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A.N. Chockalingam Chettiar Vs. K.M.S. Chinnayya Servai and ors. - Court Judgment

LegalCrystal Citation
SubjectFamily
CourtChennai
Decided On
Reported inAIR1939Mad937; (1939)2MLJ585
AppellantA.N. Chockalingam Chettiar
RespondentK.M.S. Chinnayya Servai and ors.
Cases ReferredGangayya v. Venkataramiah
Excerpt:
.....the fourth defendant asserted on the contrary that narayanan chetty during his life represented himself as well as defendants 1 to 3 in the partnership, that he held his interest in it, half for himself and half for defendants 1 to 3; that the partnership being one in which there were strangers associated, became necessarily dissolved on his death, and could not therefore be continued by the first defendant or by any other and that if it is found to have been in fact continued, neither he nor his younger uterine brother nor their property in the firm or outside, could be held liable as they were neither partners in any sense nor admitted to the benefits of a partnership. according to him, the business was continued by the family of defendants 1 to 3 as well as by the family of defendants..........be continued by the first defendant or by any other and that if it is found to have been in fact continued, neither he nor his younger uterine brother nor their property in the firm or outside, could be held liable as they were neither partners in any sense nor admitted to the benefits of a partnership.3. the learned sub-judge has accepted the case of the defendants to this extent, namely, that the compromise decree in o.s. no. 28 of 1907 created a division in status between the two groups of narayanan chettiar's family the children by his senior wife remaining joint in one group, while narayanan chetty himself with his children by the second wife formed the other group which continued in itself joint down to his death. in spite of the criticisms of the respondent's advocate, we.....
Judgment:

Krishnaswami Aiyangar, J.

1. This appeal arises out of a suit by Chinnayya Servai the first respondent to recover from, th.e appellant and ten other persons who were impleaded as defendants, the principal and interest clue in respect of a deposit made with a Nattukottai firm which carried on business at a place called Maubin in Burma. The deposit consisted of two sums placed in deposit on two different occasions, sometime after 1927. The vilasam of the firm in which the deposit was made was known as M.P.N. The firm was started in 1922 or 1923, by three partners, namely, Narayanan Chetty, Kadiresan Chetty and Chockalingam Chetty. Narayanan Chetty was the father of defendants 1 to 5; Kadiresan was the sixth defendant and the father of defendants 7 to 9, and Chockalingam was the tenth defendant and the father of defendant No. 11. At the date of the deposit Narayanan Chetty had died, but the business was being continued in fact. In the business so continued there is no doubt that Kadiresan and Chockalingam were partners and so far as they and their sons are concerned, the Subordinate Judge has passed a decree, from which no appeal has been preferred. The controversy raised in the appeal relates to the liability of Narayanan Chetty's sons by his junior wife one of whom, namely, the fourth defendant is the appellant in this appeal.

2. Narayanan Chetty died on 2nd October, 1927. His first wife was Unnamulai by whom he has left three sons, defendants 1 to 3. Even while she was alive he married a second wife Alamelu by whom he had two minor sons, namely, the appellant now a major and the fifth respondent still a minor. Each of these two groups has in its defence in the Court below attempted to shift the liability on to the other. According to the plaintiff, the sons by both the wives formed with their father Narayanan Chetty members of a joint Hindu family, and even after his death they continued joint with this difference only, that instead of the father, the eldest of the sons, namely, the first defendant became the manager of the family. Defendants 1 to 3 were majors at the date of the deposit and were accordingly sought to be made personally liable as partners but as against defendants 4 and 5 who were at that time both minors, the plaintiff only prayed for a decree against their interest in the firm and in the joint family assets. There can be no doubt that the plaintiff rested his case throughout in the lower Court on the allegation that defendants 1 to 5 were always joint in interest, a position which is quite untenable. These defendants belonging to both the groups agreed in their defence to this extent, namely, that they ceased to be joint from and after 1908 as the family became divided in status by the compromise decree in O.S. No. 28 of 1907 on the file of the Sub-Court, Madura, by which defendants 1 to 3 who were the children of his first wife became separated from Narayanan Chetty and his children by the second wife, though as between the members of each group inter se the joint status thereafter continued to subsist. Their versions however materially differed as to who in fact carried on the business after Narayanan's death, and on whose behalf it was so carried on. The position taken up by defendants 1 to 3 was that they were at no time partners of the M. P. N. business, either during the lifetime of the father or even after his death. The first defendant's undoubted association in the business was explained as being due to his having merely supervised it at the request of his stepmother. The fourth defendant asserted on the contrary that Narayanan Chetty during his life represented himself as well as defendants 1 to 3 in the partnership, that he held his interest in it, half for himself and half for defendants 1 to 3; that the partnership being one in which there were strangers associated, became necessarily dissolved on his death, and could not therefore be continued by the first defendant or by any other and that if it is found to have been in fact continued, neither he nor his younger uterine brother nor their property in the firm or outside, could be held liable as they were neither partners in any sense nor admitted to the benefits of a partnership.

