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Emani Satyanarayanamurthi, Manager of Sree Bala Tripura Sundari Rice Mill Vs. Katuri Gopalan and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1939Mad891; (1939)2MLJ279
AppellantEmani Satyanarayanamurthi, Manager of Sree Bala Tripura Sundari Rice Mill
RespondentKaturi Gopalan and anr.
Cases ReferredLancaster v. Alsup
Excerpt:
- - but a claim for damages for breach of a covenant to continue a partnership would necessarily be based on the loss which the firm suffered, not by reason of its unsuccessful trading in a particular year, but as a consequence directly flowing from the withdrawal of one of the partners from the firm. the plaint proceeds quite clearly on the footing of an obligation under the partnership deed whereby the defendants are bound to pay their quota of the trading losses......defendants in view of the findings of the lower appellate court can be held liable for the trading loss qua partners; but it is suggested that the amount may be recovered from them by way of damages for the breach of the contract entered into by their father that the partnership should be continued by his representatives after his death. it seems to me that there are two very grave objections to this contention. one is that the basis of a claim for damages for breach of a covenant to continue a partnership is totally different from the basis of a claim for a proportionate share of the loss from a particular partner. in the latter case all that the plaintiff has to do is to ascertain the total loss, divide it amongst the various shareholders and claim proportionately. but a claim for.....
Judgment:

Wadsworth, J.

1. The appellant was the plaintiff in a suit brought on the basis of a deed of partnership to recover money due by way of contribution towards the loss incurred by the partnership from the defendants as sons of a deceased partner. The basis of the suit is a covenant in the deed of partnership which runs as follows:

If any of the shareholders should die owing to an act of Providence while the business of the firm is being carried on, his heir or his representatives shall after his life time be a partner in his place, being entitled to the right and interest of the said partner, and he shall get the business done subjecting himself to the aforesaid terms and on that account neither the partnership should be cancelled nor would it come to an end.

2. The plaint alleges that the partnership worked at a loss and that by a resolution of the shareholders the plaintiff was authorised to collect the proportionate quotas of the loss from the various shareholders on behalf of the firm, that the father of the defendants having died, all his properties passed to his sons, the defendants, that the first defendant has been taking part in the management of the partnership firm and that the second defendant is liable because the business of the firm has been managed for the benefit of the family. It is established that the defendants' father died in September, 1929, that the firm incurred a loss in the year 1929-1930 and that the defendants on demand paid on 21st March, 1931, their quota towards this loss. The suit was filed in July, 1931, for what is claimed as the proportionate amount of the loss of the firm incurred in the year 1930-31. It has been found as a fact by the lower appellate Court that the first defendant did not become a partner at his father's death or take part in the management of the firm. As a matter of fact in September, 1929, when defendants' father died both the defendants were minors and they could not legally have become partners though they might have been admitted to the benefit of the partnership with reference to Section 247 of the Contract Act which governs the suit. It is established by the decision in Lancaster v. Alsup 57 L.T. 53, that a covenant by a deceased partner binding his executors to continue the partnership cannot be specifically enforced against the executors and that the effect of the death of the partner coupled with the refusal of the executors to continue the partnership will be the dissolution of the firm. The learned Judge suggests, however, that the surviving partners might have a right of action for damages against the executors for the breach of the covenant of the deceased partner that his representatives should continue the firm.

3. It is not now argued that the defendants in view of the findings of the lower appellate Court can be held liable for the trading loss qua partners; but it is suggested that the amount may be recovered from them by way of damages for the breach of the contract entered into by their father that the partnership should be continued by his representatives after his death. It seems to me that there are two very grave objections to this contention. One is that the basis of a claim for damages for breach of a covenant to continue a partnership is totally different from the basis of a claim for a proportionate share of the loss from a particular partner. In the latter case all that the plaintiff has to do is to ascertain the total loss, divide it amongst the various shareholders and claim proportionately. But a claim for damages for breach of a covenant to continue a partnership would necessarily be based on the loss which the firm suffered, not by reason of its unsuccessful trading in a particular year, but as a consequence directly flowing from the withdrawal of one of the partners from the firm. Quite conceivably such a claim for damages might be made when the firm as a whole had made a profit. In any case it has no direct relation to the amount of profit or loss made by the firm in a particular year. Incidentally I may observe that the defendants have paid their quote of the actual loss sustained by the working of the business during the year in which their father died and there is little in the evidence to indicate that the firm suffered any loss by the withdrawal of the defendants' father which is not adequately compensated by what has been paid.

4. A second objection to the remedy suggested by Mr. Sitarama Rao for the appellant is the fact that this is not a remedy which has been sought in the plaint. The plaint proceeds quite clearly on the footing of an obligation under the partnership deed whereby the defendants are bound to pay their quota of the trading losses. This is quite a different action from one in which the firm claims damages for a breach of a covenant to continue the business as a partnership by the representatives of a deceased partner. I say nothing about the further ground on which the plaintiff has been non-suited, namely, his capacity to sue as the sole representative of the firm. The appeal is dismissed with costs.

5. Leave to appeal refused.


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