The main legal point established in the judgment is that the goodwill of a partnership firm is considered an asset of the partnership and should be included in the settlement of accounts between the partners.

JUDGMENT - DAGA V.C., J.: - This appeal arises from a suit filed by appellant Mrs. Sujan Suresh Sawant ('the plaintiff' for short) against the respondent-Dr. Kamlakant Shantaram Desai ('the defendant' for short), to seek dissolution and accounts of the partnership firm run under the name and style, "Dr. Desai's Late Dr. Navalkar Memorial Maternity and General Hospital", Dadar, Mumbai.

The Facts :

Summary of the facts giving rise to the present litigation is as follows:

2. One Dr. V.N. Navalkar during his life time was running his own Nursing and Maternity hospital known as "Radhabai Nursing Home" in the building known as "Nana Nivas", 813 183-AB, Baburao Parulekar Marg, Off Gokhale Road (South), Dadar, Bombay 28.

3. Dr. V.N. Navalkar died intestate on 1st August, 1976 leaving behind his brother Shri Sitaram N. Navalkar as his sole legal heir entitled to inherit his estate.

4. Shri Sitaram Navalkar, being a retired person, not acquainted with the discipline of medicine, had no experience of running hospital and maternity home. He, therefore, in order to perpetuate the memory of his brother late Dr. V.N. Navalkar, entered into agreement with one Shri (Dr.) Kamlakant Desai on mutually settled terms and conditions. He, under the agreement handed over running hospital to Dr. Desai. He thus, permitted Dr. Desai to run and manage the hospital in question. The terms and conditions thereof which were settled between the parties were reduced to writing in the form of agreement styled as Conducting agreement dated 20th December, 1976.

5. Dr. Desai, after running the aforesaid hospital for sometime, entered into partnership with Mrs. Sujan Suresh Sawant, plaintiff-appellant herein; wife of one of his close friends, and Dr. Ramchandra Nerkar. Dr. Desai under deed of partnership dated 28th July, 1978 agreed to make available benefits of the conducting agreement dated 20th December, 1976 to the partnership firm without any reservation and consideration. Royalty which was payable under the conducting agreement was agreed to be paid from the funds of the partnership firm, with effect from 1st December, 1978 onwards. The relevant Clause 11 with respect to this conditions reads as under :

"It is specifically agreed that the benefits of the agreement dated 20th December, 1976 between Mr. S.N. Navalkar and Dr. K.S. Desai and any extension thereof shall be made available to this partnership firm by the party of the first part without any reservation and consideration and the royalty payable under the above said agreement shall paid from the partnership funds from 1st day of July, 1978 onwards. However, it is agreed between the parties hereto that any liability or loss arising from the agreement referred hereinabove or the extension thereof shall be borne by the parties hereto in equal proportion."

6. It appears that Shri Sitaram Navalkar did not approve the arrangement of partnership devised by Dr. Desai to run the hospital in question. He, therefore, filed a declaratory suit bearing S.C. Suit No. 6208/1078 in the Bombay City Civil Court, at Bombay to seek declaration that Dr. Desai is only the conductor of the hospital. This suit culminated in a consent decree on 17-1-1979; wherein Dr. Desai was declared as the "conductor" of the hospital.

7. By a deed of Dissolution and Retirement dated 8th December, 1978 Dr. Nerkar retired from partnership firm. Consequently, a fresh partnership came to be formed between the present respondent and the appellant on 11th May, 1979. Clause 11 which existed in partnership deed dated 28th July, 1978 cited (supra) came to be deleted in this fresh deed of partnership dated 11th May, 1979.

8. In the year 1981, Shri S.N. Navalkar and other landlords filed L.E. C Suit No. 105 of 1981 against Dr. Desai to seek possession of the hospital.

9. During the pendency of the suit, some dispute arose between two partners, Mrs. Sawant and Dr. Desai, parties to this appeal, which led to a notice at the instance of the defendant Dr. Desai; wh

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