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(Firm) Naraindas Lachhmandas Vs. Dina Nath and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad
Decided On
Reported inAIR1935All767; 158Ind.Cas.43
Appellant(Firm) Naraindas Lachhmandas
RespondentDina Nath and ors.
Cases ReferredBasanti Bibi v. Lal
Excerpt:
- .....sons, all of calcutta, entered into an. agreement with the east indian railway for the supply of castor seeds during the year 1923-24. in pursuance of that agreement they supplied from time to time castor seeds and received certain sums of money. payments appear to have been made to all the three sets of suppliers. on 15th july 1924, they executed a deed reciting their agreement with the e.i. railway, the fact that they had supplied castor seeds, the sums received by each and the amount found due to each on settlement of accounts being made between them. a certain sum was due from the e. i. railway, and it was, by agreement of the parties to the deed assigned to dina nath hemraj alone, who were authorised to recover it from the railway. messrs. narain das luchmandas and messrs......
Judgment:

Niamatullah, J.

1. This is a reference-under Section 61(2), Stamp Act. The question is whether the document dated 15th July 1924 is only an agreement, as held by the Subordinate Judge, or a deed of dissolution of partnership within the meaning of Article 46-B, as maintained by the Chief Inspector of Stamps. Messrs. Dina Nath Hemraj, Messrs Naraindas Luchmandas and Messrs Dewanchand and Sons, all of Calcutta, entered into an. agreement with the East Indian Railway for the supply of castor seeds during the year 1923-24. In pursuance of that agreement they supplied from time to time castor seeds and received certain sums of money. Payments appear to have been made to all the three sets of suppliers. On 15th July 1924, they executed a deed reciting their agreement with the E.I. Railway, the fact that they had supplied castor seeds, the sums received by each and the amount found due to each on settlement of accounts being made between them. A certain sum was due from the E. I. Railway, and it was, by agreement of the parties to the deed assigned to Dina Nath Hemraj alone, who were authorised to recover it from the Railway. Messrs. Narain Das Luchmandas and Messrs. Dewnachand and Sons, declared at the end of the document to 'have no further concern with or share or interest in the said sum.' The document makes it abundantly clear that after the execution thereof none of the parties had any claim against any other party and that a final settlement of accounts in respect of their joint enterprise had been made.

2. It seems that, if the agreement in question had been executed by three individuals, who had previously entered, into a partnership for the supply of castor seeds to the E.I. Railway, the view of the Chief Inspector of Stamps would have, been correct. The agreement; on the face of it, puts an end to their relationship qua the partnership previously entered into for the purpose of supplying castor seeds to the E.I. Railway. The entire assets of the partnership business were brought into the hotchpot, and the rights and liabilities of each of the contracting parties were finally determined and the assets completely divided among them.

3. There is however a peculiar difficulty in accepting the point of view put forward by the Chief Inspector of Stamps. Article 46-B, Section 1, Stamp Act, provides that a stamp duty of Rs. 5 shall be paid on a deed of dissolution of partnership. The Stamp Act contains no definition of either 'dissolution' or of 'partnership.' There can be no doubt that both these terms have been used in the sense in which they are used in the Contract Act, which regulates partnership and the dissolution thereof. Partnership is defined in Section 239, Contract Act, as

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.

4. It has been held by this Court in Basanti Bibi v. Lal 1931 All. 225 and In re Jai Dayal Madan Gopal of Benares 1933 All. 77, that one firm cannot be a partner in another firm, so that if three firms agree to combine their property, labour or skill in some business, they cannot be considered to be partners, the essential requirement of Section 239 being that the contracting parties should be 'persons', i.e. individuals. We are bound by the view taken in the cases above referred to, and must hold that if Messrs. Dina Nath Hemraj, Messrs. Naraindas Luchmandas and Messrs. Dewanchand and Sons, the executants of the document under consideration are firms each consisting of several partners, their agreement to combine property, labour or skill for the purposes of supplying castor seeds to the E.I. Railway did not amount to an agreement of partnership. The result is the same if any of them is a firm. They may have been partners in the popular sense of the term, but could not be considered to form a partnership, as defined in Section 239, Contract Act, If they did not form a partnership, there could be no dissolution of partnership within the meaning of Article 46-B, Schedule 1, Stamp Act, It is however not clear whether anyone of Messrs. Dina Nath Hemraj, Messrs. Naraindas Luchmandas and Messrs. Dewanchand and Sons, is a concern belonging to several persons as partners, or everyone of them belongs to a sole owner. In the former case, the agreement in question is not a deed of dissolution of partnership. In the latter case it is. We declare accordingly.


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