Abeyagoonesekera Et Al V. Mendis Et Al.,

Present  : Ennis J. and De Sampayo J.   1915.

ABEYAGOONESEKERA et al. v. MENDIS et al.

366-D. C. Kandy, 23,632.

Partnership action-Capital over Rs. 1,000-Agreement not in writing-May defendant in his answer admit the partnership, and raise the objection that the agreement it void for want of a written agreement ?

In a partnership action, the admission in his answer of the existence of the partnership by a defendant does not prevent him from setting up by way of defence the Ordinance of Frauds and Perjuries, where the agreement is not in writing and the capital of the partnership is over Rs. 1,000.

THE facts are set out in the judgment.

Bawa, K.C. (with him A. St. V. Jayewardene), for plaintiffs, appellants.

H. Fernando, for first and second defendants, respondents.

Schneider, for third defendant, respondent.

Bartholomeusz, for the fourth defendant, respondent.

Cur. adv. vult.

November 9, 1915. DE SAMPAYO J.-

This is a partnership action. The plaint stated that the first plaintiff, the defendants, and two others named John Fernando and Don Juanis Appuhamy, had carried on business in partnership as toddy renters from July 1, 1912, to July 31, 1913, under articles of partnership dated June 28, and that at the expiry of the said period the first plaintiff and the defendants continued the said business on certain terms until September 30, 1914, when the alleged partnership was dissolved; and the prayer was for the ordinary partnership accounting. The second plaintiff was joined in the action, as the first plaintiff had assigned his interest to him on February 28, 1914. The defendants pleaded severally. In their answers the defendants in limine took the legal objection that, the capital of the business being admittedly above Rs. 1,000, the action could not be maintained in the absence of a written agreement of partnership, as required by section 21 of the Ordinance No. 7 of 1840. The first three defendants proceeded to admit the agreement to. carry on business as toddy renters in partnership, but denied the correctness of some of the alleged terms, and the fourth defend-ant pleaded similarly, but as regards the agreement he emphasized

the fact that it was an invalid parol agreement. At the trial the legal objection was stated as a preliminary issue, and the District Judge, in view of the resent judgment of the Privy Council in Pate v. pate.1[(1915) 18 N. L. R. 289.] decided it against the plaintiffs and dismissed the action.

The appeal is supported on two grouds: (1), that the partnership since, July, 1913, was only a continuation of the partnership constituted by the articles of partnership of June 28, 1912, and therefore the requirement of section 21 of Ordinance No. 7 of 1840 was satisfied; and (2), that the writing provided for by the Ordinance was only a matter of evidence, and that as the agreement was admitted by the defendants the action was maintainable under the proviso to section 21 for the purpose of settling accounts between the partners.

With regard to the first ground, it is to be noted in the first place that the partnership constituted by the written agreement of June 28, 1912, was for the purpose of carrying on certain specific toddy rents for the period ending July 31, 1913, on the footing of licenses already obtained in the name of some of the parties. In the next place, the continuation of the business was not tacit, but a new-agreement for the further period of fifteen months was, according to the plaint, entered into. Moreover, the new agreement was neither among the same parties nor, as may be seen from a comparison between the statements in the plaint and the previous written agreement, upon the same terms. The purpose of the new agreement was to buy as many new rents as possible for the further period of fifteen months. New capital was contributed in different proportions, and the shares and interests

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