3. The learned Sub-Judge has accepted the case of the defendants to this extent, namely, that the compromise decree in O.S. No. 28 of 1907 created a division in status between the two groups of Narayanan Chettiar's family the children by his senior wife remaining joint in one group, while Narayanan Chetty himself with his children by the second wife formed the other group which continued in itself joint down to his death. In spite of the criticisms of the respondent's Advocate, we are not disposed to differ from the Subordinate Judge's finding on this point, as there is sufficient material in this case to support it, and the probabilities also point to the same conclusion. The division is in accordance with the patni bhaga rule of custom recognised in Palaniappa Chettiar v. Alagan Chetti . The notional definition of share according to the custom has been followed in this case by an actual partition evidenced by the compromise, Exhibit I, which we have no reason to doubt was anything but a genuine arrangement. We think we shall not be justified in disturbing a finding duly arrived at in this case, on the ground that in another similar appeal which arose out of a suit by another creditor against the same family this Court has expressed a different opinion on what is but a question of fact. We feel bound to examine the facts and evidence for ourselves and come to our own independent conclusion on the matter. It would indeed be a grave error, were we to take any other course.

4. We must now notice another contention raised by the appellant. It was sought to be made out that at the very-inception there was an agreement among the partners of the M.P.N. firm that the death of a partner should not work a dissolution, but that the partnership should continue with the legal representatives taking the place of the deceased partner. The Subordinate Judge has in spite of the absence of direct proof, found this agreement established from the conduct of the parties subsequent to the death of Narayanan Chetty. According to him, the business was continued by the family of defendants 1 to 3 as well as by the family of defendants 4 and 5. His view apparently is that the continuance is explicable only on the footing that there was such an agreement. We cannot agree. This fact by itself is too slender a basis to support an agreement, in the absence of other and more cogent evidence. The agreement is denied by the appellant and on a consideration of the available material we are unable to see sufficient warrant for the conclusion of the Subordinate Judge on the point. Not only is there no direct evidence but there is an utter absence of such circumstances as would warrant a Court in drawing an inference in favour of such an agreement. Defendants 1 to 3 are shown by their conduct to have taken a substantial part in the conduct of the business after their father's death as the learned Judge has found. They no doubt would be subject to all the liabilities consequent on their acts. But being divided brethren not representing and not capable of representing their minor stepbrothers, they cannot affect them to their prejudice or bind them by a fresh contract of partnership; for that is what in law the continuance of the business amounts to. A partnership such as the one in question arising by contract between the representatives of three different families is not governed by those legal incidents which are peculiar to a joint family business in Hindu Law, but is regulated by the ordinary law:

Where a managing member of a joint family enters into a partnership with a stranger, the other members do not ipso facto become partners in the business....His family as a unit does not become a partner, but only such of its members as in fact enter into a contractual relation with the stranger; the partnership will be governed by the Act.' Pichappa Chettiar v. Chockalingam Pillai (1934) 67 M.L.J. 366 (P.C.) (Mayne on Hindu Law and Usage, 10th Edn., p. 398).

5. Whatever may be the rights and liabilities as between each individual partner and the members of his own family whose position is more or less akin to that of sub-partners in a partnership Gangayya v. Venkataramiah (1917) 34 M.L.J. 271 : I.L.R. 41 Mad. 454 (F.B.) the principle of Hindu Law which prevents a dissolution of a pure joint family business by the death of a member, is inapplicable to a partnership of this kind. Narayanan Chetty's death must consequently be held to have brought about a dissolution in this case. It has no doubt been, as found by the Subordinate Judge, subsequently carried on by defendants 1 to 3 with the stranger partners, namely, defendants 6 and 10. The crucial question however on which the liability of the appellant turns is whether it was validly continued on behalf of the junior branch so as to involve the members of that branch in the liabilities of the business incurred during its continuation. On this question our answer is decidedly in the negative. The fact of it is that the defendants could not, as they probably did not, carry on the business on behalf of the junior branch, and it is equally clear that the second wife who was the natural guardian of her children did not do so either. There is ample evidence on the record to show, at any rate after Narayanan Chetty's death, that the two branches were in every respect separately living with a separate residence, a separate mess, and with a separate account of their separate expenses. Defendants 1 to 3 cannot therefore, except possibly under the direction of the natural guardian of their stepbrothers, continue the business or enter into any arrangement so as to bind them. There is, however, very little basis for the suggestion that she in fact assented to or concurred in the continuation of the business in this case. It may be observed that there is not even a suggestion that she was aware of or had been consulted before the deposits were accepted from the plaintiff. In fact there is every reason to hold that the money taken from the plaintiff was not remitted to the Maubin firm at all, but was utilised for the personal needs of the first defendant, or probably also of defendants 2 and 3 who were joint with him.

