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Hakmaji Meghaji Vs. Punnaji Devichand - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberFirst Appeal No. 228 of 1933
Judge
Reported inAIR1938Bom453; (1938)40BOMLR995
AppellantHakmaji Meghaji
RespondentPunnaji Devichand
DispositionAppeal dismissed
Excerpt:
.....statement of the legal position. but there is a good deal of authority for the view that a firm as such cannot be a member of a partnership. 11. so far this is obviously perfectly consistent with the winding up of a firm already dissolved, but further on in his deposition the defendant says :when a partner dies, the firm is continued if the heir joins......to ascertain what the view of the learned trial judge was. on issue no. 8, ' is it proved that the firm hakmaji meghaji was dissolved nine years ago ?', he has recorded a finding in the affirmative. in the course of his judgment at p. 4 of the print he says after referring to the evidence of plaintiff no. 1 : ' i think therefore that the firm hakmaji meghaji is not dissolved on the death of meghaji.' on the other hand in the last paragraph at the bottom of p. 5 of the print he appears to hold that the two firms of hakmaji meghaji and aslaji sonmal did not continue after the deaths of meghaji and bhikaji. the case really depends in this respect almost entirely on the evidence of plaintiff no. 1, and his evidence so far as it bears on the point is this : ' hakmaji meghaji firm is still.....
Judgment:

Broomfield, J.

1. This is an appeal in a suit brought by the plaintiffs-appellants for dissolution of partnership and accounts. The suit has been dismissed by the trial Court as being time-barred owing to the death of two of the partners of the firm more than three years before the suit, It appears that seven different Marwari firms trading in Gadag or the neighbourhood formed themselves into a single partnership in October, 1918, to do business in yarn. Apparently what was contemplated was forward business of a somewhat speculative nature. The composite firm so constituted traded in the name of Punnaji Devichand, which was the name of defendant No. 1, the largest of the constituent firms. The business went on for three or four months only and resulted, as we understand, in heavy losses and also in litigation which lasted for many years and involved two appeals to the Privy Council.

2. In this appeal we are not much concerned with the names of the several constituent firms or with their shares. As to the shares in fact there is no longer any dispute. But I should mention that plaintiffs claim to represent the firm of Hakmaji Meghaji, which was one of the constituent firms in the partnership, and defendant No. 1 is the firm of Punnaji Devichand and defendant No. 3 the firm of Aslaji Sonmal. The plaintiffs alleged that they frequently demanded accounts from defendant No. 1 firm, to which according to them the management of the business of the main firm was entrusted, but accounts were not furnished owing to the litigation. It is also alleged in the plaint that the plaintiffs supplied Rs. 60,000 towards the capital.

3. Defendant No. 1 in his written statement has denied that the firm of Punnaji Devichand was appointed manager of the composite firm and has also denied that any amount was contributed by the plaintiffs towards the capital. It is stated that no capital was required as the business was forward business and that any money advanced by any of the partners was by way of loan. That particular point has not been discussed or determined in the judgment of the trial Court and it appears that no evidence was led by agreement, the matter being left for subsequent decision in case a preliminary decree for accounts should come to be passed.

4. The contentions of defendant No. 1 with which we are now concerned are, firstly, that the present plaintiffs Kapurchand Hakmaji and Navalmal Hakmaji are not entitled to bring the suit because the firm of Hakmaji Meghaji of which they claim to be vahivatdars and owners was dissolved seven or eight years before the suit was brought, and, secondly, that the suit is time-barred. The written statement is not very explicit on this point, but the case made in the argument was that the bar of limitation arises because Meghaji Trikamji of the firm of Hakmaji Meghaji and Bhikaji the owner of the firm of Aslaji Sonmal both died more than three years before the suit.

5. Under Section 253 of the Indian Contract Act, which contains the law applicable to this case, a partnership is dissolved by the death of any partner in the absence of any contract to the contrary. It is an admitted fact that Meghaji Trikamji died in 1927 and that Bhikaji also died more than three years before the suit. Under Article 106 of the Indian Limitation Act a suit for an account and a share of the profits of a dissolved partnership must be brought within three years of the date of dissolution. As I have mentioned, the trial Court found that the suit is time-barred and dismissed it.

