(Delivered by Viswanatha Sastri, J.)
This is an appeal by the defendants from the preliminary decree in O.S No. 84 of 1942 on the file of the Court of the Subordinate Judge of Devakottai, The suit was instituted on 9th September 1939 in that Court but subsequently transferred to the Court of the Subordinate Judge of Ramnad and again re-transferred to the Court of the Subordinate Judge of Devakottai and numbered as above. The plaintiffs prayed for the taking of the accounts of a partnership which stood dissolved on 23rd May 1927 by the death of a partner whose interest had devolved on them. The appeal is mainly directed against the directions contained in the judgment and decree of the Court below as regards the taking of the accounts of the dissolved firm.
The parties to the suit are Nattukottai Chettis, well known indigenous bankers of South India, mostly resident in the districts of Madura and Ramnad, whose business activities however extend to Burma, Ceylon and the Federated Malay States. They carry on money-lending business abroad, mostly through agents, with their oor kadai or headquarters in their native place. The usual practice is for an agent to serve for a term of three years under a salary chit fixing his remuneration for the said period. At the end of the three years period or earlier, if for any reason, the agency is terminated, the retiring agent closes the account and prepares an ainthogai or balance-sheet. The retiring and the incoming agents settle the valuation of the outstandings and the other assets, with the approval of their principal, and the incoming agent takes them over at that valuation and conducts the business, collects the moneys lent by his predecessor and lends out moneys to borrowers who are, for the most part, owners of agricultural lands and plantations in and around the place where the money-lending business is carried on. In many cases these Nattukottai Chetti money-lenders are obliged to realise their outstandings only by taking a conveyance of lands belonging to their debtors. The lands so acquired by way of realisation are often treated as an asset of the money-lending business and the income derived therefrom is also carried into the accounts of the business and forms part of the profits. Sometimes lands are also acquired as an investment. The value of the lands fluctuates according to the current price of paddy, rubber or other produce grown on the lands. In consequence of the Japanese occupation of Burma and other parts of south-east Asia, during the last war, and the subsequent developments in those countries, landed properties situated there and owned by Indian Nationals have lost much of their value and attractiveness, as is apparent from the course of this litigation.
In the year 1916 Valliappa Chettiar the father of the first plaintiff and Alagappa Chettiar, the father of the first defendant started a money-lending business in partnership with a capital of Rs. 25,100. The said business was carried on at a place called Theinzig in Burma, under the vilasam (name and style) of RM. P. Alagappa's share in the partnership was Rs. 0-10-9 and Valliappa's share was Rs. 0-5-3 out of a total of sixteen annas. Alagappa died in 1925, but his sons Narayana, the father of the third defendant and Kasi alias Alagappa, the first defendant, took his place in the partnership and the business was carried on as before though, for legal purposes, it was a fresh partnership. Valliappa died on 23rd May 1927 leaving behind him his widow and an only son, Ramanathan alias Srinivasan, then a minor and now a major, but throughout a deaf, dumb and mentally defective person, After the death of Valliappa, the business was attended to by Narayana, the first defendant's elder brother, till he died in 1936. Whether the business was carried on after the 23rd May 1927 by Narayana or whether it was merely wound up by him, is one of the points in dispute between the parties. Ramaswami Chetti was an agent of the RM. P. firm during 1916 to 1919. Valliappa himself managed the business from 1919 to 1922. Ramaswami went out as agent again in 1922 and looked after the business till 1925. Valliappa again took charge of the business from 1925 till September 1926 when he left Burma for good and Ramaswami was employed as the local agent thereafter. Ramaswami continued to attend to the business from December 1926 till October 1932. Valliappa died, as above stated, on 23rd May 1927 leaving a will and purporting to appoint an agnatic relation of his, by name Venkatachala Chetti, and another person, by name Lakshmanan Chetti, as the executors of his will. Lakshmana does not appear to have functioned as an executor though Venkatachala professed to act as such on a few occasions.
The present suit was instituted by Ramanathan alias Srinivasan, the son of Valliappa, acting through a next friend, as the first plaintiff, Meyyammai Achi alias Sigappi Achi, brother's widow (since deceased) of Valliappa as the second plaintiff, and her adopted son as the third plaintiff, for the taking of the accounts of the dissolved firm of RM. P. at Theinzig and incidental reliefs. The second and third plaintiffs claimed to be entitled to a moiety of Valliappa's interest in the partnership by reason of a compromise in O.S No. 14 of 1939 on the file of the Court of the Subordinate Judge of Devakottai, entered into between the present plaintiffs inter se. The first defendant in the suit is the second son of Alagappa, the second defendant being the son of the first defendant. The third defendant is the son of Narayana, the first defendant's elder brother, who died in 1936. It is common ground that the RM. P., firm stood dissolved on 23rd May 1927. It may here be stated that the first defendant and his elder brother Narayana, had an extensive money-lending business of their own at Rangoon with their own vilasam of RM. P., and they also started their own separate money-lending business at Theinzig with the RM. P., vilasam, in the latter half of 1930, in the premises of the dissolved RM. P., firm. In addition to their share in the nett assets of the RM. P., firm as on 23rd May 1927, the date of its dissolution, the plaintiffs claimed an account of the “profits and interest”, alleged to have been earned by the first defendant and Narayana, by continuing to carry on the money-lending business with the property and assets of the dissolved firm.
