 46 YEARS 2 . MR. G.R. CHANNAKESHAVA S/O SRI. RANGEGOWDA NOW AGED ABOUT 45 YEARS R/AT D.No.1253 KRISHNAMURTHYPURAM AMBEDKAR ROAD BALLAL CIRCLE MYSURU NOW R/AT D.No.73 2ND CROSS VIJAYANAGAR 1ST STAGE MYSURU-570 001 3 . SMT. K.N. LOKESHWARI D/O K.B. NAGARAJ AGED ABOUT 46 YEARS R/AT D.No.73, 2ND CROSS - 2 VIJAYANAGAR 1ST STAGE MYSURU-570 001 ...APPELLANTS (BY SRI. M.C. JAYAKIRTHI, ADVOCATE) AND: 1 . SRI. D. JAYANNA S/O LATE KENCHEGOWDA MAJOR R/O. D.No.39, 6TH CROSS RAILWAY LAYOUT VIJAYANAGAR 2ND STAGE MYSURU NOW R/AT D No.67 KATTEHOSURE M.G. KOPPAL VIJAYANAGAR POST MYSURU-570 001 2 . SRI. K.N. YASHWANTHKUMAR S/O LATE SRI. NAGARAJ NOW AGED ABOUT 42 YEARS R/AT D No.1253 KRISHNAMURTHYPURAM AMBEDKAR ROAD BALLAL CIRCLE MYSURU-570 001 …RESPONDENTS (BY SRI. VIGHNESHWAR S. SHASTRI, SENIOR COUNSEL A/W. Ms. SADHANA, ADVOCATE FOR R1; NOTICE TO R2 IS DEEMED TO HAVE BEEN EFFECTED V/O DATED 03.12.2024) THIS COMMERCIAL APPEAL/COMAP IS FILED UNDER SECTION 13(1)(a) OF THE COMMERCIAL COURTS ACT, PRAYING TO SET ASIDE THE JUDGMENT AND DECREE DATED 09.11.2021 IN COM.O.S.No.103/2020 BY THE COMMERCIAL COURT AND II ADDITIONAL DISTRICT AND SESSIONS JUDGE, MYSURU. - 3 THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 22.07.2025 AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, ANU SIVARAMAN J., PRONOUNCED THE FOLLOWING: CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN and HON'BLE DR. JUSTICE K.MANMADHA RAO CAV JUDGMENT (PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN) This Commercial Appeal is filed challenging the judgment and decree dated 09.11.2021 passed by the Commercial Court and II Additional District and Sessions Judge, Mysuru ('Commercial Court' for short) in Commercial O.S.No.103/2020. 2. We have heard Shri. M.C. Jayakirthi, learned counsel appearing for the appellants and Shri. Vighneshwar S. Shastri, learned Senior Counsel as instructed by Ms. Sadhana, learned counsel appearing for respondent No.1. 3. The suit was filed by respondent No.1 seeking the following reliefs:- "a) Declare that the alleged registered partnership deed dated 26.11.2007 created between the 2nd and 4th defendant is not binding on the above plaintiff as it is void abinitio in nature. - 4 b) Pray for dissolution of first defendant partnership firm which is running under name and style as "CHEERS GARDEN PARADISE BAR AND RESTAURANT" coming into existence as per the partnership deed dated 21.02.2002. c) Pray for accounts of the firm from the date of commencement of the business till the date of dissolution. d) And consequential relief of mandatory injunction directing the 1st and 2nd defendant to settle all the capital investments, interests, good wills, profits, etc., as per the partnership deed dated 21.02.2002 till the date of realization. e) And also pray for consequential relief of permanent injunction restraining the defendant No.1 to 4, their agents, relatives, children, employees, etc., to run the partnership firm in the name and style of "CHEERS GARDEN PARADISE BAR AND RESTAURANT" in future permanently anywhere in India. f) With cost and such other relief's as this Hon'ble Court deems think fit under the circumstances of this case, in the interest of justice and equity." 4. By the judgment under appeal, the trial Court held as follows:- "The suit of the Plaintiff is decreed with costs as under: - 5 It is declared that the alleged partnership deed dated 26.11.2007 is not binding on the Plaintiff. The partnership firm which is running under the name and style 'Cheers Garden Paradise Bar and Restaurant' coming into existence as per partnership deed dated 21.02.2002 is dissolved on the date of presentation of the plaint dated 29.06.2011. The three partners of the firm i.e., Defendant No.2 G.R. Chennakeshava and Defendant No.3 Mr.K.N. Yashavantha Kumar are having 33.33% share each in the profit and loss of the firm and the plaintiff is having 33.34% share in the profit and loss of the firm as per partnership deed. The defendant No.2 is directed to furnish the accounts of the firm within four months. In case of failure to furnish the account by the Defendant No.2, the Plaintiff is entitled to take appropriate steps for relief of rendition of accounts and distribution of shares as declared above in the firm as provided under law through process of the Court. The Defendants No.1 to 4 are permanently restrained from running partnership firm in the name and style of "Cheers Garden Paradise Bar and Restaurant" in future. The suit against Defendants No.5 to 7 is dismissed. Draw preliminary decree accordingly. File be consigned to the record room." - 6 5. The learned counsel appearing for the appellants submits that the judgment and decree were passed without considering the relevant aspects of the matter and are liable to be set aside. It is submitted that the appellants and respondents No.1 and 2 had entered into a partnership to run the business of Bar and Restaurant under the name and style of 'M/s. Cheers Garden Paradise