1961 Present : Gunasekara, J., and Sinnetamby, J.

R. W. PATHIRANE, Appellant, and A. PATHIRANE, Respondent

S. C. 351/85-D. G. Kurunegala, 5810JM

Partnership-Dissolution-Action for accounts-Correct procedure-Effect of non-production of accounts-Distribution of assets--Division of profits-Partnership Act, ss. 29, 42-Civil Procedure Code, ss. 202, 430, 431, 508, 511 510, 615.

Plaintiff and defendant carried on a business as partners. The defendant was the managing partner. The plaintiff instituted the present action averring the dissolution of the partnership and asking that the accounts of the partnership be taken. He also asked for distribution of the assets and for division of profits.

Held, (i) that, when a partner states that accounts have not been rendered and asks for the taking of accounts, the Court should first make an order directing accounts to be rendered from the date from which it finds that they have not been rendered. In such cases the procedure prescribed by sections 202, 430, 431, 508, 511, 513 and 615 should be followed.

(ii) that if a partner has books or accounts in his possession and fails to submit any accounts to the Court, the Court is entitled to draw inferences adverse to the accounting party.

(iii) that the defendant was liable to share with the plaintiff the profits he made by fraudulently obtaining a renewal in his own name of certain agreements which the partnership had with a third party.

(iv) that, in the present case, as assets had not been distributed at the time of the action, the plaintiff was entitled to recover profits up to the date of the decree and, thereafter, legal interest on the aggregate sum found due to him.

APPEAL from a judgment of the District Court, Kurunegala.

H. W. Jayewardene, Q.C., with N. R. M. Dalutoatte, for the defendant-appellant.

E. B. Wikramanayake, Q.G., with T. W. Rajaratnam, for the plaintiff-respondent.

Cur. adv. vult

July 25,1961. SINNETAMBY, J.-

The plaintiff and defendant were partners and carried on a business, under a partnership agreement marked PI bearing No. 285 dated 30th December, 1942. The nature of their business involved the sale of petrol and other products of Caltex (CEYLON) Ltd. in premises belonging to the Caltex Company. They were permitted to use the equipment provided by the company on payment of a nominal hire and were subject to the conditions set out in the agreements entered into between the partnership and Caltex (CEYLON) Ltd. embodied in the documents. Dl, D3 and D14. The partners were, for the purpose of this business regarded as the business agents of the Caltex company, though in point of fact, they were not agents in the lega sense. Differences appear to have arisen between the partners and the plaintiff had instituted an action against the defendant in the District Court of Kurunegala on 18th August, 1948, claiming profits for the three years ended 31st March, 1948. He obtained a decree in November, 1954, in a sum of Rs. 10,550 on account of his share of the profits. In the meant me, on 10th September, 1948, the defendant gave the plaintiff, in terms of the partnership agreement PI, three months notice terminating the partaership as from 10th December, 1948.

The present action was instituted prior to the decree in that case on 25th August, 1949, averring the dissolution of the partnership and asking that the accounts of the partnership be taken. The plaintiff also asked for distribution of the assets and for division of profits.

The defendant, according to the partnership agreement, was the managing partner and it is not denied that he kept books ; indeed, in "the earlier action he produced his books to a firm of chartered accountants who reported on them to the court. Even in the present action he called as a witness a gentleman employed in a firm of accountants and submitted a statement prepared by him. The plaintiff averred that the defendan