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V.E.N.K.R.M.A. Venkatachellam Chetty and anr. Vs. V.E.N.K.R.M.A. Ramanathan Chetty and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in59Ind.Cas.501
AppellantV.E.N.K.R.M.A. Venkatachellam Chetty and anr.
RespondentV.E.N.K.R.M.A. Ramanathan Chetty and ors.
Cases ReferredDwarka Nath Sarkar v. Hiji Mahomed Akbar
Excerpt:
partnership - suit against partnership by third party--submission to arbitration by partner sued--award--liability of other partners--payment under award--contribution, whether can be claimed--nattukottai chetties, transaction between--interest, rate of. - - 828 and we may take it that the rule is well established and cannot be questioned. but the question here is not between a partner and a stranger but between the partners inter se, the point for determination is, whether, when a partner has in good faith submitted the claim of a third party against a firm to arbitration and that partner had to make payments in accordance with the award passed on the submission, he would not be entitled to claim contribution from his partner on the basis of that award. but it is a well established..........the basis that a sum of rs. 662-9 0 was due by the partnership to the plaintiffs while, under the award in the suit which was filed afterwards, the appellants were made liable, as already stated, for a sum of rs. 2,400, less the three items mentioned above. the amount claimed in the suit was, however, more than rs. 5,000. the learned judge held that the award was not binding on the present defendants as they were not parties to the suit and the reference to the arbitration. he relied on lindley on partnership, 8th edition, page 161. there can be no doubt, as laid down there, and in the rulings referred to therein, e.g. stead v. salt (1825) 3 bing. 101 that where a partner has submitted to arbitration, the award passed on such submission will not bind the other partner, at the instance.....
Judgment:

1. The plaintiffs and defendants are Nattukottai Chetties carrying on business in Akyab, They had a separate money-lending business of their own. It appears that they entered into a partnership with respect to a business in paddy as commission agents. They used to buy paddy for customers on commission and send it to their customers in India. The business, however, was conducted by the plaintiffs and defendants separately with their own customers and independently of each other, it was carried on in the separate names of the plaintiffs and the defendants and, so far as we can gather, they were to conduct the business entirely in their own way, but whatever was the profit or loss in the business as conducted by either party, that was to be shared by the other party equally. There was, at first, a suit for dissolution of this partnership but it was dismissed on the ground of limitation. The present suit is instituted by the plaintiffs for contribution, with respect to certain sums paid by them in connection with the joint business in paddy and in the appeal the learned Pleader for the appellants-plaintiffs has contested the finding of the Subordinate Judge with respect to three items.

