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Swaminatha Chettiar and anr. Vs. Nagalingam Chettiar and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberSecond Appeal No. 1058 of 1948
Judge
Reported inAIR1952Mad769; (1952)2MLJ249
ActsCode of Civil Procedure (CPC) , 1908 - Sections 34 and 35
AppellantSwaminatha Chettiar and anr.
RespondentNagalingam Chettiar and anr.
Appellant AdvocateR. Gopalaswami Iyengar, Adv.
Respondent AdvocateT.K. Subramania Pillai, Adv.
DispositionAppeal dismissed
Cases ReferredHakim Rai v. Gangaram
Excerpt:
- - the district munsif as well as the subordinate judge awarded interest from the date of the plaint. it is well settled that the appellate court will not interfere with an order for costs, unless the order of the subordinate court is contrary to any well recognised principle of law......the first defendant from the plaintiff in respect of their dealings prior to the starting of the suit business. learned counsel for the appellants contended that this item is an item in the partnership accounts and, therefore, the court should have allowed this item in his favour. but a scrutiny of the accounts discloses that this item was not brought into the partnership accounts at all. ex. d. 1 dated 12-4-1943 is an account of the plaintiff 'in the personal account of the first defendant. this amount finds a place in that account. that item was brought into the partnership account only under ex. p. 6 dated 2ist may 1945. it was held that the partnership was dissolved on 15th september 1944. this item therefore obviously cannot form an item in the accounting between the partners.6......
Judgment:

Subba Rao, J.

1. This is a second appeal against the decree and judgment of the learned Subordinate Judge of Kumbakonam modifying those of the learned District Munsif of Velangi-man at Kumbakonam in O. S. No. 139 of 1945.

2. The first respondent filed the suit for accounts of a dissolved partnership. A preliminary decree was made on the 10th July 1946 upholding that the partnership was dissolved on 15th September 1944 and that the accounts of the partnership should be taken from 3rd February 1943 to 15th September 1944. Subsequent to the decree, a Commissioner had been appointed and he submitted a report. Various objections were taken to the Commissioner's report by both the parties. It is not necessary to consider all the objections raised, (sic) we are concerned in the second appeal only with four of such objections.

3. The first objection is that the learned Subordinate Judge was wrong in disallowing compensation for collections made by the defendants. The Commissioner in his report stated that the defendants should be given 1 1/2 per cent of the collections as charges. The learned District Munsif held that the defendants did not incur any expenses in regard to the collections and, therefore, they are not entitled to any collection charges. With this view, the learned Subordinate Judge agreed. Mr. Gopala-swami Aiyangar contended that the defendants had taken a grave risk in supplying the goods to old constituents who owed sums to the partnership business, and that they did so only because they felt that that was the only method by which they could collect the amounts. He further stated that by so doing, in effect, the defendants credited the amounts subsequently paid by the constituents against earlier debts, with the result that the debtors of the partnership business became their own debtors.

But there is the other side of the picture. It is not suggested, nor there is any evidence in the case, that the constituents were in involved circumstances and that the debts and out-standings would have to be written off. Indeed there is no evidence in this case to establish that the defendants, because of the course adopted by them, lost any money on that account. The defendants, who continued the business, necessarily would hot give up the earlier constituents. The continuance of the business and its prosperity would depend upon their keeping earlier constituents and carrying on the business with them. In the circumstances of the case, what the defendants did was really to their advantage. The business they were carrying on in partnership with the plaintiff, they continued. There is also no evidence in the case to prove that the defendants had spent any additional amounts for the purpose of collecting the amounts due to the partnership before the plaintiff left it. In the circumstances, I agree with the court below that there is no justification for giving compensation towards the alleged charges incurred by the defendants.

