Judgment

SHAH, J. : (For self and Sarkar, J.)Vrajlal Manilal and company, a firm consisting originally of four partners (1) Manilal Anandji, (2) Jivrajbhai Ujamshi Sheth, (3) Punjabhai S. Patel, and (4) Chintamanrao, has been doing business of manufacturing bidis at Sagar and Delhi since 1944. From time to time fresh partnership deeds were executed readjusting the shares of the partners admitting new partners and adjusting the shares of the partners. In 1954 Manilal Anandji retired from the firm and on January 27, 1955, Punjabhai S. Patel died.

2. On February, 16, 1956, a fresh deed of partnership was executed. The firm then consisted of eight partners - Jivraj and his two sons being entitled in the aggregate to annas -/4/3 share in a rupee in the profits, Chintamanrao and his two sons to annas -/ 7 / 6 share in a rupee, and the two sons of Punjabhai S..Patel to the remaining annas -/4/3 share. By paragraph 7 the books of account were to be maintained by the managing partner, the financial year of the firm being from Diwali to Diwali, and profits and losses were to be ascertained at the close of the year and a copy of the balance-sheet with profits and loss statement was to be supplied to each partner, and if no objection regarding the accounts was raised within four months from the end of the year, the accounts were to be deemed conclusive and binding unless vitiated by fraud. By paragraph 12 it was stipulated that a partner desiring to retire from the partnership may, unless the other partners agreed to his retirement otherwise, do so after giving six months notice to all the partners in writing terminable at the end of the year i.e., the Diwali immediately following the date of the notice Paragraph 13 provided :

"In case of retirement of any partner the valuation of the Firm will be made on the following basis for the purpose of settling the account of the retiring partner :-

(a) Goodwill of the Firm : - That is, right to use the trade marks, trade labels and the name of the Firm.

In making the valuation of the above the net profits of the last five years will be taken as the value of the Goodwill of the Firm.

(b) Outstandings, Udhari (Recoveries) : That is loans and debts outstanding against persons other than partner will be calculated at 85 per cent. of the book value of the Firm.

(c) Stock of Raw Materials:- That is, tobacco, bidis, bidi leaves, labels and other moveable property will be valued at the book value of these in the books of the Firm and all such stock and moveables, thus valued shall be given to the remaining partners.

(d) Immovable Property :- Such as buildings, godowns, gardens, lands etc. will be valued at the purchase price or their book value in the books of the Firm as the case may be, and all these shall be given to the remaining partners. "

Paragraph 16 incorporated a clause for reference of disputes between the partners relating to the business or dissolution of the Firm to arbitration.

3. In April 1958 Jivraj and his two sons -appellant in this appeal - desired to retire from the partnership, and a deed of reference was executed on April 16, 1958, appointing Ambalal, Ashabhai, Becharbhai, Somabhai and Chaturbhuj Jasani as arbitrators to decide the dispute. It was recited in the deed of reference that since Jivraj and his two sons had expressed a desire to retire and the remaining five partners had agreed to take over the entire business of the firm, it was "necessary to effect the final account of the retiring partners with regard to the matters mentioned below as far as possible, according to and taking into consideration the terms and conditions of the Partnership Agreement.

1. Goodwill of Trade Mark.

2. Property.

3. Credits (Udhari).

4. Dead-stock.

5. Stock-in-trade i.e. the raw material or the finished goods invested in the business.

6. Other matters connected with these transactions.

7. Profit and Loss Account.

8. The Receipt and Payents account of the amounts of the partners. "

By paragraph 6 it was provi