Bar and Restaurant'. Each of the partners had contributed a sum of Rs.3,00,000/- as Capital for the business. The partnership was initially entered into on 21.02.2002. On 01.04.2007, the firm was reconstituted as per Ex.D7 and the respondents retired from the firm taking back their capital amounts and the second appellant was inducted as partner. The appellants had thereafter entered into a new partnership to carry on liquor vending business under the very same name and style. The first respondent lodged a complaint before the Police and also approached this Court in Writ Petition No.8349/2008 seeking suspension of Excise License granted to the appellants. The Writ Petition was dismissed with liberty to approach the Civil Court and the Police also issued an - 7 endorsement to the same effect. Thereafter, a Civil Suit was filed as O.S.No.532/2011 on the file of the Principal Civil Judge (Senior Division) and C.J.M., at Mysuru, which was transferred to the Commercial Court and II Additional District and Sessions Judge, Mysuru and registered as Commercial O.S.No.103/2020. The appellants filed their written statements and the following issues were framed:- "1. Whether Plaintiff proves that the alleged partnership deed dated 26.11.2007 is void ab-initio and not binding on him? 2. Whether the plaintiff proves that himself and Defendant No.3 are the co-partners of the first defendant firm? 3. Whether the Plaintiff proves that the Defendant No.1 firm is still in existence and carrying on business? 4. Whether the Defendant No.1 to 4 prove that suit is not maintainable? 5. Whether the Defendant No.1 to 4 prove that partnership firm dated 21.02.2002 was dissolved long back and said firm is no longer in existence? 6. Whether the Defendant No.1 to 4 prove that suit is barred by law of limitation? 7. Whether the Defendant No.1 to 4 prove that the suit is hit by principles of resjudicata? - 8 8. Is plaintiff entitled for the relief as prayed for? 9. What order or Decree?" 6. The first respondent/plaintiff examined himself as PW.1 and got marked 57 documents as Exs.P1 to P57. Whereas the appellant was examined as DW.1 and Exs.D1 to D13 were marked. The Commercial Court answered Issues No.1 to 3 and 8 in the affirmative and Issues No.4 to 7 in the negative and decreed the suit as prayed for. 7. The main contention of the appellant before us is that the finding on the issue of limitation is incorrect and contrary to the material on record. It is contended that respondent No.1, in its complaint before the Police dated 06.06.2008, had specifically alleged that the registered partnership deed dated 26.11.2007 was fraudulently created and is not binding on him. It is further contended that thereafter Writ Petition No.8349 of 2008 was filed on 16.06.2008, which was dismissed on 20.06.2008. It is contended that the Commercial Suit filed on 29.06.2011 is beyond three years from the date on which the cause of action arose and the suit is therefore barred by limitation in - 9 terms of Article 59 of Schedule I of the Limitation Act, 1963. It is further contended that the Limitation Act does not provide for a specific provision, under which the time limit to file a suit for Dissolution of Partnership is provided and therefore Article 113 of the Limitation Act is to be relied on. It is submitted that all such suits have to be filed within three years from the date on which the right to sue accrues. Paragraphs No.18 and 19 of the written arguments filed by the learned counsel for the appellants, read as follows:- "18. Section 44 of the Partnership Act provides for grounds on which a suit for dissolution of partnership can be filed. The present suit falls under Section 44(d) and the ground is when breach of terms of the agreement by a partner other than the partner suing. Therefore the Cause of action to file the suit for dissolution of the firm has per begun to run from the time there is breach of Clause 13 and 14 of the partnership deed as per Ex.P-1 which provides for maintenance of proper books of accounts and closure of accounts and preparation of balance sheet every year within the 31st day of March. 19. It is the specific case of the Plaintiff at paragragh 11 of the plaint that he has not been paid a single pie towards his share of profits and interest on the capital from the inception of the partnership. The said pleading is also an act of breach committed by the Appellants. It is therefore submitted that the cause of - 10 action for dissolution of the firm has accrued in the year 2003 itself. " 8. In support of his contentions, he has relied on the following decisions:- • Ishwar Ganapti Kyasti and Others v. Gurulingappa bashettappa Kyasti and Another reported in 2000 SCC OnLine Kar 348; • Pamuru Vishnu Vinodh Reddy v. Chillakuru Chandrasekhara Reddy and Others reported in (2003) 3 SCC 445; • Gannmani Anasuya and Others v. Parvatini Amarendra Chowdhary and Others reported in (2007) 10 SCC 296, and • Shakti Bhog Food Industries Limited v. Central Bank of India and Another reported in (2020) 17 SCC 260. 