Ramachandra Iyer, J.
1. This is an appeal against the preliminary decree for dissolution and taking up of accounts of the partnership passed by the Subordinate Judge of Devakottai in O.S. No. 104 of 1949. The defendant is the appellant.
2. Viswanathan Chettiar and Muthuraman Chettiar, who were two divided brothers, carried on money lending business in partnership at Minhbyu, Rangoon and Dedaye. The former two businesses were ultimately dissolved and the assets integrated with the Dedaye firm. Muthuraman Chettiar died first, i.e., on 13-4-1926 leaving his widow, the respondent as his sole heir. The business, however, continued. The respondent thereupon stepped into the shoes of her deceased husband and carried on business with Viswanathan Chettiar. Ex. B. 70 is a deed of partnership dated 10-12-1941, entered into between the respondent and Viswanathan Chettiar, the defendant's adoptive father.
There is no doubt that the partnership between them was from the date of death of Muthuraman Chettiar in continuation of the old business and this document was only a record of the terms thereof for reducing the rate of income-tax. On 19-11-1943 Viswanathan Chettiar died. About one year prior to his death the appellant was adopted to him.
Even after the death of Viswanathan Chettiar thebusiness continued as before. The appellant stepped into the shoes of his adoptive father, Viswanatha.
On 28-8-1946 the appellant and the respondent reduced the terms of their partnership to writing, viz., Ex. B. 71, defining their rights. This document again was mainly for the purpose of income-tax as Ex. B. 71 itself acknowledged that the partnership business was in existence sometime previously. On 23-2-1949 the respondent gave a notice for dissolution of the firm calling upon the appellant to render accounts.
The appellant had no objection to the dissolution of the Dedaya firm but was willing to the taking of accounts only for the period in which he had been in the business. The suit out of which this appeal arises was filed on 27-7-1949.
3. Various defences were raised by the appellant in answer to the claim of the respondent. It is unnecessary to refer to them as the question that was argued before me in the appeal related only to the mode of taking of the accounts. The lower court found that the firms at Minhbyu and Rangoon were dissolved and their assets taken over to the Dedaye firm. It also found that the partnership business ever since the time of Muthuraman and Viswanatha which was done with the help of agents was done without a break and that Exs. B. 70 and B. 71 could not be understood as creating new partnerships.
The lower court further held that the respondent would not be entitled to an account prior to the death of her husband, Muthuraman, that is prior to 13-4-1926, but that she would have a right to the taking of the accounts from 13-4-1926. The lower court made it also clear that while taking accounts it may be open to the parties to look into the old accounts i.e., accounts prior to 13-4-1920 for the purpose of ascertaining the capital contribution.
It accordingly passed a preliminary decree for taking accounts of the dissolved partnership on the lines indicated by it. The defendant has filed the present appeal against that decree.
4. Mr. Jagadisa Iyer, the learned counsel for the appellant, did not contest the findings of the lower court to matters other than its direction in regard to the accounts. His contention was that on the death of Muthuraman, the partnership between him and Viswanatha came to an end and there was a fresh partnership between the respondent and Viswanatha from 1926 to 1943, when the latter died, and that on the death of Viswanatha that firm was dissolved and the partnership business carried on by the appellant with the respondent subsequently could only be treated as a separate partnership.
He, therefore, contended that the respondent would be entitled to an account only in respect of the last of the partnerships, namely, that which was entered into by the respondent with the appellant in 1943 after the death of Viswanatha. He contended that the claim of the appellant in regard to the partnership between her and Viswanatha was barred by Article 106 of the Limitation Act. Incidentally he also contended that the partnership between the respondent and the appellant should be deemed to be only for the period after the date of Ex. B. 71, that is, 28-8-1946.
This aspect of the matter was not, however, seriously pressed having regard to the recital in the document itself and to the finding of the lower court.
5. It was first contended that there could be no legal continuation of the partnership firm of Muthuraman Chettiar and Viswanatha, as it wasonly a contractual partnership, which would come to an end under Section 42 of the Partnership Act by the death of one of the partners. It is no doubt true that the death of a partner in most cases would dissolve the partnership. But that rule is subject to any contract to the contrary between the partners.
If the intention of the partners was that the death of one of them was not to result in the dissolution of the firm, such an agreement could be given effect to. In such cases the partnership as between the surviving partners will continue. There may also be cases where under the agreement of the deceased partner between the original partners the legal representatives of the deceased partner may be entitled to join in the firm in the shoes of the deceased partner. But the application of this rule will be difficult in the case of a firm composed only of two partners.
