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K.T.M. Muhammad Abdul Latiff Rowther and ors. Vs. S.M.S. Sheik Ismail Rowther and ors. - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1934Mad9
AppellantK.T.M. Muhammad Abdul Latiff Rowther and ors.
RespondentS.M.S. Sheik Ismail Rowther and ors.
Cases ReferredWray v. Wray
.....affairs of the firm and treated as regards drawing upon it, and in other respects exactly as his elder brother, who was an undoubted partner. the evidence is well nigh overwhelming that this was the intenction and therefore when the elder brother was named as a partner that name must be deemed, we consider, to include the younger brother we must accordingly differ from the lower court upon this issue and hold that defendant 2 was a partner in the suit firm......who appeal, sued for a declaration that a firm in which they were partners, styled s.k. kadir mohidin eowther & co., was dissolved on 22nd may 1926 and for a settlement of accounts. other partners were admittedly defendant 1 and one s.k. kadir mohidin bowther, who died on the date given above. the primary question we have to decide is whether defendant 2, younger brother of eadir mfthidin eowther, was also a partner. the plaint firm was constituted by an agreement, ex. a, on 30th november 1917. the evidence shows that prior to that date kadir mohidin eowther and his brother defendant 2 had been carrying on several enterprises in partnership. the agreement itself recites that the remaining four partners, who were cloe relations of kadir mohidin eowther, were included in the.....

Curgenven, J.

1. The plaintiffs, who appeal, sued for a declaration that a firm in which they were partners, styled S.K. Kadir Mohidin Eowther & Co., was dissolved on 22nd May 1926 and for a settlement of accounts. Other partners were admittedly defendant 1 and one S.K. Kadir Mohidin Bowther, who died on the date given above. The primary question we have to decide is whether defendant 2, younger brother of Eadir Mfthidin Eowther, was also a partner. The plaint firm was constituted by an agreement, Ex. A, on 30th November 1917. The evidence shows that prior to that date Kadir Mohidin Eowther and his brother defendant 2 had been carrying on several enterprises in partnership. The agreement itself recites that the remaining four partners, who were cloe relations of Kadir Mohidin Eowther, were included in the suit firm as an act of bounty or grace to provide them with an occupation. But it contains no reference to defendants 2 himself as a partner and the plaintiffs' allegation that he occupied this position has therefore to be established in face of the terms of this document. Their case is that, as the brothers were in mercantile matters always working jointly under the name of the elder brother, when Kadir Mohidin was named as a partner in the suit firm the intention was that that name should comprise also defendant 2. The case for the defence on the other hand is that defendant 2 was no more than a sub partner of Kadir Mohidin and as such would not be liable to the other partners. If the plaintiffs' contention is correct, it has to be admitted that the partnership agreement contains little internal evidence of the truth. Perhaps, the only clue is to be found in para. 13, where it is stated that Kadir Mohidin Eowther had already been carrying on trade as his own, whereas admittedly the trade so carried on was in partnership with his brother. It looks therefore as if his name has in this passage at least to be construed as including that of defendant 2; in other words, that it was intended by the use of his name to signify the two partners of his firm. A firm not being a juristic person it of course follows that as such it cannot enter into a partnership. But there is nothing to prevent the partners of a firm, as individuals, from being brought in as partners in another firm by the use of their firm's name:

The name under which a firm carries on business is in point of law a conventional name applicable only to the persons who, on each particular occasion when the name Is used, are members of the firm. (Lindey on Partnership,, Edn. 9, p. 153.)

2. The plaintiffs contention is in brief that the name of S.K. Kadir Mohidin Eowther was intended to designate the firm which was known by that Vilasam, and not the individual. It has not been disputed that the partners of the firm may by such means be effectively denoted. In Warner v. Smith 46 E.R. 135, the two defendants who carried on business in partnership, and the plaintiff who carried on business alone as a merchant and commission agent, jointly agreed to supply arms to a foreign Government.' In a contract: with that Government the defendants were described only by their partnership name and it was signed on their behalf in that name. There was no dispute that the contract bound the members of the new firm, and the only question was in what proportions the profits should be shared. Again in Wray v. Wray (1909) 2 Ch. 349, a house was conveyed to William Wray, and evidence was accepted that it was in fact a conveyance to four partners who were carrying on business under that style. We have to decide accordingly whether Kadir Mohidin Bowther, in entering into the partnership agreement, did so on his own behalf only, or in the name of his firm. The plaint puts the plaintiffs' case as follows:

In the deed of agreement, although the name of S.K. Kadir Mohidin Rowther alone is mentioned as partner, in reality defendant 2, a brother joint in estate. with S.K. Kadir Mohidin Rowther, is included in it and it is understood and agreed by all parties that the name of S.K. Kadir Mohidin Rowther shall also mean and include the name of his brother S.K. Sheik Ibrahim Rowther, defendant 2 herein.