The defendants admitted the partnership and its dissolution as alleged by the plaintiffs, but pleaded that no fresh business was done after the death of Valliappa in May 1927, except so far as it was necessary for and incidental to, the winding up of the dissolved firm's affairs and no portion of the assets of the dissolved firm nor any of its facilities, had been used by them for their own business started in 1930. They stated that some of the outstandings of the dissolved firm were taken over by them for their full value and carried into their individual business in 1930 with the consent of Venkatachala, the executor under the will of Valliappa, as well as the agent of his widow, who herself was the natural guardian of the first plaintiff. They further alleged that the liabilities of the firm on the date of its dissolution exceeded its assets. They also pleaded that the suit which was brought in 1939 was barred by limitation by reason of the existence of the executor Venkatachala who was competent to give a discharge. This last plea of the defendants was, however, negatived by this Court in its judgment in App. No. 132 of 1943, the ground of decision being that the properties were joint family properties, which Valliappa had no right to dispose of by will and that Venkatachala was not, therefore, a validly appointed executor.
Several issues were framed in the suit and the Court below passed a preliminary decree on 21st December 1942 declaring that the partnership stood dissolved on 23rd May 1927, declaring the proportionate shares of the several parties and directing the defendants to render an account. Issues 7 to 14 were, however, reserved for consideration “at the time of the passing of the final decree”. It would be seen from a perusal of these issues extracted in paragraph 2 of the judgment now under appeal, that many of the issues so reserved for consideration, should have been determined by the trial Court before the passing of the preliminary decree. Its omission so to decide them has resulted in an incomplete report of the Commissioner appointed to take accounts. His report is dated 31st January 1944. The report having been found to be unacceptable to the Court below, it has now passed a fresh preliminary decree dated 20th August 1946 giving fresh directions for taking the accounts of the dissolved firm of RM. P., and it is against this decree that the present appeal has been preferred by the defendants.
The findings of the Court below on the matters in controversy between the parties may be summarised as follows: The accounts have to be taken on the basis of the dissolution of the RM. P. firm on 23rd May 1927. Instead of winding up the affairs of the firm, the surviving partners, namely, the first defendant and his brother, Narayana, Continued to carry on the money-lending business after May 1927 on a larger scale than before. The continuance of the business was with the moneys and assets of the dissolved firm as well as moneys advanced by the surviving partners out of their individual shop at Rangoon. Such continuance of the business was not authorised by the plaintiffs or any one legally competent to act on their behalf. Venkatachala, though interested in the plaintiffs as a relation, did not in fact and could not, in law, have authorised the continuance of the business and was not fully conversant with the state of the business after 1927 though he was in a position to know generally that business was being carried on. By continuing the business instead of winding it up, the defendants had committed a breach of their fiduciary duty to the representatives of their deceased partner and by utilising the assets of the dissolved firm for continuing the old business and for their own individual RM. P. business at Theinzig, they had made themselves liable to render a special account on the footing of wilful default. The plaintiffs had a right either to claim their share of the profits earned by the subsequent conduct of the business with the assets of the dissolved firm or interest at 6 per cent on their entire share of the assets of the dissolved firm from the date of its dissolution. The plaintiffs had not elected to take a share of the profits in their plaint and were therefore entitled to claim interest at 6 per cent, or at the nadapu rate, whichever was less, such interest to be calculated on the value of their share of the entire partnership assets as they stood on 23rd May 1927, in addition to their proper share of such assets. The Court also held that, wherever fresh advances by way of loans had been made to the old customers of the firm after the dissolution, subsequent payments made by the debtors should be appropriated in their entirety to the debts of the old firm which must be treated as realised to that extent in cash. With reference to the lands that had been acquired by the firm before 1927, the defendants were found to have taken them over at a valuation and debited themselves with such value in the accounts of the firm and credited their oor kadai account. They were therefore held liable to account for the market value of the said lands at the rate prevailing in 1928 where they took over the lands. With regard to the garden and the buildings in which the firm was doing business, the Court held that the defendants who started their own individual business in the same premises in 1930 were liable to account to the plaintiffs for the full value of those properties as it stood in 1930, subject to a small deduction by way of occupation rent in respect of the business relating to the winding up of the dissolved firm.
Mr. Bhashyam, the learned Advocate for the appellants, challenges the correctness of these findings of the Court below. He does not dispute that there was a dissolution of the partnership by the death of Valliappa Chettiar on 23rd May 1927. He, however, contends that the business of the firm was only wound up by the surviving partner Narayana in the usual manner and no fresh business was carried on after the dissolution of the firm. He states that the Courts below, in arriving at a finding adverse to the defendants on this point, has not kept in view the following circumstances. The RM. P, firm carried on a widespread money-lending business which it was not possible to close down in a short time without incurring heavy loss and the winding up had therefore to be done gradually. In order to realise the old outstandings, fresh advances had to be made to customers in many cases and security taken. In other cases lands had to be purchased by way of realisation of outstandings and fresh sums had to be advanced to the old debtors to enable them to discharge their dues to the firm and to other creditors as well. Nattukottai Chetti principals conduct their business of money-lending in foreign parts through agents on whom they have to rely. The agent Ramaswami who had been selected by Valliappa himself for carrying the business of the RM. P. firm at Theinzig was left in charge of the winding up of the firm after the death of Valliappa, and he managed the affairs of the firm according to the usual course of business and he did his best in the circumstances, to gradually wind up the business. The surviving partners themselves were residents in British India and could only exercise some sort of general control or supervision from here. Mr. Bhashyam further contends that Venkatachalam Chetti, the executor appointed by the will of Valliappa, functioned as such and he was also the agent of Valliappa's widow who was the natural guardian of her son, the first plaintiff. Venkatachala was looking after the interests of the plaintiffs and acquainting himself with the way in which the affairs of RM. P. firm were managed by the agent Ramaswami Chetti after May 1927. He refers to the correspondence between Venkatachala and Ramaswami evidenced by Ex. D. 33(a) (9-5-1928); D. 43(a) (20-6-1928); D. 43(b) (17-7-1928); D. 43-f (20-2-1929); D.8(a) (12-12-1928); D. 43(j) (27-8-1929). D. 43(m) (18-12-1929), D. 43(n) (1-4-1930) and D. 43(o) (17-4-1930). Mr. Bhashyam contends that though fresh loans were advanced and properties were acquired after May 1927, they were all incidental to and necessary for an advantageous winding up of the firm and did not constitute a continuation of the business of the firm by the surviving partners after its dissolution. The winding up was practically complete by the end of 1930 and thereafter only small advances to cultivating tenants and old constituents were made; Venkatachala Chetti was also Watching the progress of the winding up of the dissolved firm by the agent Ramaswami and corresponding with him.
