Intrepretation of order
Dhruv
(Querist) 26 October 2012
This query is : Resolved
Dear All,
In a case of disputes in a partnership firm (Defendant No. 1), the Hon' Civil Court has passed the following order:
"The Court Commissioner shall determine the immovable and movable properties and cash of defendant No. 1 firm within two months from the date of passing of this order and shall submit his detailed report before this Court.
The Court Commissioner is authorized to obtain the services of Chartered Accountant for determining the books of accounts of defendant No. 1 partnership firm and the expenditure regarding the same shall be made after obtaining prior consent of both the parties."
The firm has not been maintaining books of accounts and is has been filing Provisional Accounts in the Court every -3- months as per the previous Court Order.
My query is as to what is the expected from the Chartered Accountant appointed as per the above Order?. Is he expected to determine as to what are the assets and liabilities of the firm or is he even expected to make a Fair valuation of the same as this is a case of disputes where one partner wants to retire and his share is to be determined.
What does the term "determine books of accounts" and "determine the immovable and movable properties" mean in the above Order? Does it include only ascertaining and listing out all the liabilities and assets of the firm or does it also include making a Fair Valuation of them?
Anirudh
(Expert) 26 October 2012
Please do not get confused.
The books of accounts, to start with, is nothing but recording of receipts and payments.
From such receipts and payments, it will be classified into various heads - like fixed assets, current liabilities, loans and advances, sundry debtors, sundry creditors etc. etc.
Only such a position of books of accounts is to be ascertained and indicated by the C.A. The Order of the court is only to that limited extent.
The C.A. has no role to value or revalue the assets.
Devajyoti Barman
(Expert) 26 October 2012
Interpretation of any order is to be made in the context of facts situation of case.
A mere extract of the order would in no way help us to interpret anything which is not literal meaning of the order.
Dhruv
(Querist) 26 October 2012
Dear Sir,
This is the whole Order. I have not mentioned only 1 paragraph which states that both the Parties shall bear the Commissioner Fees of Rs. 10,000/- and parties shall equally pay the amount of the said fees.
The facts of the case in brief are as under:
1. There is dispute amongst the partners and one partner has decided to retire.
2. The other partners claim that the books of the accounts are with retiring partner, while the retiring partner has made similar counter claim.
3. Because of the above, the firm has been filing Provisional Audited Accounts with the Court.
4. Now the Court has come out with the above Order
Dhruv
(Querist) 26 October 2012
Both the parties are insisting on making valuation of the assets, determine the share of the retiring partner and close the chapter. What if the Chartered Accountant does that?. As far as I understand, he will exceed the Order. What shall be the liabilities of the Chartered Accountant if he does so? Suppose if one of the party does not agree with the Valuation arrived can he file a case against the Chartered Accountant for exceeding the Order. And if he can under what provisions can such a case be filed?
Devajyoti Barman
(Expert) 26 October 2012
Then pay the amount and let the Commissioner do the work. You can always agitate the report at the time of hearing if he does anything beyond his jurisdiction.
Do not get confused with my gender.
Dhruv
(Querist) 26 October 2012
Dear Sir,
I apologize for wrongly addressing you and have modified my comment accordingly and included the facts of the case for your reference.
So the Chartered Accountant only has to audit the Receipts & Payments. Assets and Liabilities of the firm and nothing beyond that. He is not supposed to do the Valuation.
Also the Order directs the Court Commissioner to determine the immovable and movable properties and cash of the firm. What does this mean?
Devajyoti Barman
(Expert) 26 October 2012
It means what is written there.
Do not interpret now .
Let him do the job. Once he finishes the job, submit the report in court for its acceptance then you may agitate any point which was against your interest.
Dhruv
(Querist) 26 October 2012
Dear Sir,
Actually I am the Chartered Accountant the Court Commissioner has proposed to appoint. From plain reading of the Order, it means all I have to do is perform an audit of the firm and submit a Balance Sheet and Profit & Loss Account before the Court. However the parties as well the Court Commissioner are insisting to do the valuation of the assets of the firm and determine the share of the retiring partner. Hence my above query. And if I take up the job, will I be in trouble tomorrow, if one party disagrees with the Valuation?
Devajyoti Barman
(Expert) 26 October 2012
You have nothing to worry. Do your job and submit the same.'Next time when you post query . post it clearly so we need not ponder over other issues.
