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S.K.T. Soundararajalu Vs. Minor Shanmugam and anr. - Court Judgment

LegalCrystal Citation
SubjectFamily;Commercial
CourtChennai
Decided On
Reported in(1942)1MLJ184
AppellantS.K.T. Soundararajalu
RespondentMinor Shanmugam and anr.
Cases ReferredKrishnaswami Aiyar v. Eamanadhan
Excerpt:
- - their lordships point out that in the case of a business carried on by the father upto the date of his death it devolves on the sons as ancestral business just like any other property owned by the father would devolve upon them as ancestral property, but that could not be said of a similar business started by a managing member on his own initiative which had no connection at all with the business which they inherited......with the same partner, the business which the father carried on during his lifetime becomes on his death ancestral in spite of the fact that it was a partnership business. in effect their lordships came to the conclusion that the father's interest in the business must be considered to be ancestral so that if the joint family acquires the business as an asset by settlement of accounts with the stranger partner the business must be deemed to be ancestral and it can be continued by the managing member in the exercise of his discretion. mr. sundaralingam is right in contending that the view taken in krishnaswami aiyar v. eamanadhan (1934) 88 m.l.j. 251 namely, that where a father started a business in partnership with a stranger and on his death his elder son continued the partnership with.....
Judgment:

Venkataramana Rao, J.