Mr. Bhashyam further contends that a balance sheet (Ex. D.2(a) showing the state of affairs of the dissolved RM. P. firm as on 16th September 1930 was sent to and accepted by Venkatachala on behalf of the plaintiffs and Venkatachala thereafter consented to the transfer of several Inums (outstandings) from the old RM. P. firm to the “Thanathu” (individual) business of the defendants, started subsequently under their own vilasam of RM. P., the relevant correspondence being Exs. P. 29 (7-8-1930), P. 30 (4-9-1930). P. 31 (10-9-1930), P. 32 (18-9-1930) and D.8(e) (28-9-1930). According to Mr. Bhashyam there was in effect a settlement of accounts in or about September 1930 before the individual business of the surviving partners was started at Theinzig and that the settlement was between the plaintiffs, represented by Venkatachala Chetti and the surviving partners, represented by Narayana. It is contended that it is not now open to the plaintiffs to go behind the settled accounts as dissolved by the ainthugai [Ex. D.2(a)] (16-9-1930) and claim a rendition of accounts from the date of dissolution on 23rd May 1927. He states that the individual business of the defendants under the vilasam of RM. P. was started towards the end of 1930 and thereafter the dissolved RM. P. firm was merely collecting the outstandings. Reliance is also placed on the subsequent correspondence between Venkatachala and Ramaswami the agent of the dissolved firm, Ex. D.8(i) (25-10-1931), D.8(j) (10-11-1931), D.8(k) (3-12-1931), D.8(m) (15-3-1932) and D.8(p) (29-10-1932) to show that Venkatachala was acquainting himself with the affairs of the old RM. P. firm and was requiring moneys to be remitted to the plaintiffs from the realisations of the dissolved firm. It is contended that the plaintiffs have acquiesced in and accepted the subsequent conduct of the business of the dissolved firm by the surviving partners and they have now no right to insist upon the defendants rendering an account from 27th May 1927. A balance sheet showing the position of the dissolved RM. P. firm's affairs as on 12th April 1941 is filed in the case (pages 405 to 407 of the documents) and it is contended that the plaintiffs are entitled to have an account only of the existing assets, debts and liabilities as disclosed by this balance sheet in view of their previous attitude and conduct.
We are, however, unable to accept these contentions of Mr. Bhashyam. There is clear and overwhelming evidence in the case in the shape of the accounts of the dissolved firm and the correspondence between the surviving partners and the agent of the firm to prove that the business was not only continued by the surviving partners after the death of Valliappa Chettiar, but conducted on a more extensive scale than before. An examination of the four ainthugais filed by the defendants for the four periods (1) from 14-11-1924 to 23-5-1927 (pages 401 to 403 of the printed record); (2) from 14-11-1924 to 16-9-1930, Ex. D.2(a) (pages 121 to 124); (3) from 26-10-1931 to 28-10-1933 (Ex. D.2(c) (pages 348 and 349) and (4) from 13-4-1938 to 12-4-1941 (pages 405 to 407) reveals the following facts which are set out in a tabular form:
ITEMS
1924-1927
1924-1930
1931-1933
1938-1941
Loans to constituents
706599-7-5
900799-12-9
317200-3-6
65718-2-0
937737-15-6 (correct figure on 30-6-1928)
Land purchases
800011-7-6
102252-3-0
436738-2-0
473242-11-9
House and garden purchases
8022-5-6
41284-12-0
79448-4-0
86056-0-0
Credit to Rangoon RM. P.