6. On the question whether the firm of Hakmaji Meghaji has been dissolved it is not easy to ascertain what the view of the learned trial Judge was. On issue No. 8, ' Is it proved that the firm Hakmaji Meghaji was dissolved nine years ago ?', he has recorded a finding in the affirmative. In the course of his judgment at p. 4 of the print he says after referring to the evidence of plaintiff No. 1 : ' I think therefore that the firm Hakmaji Meghaji is not dissolved on the death of Meghaji.' On the other hand in the last paragraph at the bottom of p. 5 of the print he appears to hold that the two firms of Hakmaji Meghaji and Aslaji Sonmal did not continue after the deaths of Meghaji and Bhikaji. The case really depends in this respect almost entirely on the evidence of plaintiff No. 1, and his evidence so far as it bears on the point is this : ' Hakmaji Meghaji firm is still going on. It was not to stop when a partner died. The firm Aslaji Sonmal has stopped business but pays and receives dues.' Then in cross-examinations he said : ' Hakmaji Meghaji firm does no business. It sold goods in stock. For ten or eleven years it has done no business. It recovers dues and pays sums due and amounts left were divided among partners.' This being the only evidence, there seems to be no justification for the finding of the learned trial Judge at p. 4 of the print that the business of the firm is still going on. The evidence of plaintiff No. 1, if anything, rather suggests that there was a dissolution, and certainly it cannot be said to afford any basis for a conclusion that there was a contract or agreement between the parties that the death of a partner was not to dissolve the partnership. We think it must be held on the evidence that both these firms, that of Hakmaji Meghaji and that of Aslaji Sonmal, became dissolved on the death of Meghaji and Bhikaji respectively and that was more than three years before the suit. In one sense no doubt this is not very material because learned Counsel for the respondents concedes that plaintiff No. 1 at any rate would be entitled to bring a suit for accounts of the main partnership as being himself a member of that partnership.

7. On the issue of limitation the argument for the appellants is that the partnership in suit consisted of the seven constituent firms which were partners as such, and that that being so, the death of individual members of the constituent firms would not dissolve the main firm. That argument as it happens is of no assistance to the plaintiffs in view of our finding that two of the constituent firms had been dissolved more than three years before the suit. Moreover, we are not satisfied that it is a correct statement of the legal position. No doubt according to the definition in Section 239 of the Indian Contract Act ' partnership ' is the relation which subsists between persons who have agreed to combine their property, labour or skill in some business, and to share the profits thereof between them, and according to the definition of ' person ' in the General Clauses Act, unless there is anything repugnant in the subject or context, it includes any company or association or body of individuals whether incorporated or not. But there is a good deal of authority for the view that a firm as such cannot be a member of a partnership. In Seodoyal Khemka v. Joharmul I.L.R. (1923) Cal. 549 Manmull1 Mr. Justice Page says (p. 558) :-

A firm as such cannot be a member of a partnership. A partnership under Section 239 is a relationship which subsists between persons; but a firm is not a person ; it is not an entity ; it is merely a collective name for the individuals who are members of the partnership. It is neither a legal entity, nor is it a person.

Then, after referring to authorities and noting that the law is different in Scotland, he says : ' A firm name, in truth, is merely a description of the individuals who compose the firm. It is that, and it is nothing more.' These observations were approved by a division bench of the same High Court in Brojo Lal Saha Banikya v. Budh Nath Pyarilal & Co. I.L.R. (1927) Cal. 551 and the Allahabad High Court has followed these cases, although with a certain amount of hesitation, in In the matter of Jai Dayal Madan Gopal I.L.R. (1932) All. 846. We understand that the same view of the law has been taken in Madras also, and I may mention Ghishulal Gamshilal v. Gambhirmal Pandya I.L.R. (1934) Cal. 510 As at present advised, we are not prepared to differ from this consensus of authority, and hold that the trial Judge was right in his view that all the members of the seven constituent firms must be taken to have been individual partners in the main firm. It follows from that that the main firm would be dissolved on the death of Meghaji and Bhikaji, unless there is reason to suppose that there was a contract providing that the main firm was not to be dissolved by the death of individual partners.