9. The learned senior counsel appearing for the first respondent contends that these aspects of the matter were specifically considered by the trial Court. In answer to the issue, whether the defendants proved that the suit is barred by limitation, the Court had specifically considered the contentions of the parties with reference to the evidence on - 11 record. It was found that defendants have not produced the original deed of admission-cum-retirement of partners dated 01.04.2007, but had only produced a copy which was obtained under the Right to Information Act. The said deed of admission-cum-retirement was not duly proved before the Court. The defendants have not produced any documents to show that the capital investment, interests or profits had been paid to the plaintiff. Therefore, the trial Court had come to the conclusion that the contention of the plaintiff that the original partnership continued without dissolution was more probable and that the firm is to be treated as one which is still in existence. It was also found that the defendants have not raised any contention that there was an arbitration clause in the Partnership Deed. Taking note of the totality of the circumstances, the Court came to the conclusion that the defendants had failed to prove whether the Partnership Firm constituted by Deed dated 21.02.2002 was ever dissolved. It is in the above circumstances that the Court came to the conclusion that the partnership is still in - 12 existence and the plaintiffs are entitled to the reliefs prayed for. 10. In support of his contentions, the learned Senior counsel has relied on the following citations:- • Shreedhar Govind Kamerkar v. Yesahwant Govind Kamerkar and Another reported in (2006) 13 SCC 481; • Pamuru Vishnu Vinodh Reddy v. Chillakuru Chandrasekhara Reddy and Others reported in (2003) 3 SCC 445; • Prem Lata (SMT) and Another v. M/s Ishar Dass CHaman Lal and Others reported in (1995) 2 SCC 145; • Commissioner of Income Tax, West Bengal III v. Pigot Champan and Company reported in (1982) 2 SCC 330; • Commissioner of Income Tax, West Bengal v. A.W. Figgis and Company and Others reported in (1953) 2 SCC 219, and • Shantharam Sadashiva Harithe v. Sripada Bhavani Shankar and Others reported in 1973 SCC OnLine Kar 328. - 13 11. The decisions relied on by the learned senior counsel are authority on the point that a partnership does not dissolve automatically due to disputes or even stoppage of business. Dissolution has to be effected specifically either by mutual agreement/dissolution deed or through a decree of Court under the Partnership Act, 1932. If the dissolution is not duly effected and proved, then the partnership subsists. 12. We have considered the contentions advanced. It was the specific case of the plaintiff that the partnership which was created by a Deed dated 21.02.2002 had remained in existence and had never been dissolved in the manner known to law. The appellants have taken the specific contention that the earlier partnership was dissolved and that partnership dated 26.11.2007 was registered and that the appellants were entitled to continue the said partnership. The trial Court found that the original deed of admission-cum-retirement of partners dated 01.04.2007 which would have proved the appellants' case was never produced or proved before the Court. In the absence of any - 14 acceptable evidence having been tendered as to the retirement of partners and reconstitution of the firm, the Court came to the conclusion that the partnership formed in the year 2002 subsisted. It was in the said circumstances the Court came to the conclusion that the suit was not time barred. 13. The Partnership Deed dated 21.02.2002 which was produced and proved before the Court specifically provided that upon retirement, death or insolvency of any of the partners, the firm shall not ipso facto be dissolved and shall continue with the continuing or remaining or solvent partners admitting the legal heirs of the deceased partners as per Clause 179(e) unless their number is reduced to one. Clause 21 further provided that the duration of the partnership shall be at will, subject to however, that the partnership shall not be dissolved so long as the loans borrowed by the firm remain unpaid without the prior consent of the lending Bank or Financial Institution. 14. Having considered the contentions advanced and in the light of the oral and documentary evidence led in the - 15 instant case, we are of the opinion that the finding of the Commercial Court that the dissolution of the Partnership in the year 2007 was not proved by the defendants is an acceptable contention. The grounds raised in the appeal are devoid of merits. The appeal fails and the same is accordingly dismissed with costs. All pending interlocutory applications shall stand dismissed. Sd/- (ANU SIVARAMAN) JUDGE Sd/- (DR. K.MANMADHA RAO) JUDGE cp*