PATNA HIGH COURT
Kanhaiya Singh and Ramratna Singh JJ.
Ram Prasad Singh
Versus
Shivanandan Misra
Appeal From Appellate Decree No. 925 of 1958 ;
Decided On : NOVEMBER 03, 1962
PARTNERSHIP - CONTRIBUTION - RIGHT OF TRANSFEREE OF SHARE IN PARTNERSHIP BUSINESS - PAYMENT OF DUES OF FIRM - NO RIGHT TO CLAIM CONTRIBUTION FROM OTHER PARTNERS - INDIAN PARTNERSHIP ACT, 1890, SECS. 19, 29, 31, 69.
Fact of the Case:
Plaintiff purchased half share of defendant 2 in a partnership hotel. Plaintiff paid rent and electric charges from his own pocket. Plaintiff sued for contribution from both defendants. Trial court granted decree against defendant 2 only.
Finding of the Court:
Plaintiff was not a partner in the firm and had limited rights as a transferee. Plaintiff had no right to interfere in the conduct of the business or to claim contribution. Defendant 2 could not claim contribution and his assignee could not do so either. Plaintiff was not liable towards the creditors of the firm. Plaintiff's payment of dues was gratuitous.
Issues: Whether the plaintiff, as a transferee of a share in a partnership business, had the right to claim contribution from the other partners for payments made by him towards the dues of the firm.
Ratio Decidendi: A transferee of a share in a partnership business is not a partner and has limited rights. He cannot interfere in the conduct of the business or claim contribution. The act of a partner to carry on the business of the firm in the usual way binds the firm, but this authority does not empower him to admit any liability in a suit or proceeding against the firm. The plaintiff's payment of dues was gratuitous as he was not liable to make any payment and had no interest in doing so.
Final Decision: Appeal dismissed with costs.
Kanhaiya Singh, J.
1. This appeal by the plaintiff arises out of a suit for declaration. The facts found by the courts below, which are no longer in dispute, are these :
2. Defendants 1 and 2 owned and ran in partnership a hotel called New Milan Hotel in mohalla Muradpur holding half share each. The rent of the house, in which the hotel was located having fallen in arrears, the landlord instituted a proceeding for their eviction on the ground of non-payment of rent. During the pendency of the proceedings, the plaintiff purchased the half share of defendant Mo, 2 in the said hotel by a registered deed of sale dated the 6th April, 1950. On 15th September, 1950, the plaintiff paid Rs. 975/- to the landlord as rent from September, 1949 to the date of the payment and in consequence whereof the proceedings for eviction were dropped. The plaintiff further paid rent from his own pocket from September, 1950 to January, 1951 at the rate of Rs. 75/- per month. He further paid Rs. 200/4/-on account of electric charges from January, 1950 to January, 1951. The plaintiff thereafter brought the present suit on 20th February, 1951, claiming contribution from the defendants on the ground that they were benefited by these payments and he was entitled to recover all the amounts due from defendants 1 and 2. He accordingly claimed Rs. 738/12/- from defendant No. 1 and Rs. 293/2/- from defendant No. 2.
3. Both the courts below granted the plaintiff a decree against defendant No. 2 only. They disallowed his claim against defendant No. 1 on the ground that he was not liable to contribute. Hence this appeal by the plaintiff.
4. Learned counsel for the appellant contended that after having acquired the interest of defendant No. 2 in the partnership business, the plaintiff was interested in payment of the dues which the defendants were liable to pay and accordingly he was entitled in law to be reimbursed by both the defendants in proportion to their shares in the amount claimed. This argument is based on the provisions of Sec. 69 of the Indian Contract Act. Learned counsel for the respondents, on the other hand, contended that the plaintiff had no right to claim contribution from defendant No. 1 and relied upon a Bench decision of this Court in the case of Mst. Jagpati Kuer V/s. Sukhdeo Prasad, AIR 1942 Pat 204. In this case it has been laid down by their Lordships that where one of the partners pays off a partnership debt, his only remedy against the other partners in respect of such debt is by way of suit for account or dissolution and not suit for contribution. Learned counsel for the appellant did not challenge the above proposition of law, but contended that the plaintiff is not a partner in the firm, and, therefore, there is no provision in law against his claim for contribution. His case is that as a transferee he had the right to run the partnership business by making these payments. It is true that assignment of the interest in a partnership does not ipso facto entitle the transferee to become a partner in the firm. Me, as the transferee of a share of a partner, has got very limited rights. As laid down in Sec.31 of the Indian Partnership Act, no person shall be introduced as a partner into a firm without the consent of all the existing partners. In this case it has been found by the courts below that the plaintiff was not admitted by both the defendants as a partner in the said firm. He was, therefore, not a partner in the firm and as a transferee he had very limited rights. All that he was entitled to was a right to claim a share of the profit to which the transferring partner would be otherwise entitled to. As provided in Sec.29 of the Indian Partnership Act such a transferee had no right to interfere in the conduct of the business, or to require accounts, or to inspect the books of the firm. The transfer only entitles him to receive the share of the profits of the transferring partner. He cannot even question the accounts as settled
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