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Bombay High Court
SHARAD MANOHAR
Francis Joseph Rebellow - Appellant
Versus
Olivia Jane Rebellow - Respondent
Decided On : 01/05/1981
PARTNERSHIP - DISSOLUTION - ACCOUNTING - LIMITATION - PRELIMINARY ISSUE - JURISDICTION - AGREEMENT BETWEEN SURVIVING PARTNERS AND HEIRS OF DECEASED PARTNER - AGENCY - CO-OWNERSHIP - PARTNERSHIP ACT, SECTIONS 37, 45, 53 - CIVIL PROCEDURE CODE, ORDER 14, RULE 2.
Fact of the Case:
A partnership business was carried on by three brothers, Lawrence, the plaintiff, and defendant No. 11. Lawrence died on 1-12-1961. The plaintiff and defendant No. 11 contended that the partnership stood dissolved by virtue of and with effect from the death of Lawrence. On 17-8-1963, a notice was given on behalf of the plaintiff and defendant No. 11 to defendant No. 1, stating that the partnership stood dissolved on the death of Lawrence and that they were entitled to have accounts in respect of the partnership business. Defendant No. 1 denied the existence of the partnership and refused to render accounts. The plaintiff filed a suit for various reliefs, including a declaration that the partnership was dissolved from 1-12-1961, appointment of a Receiver, and accounts of the business as on 1st December 1961 and for the period subsequent thereto. The defendants contended that the suit was barred by limitation, as it was filed more than three years from the date of dissolution of the partnership.
Finding of the Court:
The trial court held that the suit was barred by limitation under Article 5 of the Limitation Act, 1963, and dismissed the plaintiff's suit. The plaintiff and defendant No. 11 appealed, arguing that the learned Judge was in error in trying the issue relating to bar of limitation as a preliminary issue and that the suit could not be said to be governed by Article 5 of the Limitation Act 1963 at all.
Issues: 1. Whether the suit was barred by law of limitation? 2. Whether the agreement between the surviving partners and heirs of the deceased partner created a fresh cause of action? 3. Whether the surviving partners jointly constituted defendant No. 1 as their agent for carrying on the business until accounts were taken?
Ratio Decidendi: 1. The court held that the trial court erred in deciding the entire suit on the preliminary issue of limitation without considering the legal position arising out of the agreement between the surviving partners and heirs of the deceased partner. 2. The court observed that the agreement, if proved, could give rise to certain equities in favor of the plaintiff and defendant No. 11, such as the right to enforce the agreement against the contesting defendants or the creation of an agency relationship between defendant No. 1 and the surviving partners. 3. The court also noted that the Partnership Act, Sections 37, 45, and 53, needed to be considered in determining the legal consequences of the agreement.
Final Decision: The appeals were allowed, the decree of the trial court was set aside, and the matter was remanded for a fresh decision on all issues, including the issue of limitation, after considering the evidence on record and any additional evidence led by the parties. The trial court was directed to dispose of the suit before 31st July 1981.
2. The plaintiff, defendant No. 11 and one Lawrence were three brothers. A partnership-deed dated 29th of Dec. 1952, came to be executed by the three brothers for carrying on the business of Restaurant and other business under the name and style of Jai Hind Shamrock Restaurant at Colaba. Though it was only a restaurant in the premises in question there were also a tailoring shop and certain stalls such as of Panwala etc. It is the contention of the plaintiff and defendant No. 11 that as per the partnership-deed, the plaintiff and defendant No. 11 each were having 25% share in the partnership, whereas their brother Lawrence was having 50% share in the same. According to the plaintiff, the partnership business was carried on or actively managed mainly by Lawrence and plaintiff and defendant No. 11 were getting their share of profit.
Lawrence died on 1-12-1961. Defendant No. 1 is his widow and defendants Nos. 2 to 10 are the children of deceased Lawrence. The plaintiff admits that the partnership was a partnership at will. The plaintiff and defendant No. 11 contend that the partnership stood dissolved by virtue of and with effect from the death of Lawrence. But they have contended further as follows:
"Final account of the assets and liabilities of the partnership business as on the death of the said Lawrence Romaldas Rebellow was not taken. The same was permitted to be used for continuing the said business for the benefit of the surviving partners and the heirs and legal representatives of the said Lawrence Romaldas Rebellow and the business continued with the funds of the old partnership."
The above are only the averments in the plaint; they are not admitted facts; but it is common ground that on 17-8-1963 a notice came to be given on behalf of the plaintiff as well as defendant No. 11 to defendant Number 1 stating that the partnership stood dissolved on the death of Lawrence. It appears to have been mentioned therein that the death took place on 8th December, 1961. But it was common ground before me that it was a mistake. In any event, that date is not going to make any difference so far as the question involved in this litigation is concerned. By the said, notice it was further stated that plaintiff and defendant No. 11 had become entitled to have accounts in respect of the partnership business, that since the death of Lawrence defendant No. 1 has been looking after the affairs of the business but had not rendered accounts to the plaintiff and defendant No. 11. It was pointed out that both of them were having 1/4th share each in the said business as also in the profits of the same. Prima facie, therefore, they claimed 1/4th share not only in the profits, but also in the net assets of the firm. Defendant No. 1 was called upon to give to the plaintiff and defendant No. 11 accounts in respect of the business within eight days from the receipt of the notice.
To this notice a reply dated 24th August, 1963 was given on behalf of defendant No.1 and by that reply defendant No. 1 flat
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