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1938 Supreme(Mad) 48

IN THE HIGH COURT OF MADRAS
Madhavan Nair, J.
Chockalingam Chettiar
Versus
Meyappa Chettiar and Ors.
Decided On : 28.01.1938

Headnote:

Partnership - Suit for contribution - Dissolution of partnership - Liability of partners - Pious obligation of son to pay father's debt - Applicability of law of partnership to claim of contribution - Scope and effect of Privy Council decision in Gopala Chetty v. Vijayaraghavachariar - Whether plaintiffs entitled to contribution against defendants.

Fact of the Case:

A partnership firm was dissolved in 1908. In 1912, a creditor of the firm obtained a decree against the partners, including the plaintiffs, who were the sons of one of the partners. The plaintiffs paid the decree amount in 1923 and filed a suit for contribution against the other partners. The defendants contended that the suit was barred by limitation as the suit for taking partnership accounts was barred. The lower Court held that the plaintiffs were not entitled to contribution. On appeal, the High Court held that the plaintiffs were entitled to contribution.

Finding of the Court:

The High Court held that the plaintiffs were entitled to contribution. The Court held that the Privy Council decision in Gopala Chetty v. Vijayaraghavachariar did not apply to the present case as the plaintiffs were not partners and their claim was not based on any right as a partner. The Court also held that the law of partnership did not apply to the claim of contribution as the partnership had been dissolved and the plaintiffs were not seeking to enforce any right as a partner.

Issues: 1. Whether the plaintiffs were entitled to contribution against the defendants? 2. Whether the suit for contribution was barred by limitation?

Ratio Decidendi: 1. The Court held that the plaintiffs were entitled to contribution against the defendants. The Court held that the Privy Council decision in Gopala Chetty v. Vijayaraghavachariar did not apply to the present case as the plaintiffs were not partners and their claim was not based on any right as a partner. The Court also held that the law of partnership did not apply to the claim of contribution as the partnership had been dissolved and the plaintiffs were not seeking to enforce any right as a partner. 2. The Court held that the suit for contribution was not barred by limitation. The Court held that the right to contribution accrued to the plaintiffs only when they paid the decree amount in 1923 and the suit was filed within three years from that date.

Final Decision: The appeal was allowed and the plaintiffs were held entitled to contribution against the defendants.

JUDGMENT

Madhavan Nair, J.

1. The 1st plaintiff is the appellant. This appeal arises out of a suit instituted by the plaintiffs to recover from the 3rd defendant personally and from defendants 1 and 2 out of the family properties Rs. 17,358 with subsequent interest at 12 per cent, per annum or in the alternative to recover from all the defendants 14/20th of the said amount with interest by way of contribution in respect of a decree debt discharged by the plaintiffs in execution of the decree in Appeal No. 296 of 1917 on the file of the High Court (see Ex. F). In the plaint the share of the debt claimed by way of contribution is 17/20, but in the argument the claim was altered to 14/20 accepting the contention of the defendants.

2. S.A. Subrahmanya Chetty and S.N. Subrahmanya Chetty, the 3rd defendant in the suit, sons of two brothers, started a money-lending firm at Singapore under the name and style of S.N.A. with a capital of more than six lakhs of dollars. The agents of the firm from 1901 to 1908 were successively Avadiappa Chetty and Jayangondan. They, as well as S.A. Subrahmanya Chetty, one of the partners, are now dead. Plaintiffs 1 and 2 in the present suit are the son and the grandson by a predeceased son of Avadiappa Chetty. Defendants 1 and 2 are the sons of Jayangondan. On the death of S.A. Subrahmanya Chetty, his mother adopted the 4th defendant as son to her husband Subrahmanya Chettys father, and his widow adopted the 5th defendant as son to Subrahmanya Chetty himself. For the purpose of benefiting their agents it was the custom with these partners to start smaller firms in which their firm as well as the agents became partners. During the time of Avadiappa Chetty, S.N.A. firm and himself carried on such a partnership under the style of V.R.M.A. firm. We are not directly concerned with that firm in the present case. Avadiappa Chetty was agent till about the end of May, 1903. He was succeeded by Jayangondan. After the latter became the agent of the S.N.A. firm, a smaller firm, V.R.M.A.S. was started. It had a capital of 20,000 dollars. This is the firm with the dealings of which we are concerned in this appeal. The partners of this firm were S.N.A. firm, Avadiappa Chetty and Jayangondan. The plaintiffs stated that the shares of the partners in this firm were S.N.A.s share 7 and 7, Avadiappa Chetty and Jayangondans share 3 and 3. The defendants contended that the shares were in the proportion of 5, 5, 6 and 4. At the trial the plaintiffs admitted that the shares were in the proportion stated by the defendants. On the 11th November, 1904, S.A. Subrahmanya Chetty of the S.N.A. firm, died leaving a will. Afterwards the 3rd defendant for all practical purposes continued to manage the S.N.A. firm through the agent Jayangondan, who, it will be observed, was a partner of the firm of V.R.M.A.S. along with Avadiappa Chetty and S.N.A. firm and was also the manager of V.R.M.A.S. firm.

3. After a litigation which lasted from 1907 to 1912, Ramaswami Chetty, the executor of S.A. Subrahmanya Chetty, obtained probate of his will which was confirmed by the Privy Council on 21st February, 1916. In the meanwhile Subrahmanya Chettys widows attorney sued the 3rd defendant for a declaration that the S.N. A. firm had become dissolved by reason of Subrahmaniya Chettys death and for accounts of the partnership. The present 3rd defendant contended that the suit was barred by limitation and got it ultimately dismissed by the Privy Council on 2nd March, 1916, on that point.

4. After Jayangondan became the agent of S.N.A. firm he was also the adathi agent of M.S.A.M. firm of Meyappa Chetty. As such agent he lent 3,000 dollars of M.S.A.M. firms money to V.R.M.A.S. firm on the 29th February, 1908. At about this time both the S.N.A. firm and the V.R.M.A.S. firm had suffered heavy losses. In November, 1908, Jayangondan retired and his liabilities were taken over by the 3rd defendant on behalf of the S.N.A. firm. On Jayangondans retirement the 3rd defen













































































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