3. Plaintiff 1, examined as P.W. 1, states that defendant 2 was present when the agreement was executed, and that when the other partners represented to Kadir Mohidin Bowther that defendant 2 should also execute it, he replied that it was enough if he did so because he was the elder brother and both were carrying on their joint business in his sole name. It is pretty clear that Kadir Mohidin Bowther was the dominant personality, and this course was acquiesced in. Plaintiff 3, as P.W. 2, gives similar evidence. As a witness in this suit defendant 2 denies that he was present on that occasion, but in a previous deposition, Ex. Y, he has admitted being present.

4. The remainder of the evidence in this case has been adduced for the purpose of showing how the agreement was understood and acted upon. It includes several admissions by defendant 2 that he was a partner. The first in order of date comprises some records in a suit filed by a pauper plaintiff against the suit firm in 1922. All six partners were impleaded and they signed a joint vakalat. The written statement (Ex. D-3) was filed by Kadir Mohidin and defendants 1 and 2 here, and in this they admitted that the six persons named as defendant had keen conducting business in partmBr h p Hnder the style of S.K. Kadir Mohidin Bpiwther & Co The present defendant, with another of those defendants, filed a separate written statement (Ex. D-4) in which be adopted this written statement. In his deposition here defendant 2 dens any acquaintance with the plaintiff in that suit and fails to remember having signed these documents. We come then to a very significant document, Ex. B, which is a security bond executed by the two brothers on 24th November 1925. Both the brothers had been making large drawings upon the firm and by that time they were indebted to it to the extent of Rs. 17,000. 'Under pressure from the other partners, and to avoid a dissolution, they executed this bond for a sum of Rs. 15,000, mortgaging their immovable property for that amount. The deed begins by reciting that the partnership business was being conducted 'by us six persons in partnership in the name of C.K. Kadir Mohidin Eowther & Co.' There are other statements in it which are only compatible with both brothers being on precisely the same footing of partnership in the suit firm. Kadir Mohidin, as has been said, died in May 1926, and in the following year the plaintiffs sent a lawyer's notice to defendant 2 and the deceased brother's heirs calling upon them to pay the amount secured under Ex. B within a month. This document begins by referring to the common estate and business of Kadir Mohidin, defendant 2, and then states that Kadir Mohidin on behalf of the said common family joined with the other partners to constitute the suit firm. There then occurs this passage:

As regards the said partnership business, the aforesaid five persons executed a partnership agreement on 80th September 1917 and it was registered. In the said business, individual No. 1 (i.e., defendant 2) a joint member of the family along with the said C.K. Kadir Mohidin Rowther is also an ulpangu or dormant partner.

5. It is doubtful whether the Subordinate Tudge is right in translating the word 'ulpangu' as sub-partner. The notice was drafted by a vakil and the first plaintiff states that the word 'ulpangu' was used in it when referring to defendant 2 as no better translation of the expression 'dormant partner' could be found, and that the expression dormant parther' was used because defendant 2 had not executed the partnership agreement. It appears to us that the two terms were used to express the same idea, and that if that idea was that defendant 2, while a partner, was an undisclosed partner, that would be in accordance with the sense of the word dormant as understood in English law. Lindley (p. 53) paraphrases it as a partner not known but appearing to be such, and at p. 178 states that it may be understood in the sense of an undisclosed principal who carries on the business by partners or agents. This is very near to the description of defendant 2's position, as given in the plaint and in the notice Ex. C. In his reply (Ex C-1) to that notice defendant 2 accepted the position assigned to him and all liability there to attaching as a partner.