354557-0-3
614854-1-0
576679-0-9
768458-6-0
Credit to RM. P shop, Theinzig
nil
nil
16677-7-6
187047-10-6
This statement shows that from May 1927 till the end of 1930 the surviving partners conducted the business on an extensive scale instead of winding it up. The correspondence, hereinafter refer, red to, would also show that the surviving partners considered themselves to be the sole proprietors of the dissolved firm and conducted the business on that footing, at any rate until 1930. Ramaswami Chettiar, the agent of the dissolved firm was writing from time to time to the surviving partners resident in India, about the keen demand for loans, good prospects of the money-lending business in Burma, the necessity for retaining the old constituents of the RM. P., firm by making fresh advances, the desirability of preventing rivals in the business from annexing the constituents of the RM. P. firm, the moneys he was drawing from the Rangoon shop of the surviving partners for carrying on the business of the dissolved firm at Theinzig, the lons he was granting to the constituents, the current prices of agricultural lands, the desirability of purchasing fresh lands as an investment, the purchases made by him for the dissolved firm, the details relating to the extent of the lands and the prices paid for their purchase and various other matters connected with the business of the firm. The surviving partners must have been in receipt of the accounts of the business carried on by Ramaswami Chetti, the agent of the dissolved firm, subsequent to 1927. The usual practice of Chetti agents carrying on business abroad on behalf of their principals in India, is to send periodical accounts of the business to their principals here, and presumably this practice was also observed in the present case. The surviving partners must have been in receipt of such accounts. They have also given instructions to the agent as regards the conduct of the business, the taking of security from debtors, the realisation of outstandings, the purchase of lands and other matters connected with the conduct of the business after 1927. Indeed the idea of winding up the dissolved RM. P., firm dawned upon the surviving partners only towards the close of the year 1930. The gist of the voluminous correspondence between the agent Ramaswami and the surviving partners in India is, as above stated. The Court below has referred to some of the letters that passed between the surviving partners and their agent at Theinzig in paragraph 7 of the judgment and we agree with its conclusion that the correspondence shows “that fresh business was being done and amounts were being advanced subsequently, as a matter of course, without the slightest regard to the partnership itself having been dissolved on 23rd May 1927 by the death of Valliappa Chettiar.”
An examination of the accounts relating to the dissolved RM. P., firm's inums would show that about 200 fresh loans had been advanced subsequent to 23rd May 1927, to old constituents who had no arrears of outstanding loans payable to the dissolved firm or to fresh borrowers. In some cases, the fresh advances are of much larger sums than the outstanding loans. In other cases, considerable sums of money have been advanced as fresh loans carrying interest. An analysis of such fresh loans is given in the statement printed at pages 408 to 420 of the record. The RM. P., firm has taken over the liability of the constituents of the Rangoon Thanathu (individual) shop of the surviving partners, by paying off the Rangoon shop and treating the constituents as its own debtors. The collections made by the dissolved firm have been remitted to the Rangoon shop of the defendants and moneys required for advancing fresh loans by the dissolved firm have been borrowed from the Rangoon shop the latter acting as a sort of banker for the dissolved RM. P., firm with the benefit of a large overdraft. Lands have been purchased not only by way of realisation of old outstandings but also by way of fresh investment. The expansion of the business of the dissolved firm resulted in a large increase of the firm's liabilities, notably only to the Rangoon shop of the defendants. It was only towards the end of 1930 that the surviving partners, faced with a fall in the price of landed properties and financial stringency, seriously thought of winding up the affairs of the RM. P. firm.
The correspondence also shows that after May 1927, the surviving partners ignored the existence of the representatives of their deceased partner Valliappa and considered themselves free to expand the business of the dissolved firm and acquire landed properties for the firm by way of investment. We have been taken through the relevant correspondence. The RM. P., firm's business was money-lending and on its dissolution, the surviving partners had to wind up the business, realise the outstandings in cash as far as they could or in the shape of lands if cash was not forthcoming, discharge the liabilities of the firm and distribute the remaining assets among the partners or their representatives according to their shares. It is no doubt true that the nature of the business was such that it could not be wound up in the course of a day. It is equally true that in the course of winding up lands might have been purchased by way of realisation of outstandings. It may be that in a few cases fresh advances might have had to be made to enable collection of the outstandings by taking over the lands of the debtors. In the present Case however the business activities of the surviving partners were not in the nature of a winding up, at any rate, till the latter part of 1930, but definitely amounted to an expansion and extension of the business done before dissolution. At one stage of the argument, Mr. Bhashyam went so far as to state that Ramaswami Chettiar was responsible for such business as was done after May 1927 and the surviving partners could not be fixed with liability on that score. There is, however, no room for any such suggestion. The written statement definitely states that the surviving partners wound up the affairs of the firm and such business as was done was only incidental to the winding up. The correspondence filed in the case clearly shows that Ramaswami was only acting under the instructions of the surviving partners in the conduct of the business of the dissolved firm and the surviving partners were themselves exercising close supervision and control over the conduct of the business.
In November 1928, Ramaswami, the agent, asked for instructions from the surviving partners as to whether the plaintiffs have any share or interest in the dissolved partner RM. P., firm and what representation should be made to the income tax authorities regarding the position of the plaintiffs in relation to the dissolved firm. In their reply, Ex. P. 8(c) of 6th December 1928, the surviving partners evade giving a definite answer apparently, thinking that they could ignore the plaintiffs altogether as persons interested in the dissolved firm. But in 1930 they found that their attitude in ignoring the existence of the plaintiffs, as persons having a share in the dissolved firm had attracted a heavy income-tax liability to themselves and they profess to find fault with the agent for not including the plaintiffs as persons having a share in the RM. P., firm (vide Ex. P. 29 dated 7-8-1930). Rightly or wrongly, the surviving partners thought that they could conduct the business of the dissolved firm in their own way without reference to the plaintiffs and without realising the necessity for winding up the firm's affairs.
It is not as if there were any difficulties in the way of winding up the affairs of the RM. P., firm in the years 1927 and 1928. On the other hand, the correspondence between the agent and the surviving partners would suggest that there was a keen competition among the money-lenders in Burma and borrowers were eagerly sought after in those years by Nattukottai Chetti money-lending firms. In Ex. P. 12 dated 2nd June 1927, the surviving partners write to the agent to keep his hold on the inums by advancing fresh loans if necessary and not to allow them to borrow elsewhere. The surviving partners would not have thought of starting their own money-lending business at Theinzig towards the end of the year 1930 if money lending had then become so hazardous, risky and unprofitable as some of the defendants' witnesses would now say.
