SUPREME COURT OF INDIA
D.A. DESAI AND R.B. MISRA, JJ.
Vishnu Chandra, Appellant
Versus
Chandrika Prasad Agrawal and others, Respondents.
Civil Appeal No. 3717 of 1982 (Arising out of S.L.P. (Civil) No. 8056 of 1981), D/- 18-11-1982.
Advocates appeared
Mr. Y. S. Chitale, Sr. Adv. M/s. S. C. Jain, Advocate with him, for Petitioner; Mr. J. L. Jain, Sr. Advocate, Mr. S. C. Birla and Mr. R. N. Poddar, Advocates with him for Respondents.
Indian Partnership Act 1932 - Section 44 - Suit for dissolution of partnership and rendition of accounts - Appellant as plaintiff filed a suit for dissolution of partnership and rendition of accounts of a firm styled as Shyam Bricketing Udyog having its principal place of business at Etah in State of Uttar Pradesh - Trial Court in this suit granted relief of dissolution of firm effective from November 23, 1976 and passed a preliminary decree for taking accounts - Defendants after an unsuccessful appeal to first appellate Court approached High Court in second appeal - High Court allowed appeal, set aside concurrent findings and dismissed plaintiffs suit with costs throughout - Hence this appeal by special leave - Held, Partnership business commenced on December 1, 1976 - Period of one year would expire on November 30, 1976 - Plaintiff sought dissolution effective from November 23, 1976. His request was thus under clause 20 premature by a period of seven days - At best, it Court thinks fit retirement may be made effective from November 30, 1976, but on this technical ground relief cannot be denied - At best the capital would become refundable as envisaged by clause 20, after November 30, 1976 - But in any view of matter plaintiff is entitled to a relief for a declaration that he has retired from partnership without dissolution of firm from date of institution of suit and accounts may be made till that date and necessary preliminary decree will have to be made - Appeal is allowed.
ORDER :- Special Leave granted.
2. At the request of the parties we proceeded to hear the matter on merits. We heard Dr. Y. S. Chitaley for the appellant and Mr. S. C. Birla for the respondents.
3. Appellant as plaintiff filed a suit for dissolution of partnership and rendition of accounts of a firm styled as Shyam Bricketing Udyog having its principal place of business at Etah in the State of Uttar Pradesh. The trial Court in this suit granted relief of dissolution of firm effective from November 23, 1976 and passed a preliminary decree for taking accounts. The defendants after an unsuccessful appeal to the first appellate Court approached the High Court in second appeal. The High Court allowed the appeal, set aside the concurrent findings and dismissed the plaintiffs suit with costs throughout. Hence this appeal by special leave.
4. Plaintiff-appellant filed the suit for dissolution of firm and rendition of accounts alleging that the partnership was a partnership at will and by the notice and by institution of the suit the firm stood dissolved effective from November 23, 1976. The respondents resisted the suit alleging that the partnership is not a partnership at will. Two questions that were agitated before the High Court were: "(i) whether the partnership was a partnership at will or for a fixed duration; (ii) whether the respondent (appellant before us) was entitled for retirement from the partnership or for dissolution of the firm itself." After an elaborate discussion and after specifically referring to clauses 7, 18 and 20, both amended and unamended, of the instrument of partnership the High Court held that the partnership was not a partnership at will. We do not propose to examine this contention. What was pressed before us was the second contention canvassed before the High Court.
5. The second contention is whether the plaintiff is entitled to retire from the partnership. To begin with it would be advantageous to refer to clause 18 of the instrument of partnership. It reads as under :-
" 18. That if any partner wants to dissociate from the partnership business then he can dissociate after serving one month notice to remaining partners, but in that event the partnership business will not come to an end. If the majority of the partners do not agree to work with other partner then in that event the majority partners will have the right to seek explanation from that partner and, if think fit and justifiable, may expell him from the partnership business." Before proceeding further it is also advantageous to note that in the concluding portion of para 20 of the instrument of partnership it was provided that no partner will separate from the partnership business till one year from the beginning of the business, and if he will dissociate then his capital will not be given till the end of one year. These two clauses leave no room for doubt that a partner can dissociate from the firm. Section 32 (1) provides, inter alia, that a partner may retire ... (b) in accordance with an express agreement by the partners. A partnership business is run in accordance with the terms of the contract of partnership. The terms, inter alia, envisage a situation that a partner can retire from partnership. The expression used in clause 18 that a partner may dissociate from the partnership envisages a situation where a partner wants to retire from business. The contract of partnership also envisages a situation where a partner may be expelled from the partnership. But that situation need not he examined. The only point on which the parties are at variance is whether a partner can retire from the partnership and the expression, that if any partner wants to dissociate from the partnership business, comprehends a situation where a partner wants to retire from the partnership. Therefore, it does appear that the contract of partnership permits a partner to retire from the partnership. Unfortunately the High Court examined the contention from an angle imper
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