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Madras High Court
NATESAN
M.M.Valliammai Achi - Appellant
Versus
KN.PL.V.Ramanathan Chettiar - Respondent
Decided On : 11/30/1967
PARTNERSHIP - SUIT FOR ACCOUNTS AND SHARE IN IMMOVABLE PROPERTIES - LIMITATION - ARTICLE 106 OF THE LIMITATION ACT, 1908 - WHETHER APPLIES TO A SUIT BY THE LEGAL REPRESENTATIVES OF A DECEASED PARTNER - WHETHER THE CHARACTER OF ANY PARTICULAR ASSET OF THE PARTNERSHIP HAS LITTLE TO DO IN ASCERTAINING THE SHARE TO WHICH A PARTNER OR HIS REPRESENTATIVE MAY BE ENTITLED IN THE PROPERTY OF THE FIRM ON DISSOLUTION.
Fact of the Case:
The suit was filed for partnership accounts and a half share in the immovable properties described in the plaint schedule. The defendants who opposed the action having succeeded in the trial Court but failed with respect to the immovable properties on appeal, have preferred the second appeal.
Finding of the Court:
The partnership in question was dissolved in March 1933 with the death of Valliappa Chettiar. There was no settlement of accounts. The suit immoveable properties were not separated from the assets of the partnership by any agreement between the partners. The sale of the suit properties was not a bona fide one but a fraudulent transaction. The learned District Judge would go further and hold that even if the deposit alleged by the contesting defendants was conceded, Meyyappa Chettiar was not competent to sell away the shares of the plaintiffs and Kuppan Chettiar. This may not be a correct proposition of law, as the surviving partners in the course of winding up can sell the assets of the firm. Section 47 of the Indian Partnership Act continues the authority of partners for the purpose of winding up, and the authority of a partner under that section to do all things necessary for the purpose of winding up the affairs of the firm also includes the rights to sell the partnership property.
Issues: 1. Whether the suit for accounts of the dissolved partnership is barred by limitation? 2. Whether the claim for a share in the suit immoveable properties is barred by limitation?
Ratio Decidendi: 1. The suit for accounts of the dissolved partnership is hopelessly barred by limitation and this is not a case where any claim is made or can be sustained as for profits earned by the utilisation of the deceased partner's interest in a business continued after his death. 2. The only question for consideration is whether the fact that the suit properties, though assets of the dissolved firm, are immovable properties, makes a difference and entitles the plaintiffs to their share in the properties. 3. A partner's or his representative's lien with reference to partnership assets is on the surplus of the assets of the firm and not on any particular item of property belonging to the partnership. 4. On the dissolution of a firm, all the properties belonging to the partnership have to be sold and the sale proceeds after discharging all the partnership debts liabilities, have to be divided among the partners according to their respective shares, and this is the general rule. 5. The lien of a partner is not one on any specific assets of the partnership existing on the death of a partner such as would fetter its conversion into money. 6. The right of a representative of a partner is really a claim against the surplus assets on realisation - whether the surplus assets consist entirely of the proceeds of realisation or whether they include some specific items of property which existed on the death of the partner. 7. The proper remedy of a partner in the circumstances is to have accounts taken to ascertain his share and if the right to sue for accounts is barred by limitation, the partner cannot sue any partner in possession of the assets for a share therein.
Final Decision: The decree and judgment of the learned District Judge have therefore to be and are hereby set aside. The decree and judgment of the learned Subordinate Judge dismissing the suit with costs are restored. The second appeal is accordingly allowed, the two Memoranda of Cross-objections as well as the C. M. A. consequently fail and are dismissed without costs. The parties will bear their respective costs in the lower appellate Court. The appellants are entitled to their costs in this Court, against the contesting respondents that is the 1st plaintiff, and the 2nd plaintiff and the 12th defendant represented by their legal representatives.
JUDGMENT :- The above second appeal arises out of a suit for partnership accounts and a half share in the immovable properties described in the plaint schedule. The defendants who opposed the action having succeeded in the trial Court but failed with respect to the immovable properties on appeal, have preferred the second appeal.
One Valliappa Chettiar, father of the plaintiffs, Kuppan Chettiar father of the 12th defendant, and Meyyappa Chettiar, the deceased husband of the 1st defendant and father of defendants 2 to 11, were doing money lending business from 11-11-1921 in Perambalur under the name and style of 'PL. M. Valliappa Chettiar'. Valliappa Chettiar was entitled to a half share and the other two partners, Kuppan Chettiar and Meyyappa Chettiar, were each entitled to a quarter share. The suit properties were acquired for the moneys due to the partnership under Ex. A-3 in 1924 and formed assets of the partnership. To this extent the facts were admitted.
Valliappa Chettiar died in March 1933 and Kuppan Chettiar, in 1947. According to the plaintiffs who are joined in their case by the 12th defendant in the action, on the death of Valliappa Chettiar, the partnership was reconstituted, the plaintiff taking the place of the father Valliappa Chettiar. Similarly on the death of Kuppan Chettiar in 1947, the partnership was again re-constituted, the 12th defendant stepping into the place of his father. The suit for accounts of the partnership was instituted by the plaintiffs in June 1959, within three years after the death of Meyyappa Chettiar in December 1956. It is the further case of the plaintiffs and the 12th defendant, that on re-constitution of the firm after the death of Valliappa Chettiar, the suit immoveable properties were withdrawn from the partnership and agreed to be enjoyed by the plaintiffs and the two surviving partners as co-owners. On this basis a share in the suit properties was claimed and rendition of accounts of the dissolved partnership was also prayed for.
2. The first defendant and her children, defendants 2 to 11, denied re-constitution of the partnership and withdrawal of the suit properties from the partnership. It was said in defence that on the dissolution, the partnership was wound up by the surviving partners and in discharge of the debt due to one Muthuraman Chettiar the suit properties were sold on 1-2-1935 for a consideration of Rs. 4,000/-. Muthuraman Chettiar owed a sum of Rs. 3,500/- to his sister, the first defendant, towards her Stridhana according to the family custom, and this amount had been deposited with the firm. Subsequently Muthuraman Chettiar sold the properties by his power of attorney agent who was none other than Meyyappa Chettiar to the first defendant under Ex. B-6 on 17-4-1950. The 13th defendant in the suit, a contesting defendant, purchased the properties from the first defendant under Ex. B-7 on 10-11-1958 for a consideration of Rs. 10,500/-. The contesting defendants repudiated the case of the plaintiffs that the deposit, sale and subsequent transactions were all sham and nominal. Maintaining the validity of the sale and its binding nature, it was also pointed out that the suit was barred by limitation. The further case of the contesting defendants was that the partnership was dissolved on the death of Valliappa Chettiar, that there was no re-constitution, and that the accounts of the partnership were settled in December 1933. The sale having been effected in 1935, it is said that there was also adverse possession with reference to the suit properties.
3. The learned Subordinate Judge, Tiruchirapalli, accepted the defence put forward. He found that the suit partnership firm which was dissolved in March 1933 was not re-constituted and continued. He held that the sale under Ex. B-9 was a valid document binding on the partnership having been for a debt due by the partnership to the vendee. The subsequent transfer in favour of the 1st defendant was also held to be justi
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