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Sundarajan (A.R.) Vs. A.P. Challiappan and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Judge
Reported in(1966)ILLJ564Mad
AppellantSundarajan (A.R.)
RespondentA.P. Challiappan and anr.
Cases ReferredO. v. M.N. Gan
Excerpt:
- - on the other hand, the labour court proceeded on the assumption that the section would apply and it was of the opinion that inasmuch as the third condition in the proviso to the section was not satisfied, respondent 1 was entitled to retrenchment compensation as computed by it. 2. a firm of partnership, as far as i can find, has never been held to be a legal entity like a company......deemed to act for the other, though in a sense the firm owns the assets and is responsible for the firm's liabilities. in law the assets of the firm are owned by the members of the firm and the liabilities are owing by them. it flows from these propositions that when a firm is dissolved, no transfer of ownership as such is involved. all that follows from the process of dissolution is that what is owned in common is defined in severality and each member takes his share of the property subject to his share of the liability. that being the case, dissolution of partnership neither involves a transfer of ownership nor involves transfer of management of the undertaking. this principle appears to have been recognized by the calcutta high court in alex a. apcar (jr.) and co. v. m.n. gan :.....
Judgment:

K. Veeraswami, J.

1. The order sought to be quashed was made Under Section 33C(2) of the Industrial Disputes Act, 1947. Respondent 1 was employed as a conductor from 10 February 1951 to 20 July 1961 on a basic wage of Rs. 45 and dearness allowance of Rs. 29 per mensem in the transport business of a firm of partnership with the name and style of Sundaram Transports, sivakasi. On 3 January 1961, there was a dissolution of the partnership and the assets and liabilities were divided between the two partner, one of them being the petitioner. It appears that the buses were apportioned between the two partners and with them also the staff. On that basis respondent 1 happened to be allotted to the other partner. Respondent 1 applied to the labour court, Madurai, for determination of his retrenchment compensation on the footing that the dissolution of the partnership involved a change of ownership or of management of the undertaking. The labour court does not appear to have addressed itself to the question as to whether at all the facts would attract the application of Section 25FF. On the other hand, the labour court proceeded on the assumption that the section would apply and it was of the opinion that inasmuch as the third condition in the proviso to the section was not satisfied, respondent 1 was entitled to retrenchment compensation as computed by it. This petition is to quash its order.

2. A firm of partnership, as far as I can find, has never been held to be a legal entity like a company. It is true that for certain purpose under the Civil Procedure code a firm is treated as legal entity. But the legal fiction goes no further. A firm of partnership is but a convenient and compendious device by wish two or more individuals join together, pool the their resources or labour on a Joint venture of business. In a firm each partner is deemed to act for the other, though in a sense the firm owns the assets and is responsible for the firm's liabilities. In law the assets of the firm are owned by the members of the firm and the liabilities are owing by them. It flows from these propositions that when a firm is dissolved, no transfer of ownership as such is involved. All that follows from the process of dissolution is that what is owned in common is defined in severality and each member takes his share of the property subject to his share of the liability. That being the case, dissolution of partnership neither involves a transfer of ownership nor involves transfer of management of the undertaking. This principle appears to have been recognized by the Calcutta High Court in Alex A. Apcar (Jr.) and CO. v. M.N. Gan : AIR1960Cal14 with which I am in agreement. There the firm consisted of two partners but by an arrangement between them one of the two took over the entire assets and liabilities and continued the undertaking. It was held that when plural proprietors became a single proprietor there is no change in the employer within the meaning of Ss 25F and 25FF of the Industrial Disputes Act. When the firm in the instant case was running the business, respondent 1 was employed under it. That meant that he was employed under its partners. After its dissolution, respondent 1 still continued to be employed under one of the erstwhile partners. In that sense there is no change in the employment or the employer.

3. I hold, therefore, that Section 25FF is not applicable to the facts of the case. The order of the labour court is quashed and the petition is allowed but without cost.


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