In that case if one of the partners died, there will not be any partnership existing to which the legal representatives of the deceased partner could be taken in. In such a case the partnership would come to an end by the death of one of the two partners, and if the legal representatives of the deceased partner joins in the business later, it should be referable to a new partnership between them.
This question has been considered in Ram kumar v. Kishorilal : AIR1946All259 . In that case there was a business carried on in partnership between two partners. On the death of one of them, the heirs of the deceased continued the business with the surviving partner. From that conduct the learned Judge inferred an agreement between the original partners that the partnership was not to be dissolved upon the death of a partner.
6. In Sugra v. Babu, : AIR1952All506 , a later decision of the Allahabad High Court, a contrary view was taken. It was held that in order to apply the rule that a partnership could not be dissolved by the death of one of the partners, there should be more than two partners and that in the case of a partnership which consisted only of two partners, no partnership would remain on the death of one of them.
The learned Judge held that it would be a contradiction in terms to say that there could be a contract between the two partners to the effect that on the death of one of them the partnership would not be dissolved but would continue. The learned judges referred to the principle that one partner cannot by his own contract impose a partnership upon his heir or legal representatives, as partnership was not a matter of status, but of contract.
7. Mr. T. Venkatadri, the learned advocate for the respondent, contends that the view of the learned Judge in : AIR1952All506 , should not be accepted, and that the correct view is that contained in : AIR1946All259 . In support of that contention, he referred me to the observation contained in Sokkanadha Vannimundar v. Sokkanadha Vannimundar, ILR 28 Mad 344.
In that case a sub-lease of a fishery right was held by the plaintiff along with one Kandasami. Kandasami died and there was evidence that afterwards, the plaintiff and the members of Kandaswami's family were participating in litigation in connection with the business. The learned Judges observed at page 348,
'This circumstance, if true, would be a piece of evidence as to an implied agreement between the parties to continue the business with the plaintiff as a partner.'
This observation cannot support the contention for which it is relied on. It could only mean that there was a fresh partnership with the members of Kandaswami's family to continue the business and it cannot be considered as if it could be implied that there was an agreement even at the beginning between the plaintiff in that case and Kandaswami that the death of one of them was not to result in the dissolution of the business.
In my opinion the later view of the Allahabad High Court, namely, that contained in : AIR1952All506 , is the more acceptable one. In the circumstances of this case however this aspect of the matter cannot make much difference. In : AIR1952All506 , the facts were like these. There was a partnership between A and B. A died leaving behind him a number of heirs. Some of them were majors and others minors.
The partnership was continued as before with the major heirs having become partners and the minor heirs having been admitted to the benefits of the partnership. The learned Judges held that in such a case where the business was continued with the old partnership assets with the same rights and liabilities, an agreement between the parties can be implied that the rights and liabilities of the new partners will be taken to be as if the partner's death had created no dissolution and they would be liable on accounts being taken from the commencement of the old partnership or from the date of the last accounting as the case may be.
This may be viewed as an agreement between the surviving partner and the heir of the old partner to treat the new partnership between them as a continuation of the old. Another way in which the matter can be looked at is that although the partnership was dissolved by the death of one of the partners the entire assets of the old firm which would include the original assets as well as the subsequent profits or losses would be taken to be the assets of the new firm.
In that view there will be no practical difference by treating the firm as new one or treating it as a continuation of the old firm. For in either event in order to ascertain the legal rights of the parties the accounts of the old firm had to be taken, In that view the conclusion arrived at by the learned Subordinate Judge that the respondent would be entitled to an account from 13-4-1926 is unassailable. There is no controversy in the present case that the firm was continued from the beginning without a break.
8. The learned Subordinate Judge has also held that in taking accounts of the partnership from 1926, it would be open to look into the earlier accounts for the purposes of ascertaining the capital contribution in view of the fact that the parnership between the respondent and Viswanatha was in continuation of the old partnership which Muthuraman had with the latter. Although there has been a dissolution of the partnership between Muthuraman and Viswanatha on 13-4-1926 by reason of the death of the former the entire assets of that firm were taken over by the business which was subsequently carried on by the respondent with Viswanatha.
For ascertaining the exact assets which werebrought or could be deemed to be so brought intothat firm it would be necessary to look into theaccounts of the previous partnership. The conclusion of the learned Subordinate Judge is, therefore, correct. This appeal fails and is dismissedwith costs.