Mr. Bhashyam's further contention that the business was continued subsequent to 23rd May 1927 by the surviving partners with the consent and approval of the plaintiffs or their executor Venkatachala, that there was a final and binding settlement of account in September 1930 between the surviving partners and the plaintiffs and that the accounts should now be taken only for the subsequent period without re-opening the prior settlement of accounts, cannot be accepted. We have already stated that the plaintiffs had no part in the further conduct of the business after its dissolution in 1927. We have come to the conclusion that there has been no settlement of accounts, much less a binding settlement of account between the plaintiffs and the surviving partners at any time after the dissolution of the firm. It has now been held by this Court that Venkatachala was not a duly appointed executor under the will of Valliappa (Ex. D.7 dated 6th December 1926). Nor was he a duly appointed agent of the first plaintiff's mother, or of the other plaintiffs. It is true that, as a relation of theirs, he was taking an interest in their efforts especially as the first plaintiff was a minor and an incapacitated person, his mother and the second plaintiff were widows, unable to attend to business matters and the third plaintiff was also an infant. He was occasionally corresponding with the agent of the dissolved firm at Theinzig requiring him to make remittances to the plaintiffs for their household expenses and making some general enquiries. It was only in 1930 when the surviving partners wanted to transfer certain good inums from the dissolved firm to their own individual business which they subsequently opened in the premises of the dissolved RM. P. firm, that they wanted to get the consent of Venkatachella to the said transfer as a “Willdar” or executor. After resorting to various subterfuges, the surviving partners asked their agent to send a copy of the balance sheet (Ex. D.2(a) to Venkatachala, a document which would not have enlightened him as to the rights or the real position of the plaintiffs in relation to the dissolved firm. There is no evidence that the plaintiffs were even informed of the alleged settlement. Venkatachala gave evidence that he did not manage the properties of Valliappa after his death and that, as the surviving partners refused to pay the moneys required for their subsistence by the plaintiffs, without some letter from him, he wrote letters asking for remittances to be made to the plaintiffs by the agent of the dissolved firm. Venkatachala was not a de facto guardian of the first plaintiff whose mother and natural guardian was alive. His interest and intervention in the affairs of the plaintiffs, such as they were, were attributable to his relationship with, the family and the helpless situation in which the family was left after the death of Valliappa. We hold that the Court below was right in arriving at the conclusion that Venkatachala did not in fact and could not in law, enter into a binding settlement of account with the surviving partners in the year 1930 and that the plaintiffs are therefore not bound by the alleged settlement of accounts. In fact, the written statement of the defendants does not allege any such settlement of account in 1930 as would operate as a bar to the taking of accounts from the date of dissolution. We therefore hold that the accounts of t he dissolved RM. P. firm have to be taken from the date of its dissolution on 23rd May 1927. The exact basis on which accounts will have to be taken will be indicated later in the course of this judgment.
Mr. Bhashyam next contended that the business of the dissolved firm was carried on without using the assets of the partnership. His contention is that a portion of the assets consisted of lands, gardens and buildings which were simply retained without being sold and it could not be said that they were used for the further conduct of the money-lending business. The realisations of the outstandings of the dissolved firm were then and there remitted to the Rangoon RM. P. shop of the surviving partners in reduction of the liability of the said firm to the Rangoon shop. Fresh moneys required for the conduct of the dissolved firm at Theinzig were only borrowed from the Rangoon shop of the defendants and therefore, no part of the assets of the dissolved firm, could be considered to have been used for the conduct of the business after the dissolution. This argument however, is not supported by the accounts. The Rangoon RM. P. shop of the partners functioned as bankers for the RM. P. firm at Theinzig, both before and after its dissolution as may be seen from the balance sheets of the RM. P. firm already referred to. Moneys realised from the constituents of the RM. P. firm were also advanced by way of fresh loans after its dissolution and no distinction was made between the moneys drawn from the Rangoon shop of the defendants and moneys realised from the constituents of the dissolved firm. The income from the lands and gardens of the dissolved firm is also credited in the accounts. All these moneys were pooled together and from this composite fund, fresh loans were advanced by the dissolved firm and subsequently realised either in cash or in the shape of landed properties. From the same composite source, fresh lands of considerable extent and value have been acquired by the firm after its dissolution. In these circumstances it is impossible to hold that no part of the assets of the dissolved firm was utilised for the continuance of the business after dissolution. It follows from the above discussion of the evidence that we are in agreement with the conclusions of the Court below on issues 8 to 10 and 12 and 12(a).
