SULEMAN vs ABDUL LATIF - 1930 Supreme(SC) 33

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1930 Supreme(SC) 33

PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD BLANESBURGH, LORD RUSSELL OF KILLOWEN, AND SIR LANCELOT SANDERSON.
SULEMAN - Appellant
Versus
ABDUL LATIF - Respondents
On appeal from the Court of the Judicial Commissioner of Sind.
Decided On : Mar. 28. 1930.

Advocates:
Solicitors for appellants:T. L. Wilson & Co. Solicitors for respondents: Barrow, Rogers & Nevill.

Important Points

In partnership dissolution suits, interest on the amount due is awarded from the date of the final decree, not the plaint, as the debt is only determined after accounting. Partners are entitled to their share of goodwill and generally not charged interest on overdrawings.

Subject

Civil Law - Partnership Law

Headnote

(A) Partnership Law - Dissolution of partnership and taking of accounts - Interest on decretal amount - In an action to dissolve and wind up the affairs of a partnership, it is impossible to determine what is due from any partner to others until accounts have been taken - Interest should only be allowed from the date of the final decree by which the amount is found due, and not from the date of the plaint.

(B) Partnership Assets - Goodwill - Partners are entitled to their share of the assets of the firm at the date of dissolution, which necessarily includes the goodwill attaching to the business branch.

(C) Partnership Overdrawings - Interest - A partner is not charged with interest in respect of over-drawings unless circumstances justify a departure from the ordinary rule.

(D) Appeal - Concurrent findings of fact - Where two courts have reached concurrent findings of fact, the appellate court will not depart from the ordinary rule to reverse or alter those findings.

Facts of the case:
A suit was brought for the dissolution of a partnership, taking of accounts, and payment of sums found due. A dispute existed regarding whether certain associates were paid servants or partners, and if partners, what their respective shares in profits and losses were. The lower courts found that the associates were servants for an initial period and subsequently partners with specific shares.

Findings of Court:
The concurrent findings of the lower courts regarding the status and shares of the parties were upheld. The court held that interest on the amount found due should be awarded from the date of the final decree rather than the date of the plaint. It was further held that the partners were entitled to their share of the assets, including goodwill, and were not liable for interest on overdrawings.

Issues: Whether interest on the amount due in a partnership dissolution suit can be awarded from the date of the plaint; whether partners are entitled to a share of the goodwill of the business; and whether interest can be charged on overdrawings by a partner.

Ratio Decidendi: In a suit for dissolution of partnership, the amount due is not a debt existing at the date of the plaint but is determined only after the accounts are settled; therefore, interest runs from the date of the final decree. Partners have a right to their share of the firm's assets, including goodwill. Under the ordinary rule of partnership, interest is not charged on overdrawings unless specifically justified.

Result: Appeal and cross-appeal dismissed without costs.

Legal Category Hierarchy

Judgement

Consolidated Appeal and Cross-Appeal (No. 55 of 1929) from an appellate decree of the Court of the Judicial Commissioner of Sind (June 13, 1927), which modified a decree of that Court in its District Court jurisdiction.

The appeals arose out of a suit brought by the respondents in the principal appeal for dissolution of

partnership, accounts and payment of the sum found due.

The facts and the effect of the decisions below appear from the judgment of the Judicial Committee.

1930. March 10. Dunne K.C. and Wallach for the defendants,

De Gruyther K.C. and Hyam for the plaintiffs.

The arguments were upon the evidence, save that it was contended for the defendants that interest upon the sum found due should not have been allowed from the date of the plaint. With regard to interest on overdrawings reference was made to Lindley on Partnership, 9th ed., p. 479. It was not contended that the circumstances justified interest being charged.

March 28. The judgment of their Lordships was delivered by

LORD RUSSELL OF KILLOWEN. The suit in which these appeals arise is a partnership suit in which the plaintiffs claimed (a) a decree for dissolution, and (b) that the accounts of the partnership be taken. Other relief was claimed in the following terms " (c) That sums found due to the plaintiffs by the defendants be ordered to be paid by them.”

Up to a point the facts are hot in dispute. The plaintiffs, or their predecessors in title, had for some years before 1902 carried on a business in Karachi, as partners, in the firm name of A. Haji Dossal & Sons. In the year 1902 the firm acquired a business of dealing in arms and ammunition, which originally belonged to one A. Haji Tar Mahomed and which in 1902 was being carried on by his son Haji Hamads The firm having acquired the said business, carried it on a. a branch or department of their general business which they continued to carry on in their firm name, A. Haji Dossal & Sons. At the time the arms and ammunition business was acquired, the defendants (who were relations of Haji Tar Mahomed and Haji Mahomed and had worked in that business) became associated with the firm, and so continued in association with the firm until the dissolution decreed in this action. It is at this point that the facts cease to be undisputed, the principal issue in the action being as to the position occupied by the defendants in relation to the arms and ammunition branch or department from 1902 onwards.

The contention of the plaintiffs was that from 1902 to 1907 the defendants were employed as paid servants of the firm, that from 1907 to 1911 they were partners in the business of the arms and ammunition branch or department with a 2 anna share on the profits and losses of the said business, and that from the beginning of 1912 onwards their share was increased to 4 annas. The defendants contended that they were partners throughout with a 2 anna share from 1902 to 1911, and an 8 anna share from the commencement of 1912 onwards.

The suit was heard in the Court of the Judicial Commissioner of Sind; a preliminary decree was made which (so far as material) is in the following terms "It is ordered and decreed that the suit is maintainable and that the share of the defendants in the profits and losses were two annas from 1907 to 1912 and thereafter four annas up to 1922, when the defendants ceased to be active members in the firm. It is further ordered that issue No. 4 be referred to Court Commissioner to take accounts and report within two months." The reference of issue No. 4 to the Court Commissioner appears to their Lordships necessarily to involve the taking of the partnership accounts by that official in the manner customary when a partnership is dissolved by the Court. In the course of his judgment the additional Judicial Commissioner directed that the accounts should be taken from 1907, but that nothing was to be taken into account as regards goodwill. He made no provisions as to costs, which he said would be prov

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