6. The evidence of the second defendant who did no doubt depose that he acted not for himself but only in pursuance of the instructions of the stepmother in taking part in the conduct of the business and by writing the letter Ex. D is palpably false, and there is ample justification for the observational the Subordinate Judge that he is a person who has no regard for truth. There is however another piece of evidence which is not open to objection. While alive Narayanan Chetty had sued in O.S. No. 19 of 1926 on a pronote executed in his favour by one Alagappa Chetty, an assistant in the firm, who had been found liable for a sum of Rs. 5,000 on a settlement of accounts. On the death of Narayanan the names of defendants 1 to 6, as well as that of another son of the junior wife who has since been adopted away were substituted on the record of the suit. This must have been done with the knowledge and consent of the junior wife for the obvious reason that she joined in the execution of a vakalat in favour of a pleader to represent her children who were all minors at the time. In support of the application for the substitution of the legal representatives, an affidavit was sworn to by the second defendant in which the sons of Narayanan Chetty by both wives were described as undivided sons and heirs who had obtained the properties of the father by survivorship. This is, as the Subordinate Judge has rightly held, a false affidavit put in merely for the purpose of avoiding the necessity for the production of a succession certificate which would have been insisted on if the divided status had been disclosed. But this apart, a point was sought to be made out of this transaction, in support of the theory that the business was continued by the second wife also on behalf of her sons after the death of her husband. There might be something in it, if the promissory note sued on had been executed in respect of a liability which arose in a transaction of the firm after Narayanan Chetty's death. If that had been the case, the connection of the junior branch in the suit might indicate their association in the subsequent conduct of the business. But it is conceded as indeed it is apparent from the fact that Narayanan Chetty was himself the plaintiff, that the liability evidenced by the promissory note, was one which related to the anterior period, and was therefore one in which as the learned Judge has pointed out both branches were interested.

7. It seems to us therefore that this transaction is incapable of being founded on either for disproving the partition as the Subordinate Judge has held, or making out as was here attempted a continuance of the business by or on behalf of the junior branch. While we agree with the Sub-Judge that the business was continued after the death of Narayanan Chetty, we must, differing from him, hold that it was defendants 1 to 3 alone who continued it, along with defendants 6 and 10, of course.. As defendants 4 and 5 were minors at their father's death, they could not, and their mother did not in fact as we have said, continue the M.P.N. business.

8. The plaintiff's claim has therefore to be judged on the footing that he lent the money to a firm in which the junior branch were not in fact interested as partners either by Hindu Law or by reason of an admission under the contractual law, to the benefits of a partnership. Their interests in the business consisted merely of the right to have the share in the assets of the dissolved business ascertained and paid over to them as at the death of their father, together with interest or a share of the profits if their share of the assets had been utilised in the business subsequently carried on.

9. If their mother had concurred in the continuation of the business, or if the partition of 1908 had been a mere sham, other and more difficult questions would have arisen for decision. We would have had then to consider as we were in fact invited to consider, whether the subsequent business was an ancestral business, and the debts incurred by those in charge of it bound all the members of Narayanan Chetty's family in both the branches. In view of the findings of fact we have arrived at, we are relieved from the necessity of having to express any opinion upon this somewhat difficult branch of the Hindu Law.

10. The appeal therefore succeeds, and the decree of the lower Court has to be modified by omitting the relief given to the plaintiff against the appellant and the 5th respondent in respect of their family properties. Their interest in the assets of the M.P.N. firm is equally free from liability to the plaintiff's claim. As against the other defendants the decree stands. The appellant is entitled to his costs here and in the lower Court against the first respondent who alone contested the appeal.


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