The appellants next contend that even if these findings are correct, the Court below has misapplied the law relating to the accountability of a surviving partner to the representatives of a deceased partner. The dissolution of the RM. P. firm having taken place in 1927, the provisions of the Indian Partnership Act which came into force in 1932 are, it is contended, inapplicable to a determination of the rights of the parties in the present case and resort must be had only to the relative provisions of the Indian Contract Act and the Trust Act. We do not consider that either the English Partnership Act of 1890 or the Indian Partnership. Act of 1932 which was modelled on the English Act, has effected any radical change in the law applicable to any of the matters in controversy in the present case [vide Ramakrishna Ayyar v. Muthusami Aiyar (1)], Govinddas v. Official Assignee, Madras (2) Hugh Stevensons and Sons v. Aktiengesellsehaft Fur Carton Nagenindastrie (3). The discussion at the Bar has ranged over a wide field and many cases, English and Indian dealing with the rights and obligations of partners, before and after dissolution, have been cited to us. The obligations of a surviving partner in a dissolved firm, to the representatives of a deceased partner, are not more onerous than those of a partner to his other partners in a running partnership. A partner though an agent is, in no sense, a trustee for his co-partner [vide Piddocke v. Burt (4)]. He has no higher duty than to deal fairly and honestly with him (S. 9 of the Partnership Act). He is bound to indemnify his co-partners for any loss caused by his fraud (S. 10) and is liable, in the absence of a contract to the contrary, to account to them for profits earned by him by use of the firm's property or by carrying on a competing business (S. 16). If he clandestinely secures a personal profit to himself in a partnership transaction, he must share the profit with the other partners (S. 88 of the Trusts Act). He is not in the position of an insurer or a guarantor of his other partners. He is under no positive duty to make or earn a profit or avert a loss in the conduct of the partnership business. All that the law imposes on him is an obligation of good faith and all that is required of him is that he must not act in a manner antagonistic or prejudicial to the interests of the firm. As the management of the partnership business is in the hands of all the partners, each of them being entitled to act in the absence of a provision to the contrary in the articles, no one partner can be considered to be a trustee for the others.
After dissolution, the partnership continues only for the purpose of winding up the business, realising the assets discharging liabilities, and adjusting the rights of the partners. The authority, rights and obligations of the partners continue only for this limited purpose. On a dissolution by the death of a partner, the representative of the deceased partner is entitled to call upon the surviving partners to account for the deceased partner's share as it stood on his death and to have his claim satisfied out of the assets of the dissolved partnership after discharging all liabilities incurred before dissolution and such only of the liabilities incurred thereafter by the surviving partners, as are incidental to and necessary for the winding up of the business (Ss. 46 and 47 of the Partnership Act). The surviving partners have the right and duty to realise the partnership property and in this sense and for this purpose, they hold a fiduciary relationship towards the deceased partner's representatives as regards his interest in the partnership property [Bourne v. Bourne (5), Govinddas v. Official Assignee, Madras ]. The surviving partner's right to deal with and dispose of the assets of the dissolved firm or to incur fresh liabilities, so as to bind the interests of the deceased partner, is limited to the purposes of realisation and winding up and for completing transactions begun but unfinished at the time of the dissolution [Govinddas v. Official Assignee, Madras ]. Mr. T.M Krishnaswami Aiyar has referred us to the dictum of Lord Dunedin in Hugh Stevensons v. Aktiengesellsehaft , where His Lordship describes the position of the surviving partners as “trustees for the partners until the winding up is effected.” The other learned Lords merely refer to the surviving partner as standing in a fiduciary relationship to the representatives of a deceased partner. Sir Frederick Pollock observes that the reference to the surviving partner as a “trustee” is a metaphorical and inaccurate expression (see the Law of Partnership, page 119). The surviving partners are not trustees for a deceased partner's representatives not liable to them otherwise than as debtors [see Knox v. Gye , and Gopal Chetti v. Vijayaraghavachariar ], though their obligation is one in the nature of a trust, to adopt the language of the heading to Chapter IX of the Indian Trusts Act of 1882.
Cases relating to trustees or executors charged with the duty of selling and realising stocks and shares and securities and distributing the proceeds among the beneficiaries or legatees, were relied on by Mr. T.M Krishnaswami Aiyar for the position that the surviving partners also came under a similar obligation to the representatives of a deceased partner; but we are of the opinion that the analogy is apt to mislead. The surviving partners have themselves an interest in the assets of a dissolved firm and all that the law requires is that there should be no conflict between their interest and their, duty to the legal representatives of the deceased partner and that they should not gain an unfair advantage over the latter. This is the principle underlying S. 88 of the Trusts Act and illustration (f) to that section. We have not therefore thought it necessary to examine in detail cases like Sculthorpe v. Tipper and Grayburn v. Clarkson , relating to the liability of executors and trustees charged with the duty of sale and conversion of the properties of a deceased testator, nor is it necessary to consider the difficult questions that might rise if a continuing partner is personally responsible as executor or trustee to the persons beneficially entitled to the share of a late partner. In such cases the liability which the surviving partner-might incur as a trustee or executor would be more onerous than his liability as a mere partner. In this connection it must be remembered that the representatives of a deceased partner have the remedy in their own hands and after dissolution, the Court will readily interfere at their instance by an injunction or by an appointment of a receiver, to preserve and realise the partnership assets and to prevent any act of a partner which would interfere with the rights of other partners or, their representatives or impede a speedy and profitable winding up. The contention of the respondents, apparently accepted by the Court below, that a surviving partner is in the position of a trustee for the representatives of a deceased partner and is bound, at his peril, to realise, all the outstandings of the dissolved firm and convert all the immovable properties of the firm into cash immediately on a dissolution and on default, to account to the representatives of the deceased partner for the full value of such assets and outstandings as they stood on the date of dissolution with interest on such value from the date of dissolution down to the date of final decree, is, we think, unsustainable. The mere inaction of the surviving partner has not been visited with such serious consequences in any of the reported cases to which Our attention has been drawn.
In an Ordinary winding up all that the representatives of a deceased partner can claim is, to have an account taken in the manner provided by Ss. 46 and 48 of the Partnership Act.
