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P.L.A. Palaniappa Chettiar Vs. V.L.A.R. Veerappa Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtChennai
Decided On
Reported in(1918)34MLJ41
AppellantP.L.A. Palaniappa Chettiar
RespondentV.L.A.R. Veerappa Chettiar and ors.
Cases Referred and Baikunt Nath Chakrabarti v. Hara Lal Pal Chowdhury
Excerpt:
- - 932, but we think that the arrangement was a business-like one and was entered into for the purpose of securing the best interests of the debtor firm. that one partner can release a partnership liability is well established......a partner with defendants 3, 6 and 8 in the epoh firm, which we shall denominate as the creditor firm. defendants 3, 6 and 8 were also partners with the 1st defendant in the singapore firm which we shall call the debtor firm. the plaintiff's father died in 1903. during the course of the winding up of the creditor firm, defendants 3, 6 and 8 lent to the debtor firm a certain sum of money. the present suit is to recover the plaintiff's share of that loan. the question whether the plaintiff can maintain the suit against a firm which consists of some of his own partners need not be decided as we agree with the lower court upon another point.2. by exhibit i, the debtor firm entered into a deed of composition with the outside creditors of that firm. the main provisions of that document are.....
Judgment:

1. On the second question argued by Mr. A. Krishnaswami Aiyar, the facts are these :-The father of the plaintiff was a partner with defendants 3, 6 and 8 in the Epoh Firm, which we shall denominate as the Creditor Firm. Defendants 3, 6 and 8 were also partners with the 1st defendant in the Singapore Firm which we shall call the Debtor Firm. The plaintiff's father died in 1903. During the course of the winding up of the Creditor Firm, Defendants 3, 6 and 8 lent to the Debtor Firm a certain sum of money. The present suit is to recover the plaintiff's share of that loan. The question whether the plaintiff can maintain the suit against a firm which consists of some of his own partners need not be decided as we agree with the Lower Court upon another point.

2. By Exhibit I, the debtor firm entered into a deed of composition with the outside creditors of that Firm. The main provisions of that document are that the 1st defendant should pay a certain sum of money to pay off these outside creditors and that he should be released from, liability to his partners for any moneys advanced by them. The arrangement come to appears to us to have been bona fide and reflects credit on the partners in that they agreed to forego their own rights with a view to pay off those who had lent moneys to the firm. We are unable to agree with Mr. A. Krishnaswami Aiyar that by such an understanding, defendants 3, 6 and 8, secured any personal advantage to themselves, We, agree that moral turpitude need not be brought home to them see Nocton v. Lord Ashburn (1914) A.C. 932, but we think that the arrangement was a business-like one and was entered into for the purpose of securing the best interests of the Debtor Firm. The question, under these circumstances, is whether the release of the 1st defendant is impeachable by the plaintiff. That one partner can release a partnership liability is well established. See Lindley, page 180. That after dissolution by the death of one of the partners, the surviving partners, still have the right of releasing a claim is clear from Section 263 of the Contract Act. Vide also Motilal Bechardoss v. Ghellabai Hariram I.L.R. (1892) B 6.

3. Mr. A. Krishnaswami Aiyar put forward the ingenious argument that after the death of one of the partners, his legal representative continues to be a partner for the purpose of winding up. We are unable to accede to this proposition, Under Sections 241, the legal representative of a deceased partner will become a lender in respect of any business that might have been carried on by the surviving partners. If no business is carried on then the legal representative will be a tenant in common with the surviving partners in respect of the assets of the business. Vide Story on Partnership, Section 346. That the principle of Section 45 of the Contract Act is applicable to partners was decided in Moti Lal Bechardass v. Ghellabai Hariram I.L.R. (1892) B. 6 and we agree with this proposition. The argument that by Section 263 of the Contract Act, the legal representative of a deceased partner is by implication a partner is opposed to the language of the section. Clause 2 of Section 29 of the English Partnership Act was relied on. That only shows that if during . the winding up, the partner makes a secret profit, he is accountable to the legal representatives of the deceased partner for it. That section is no authority for the position contended for by the learned Vakil. Piercy v. Fynney (1871) 12 E c 69, Virasivami Naicher v. Ibramsa Ravuthar (1909) 19 M.L.J. 221 and Baikunt Nath Chakrabarti v. Hara Lal Pal Chowdhury (1911) 13 C.L.J. 234, lay down that if a release by one of the partners is fraudulent, the other partners can avoid it and seek to recover their share of the released debt. The legal representative is not entitled to such a right which is personal to the partners. We are therefore of opinion that the release of the 1st defendant is binding on the plaintiff. If he has been damnified by the conduct of defendants 3, 6 and 8 his remedy is to sue them for damages. As we have held that the claim against the defendants 3, 6 and 8 is barred by limitation, this matter need not be pursued any further.

4. The decision of the court below is right and we dismiss the appeal with the costs of defendants 1 and 2.


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