PATNA HIGH COURT
V.Ramaswami and B.P.Jamuar JJ.
Ramnarayan
Versus
Kashinath Jagnarain
Civil Revision No. 220 of 1950 ;
Appeal from Original Decree No. 294 of 1948 ;
Decided On : MARCH 10, 1953
PARTNERSHIP - DISSOLUTION - EXPULSION OF PARTNER - ACCOUNTING - PROFITS - FIDUCIARY RELATIONSHIP - PARTNERSHIP ACT, 1932, SECTIONS 33, 37, 38, 40, 41, 42, 43, 44, 88.
Fact of the Case:
Plaintiff and defendants entered into a partnership agreement to carry on a salt business under the name Ramchandar Ramkumar. The partnership was initially for a fixed term, but was later renewed with a new agreement. Disputes arose between the partners, and the plaintiff was expelled from the partnership in September 1945. The plaintiff filed a suit for dissolution of the partnership and for accounts to be taken of the partnership business.
Finding of the Court:
The court held that the plaintiff was not expelled from the partnership in accordance with the terms of the partnership agreement, and that the expulsion was therefore in breach of the contract of partnership. The court also held that the partnership was dissolved when the salt control was lifted in January 1947, as the object of the partnership was to exploit the salt license and agency, which came to an end when the control was lifted.
Issues: 1. Whether the plaintiff was expelled from the partnership in accordance with the terms of the partnership agreement? 2. Whether the partnership was dissolved when the salt control was lifted in January 1947? 3. Whether the plaintiff is entitled to a share of the profits made after the dissolution of the partnership?
Ratio Decidendi: 1. The court held that the plaintiff was not expelled from the partnership in accordance with the terms of the partnership agreement, as the expulsion was not carried out in good faith by all the partners whose concurrence was necessary under the articles of the partnership. 2. The court held that the partnership was dissolved when the salt control was lifted in January 1947, as the object of the partnership was to exploit the salt license and agency, which came to an end when the control was lifted. 3. The court held that the plaintiff is entitled to a share of the profits made after the dissolution of the partnership, as the surviving partners continued to carry on the business of the firm with the property of the firm without any final settlement of accounts.
Final Decision: The court decreed that the partnership be dissolved with effect from 31-1-1947 and that a Commissioner be appointed to examine the accounts of partnership business from 12-4-1945 till 31-1-1947. The plaintiff was entitled to 8 annas share of the profits and to recoup the amount of capital he had contributed in accordance with the terms of the contract of partnership. If on the basis of this accounting any amount was found due to the plaintiff from the defendants on 31-1-1947 the plaintiff would be entitled to 6 per cent interest from 31-1-1947 till the date of payment under the provisions of Sec.37 of the Partnership Act.
Ramaswami, J.
1. This appeal is presented on behalf of the defendants against the judgment and decree of the Subordinate Judge of Chapra dated 24-7-1948.
2. The plaintiff Kashinath Jagnani and the defendants Ramnarain, Ramkumar and Dhanraj agreed to carry on a joint business in salt under the name of a partnership called Ramchandar Ramkumar of Mairwa. On 11-2-1944 the parties executed a deed of partnership according to which the share of the plaintiff was 12 annas and the share of the defendants was 4 annas. It was agreed that plaintiff would contribute the entire capital and the defendants would contribute skill and labour in carrying on the salt trade. The plaintiff agreed in the first instance to contribute an amount of Rs. 10,000, of which a sum of Rs. 5000 was paid by him as contribution towards the Red Cross Fund. The partnership had no smooth course. Ill-feeling arose between the partners and on 23-3-1943 the plaintiff complained before the Sub-divisional Officer of Siwan that the defendants had removed account books of the firm and prevented the plaintiff from making an inspection. The matter was compromised at the intervention of the Sub-divisional Officer and a fresh registered deed of partnership was drawn up on 12-4-1945. It was now agreed between the parties that the plaintiffs share would be eight annas and not twelve annas in the profits and that the partnership would continue till the parties secured separate agencies for salt. The plaintiff alleged that subsequent to the execution of the deed of partnership the defendants attempted to monopolise the salt business and prevented the plaintiff from taking any part in the affairs of the partnership. On 12-9-1945 the defendants filed a petition before the District Magistrate asking that the plaintiff should be restrained from taking delivery of a consignment of salt which had been despatched in the name of the partnership of Ramchandar Ramkumar. The petition was forwarded by the District Magistrate to the Sub-divisional Officer who started proceedings under Section 144, Criminal P. C. The plaintiff appeared in response to the notice and claimed that the consignment of the salt should be delivered half and half to the parties since there was no dissolution of the partnership. The defendants filed a rejoinder petition stating that they had taken delivery of the whole consignment of salt. The proceedings were dropped by the Sub-divisional Officer but on 8-11-1945 the District Magistrate ordered that the salt agency would continue in the name of the firm Ramchandra Ramkumar and separate agency would not be granted to the plaintiff. As the partnership could not be continued in view of the strained feelings between the partners, the plaintiff instituted the present suit for dissolution of the partnership and for accounts to be taken of the partnership business. The defendants contested the suit mainly on the ground that the partnership was dissolved on 18-5-1945 and accounting was made and the dues of the plaintiff were fully paid off. It was claimed on behalf of the defendants that after 18-5-1945 till 10-9-1945 the parties carried on separate business in salt. It was admitted that after 10-9-1945 the plaintiff was not permitted to take delivery of any consignment of salt since the District Magistrate had refused to grant separate agency to the plaintiff. Upon a consideration of the oral and documentary evidence the learned Subordinate Judge held that the partnership was not dissolved on 18-5-1945 that the partnership was, on the contrary, still subsisting and that the plaintiff was entitled to a decree for dissolution of the partnership and for taking of the accounts of the partnership business from 12-4-1945 "up to the date of the actual dissolution of the business of the firm and the taking of the accounts by the pleader commissioner.
3. The first and principal question in this appeal is whether there was dissolution of the partnership on 18-5-1945 and whethe
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