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1995 Supreme(Mad) 405
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE ABDUL HADI AND THE HONOURABLE MR. JUSTICE A. R. LAKSHMANAN
M/s. Vaiyapuri Mudaliar and Sons, Avanashi and Others
Versus
M/s. Sri Arunodhaya Textiles, Erode and Others
Appeal No.219 of 1985
Decided On : 06-04-1995
In the case of a partnership at Will, retirement of a partner is possible with the consent of all the other partners under Section 32(1)(a) of the Indian Partnership Act, 1932.
Headnote:
PARTNERSHIP - RETIREMENT - CONSENT OF ALL PARTNERS - SECTION 32(1)(A) OF THE INDIAN PARTNERSHIP ACT, 1932 - INTERPRETATION - PARTNERSHIP AT WILL - METHOD OF RETIREMENT - SECTION 32(1)(C) OF THE ACT - APPLICABILITY - DISTINCTION - AMOUNTS PAYABLE TO RETIRING PARTNERS - DETERMINATION - EVIDENCE - ADMISSIONS - ACCOUNT BOOKS - FAILURE TO PRODUCE - ADVERSE INFERENCE - INTEREST - CLAIM - WAIVER - COURT-FEES ACT, SECTION 52(3).
Fact of the Case:
Plaintiffs 2 to 6, partners of a rice mill firm, retired from the 1st defendant firm, a wholesale cloth business, with effect from 13-4-1979. The 1st defendant firm was managed by T.R. Arthanari Mudaliar and A. Balasundaram till the former's death on 7-5-1979 and thereafter by defendants 2 to 6. The plaintiffs claimed a sum of Rs. 3,06,973.40 towards their share of profits and interest thereon, besides a sum of Rs. 52,627.30 towards their share capital. The defendants denied the retirement of plaintiffs 2 to 6 and contended that the 1st defendant firm was a partnership at Will and that the only method of retirement was by giving notice in writing to all the other partners under Section 32(1)(c) of the Indian Partnership Act, 1932 (the Act).
Finding of the Court:
The Court held that the retirement of plaintiffs 2 to 6 was with the consent of all the other partners and that Section 32(1)(a) of the Act applied to the facts and circumstances of the case. The Court further held that the amounts claimed in the plaint were the amounts reflected and borne out in the records and statements of accounts of the 1st defendant firm and that the defendants had agreed to pay the same. The Court also held that the plaintiffs were entitled to interest at 15% per annum from the date of retirement till the date of suit, but that the claim for interest for the period from the date of plaint till the date of decree was waived by the plaintiffs' counsel.
Issues: 1. Whether plaintiffs 2 to 6 had retired from the 1st defendant firm with effect from 13-4-1979? 2. Whether plaintiffs 2 to 6 are entitled to the amounts prayed for in the plaint? 3. Whether, the plaintiffs are entitled to interest and if so, for what period and at what rate?
Ratio Decidendi: 1. Section 32(1)(a) of the Act provides for retirement of a partner with the consent of all the other partners. In the present case, the retirement of plaintiffs 2 to 6 was with the consent of all the other partners, as evidenced by Exs. A-1, A-2, A-44 to A-47, A-17, A-69, and A-72. 2. The amounts claimed in the plaint were the amounts reflected and borne out in the records and statements of accounts of the 1st defendant firm, as seen from Exs. A-40 and A-41. The defendants had also agreed to pay the same, as evidenced by Exs. A-1, A-2, A-45, and A-46. 3. The plaintiffs were entitled to interest at 15% per annum from the date of retirement till the date of suit, as the 1st defendant firm was paying interest at that rate even prior to suit.
Final Decision: The appeal was allowed and the suit was decreed as prayed for, save interest for the period from 12-4-1982 to 31-8-1984.
A.R. LAKSHMANAN, J.
The unsuccessful plaintiffs are the appellants in this appeal. The 1st plaintiff is a firm carrying on a rice mill business at Avanashi. Plaintiffs 2 to 6 are the partners of the said firm, being the sons and grandsons of one V.S. Vijyapuri Mudaliar. The 1st defendant is a firm carrying on a wholesale cloth business at Erode. The same was started during 1968. The partners of the said firm were composed of the family members of V.S. Viyapuri Mudaliar and T.R. Arthanari Mudaliar. On 7-5-1979, T.R. Arthanari Mudaliars widow the 5th defendant and his last son the 6th defendant have been taken as partners. The 1st defendant firm was managed by T.R. Arthanari Mudaliar and A. Balasundaram till the formers death on 7-5-1979 and thereafter by defendants 2 to 6.
2. According to the plaintiffs, the profits and other sums due by the 1st defendant firm to plaintiffs 2 to 6 used to be credited from time to time in the 1st defendants firms accounts in the firm name of M/s. Vaiyapuri Mudaliar and Sons, the 1st plaintiff, since plaintiffs 2 to 6 have been carrying on business in partnership in the said firm name instead of in the individual names. The same procedure and practice was also adopted in the books of the 1st plaintiffs firm for the sake of convenience and pursuant to the understanding between the parties. It is the case of the plaintiffs that plaintiffs 2 to 6 retired from the 1st defendant firm with effect from 13-4-1979 and a sum of Rs. 3,06,973.40 was found owing by the 1st defendant firm to plaintiffs 2 to 6 towards the share of their profits together with interest on the same, besides a sum of Rs. 52,627.30 towards their share capital. The said two sums were also shown as outstanding in the 1st plaintiffs accounts as bring due by the 1st defendant firm. T.R. Arthanari Mudaliar who was in the management of the firm, undertook to pay the said sum together with interest at 15% on the same and also the share capital of Rs. 52,627.30 to plaintiffs 2 to 6 as early as possible. Unfortunately, he died on 7-5-1979 and the 1st defendant firm was reconstituted with defendants: 2 to 6 as its partners, who also agreed to discharge the suit liabilities.
3. It is the further case of the plaintiffs, that pursuant to the undertaking, the 1st defendant has been remitting into the accounts of the 1st plaintiff firm, for and on behalf of plaintiffs 2 to 6 amounts from time to time by means of cash, cheques and drafts in liquidation of their liability. Further, the defendants have also got to pay a sum of Rs. 52,627.30 towards refund of share capital to plaintiffs 2 to 6 together with interest at 15% per annum. In spite of repeated requests, the defendants did not pay the amounts outstanding: The plaintiffs issued a registered lawyers notice dated 15-12-1981 to defendants 2 to 6 calling upon them to pay the aforesaid sums. The 2nd defendant alone sent a reply dated 5-2-1982. The plaintiffs prayed for a decree directing the defendants to pay plaintiffs 2 to 6 the suit claim of rupees 2,85,610.14 together with interest at 15% per annum on the sum of Rs. 2,85,610.14 from the date of suit till date of payment together with costs.
4. Defendants 1 and 3 to 6 filed a common written statement. According to them, plaintiffs 2 to 6 did not retire from the 1st defendant firm. The 1st defendant firm is a partnership at Will. Section 32 of the Indian Partnership Act, 1932 (hereinafter referred to as the Act) inter alia interdicts that any partner of a firm at Will can retire from the firm giving notice in writing to all the other partners of the firm of his intention to retire. No such notice was ever given nor even claimed to have been given by plaintiffs 2 to 6. There is no legal, factual or valid retirement of plaintiffs 2 to 6 from the 1st defendant firm. The death of T.R. Arthanari Mudaliar also did not dissolve the firm in law, nor plaintiffs 2 to 6 ceased to be the partners of the 1st defendant firm. Plaintiffs 2 to 6 wer
