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1925 Supreme(Mad) 449
IN THE HIGH COURT OF MARAS
V M Trotter, V Sastri
Umamkeswara Mudaly
Versus
Muniswami Mudaly
Decided On : 25 August, 1925
Interest allowances in dissolution of partnership must be in accordance with established legal authority and practice.
Headnote:
Interest Allowance - Dissolution of Partnership - The court disallowed interest on monies drawn from partnership funds and interest on certain advances up to the date of the final decree, citing clear authority in Meymott v. Meymott and Barfield v. Loughborough.
Fact of the Case:
The learned Judge made errors in allowing interest on monies drawn from partnership funds and interest on certain advances up to the date of the final decree in a suit for dissolution of partnership.
Finding of the Court:
The court found that the interest allowances made by the Judge were not in line with established legal authority and practice.
Issues: Errors in interest allowances in the final decree of a suit for dissolution of partnership.
Ratio Decidendi: The court disallowed the interest allowances based on clear legal authority in Meymott v. Meymott and Barfield v. Loughborough.
Final Decision: The decree was amended to disallow the interest allowances and to allow interest at 9 per cent. up to the date of the preliminary decree, and at the usual rate of 6 per cent. interest thereafter.
1. In this case the learned Judge in making his final decree in a suit for dissolution of partnership has made two errors in taking the accounts. In the first place he has allowed interest on monies drawn by a partner from the partnership funds--be it capital or interest, it does not matter--a thing which it is not the practice to allow unless it is so provided in the deed. There is clear authority in the case of Meymott v. Meymott (1862) 54 E.R. 1211 : 31 Beav. 445 : 32 L.J.Ch 218 : 9 Jur.(N.S.) 426 : 135 R.R. 515. The other thing he has allowed is interest on certain advances up to the date not of the dissolution which had been effected by the preliminary decree but right up to the date of final decree. For that again there is clear English authority, Barfield v. Loughborough (1873) 8 Ch. 1 : 42 L.J.Ch.l79 : 27 L.T. 499 : 21 W.R. 86 that such allowances cannot be made. The decree will be amended by disallowing those two items, interest at 9 per cent. being allowed up to the date of the preliminary decree. After that date the usual rate of 6 per cent. interest will be allowed.