6. In 1928 a suit was brought by Kadir Mohidin's daughter in law against the partnership, again including defendant 2. The plaint described the six persons as partners and defendant 2 filed a written statement (Ex. El) replying to the claim in terms only appropriate to a partner. He also gave a deposition (Ex. E-2) in which he explicitly referred to the partnership as including himself, and in the judgment (Ex. E-3) he was treated as a partner. It was only after the written statement in the present suit was filed that defendant 2 changed his attitude, as will be seen from Ex. P-2, the judgment in a, small cause suit filed against the firm. There is then abundant evidence that defendant 1 was aotively working in the firm. This is supplied by the letters, Ex. T series, the earliest of which dates from March 1923. It is clear from these letters that he was travelling about and engaging in transactions on the firm's behalf, even on occasion giving instructions to some -other partners. The accounts of the suit firm also lend support to the theory that this man was a partner, because entries of drawings, payment of allowance, etc., are made not in the single nime of Kadir Mohidin, as we should expect if he alone of the two brothers were a partner, but in the name of 'C.K.K. Brothers' or 'C.K.K. and C.K.S.' These entries certainly go some way towards showing that the firm composed of Kadir Mohidin and his brother, and not Kadir Mohidin himself, was regarded as the partner. In all respects the two brothers are treated in the firm's accounts as on the same footing. This corresponds with similar entries in the accounts of the brother's firm, all receipts being put in their joint accounts.

7. There is only one piece of documentary evidence which runs counter to all this evidence. The firm had an interest in a chit fund, and after Kadir Mohidin's death the four surviving partners, exeluding defendant 2, passed a resolution (Ex. 2 A) that the amount due should be paid to them as entitled to partnership in the firm. They took the precaution however of obtaining a letter from defendant 2 and Kadir Mohidin's legal presentatives consenting to this course (Ex. 2C). The explanation given by plaintiff 1 for the course adopted is that defendant owed a large sum of money to the suit partnership and so agreed that the others should collect this money. It was no more than a winding up operation after the firm was dissolved and not much significance can in the circumstances be attached to the fact though, perhaps to facilitate collection, defendant 2's interest was suppressed One other document, Ex. 4, which purports to be a copy of a letter written by defendant 2 to plaintiff 3, has not been relied upon before us and it is unnecessary to discuss its evidentiary value.

8. To sum up : we find defendant 2 actively interesting himself in the affairs of the firm and treated as regards drawing upon it, and in other respects exactly as his elder brother, who was an undoubted partner. The ledger account headings regarding these drawings show that the firm considered itself to be dealing not with Kadir Mobidin alone but with the firm composed of himself and his brother. Not only in the firm accounts but in so important a document as Ex. B defendant 2 was treated as possessing identical interests in the firm and equally liable to it with Kadir Mohidin. This document and a number of others contain admissions both by defendant 2 and his brother and the other partners that the first named was a partner, and up to the dissolution of the firm by the brother's death there is no evidence to contradict this. These admissions have been continued after the brother's death, notably in the notice Ex. C. The single piece of documentary evidence to the contrary, Ex. 2, originated after the firm went into dissolution and may be accounted for upon special grounds. In general therefore it may be said that the evidence is all one way and that only the partnership agreement itself points in the opposite direction. We think that the only explanation for the omission of defendant 2's name from that document which is at all compatible with the remainder of the evidence is that given by the plaintiffs-that in every trading enterprise he was regarded as joint with his elder brother and that it went without saying that on the formation of a new firm the same relationship was accepted by the other partners. The evidence is well nigh overwhelming that this was the intenction and therefore when the elder brother was named as a partner that name must be deemed, we consider, to include the younger brother We must accordingly differ from the lower Court upon this issue and hold that defendant 2 was a partner in the suit firm.

9. The only other point relates to interest upon advances and overdrafts. So far as the sum of Rs. 15,000, which is secured by the bond Ex. B is concerned the terms of that bond, which provide 9 per cent simple interest, should be followed. With regard to any amount, whether advanced or overdrawn, and not so covered, it is admitted that there were yearly settlements of balances upon which interest was charged at 9 per cent, with annual rests. The appropriate order therefore is that such amounts should bear compound interest at this rate. In modification of the preliminary decree of the lower Court, i.e. is hereby declared, that the plaintiffs, defendant 1, and the late Kadir Mohidin Rowther and defendant 2 were partners of the plaint-mentioned firm, the share of each of the plaintiffs and of defendant 1 being one out of eight, and the shares of the deceased Kadir Mohidin and defendant 2 being the remaining four. The accounts as directed in the lower Court's decree should be taken on the said basis. On the taking of the accounts, if any sum is found due to plaintiffs and. defendant 1 from defendant 2 and his deceased elder brother, such amount to the extent of a sum not exceeding the unpaid balance due under the hypothecation bond Ex. J3, is recoverable by the sale of the still unsold properties' (Schedule 2 in Ex. B), in execution of the final decree to be passed in this suit, and any sum over and above such amount, if due, will be recoverable from defendant 2 and the assets of the deceased in the hands of his heirs. The appellants will have their costs of this appeal from respondent 1; The costs in the Court below will Me provided for in the final decree.

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