Methods of ascertaining good will of the firm after dissolution.

T.N. Singaravelu, J.

1. Suit is to recover sum of Rs. 1,16,540,30 ps. with future interest and for another sum of Rs. 1,914.17 p. The plaintiffs' case is this The first defendant, namely, Messrs. G Bell and Company was carrying on business with the two plaintiffs as partners. Defendants 2 and 3 are the other partners of the firm and each of them had contributed Rs. 10,000 towards capital and the total capital was Rs. 40,000. On 30th June, 1977, the partners agreed that the plaintiffs may retire from the partnership and that the defendants 2 and 3 will take the partership firm of Messrs. Bell and Company with all rights and goodwill as a going concern. The goodwill was to be ascertained as per the agreement and half share of the goodwill evaluated shall be paid to the account of the first plaintiff. The accounts were audited and a certificate was issued on 16th August, 1979. Thus, the balance due to the first plaintiff is Rs. 1,10,617.88 p. and to the second plaintiff is Rs. 26,407.48 p. The mode of payment was also agreed to by the partners. The defendants made a part payment and the balance is due as per the plaint. Future interest is claimed at 18 per cent per annum from the due date.

2. The defendants resisted the suit and contended as follows :--The partnership and the retirement of the plaintiffs in 1977 are admitted. It is true that it was agreed that the goodwill shall be evaluated as per the terms of the partnership deed and half share shall be credited to the account of the first plaintiff. But, there was no goodwill of the firm, and therefore, no amount was credited in the books of accounts. The balance sheet itself does not mention anything about the goodwill. These defendants have paid the plaintiffs sums of Rs. 25,000 each and this itself was an excess payment. Thus, the suit claim based on an alleged auditor's certificate, dated 16th August, 1979, is not maintainable in law, since the accounts between the parties have already been settled. The claim of a large sum of money as goodwill is imaginary and untenable. In any event, no interest is payable on goodwill. The suit is also bad for misjoinder of causes of action.

3. The following issues were framed for trial--

1. Whether the suit is maintainable ?

2. Whether the plaintiffs are entitled to the suit claim?

3. Whether the suit is bad for misjoinder of causes of action?

4. To what relief, if any, are the parties entitled?

4. Issue No 2 : The partnership deed, dated 25th April, 1970 (Exhibit P-2) and the retirement of the plaintiffs as partners and the deed Exhibit P-1, dated 29th June, 1977, are not in dispute. The defendants, who are continuing the first defendant firm Messrs. Bell and Company have already paid a sum of Rs. 25,000 to each of the two plaintiffs in a lump sum when they retired. Now, this suit is only for recovery of the amount subsequently ascertained as goodwill by the auditors. Clause 14 of Exhibit P-2 reads that on dissolution of the firm, goodwill shall be assessed as three years' profits of the average of the last five years. As per the auditor's certificate Exhibit P-3 the plaintiffs claim the suit amount payable to them as goodwill. Thus, in short, the amount claimed represents the goodwill which was ascertained by the auditors after the dissolution of the firm as per the agreement.

5. The parties herein have been carrying on business in partnership under the partnership deed, Exhibit P-2. dated 25th April, 1970, and they were selling and packing Honey-rex. The partnership was in existence only for a period of seven years and the partnership was dissolved in June, 1977 under Exhibit P-l. The capital contributed by each of the four partners was only Rs. 10,000, aggregating to a total of Rs. 40,000. Now, the first plaintiff claims a sum of Rs. 1,16,540,30 p. and the second plaintiff claims Rs. 1,914.17 p. as goodwill. This claim is stoutly resisted by the defendants as disproportionate and imaginary.

6. To appreciate this controversy it is nece