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Palla Veeraswami and anr. Vs. Bandaru Chitti Naidu and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported in(1947)2MLJ450
AppellantPalla Veeraswami and anr.
RespondentBandaru Chitti Naidu and ors.
Cases ReferredLala Hakim Rai v. Lala Gangaram
Excerpt:
.....that the first defendant had utilised any large amount of the partnership funds for his own benefit after the business was stopped in may, 1925. it is also urged for the respondent that this is a case in which the partnership was by agreement dissolved prior to suit and that in any event after the cessation of the business the partnership must be treated as dissolved. there is no issue ;nor a finding in any of the judgments of the courts below that there was an agreement to dissolve the partnership prior to suit and it is well established that with the mere cessation of business of the partnership a dissolution of the firm is not brought about......was by agreement dissolved prior to suit and that in any event after the cessation of the business the partnership must be treated as dissolved. i am unable to agree with this contention. there is no issue ; nor a finding in any of the judgments of the courts below that there was an agreement to dissolve the partnership prior to suit and it is well established that with the mere cessation of business of the partnership a dissolution of the firm is not brought about. in these circumstances, i am unable to see how the principle in lala hakim rai v. lala gangaram (1943) 1 m.l.j. 16 applies to the facts of this case. in my view, therefore, the interest at six percent. per annum on the amount decreed by the learned district judge must be calculated only from 9th august, 1939, the.....
Judgment:

Satyanarayana Rao, J.

1. This appeal arises out of proceedings for passing a final decree in a suit for dissolution of partnership and for accounts. The first plaintiff and the first defendant were partners and commenced business as partners on 16th September, 1923. They carried on business in tobacco until July, 1925, when on account of disputes between them the business was stopped The first plaintiff then instituted this suit on 2nd February, 1926, for dissolution of the joint business and for taking accounts of the partnership. A preliminary decree dissolving the partnership was passed by the learned Subordinate Judge on 28th September 1931 and it had become final as there was no appeal against it. A Commissioner was appointed to take accounts and he submitted his report, dated 18th June 1933. The matter then came up for consideration before the learned Subordinate Judge after objections were filed by both parties. After considering the objections the learned subordinate Judge came to the conclusion that the plaintiff was entitled to a decree for a sum of Rs. 3,337-9-10 with interest on that amount at six per cent. per annum from the date of the plaint till realisation. The matter was carried in appeal by the defendants to the District Court, East Godavari The learned District Judge modified the decree of the learned Subordinate Judge by reducing the amount decreed by a sum of Rs. 2,000. This second appeal has been preferred by the defendants against the judgment and decree of the learned District Judge.

2. For the appellants three points have been argued before me The first is that the Courts below erred in giving credit to the plaintiff for a sum of Rs 702-2-6 as advance ; secondly, that the Courts below did not follow the principles laid down in Section 48 of the Partnership Act for the distribution of the assets of a partnership in winding up ; and thirdly, that the Courts below erred in granting interest on the amount decreed from the date of the plaint instead of from the date of the final decree.

3. As regards the first point, the contention urged by Mr. B.V. Subrarnanyam the learned advocate for the appellants, is that the plaintiff failed to establish his case that the sum of Rs. 792-2-6 represented the value of the tobacco which he had advanced to the partnership.

[His. Lordship after discussing the evidence concluded.]

4. I am therefore unable to accept the contention of the appellants and I agree with the findings reached by the learned District Judge on this question.

5. It is also urged by the learned advocate for the appellants that in any event the plaintiff ought not to have been given credit twice over in respect of this amount of Rs. 792-2-6, once as an advance and again as outstandings of the partnership as these promissory notes were included in the partnership outstandings dealt with by the commissioner in paragraph 9 of his report. I thought at first that if it were so, there is no possible answer to the contention ; but, on a closer examination of the accounts and also the method of calculation adopted by the learned Subordinate Judge it is clear that really the first plaintiff was not given credit twice over for this amount. He has allowed this amount only once as an advance.

6. As regards the distribution of assets in accordance with the principles laid down under Section 48 of the Partnership Act, I do not think there is any substance in this contention either. The point was not raised in any of the Courts below and even if it is permitted to be raised, I think the result of applying the section would be the same as the one now reached by the Courts below.

7. As regards the date from which the plaintiff is entitled to get interest on the amount decreed to him, I agree with the contention of the appellant that the plaintiff is entitled to interest only from the date of the final decree, that is, 9th August, 1939, and not from the date of the plaint. In my view, as this is a suit for dissolution of an existing partnership and for accounts, the principle laid down by the Privy Council in Sulaiman v. Abdul Latiff I.L.R.(1930) Cal. 208 applies to this case. Their Lordships state at page 212:

This is not an action to recover some debt of which it can be said that it was due at the date of the plaint. It is an action to dissolve and wind up the affairs of a partnership ; and until the accounts have been taken, it is impossible to say what, if anything, is due from any partner to his co-partners. In their Lordships' opinion, interest should only be allowed to the plaintiffs from the date of the final decree by which the amount (if any) is found due from the defendants to the plaintiff.

Mr. Viyyanna, the learned advocate for the first respondent, placed strong reliance upon the decision of the Privy Council in Lala Hakim Rai v. Lala Gangaram (1943) 1 M.L.J. 16. That was a case in which the partnership was dissolved two years prior to the date of the suit by agreement between the parties and there was no question of dissolving an existing partnership. Further I am not satisfied on the evidence that the first defendant had utilised any large amount of the partnership funds for his own benefit after the business was stopped in May, 1925. It is also urged for the respondent that this is a case in which the partnership was by agreement dissolved prior to suit and that in any event after the cessation of the business the partnership must be treated as dissolved. I am unable to agree with this contention. There is no issue ; nor a finding in any of the judgments of the Courts below that there was an agreement to dissolve the partnership prior to suit and it is well established that with the mere cessation of business of the partnership a dissolution of the firm is not brought about. In these circumstances, I am unable to see how the principle in Lala Hakim Rai v. Lala Gangaram (1943) 1 M.L.J. 16 applies to the facts of this case. In my view, therefore, the interest at six percent. Per annum on the amount decreed by the learned District Judge must be calculated only from 9th August, 1939, the date of the final decree, and not from 2nd February, 1926. I therefore allow the second appeal to this extent and modify the decrees of the Courts below by disallowing interest on the amount decreed from the date of the plaint--2nd February, 1926-to 9th August, 1939.

8. The parties will pay and receive proportionate costs throughout. (No leave.)


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