8. The learned advocate for the appellants has attached importance to paragraph 4 of the written statement of defendant No. 1 which is as follows :-

As the partnership account books have been produced in the year 1919A.D. in the litigations going on in the Bellary and Dharwar Courts in respect of the said partnership, there was no opportunity to make up accounts in respect thereof. Hence the plaintiffs have neither asked to make up accounts and to award the amount found due on accounts nor these defendants had ever denied.

It is suggested that the case made out in this paragraph is not that the plaintiffs' suit is time-barred but that it is premature. But I think that is to place an interpretation upon an isolated passage in the written statement which it cannot fairly bear. This paragraph is obviously an answer to the allegation in the plaint that accounts were asked for by the plaintiffs on several occasions and that defendant No. 1 refused to give them.

9. We were also referred to a letter, exhibit 74, which was sent by one Sonmal on behalf of the firm of Punnaji Devichand to plaintiff No. 1 in October, 1927. It gives him information of the date which had been fixed for the hearing of a suit brought by one Kapurji Magniram and requested his presence at the hearing. There is practically no evidence as to the circumstances in which this letter was sent, but even if we assume that the suit of Kapurji Magniram was against the main firm of Punnaji Devichand and not the firm of defendant No. 1, which also traded under that name, the fact that plaintiff No. 1 was asked to attend during the litigation has no value as evidence that the business of the main firm was still continuing and that there had been no dissolution. Even after dissolution persons who had been partners in the firm would be interested in litigation relating to its affairs.

10. The appellants rely mainly on statements made by defendant No. 1 himself in support of the case that there was an agreement that the partnership was not to be dissolved on the death of any partner. The material passages in his evidence are as follows :-

The bigger firm Punnaji Devichand is conducting suits of its own. Suits Nos. 46 and 47 are going on in this court. Account has not yet been settled between the partners of the bigger firm. There is a khata of the bigger firm even now going on in the small firm Punnaji Devichand. There is a khata of Hakmaji Meghaji with defendant No. 1 firm which is not yet settled.

11. So far this is obviously perfectly consistent with the winding up of a firm already dissolved, but further on in his deposition the defendant says : ' When a partner dies, the firm is continued if the heir joins. Even if the heir leaves, the other partners conduct the firm.' It does not appear that the heirs of Meghaji or of Bhikaji joined the main firm as partners, so that the only statement of this defendant which can be said to lend any real support to the appellants' case is the final sentence ' Even if the heir leaves, the other partners conduct the firm.'

12. But in the present case it is common ground that the firm was not doing any business at the material time. It did business for three or four months only. After that there was nothing to do except to wind up the business and settle accounts. It would in our opinion be stressing the statement of defendant No. 1 unfairly to treat it as an admission that the partnership continued after the death of two of the partners. The circumstances of the case rather suggest that the business which was contemplated was to last a short period only and on the ground of general probabilities therefore there is no reason to suppose that the parties would be likely to agree that the partnership was not to be dissolved according to the ordinary law by the death of a partner. We must hold that the plaintiffs have not succeeded in proving the contract to the contrary which they have alleged and that the deaths of Meghaji and Bhikaji dissolved the firm for the dissolution of which the suit is now brought.

13. In the final paragraph of his judgment the learned trial Judge has expressed the view that the suit is barred by reason of the fact that business was stopped three months after the formation of the partnership. This point was not taken in the written statement and appears to be based on paragraph 4 of the plaint where in a rather obscure passage it is stated : ' The original yam dealing of the partnership went on only for three or four months. As the business was stopped then, it did not go on and it is not to go on.' It was suggested on behalf of the respondent that in this passage the plaintiffs asserted that the partnership itself came to an end three months after it was formed. The most: reasonable construction of the words, however, seems to be not that the partnership came to an end but that the business of the partnership came to an end, and there is nothing in the Indian Contract Act which justifies the view that the mere cessation of business would dissolve the partnership. On the other hand there is the authority of the Privy Council for holding that it would not do so, Sathapa v. Subrahmanyan . This point, however, in view of our decision on the other issues is not of much importance.

14. The appeal must be dismissed with costs.


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