2. The first refers to the amount, recovered in Original Suit No. 80 of 1910 by the plaintiff in the suit against the present plaintiffs Nos. 1 and 2. In that suit the present defendants (respondents in the appeal) were not made parties and the present appellants who were the only defendants agreed to the submission of the suit to arbitration, The arbitrators passed an award finding that a sum of Rs. 2,400 was due to the plaintiffs in that suit. Some small items concerned in that suit admittedly did not relate to the partnership in question. Those are a sum of Rs. 66-9-3, a sum of Rs. 38 8 9 and a sum of Rs. 31-6-0 mentioned in the plaint, Exhibit A. The appellant's contention is that the rest of the items to which the award related formed part of the partnership transaction. The practice adopted apparently was for the plaintiffs and the defendants to adjust the rights and liabilities with respect to each transaction soon after it closed. In accordance with that practice, they adjusted their accounts with respect to the dealings with the plaintiffs in Original Suit No. 80 of 1910 on the basis that a sum of Rs. 662-9 0 was due by the partnership to the plaintiffs while, under the award in the suit which was filed afterwards, the appellants were made liable, as already stated, for a sum of Rs. 2,400, less the three items mentioned above. The amount claimed in the suit was, however, more than Rs. 5,000. The learned Judge held that the award was not binding on the present defendants as they were not parties to the suit and the reference to the arbitration. He relied on Lindley on Partnership, 8th Edition, page 161. There can be no doubt, as laid down there, and in the rulings referred to therein, e.g. Stead v. Salt (1825) 3 Bing. 101 that where a partner has submitted to arbitration, the award passed on such submission will not bind the other partner, at the instance of the third party. The ground on which this ruling is founded is obvious, that submission to arbitration ordinarily does not come within the scope of a partner's authority so as to bind the other partner. This ruling has been followed in Bam Bharose v. Kallu Mal 22 A. 135 and Datoobhoy v. Vallu 1 Bom. L.R. 828 and we may take it that the rule is well established and cannot be questioned. But the question here is not between a partner and a stranger but between the partners inter se, The point for determination is, whether, when a partner has in good faith submitted the claim of a third party against a firm to arbitration and that partner had to make payments in accordance with the award passed on the submission, he would not be entitled to claim contribution from his partner on the basis of that award. There is no express authority on this point. One which has bean brought to our notice as being nearest to the present case is the ruling of the Privy Counsel in Dwarka Nath Sarkar v. Hiji Mahomed Akbar 21 Ind. Cas. 307. There the question was sought to be raised for the first time in the Appellate Court and their Lordships of the Privy Council held that it should not have bean allowed to be so raised. The question whether a legal representative of the deceased partner should be bound by the reference made by a surviving partner in relation to a partnership contract was not a pare question of law to be decided without reference to the facts of the case; and it was held that the High Court was in error in permitting the question to be raised for the first time in appeal. That passage, at least, suggests that there may be circumstances in a particular case which would justify the Court in holding that the legal representative of the deceased partner was bound by a reference by the surviving partner relating to a partnership contract.

3. Mr. Krishnasawai Aiyar, the learned Vakil for the respondents', however, urges that the surviving partner's powers are widar than those of an ordinary partner after the dissolution. That may be so, generally speaking. But it is a well established rule relating to partnership that if one partner has the authority to settle accounts relating to partnership and to give release with respect to partnership debts he can be sued alone on a contract entered into by him, and his other partner would be bound by the decree so obtained. That being so, it is not easy to understand why, in a case where a partner is sued alone, he should not be at liberty to agree to a submission and why the award on such submission should not, as between him and his co partner, be good and conclusive evidence of the liability of the firm. It is not contended in this case that the submission was not bona fide. In fast, it was as mush the interest of the plaintiffs as would have bean that of the defendant, if he was a party to the suit, to resist an unjust claim and if the plaintiffs thought that the submission was the best way of settling the dispute, there is no good reason for holding that his partner should not contribute to the amount decreed by the award. As the submission was bona fide, and as it has not been shown that the award was vitiated by any illegality, we must hold that the defendants are liable on the basis of the award. On that basis the plaintiffs would be entitled to get from the defendants the sum of Rs. 800 with interest from the date of the award.

4. The next point taken in appeal refers to the expenses of certain litigation in Original Suit No. 80 of 1910, already referred to, and of Original Suit No. 118 of 5910. The lower Court disallowed the claim on the ground that the entries in the accounts' stand in the name of one Paliniappa Chatty who was the agent of the plaintiffs. But if the money was spent through that agent there seems to be no reason why, on that account, the amount so spent should be disallowed simply because the amounts are entered in the name of the person who actually disbursed them. Mr. Krishnasawmi Aiyer, however, argued that there is really no evidence that the sum claimed under this head was actually spent on account of the suits relating to the partnership transactions. We have the accounts, Exhibits S and T series, and the evidence of one of the plaintiffs that the entire expanses relating to the litigation amounted to the sum entered in the Schedule D of the plaint, that is, Rs. 865 3 0. There WAS no serious attempt made to show that this is incorrect. We, therefore, hold that half of this amount should have been decreed to the plaintiffs.

5. As regards the third point, it relates to the rate of interest. The Subordinate Judge has allowed interest at 6 per cent but the defendant's own evidence is that the usual rate, that is the Madras rate of interest prevailing among the Chetties is 81/2 per cent. That, we think, is the rate which should be awarded) The decree will, therefore, be modified in accordance with the above findings. The appellants will have their costs from the respondents.


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