4. The second objection relates to interest. The District Munsif as well as the Subordinate Judge awarded interest from the date of the plaint. Learned counsel contended that the ordinary principle is that in a case of dissolution of partnership, the partners will be entitled to interest only from the date when the amounts due from the one to the other is ascertained. In support of his contention, he relied upon a decision of the Judicial Com-mittee in 'Suleman v. Abdul Latif', 58 Cal 203. There, their Lordships ruled that the decree in a suit for dissolution of partnership and accounts should provide for payment of the interest on the amount due only from the date of the final decree by which the amount (if any) is found due and not from the date of the plaint. Satyanarayana Kao J. applied that principle in 'Veeraswami v. Chitti Naidu', : (1947)2MLJ450 . There, the plaintiff filed the suit for dissolution of an existing partnership and for accounts. The learned Judge held that he was entitled to interest on the amount decreed only from the date of the final decree and not from the date of the plaint.

The Privy Council distinguished their own decision 'SULEMAN v ABDUL LATIF', 58 Cal 208 in 'Hakim Rai v. Gangaram', 1943 1 M.L.J. 16 . In that case, the suit was brought nearly two years after the dissolution of the partnership against a former managing partner, who has been retaining in his hands and for his own purpose, the assets of the firm, without accounting for them or their proceeds to his partner. The Privy Council held that, in the circumstances, interest is properly chargeable against the accounting defendant, even though he has not acted fraudulently. They awarded interest to the plaintiff from the date of plaint until realisation. When 'Suleman v. Abdul Latif', 58 Cal. 208 was cited, the Privy Council distinguished that case on the following ground:

'But that ease was concerned with an ordinary suit for the dissolution and the winding up of the affairs of a going partnership. The present case is widely different. It is a suit brought nearly two years after the dissolution of the partnership against the former managing partner, who has been retaining in his hands and for his own purposes assets of the firm without accounting for them or their proceeds to his co-partner. In such a case interest is properly chargeable against the accounting defendant even though he has not acted fraudulently.'

It is, therefore, clear that though the ordinary rule in a suit for dissolution of partnership is to award interest only from the date when the amount due from the one to the other is ascertained, in a case where the suit is for an account in respect of a dissolved partnership, interest may be given even from the date of the filing of the plaint, if the circumstances in that case establish that the other partner was in possession of the assets or utilised them for the purpose of his business, or was otherwise guilty of latches. In the present case the learned Subordinate Judge found on the evidence that 'though the partnership was dissolved on 15th September 1944, the appellants did not take any steps to collect the out-standings or to enable the plaintiff to collect the outstandings or to pay off whatever was due to the plaintiff. Instead, they continued carrying on the business ignoring the severance of the plaintiff and took up an attitude even when the suit was filed which was absolutely unhelpful to the plaintiff.' On the aforesaid ground, the learned Subordinate Judge agreed with the learned District Munsif that interest should be awarded from the date of the plaint. I cannot say that the direction of the learned Judge is inconsistent or otherwise contrary to the principle recognised in 'Hakim Rai v. Gangaram', 1943 1 M.L.J. 16 . In my view, interest has rightly been awarded to the plaintiff.

5. The next objection relates to a sum of Rs. 332-4-6. It appears that this amount was due to the first defendant from the plaintiff in respect of their dealings prior to the starting of the suit business. Learned counsel for the appellants contended that this item is an item in the partnership accounts and, therefore, the court should have allowed this item in his favour. But a scrutiny of the accounts discloses that this item was not brought into the partnership accounts at all. Ex. D. 1 dated 12-4-1943 is an account of the plaintiff 'in the personal account of the first defendant. This amount finds a place in that account. That item was brought into the partnership account only under Ex. P. 6 dated 2Ist May 1945. It was held that the partnership was dissolved on 15th September 1944. This item therefore obviously cannot form an item in the accounting between the partners.

6. The last objection relates to costs. Learned counsel contended that costs of the parties should have been directed to come out of the partnership assets and that the lower court was wrong in directing the appellants to pay the costs of the plaintiff. The learned Judge gave sufficient and valid reasons for awarding costs in the manner he did. He followed the correct principle and directed the appellants to pay the costs because, in his view, the appel-lants took up a hostile and unhelpful attitude, and even stated that the plaintiff could not maintain the suit. It is well settled that the appellate court will not interfere with an order for costs, unless the order of the Subordinate Court is contrary to any well recognised principle of law.

7. In the circumstances, I do not see any reasons for interference in second appeal. The second appeal is dismissed with costs. (No leave).


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