1. This batch of appeals arise out of a remand by the learned Subordinate Judge of Kurnool of two suits filed by the plaintiff one Venkatanarasa Reddi for dissolution of two partnerships entered into by his deceased younger brother, Hanumantha Reddi who died in February 1947. Hanumantha Reddi who is said to have been educated entered into partnerships with third parties to trade in timber and bamboos. Alleging that he and his younger brother constituted a Joint family at the time of the latter's death, Venkata-narasa Reddi filed these two suits, O. S. Nos. 130 of 1947 and 131 of 1947 in which he impleaded the partners of the businesses and Hanumantha Reddi's widow. Narasanima as defendants. The District Munsif dismissed the two suits holding that Venkatanarasa Reddi and Hanumantha Reddi were divided in status from 1938 and that the suits were not maintainable.
In appeal the learned Subordinate Judge held that Venkatanarasa Reddi and Hanumantha Reddi continued to be joint and that therefore Venkatanarasa Reddi was entitled to sue for dissolution of partnerships and for accounts, if it was found under issue No. 3. That Hanumantha Reddi had invested family funds in both the suit partnerships. He also found that the widow, Narasamma was entitled to his half share in all the family property including the suit partnership and that Venkatanarasa Reddi was entitled to the other half. It was disclosed in the course of a long argument that Venkatanarasa Reddi Had filed a partition suit O. S. No. 45 of 1948 against Narasamma which when these appeals were admitted was stayed. It is regrettable that all the suits were not given a. simultaneous disposal.
2. Two of these appeals, C. M. A. Nos. 604 and 605 of 1949 have been filed by the widow, Narasamma and the other two appeals, C. M. A. Nos. 96 and 97 of 1950 by the partners in the two businesses. The main issue argued before me elaborately by Mr. T. M. Krisbnaswami Iyer for the appellant and Mr. Thyagarajan for the plaintiff-respondent, Venkatanarasa Reddi is whetner these two brothers were divided in status or constituted an undivided coparcenary up to the time of Hanumantha Reddi's death. They had a third brother one Swami Reddi who admittedly separated from them many years ago end went to the house of his wife's brother from whom he got substantial property. He has been examined as D. w. 1 and he supports the plaintiff's case that he and Hanumantha Reddi continued undivided all through.
The main document in the case is Ex. D. 1 dated 29-8-1938 which is really a reference to arbitration signed by all the three brothers to five named mediators. This was admittedly some years after Swami Reddi went out of the family. It contains the following recitals:
'Previously we became divided but due to some mistake the Pharikat (Partition deed) was not executed all this while. As individual 2 (Swami Reddi) is now having misgivings and as there is no partition deed the three have together agreed to abide by the mediation of the above mentioned respectable persons.....if any ofus three were to fail to so abide by the decision of the above mediators and reject the same that very person shall bear the entire expenses for the partition deeds.'
It is common ground that the arbitrators as suchdid not function at all, and that HanumanthaReddi continued to live with his brother in thefamily house where he died. There was evidenceto show that Hanumantha Reddi's wife Narasamma had been cooking separately in the familyhouse for a number of years. Narasamma is saidto be colluding with Namalayya who is one ofthe partners of the two businesses. Since Hanumantha Reddi's death Venkatanarasa Reddi hasbeen admittedly in enjoyment of the family land.It, also stated that since Hanumantha Reddi'sdeath the two timber businesses have been continued as before, but with Narasamma taking theplace of her deceased husband Hanumantha Reddi.According to Karnam Subbarayudu P. W. 4 thewriter of Ex. D. 1 it was necessitated by a disputeraised by Swami Reddi long after he separatedbut as the previous document was discovered noaward was given by the panchayatdars. In thisP. W. 4 is corroborated by one of the mediatorsreferred to in Ex. D. 1 (D. W. 2). That previousdocument has not been filed. P. W. 4 was prepared to swear that at no time was there any intention as between Hanumantha Reddi and Venkatanarasa Reddi to separate. According to him Hanumantha Reddi was the manager of the joint familywho paid all lists for the family lands and advanced monies out of the joint family funds forthe suit partnerships.