1. This second appeal arises out of a suit to recover a sum of money due under a promissory note executed by the first defendant on his own behalf and as guardian of defendants 2 and 3. The defendants are brothers the first defendant being the eldest and are the sons of one Manicka Samayar who died in or about 1926. Manicka Samayar during his life carried on business in medicine in partnership with one Vythilinga Pillai and after the death of Vythilinga Pillai with his son Chandrasekharan Pillai. On the date of the death of Manicka Samayar all his three sons were minors. The 1st defendant attained majority in 1929 and he started a business in medicine and the money borrowed under the promissory note was in respect of this business. Defendants 2 and 3 deny their liability for the said debt on the ground that the business started by the first defendant was not ancestral business but a new business and therefore they are not liable for the debts incurred in respect thereof. The contention of the plaintiff is that the business was not a new business but a continuation or a revival of the business carried on by Manicka Samayar during his life in partnership with Vythilingam and thereafter with Chandrasekharan and therefore defendants 2 and 3 ought to be held liable. Both the lower Courts came to the conclusion that the business started in 1929 by the first defendant was a new business and therefore dismissed the suit against defendants 2 and 3. This appeal is by the plaintiff and on his behalf his learned Counsel, Mr, Sundaralingam, contends that the view taken by both the lower Courts is wrong. Before dealing with this contention it may be necessary to state that after the death of the father Manicka Samayar in 1926 the business which was carried on by him in partnership with Chandrasekharan was not wound up until 1935, and all the assets of the said business continued to remain with the said Chandrasekharan up to that date. The first defendant after attaining majority instituted O.S. No. 28 of 1932 on the file of the Sub-Court of Tiruvarur against Chandrasekharan for recovery of the share of assets due to his father in the said business and the said litigation was finally compromised in 1935 by which the first defendant obtained a sum of Rs. 2,500 in full satisfaction of his father's share. It is thus clear that no portion of the business assets came into the hands of the first defendant. The contention of Mr. Sundaralingam is that the business carried on by Manicka Samayar with Chandrasekharan must be deemed to be ancestral business, that as on the date of the death of Manicka Samayar all the defendants were minors they could not continue it immediately and no sooner the first defendant attained majority than he started the same business in medicine and it must therefore be deemed to be a revival or reconstruction of the old business and cannot therefore be considered to be a new business. He relied very strongly on the decision of the Privy Council reported in Sri Thakur Ramakrishna Muraji v. Ratanchand (1931) 61 M.L.J. 665 : UK. 98 I.A. 173 : I.L.R. 53 All. 190 (P.C.) and contended that both the lower Courts relied on the decision in Krishnaswami Aiyar v. Ramanadhan (1934) 68 M.L.J. 251 which according to him must be deemed to have been overruled by the said Privy Council decision. What is an ancestral business and what is a new business were considered by the Privy Council in Sanyasi Charan Mandal v. Krishnadhan Banerji . In that case one Bhuban Mohan Mandal carried on a business in rice during his lifetime at Kali Bazar and that business devolved on his sons and, was continued by the eldest son Nilrathan as the kartha of the family. Sometime after the father's death Nilrathan started a business in rice in another place Orphangunj and the question arose whether two minor brothers of his could be held to be liable on a debt incurred in respect thereof. Their Lordships of the Privy Council held that the business was neither ancestral nor an extension of the ancestral business though it was a rice business. Their Lordships point out that in the case of a business carried on by the father upto the date of his death it devolves on the sons as ancestral business just like any other property owned by the father would devolve upon them as ancestral property, but that could not be said of a similar business started by a managing member on his own initiative which had no connection at all with the business which they inherited. If the principle of this decision were to be applied to this case, there can be no doubt that the business started by the first defendant was a new business. But Mr. Sundaralingam contends that the Privy Council decision in Sri Thakur Ramakrishna Muraji v. Ratanchand (1931) 61 M.L.J. 665: L.R. 38 IndAp 173 : I.L.R. 53 All. 190 (P.C.) laid dowini that where a father carried on business in partnership with a stranger down to the date of his death the said business was ancestral business and therefore the business started in 1929 must be considered to be ancestral business because on the father's death the old business became dissolved and there was a temporary suspension of the business of the family on account of the minority of the defendants. A close examination of the decision in Sri Thakur Ramakrishna Muraji v. Ratanchand (1931) 61 M.L.J. 665 : 1931 L.R. 38 IndAp 173 : I.L.R. 53 All. 190 (P.C.) does not support the contention of Mr. Sundaralingam. The facts of that case were as follows: One Hardeo Das carried on business in partnership with Kalyan Mal under the name and style of Hardeo Das Kalyan Mal. He died in 1917 leaving his adopted son Gulab Chand and two sons born to him subsequent to the adoption, namely, Ratan Chand and Madan Gopal. After the death of Hardeo Das, Gulab Chand carried on business with Kalyan Mal until the 9th October, 1919, when Kalyan Mal retired from the business and the partnership was dissolved and the assets and liabilities were divided and apportioned. On the same date, namely, the 9th October, 1919, Gulab Chand opened new books and began to carry on a similar business under the name and style of Hardeo Das Gulab Chand. It was in respect of this business debts were incurred and the question arose whether the brothers of Gulab Chand were liable for them. The High Court took the view that it was a new business and they could not be made liable. But their Lordships of the Privy Council reversed this decision. On the facts of that case their Lordships were of the opinion that the business carried on under the name of the old partnership did not come to an end but on the other hand the business was carried on under a new name without break of continuity or interval, that when Kalyan Mal retired from the business, it had on the dissolution accrued to the joint family and that Gulab Chand as the manager was entitled to carry it on for the benefit of the joint family. This case is an authority for the proposition that where a father carried on business in partnership with a stranger and dies without effecting a dissolution and the son continues the business with the same partner, the business which the father carried on during his lifetime becomes on his death ancestral in spite of the fact that it was a partnership business. In effect their Lordships came to the conclusion that the father's interest in the business must be considered to be ancestral so that if the joint family acquires the business as an asset by settlement of accounts with the stranger partner the business must be deemed to be ancestral and it can be continued by the managing member in the exercise of his discretion. Mr. Sundaralingam is right in contending that the view taken in Krishnaswami Aiyar v. Eamanadhan (1934) 88 M.L.J. 251 namely, that where a father started a business in partnership with a stranger and on his death his elder son continued the partnership with the stranger the business was a new business can be held to be no longer law in view of the decision of the Privy Council. But in order that the business should not be considered to be new, it must be a continuation or revival of the old business. Where another business was started by a manager which had absolutely no connection with the old business, the fact that the business started was of the same nature as the old business cannot be considered to be an ancestral business at all. In this case the old business was not wound up till 1935 and the business which was dissolved on the death of the father was not continued or revived: by the defendants.

2. It seems to me that the conclusion reached by the lower Courts that the business is a new business is correct. I therefore dismiss the second appeal with costs. Leave to appeal refused.


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