Various and difficult questions arise where the surviving partners, instead of Winding up the firm, carry on the business with the assets and property of the dissolved firm, without any final settlement of accounts as between them and the representatives of a deceased partner. S. 37 of the Indian Partnership Act which is modelled on S. 42 of the English Act, has made provision for these cases, giving a right to the deceased partner's representative, in the absence of a contract to the contrary in the partnership articles, to claim at his option, “such share of the profits made since he ceased to be a partner as may be attributable to the use of his share of the property of the firm or interest at 6 per cent per annum on the amount of his share in the property of the firm.” The contention of Mr. Bhashyam for the appellants is that neither the section nor the option conferred by it is applicable to the case of a dissolution before the Act came into force and that the only right of the deceased partner is to claim a share of the profits as provided in illustration (f) to S. 88 of the Trusts Act. This contention is evidently pressed on account of the recent developments in Burma by reason of which the large extent of landed property acquired for the RM. P., firm after its dissolution, by the surviving partners has lost its value to a considerable extent. That apart, we think that the contention itself is untenable. A series of authorities, both England and Indian, had previously laid down the same rule as was subsequently enacted in S. 42 of the English Partnership Act corresponding to S. 37 of the Indian Act and under those decisions, the representatives of a deceased partner had the option to claim profits or interest [see Vyse v. Foster , Ahmed Musaji Saleji v. Hasim Ibrahim Saleji , Veerappa Chetti v. Muthiah Chetti , and Ramakrishna Aiyar v. Muthusami Iyer ]. The object of the rule is to compensate the estate of the late partner for the use of his capital by the surviving partners and the compensation might, at the option of the representative of the partner, be in the shape of profits or interest. As to claiming an account of profits after dissolution, Sir Frederick Pollock in his Law of Partnership, 14th edition, at page 118 observes:
“It is a question, however, whether success in asserting claims of this kind is not in practice little more profitable than failure; for an account of profits after dissolution has seldom or never been known to produce any real benefit to the parties who obtained it.”
The reason for this result is that the profits must be “attributable to the use of the deceased partner's share” of the partnership assets. Where profits have been made subsequent to dissolution, the Court has to consider how much they are due to the skill, supervision and business ability of the continuing partners and how much they are due to the use of the late partner's share of the assets and arrive at the resultant profits attributable solely to the use of such assets. It may be that a very small proportion of the profits has actually been due to the employment of the late partner's capital. It is, perhaps, to avoid these speculative and uncertain enquiries that the Courts evolved an alternative method of giving compensation in the shape of interest at a fixed rate, even before the Statutes enacting the Law of Partnership were passed in England and in India.
Assuming therefore that the principle recognised and embodied in S. 37 of the Partnership Act, is applicable to cases of a dissolution before 1932, the further question that arises in the case is, on what basis is interest to be calculated and awarded, if the representative of a deceased partner chooses to claim interest. Mr. Bhashyam contends that the rule recognised in S. 37 would not apply unless the entire share of the deceased partner in the firm's assets (consisting in this case of lands, gardens, buildings and outstandings) had been used by the surviving partners in continuing the business and if only the cash assets or a portion thereof had been so used, the rule will not apply. This contention is opposed to the reason behind the rule and is manifestly untenable. If in the case of a money-lending business the assets on the data of dissolution consist of lands purchased by the firm by way of realisation and also of cash on hand and realisable outstandings, the fact that the cash assets alone are utilised in the conduct of the business after dissolution, does not render the rule inapplicable or disentitle the representatives of a deceased partner to interest on the portion of the assets so utilised in the business. Mr. T.M Krishnaswami Aiyar on the other hand contends that if any portion of the share of a deceased partner in the firm's assets is utilised by the surviving partners for the continuance of the business after dissolution, then, the representative of the deceased partner is entitled to 6 per cent interest not merely on the portion of the assets actually utilised but on the full value of the entire share of the deceased partner in the assets of the firm as on the date of dissolution. To give a concrete example, let us suppose a case where a firm's assets on the date of dissolution consist of lands of the value of Rs. 20 lakhs and cash and realisable outstandings to the extent of Rs. 5 lakhs, the share of the deceased partner therein being a one-fifth. If the surviving partner having a four-fifths share, continues the business utilising only a lack of rupees out of the cash assets of the dissolved firm, he would, according to the respondents' contention, be liable to pay interest at 6 per cent on Rs. 5 lakhs to the representatives of the deceased partner from the date of dissolution to the date of final decree. This is manifestly an unjust result, but it is argued that this is the law as laid down by judicial decisions and recognised in S. 37 of the Partnership Act.