3. Two views were taken by the Courts below,the learned District' Munsif preferring to inferseparation in status from the recitals in Ex. D. 1while the learned Subordinate Judge attachedgreater weight to the actual evidence and admissions made by both sides. There is, however, nothing inconsistent between division in status anda continuation of living together in the family house in common enjoyment of the family lands which have not been divided by metes and bounds.
Mr. Thyagarajan has urged that Ex. D. 1 merely shows a partition between Swami Reddi on the one hand and Venkatanarasa Reddi and Hanumantha Reddi who continued joint on the other. I find myself unable to agree in view of the recitals in Ex. D. 1 extracted supra. It is reasonable to expect that if this was the intention, it would have been made more explicit in this reference to arbitration which referred also to a previous family partition. I prefer to accept the interpretation placed on the document by the learned District Munsif, that there was an unequivocal intention by all the three brothers to divide from each other expressed in this document.
It is well settled case law that an agreement between the members of a joint family whereby they appoint arbitrators to divide the joint family property among them amounts to a severance of the joint status of the family from the date of the agreement. The Privy Council in -- 'Harkishan Singh v. Partap Singh' , while laying this down observed that the legal construction or legal effect of an unambiguous document defining shares of the members of the family cannot be controlled or altered by evidence of the subsequent conduct of the parties who may after severance make physical division of the property or may decide to live together and enjoy the property in common.
In -- 'Radhakrishna v. Satyanarayana', AIR 1949 Mad 173 (B), it was laid down that once there is a division in a joint Hindu family whether of status or property there is no means of avoiding the result except by a reunion for which an agreement express or implied is always required. Mere continuance to live together in the family house and one member undertaking the responsibilities of management will not by themselves effect reunion for which there must be an unambiguous fresh expression of intention clearly and definitely proved to reunite. When the previous intention to separate is expressed in a document it is reasonable to expect the intention to reunite being similarly expressed in a document and when that is not done reunion becomes a very difficult matter to establish. It is not necessary for me to refer to the wealth of other case-law cited by both sides. I find myself in agreement with the learned District Munsif that there was severance of status between these two brothers by Ex. D. 1 which though not registered as a partition deed can be used in evidence for this collateral purpose. Authority, if need be, for this position, is supplied by a recent decision of the Bombay High Court in -- 'Ramlaxmi v. Bank of Baroda' : AIR1953Bom50 .
4. From the standpoint of the maintainability of these suits there is not, as it appears to me, much practical difference whether there has been severance in status between these brothers or whether they continued to be joint. In the matter of devolution of Hanumantha Reddi's property of course it makes a great deal of difference. If there was severance in status the widow Narasamma will get a widow's estate in his share of the undivided family property and is also entitled to her husband's share in the partnership assets in the business which he commenced with strangers. Even on the assumption that Hanumantha Reddi and Venkatanarasa Reddi constituted a joint Hindu family it does not necessarily follow that these two partnerships entered into by Hanumantha Reddi with strangers wereconducted for the benefit of the joint family in which the joint family as such had the real interest apart from the individual interest of Hanumantha Reddi.
It is settled law that a Joint Hindu family as such cannot enter into a partnership. It is possible, however, for the kartha or the managing member of the adult members of the family acting within their rights under the Hindu law to enter into partnership in such a manner as to make the entire joint family liable for the debts of the partnership and also entitled to the benefits thereof. The result is that when the joint family representative dies it becomes a question of pure iact as to whether he represented the joint family in a partnership business venture or embarked on it in his individual capacity.
Mayne's Hindu Law (11th Edn., page 302) quotes abundant case law for the well established position that the powers of a senior coparcener to carry on a family business is ordinarily confined to ancestral business, and that he cannot start a new trade or business so as to impose upon the minor members risks of such businesses; nor can he start any new business so as to bind the whole coparcenary except with their consent express or implied. Now Hanumantha Reddi was the younger son who being more educated embarked upon these ventures in trade. There is absolutely no material to show that his elder brother had given his consent express or implied to these new ventures as binding on him as an adult coparcener in respect of liability to losses and to a share in profits. It cannot be too strongly emphasised that liability to share losses and a right in profits are reciprocal and indivisible. The coparceners in a joint family require protection from doubtful business ventures by individual coparceners, or even by their managing member or kartha. It is only when circumstances and evidence show clear association of the entire adult coparcenary in a business conducted with others that acting as a legal entity it can sue for dissolution and accounts with full admission of liability of the coparcenary for debts of the business. The only inference that can be drawn from the material in the suit is that Hanumantha Reddi embarked on these two private enterprises in his individual capacity, there being nothing to show that his elder brother gave his consent either express or implied to these ventures as binding upon his share of the coparcenary property.
5. In -- Venkataraniayya v. Venkataramappa', Appear No. 20 of 1949 (since reported in : 26ITR351(Mad) ) on the file of this court Krishnaswami Nayudu J. and myself considered a case in which a younger brother left his family house and started a separate business in a. neighbouring village. We held that if for the purpose of starting a trade he got assistance by way of a, contribution from the joint family funds without any further assistance from the joint family it was reasonable to extend the principle of the Hindu Gains and Learning Act to such a case. We expressed our inability to find any real distinction between such a case and that of a member educated out of the joint family funds practising a profession or trade in a town whose earnings as a result of such education become in law his self acquisitions.
As it appears to me the spirit of initiative and enterprise in those who remain in a village and continue to reside in the ancestral family house would be destroyed if any enterprise they start which requires individual energy skill and ability is liable to be regarded as a joint family venture in which in the event of its making profits the entire coparcenary can claim a share. It is becoming more and more necessary for educated persons to take their education back to villages to reconstruct and revitalise rural areas. I find it difficult to see why the manager of a Hindu joint family whether he be the eldest son or whether he be a manager of the joint family 'de facto' should be placed under a strong disability as compared with his urban counter-part or an educated man who leaves his village and lives in a town as regards his. right to regard the property he acquires by his own exertions, initiative and enterprise as his self acquired properties. It may be that he utilises on a business venture Joint family funds, but such user by itself will certainly not entitle all the coparceners in the joint family to a right to a share in the profits on the footing that the business venture is solely for this reason a joint family divisible asset.
6. In this view for purposes of these suits it is really immaterial whether Hanumantha Beddi was divided in status from his brother or whether he continued to be joint. All that the elder brother would be entitled to recover from these businesses would be his share of any joint family money invested by Hanumantha Reddi in these two partnerships obtained out of the family lands. Whether on the footing of a coparcenary joint ownership or a tenant in common, whichever view is taken, the widow, Narasamma would be entitled to the partnership assets as the self acquisitions of Hanumantha Reddi.
The finding of the learned District Munsif, therefore, that there was severance of status between these brothers with which I agree does not mean that these suits should be dismissed. There must be a remand as found by the learned Subordinate, judge for a finding as to the quantum of family or more strictly co-tenancy funds (if any) invested in these partnerships. If the plaintiff is able to prove that Hanumantha Reddi invested in these partnerships Income from the undivided family lands he Will be entitled to recover from his widow and from Hanumantha Reddi's share in the partnership assets at the time of his death in the hands of the partners his half share of such investments with interest or profits earned by such investments under Section 88 of the Trusts Act. Whether interest or profits should be allowed is a matter which the trial Court must determine on the facts disclosed at the trial of this issue. The parties in these appeals will bear their own costs irrespective of the result of the suit.
7. Leave refused.