It must be observed at the outset that S. 37 of the Indian Act like S. 42 of the English Act applies only where the surviving partners carry on the business with the property of the firm after dissolution, without a final settlement of accounts. If this condition is satisfied, the outgoing partner or his estate is entitled to share the profits that might be attributable to the use of the share of the outgoing partner in the firm's assets or to interest at 6 per cent on the amount of such share. If there is a claim for profits, there must be an enquiry as to what part of the firm's assets has been so used, what use has been made of it and what is the profit attributable to such use after making the necessary allowances for the labour, skill, supervision and employment of the capital of the surviving partners. [See Manley v. Sartori and Willet v. Blanford ]. Mr. T.M Krishnaswami Aiyar contends that whatever might be the rule with reference to a claim for profits, if the representative of a deceased partner claims interest instead of profits, he is entitled to interest at six per cent, on the full value of his entire share of the partnership assets as they stood on the date of dissolution irrespective of the actual amount or extent of those assets used by the surviving partner in continuing the business. He contends that all the partners are joint owners of all the property originally brought into the partnership stock or acquired thereafter with partnership funds. Even after dissolution, in the absence of a final settlement of accounts and adjustment and separate allotment of the shares of the partners, each partner continues to be a joint owner with the others, of every part of the partnership assets. The representative of the deceased partner is in the same position as the deceased partner himself. Since it is not possible to predicate of any part of the partnership assets that it is the exclusive property of any partner until there has been a winding up and distribution of assets among the partners, if any part of the assets of the firm dissolved by the death of a partner is used for carrying on the business by the surviving partners, the representative of the deceased partner, it is contended, acquires a right to claim interest at 6 per cent, on the full value of the entire share of the deceased partner in the assets of the firm, as they stood on the date of the dissolution and not merely on that portion of the firm's assets found to have been actually used in the conduct of the business after dissolution. Reliance is placed by the learned Advocate on Ramakrishna Aiyar v. Muthusami Iyer and particularly on the following observations of Phillips J.:
“It is not necessary that the whole of the partnership assets should be used in making the subsequent profits, for, if any portion of the assets are so used, the retiring partner who has a share in every portion of the partnership assets is entitled to a similar share in the profits; this is laid down by Romer J. in a very recent case in Manley v. Sartori . It is often difficult to ascertain the exact share in the profits which should be awarded as Lord Lindley points out in Lindley on Partnership at page 710, and it may, therefore, be more proper in such cases to award interest on the share of the assets at the date of the dissolution.”
We do not think that these observations of the learned Judge support the proposition advanced by Mr. T.M Krishnaswami Aiyar. The actual decision in that case was that when a partner retires from the firm and the business is thereafter carried on by the surviving partner with its capital or assets, without any final settlement of accounts as between them and the outgoing partner, then, he, in the absence of an agreement to the contrary, is entitled, at his option, either to claim a share of the profits made with the use of his share of the partnership assets since the dissolution of the firm by his retirement or to interest and that the retiring partner is not bound to make his election as to whether he would claim a share of the profits or interest until the share of the profits that would fall to him has been ascertained. In other words, it was held that the retiring partner was entitled to postpone his election until the accounts of the business subsequent to his retirement have been taken. We understand the observations of the learned Judge above quoted as meaning that it is not open to the surviving partners to resist a claim for profits or interest by the retired partner on the ground that the portion of the assets of the dissolved firm used by the surviving partners in the subsequent conduct of the business was well within the limits of their own share of such assets and therefore the retiring partner's share could not be considered to have been used at all by them for the subsequent business. Whether the claim is for profits or for interest, the object of S. 37 of the Partnership Act is to award compensation for the exclusive use of money or other assets belonging to a firm, by one or some of the partners and the measure of compensation is either the profit earned by the use of such assets or interest at 6 per cent, on the amount of the assets, so used, whichever is more advantageous to the partner who did not continue to carry on the business after dissolution. The amount due to the retiring partner or the estate of a deceased partner out of the firm's assets not paid over to him or his estate, but utilised by the surviving partners for continuing the business, is treated as a loan by the former to the latter and interest is awarded thereon, though, in fact, there was no contract for a loan and payment of interest.
It has been assumed by text writers and in decisions of authority, that the right to profits and the right to interest are governed by the same principles and that interest is payable only on the amount of the share of a retiring or a deceased partner, actually used or employed by the surviving partner in continuing the business after dissolution. (See Pollock on the Law of Partnership 14th edition, page 118 and Lindley on Partnership 10th edition pages 695 and 696). At page 739 of Lindley on Partnership (10th edition), it is observed as follows:
“Where an executor improperly employs the assets of the testator in a business carried on by himself he is chargeable at the option of the persons beneficially interested in the estate of the deceased, either with the sum employed and interest thereon at 5 per cent or with the sum employed and the profits made by its employment.”
The rule embodied in S. 37 of the Partnership Act is only a branch of a well recognised equitable doctrine that if a trustee mixes the trust fund with his own moneys and employs both in a trade of his own, the cestui que trust may either claim a proportionate share of the profits or interest on the amount of the trust funds so employed [See Docker v. Somes , Vyse v. Foster ], Lord Sumner in delivering the judgment of the Judicial Committee in Ahmed Musaji Saleji v. Hashim Ibrahim Saleji , states the rule thus,
“It is well settled that in certain cases when, on the dissolution of a firm, one of the partners retains assets of the firm in his hands without any settlement of accounts and applies them in continuing the business for his own benefit, he may be ordered to account for these assets with interest thereon and this, apart from fraud or misconduct in the nature of fraud.”
In the case cited above interest at 6 per cent was awarded on the amount taken by the surviving partner from the assets of the dissolved firm and utilised for the conduct of the business. A similar decree was made in Veerappa Chetti v. Muthiah Chetti , and Bhagwandas v. Rivett Carnae .
The further contention of the appellants is that the plaintiffs have elected in 1930 and again in their present plaint, to claim only a share of the profits made by the dissolved firm and attributable to their share of the partnership, assets and it is not open to them at the conclusion of the trial, to claim interest. We have held that there was no settlement of accounts and that the plaintiffs are not proved to have been parties to any such settlement either directly or through any person having authority to represent them at such a settlement. We have gone through the plaint and do not find any irrevocable election by the plaintiffs in favour of profits, so as to preclude them from claiming interest at the trial. Paragraph 10 of the plaint runs thus:
“The plaintiffs claim that they are entitled to all the profits if any made by the defendants due to the using of the firm monies and other facilities of the old firm in addition to all the amounts found due to the deceased Valliappa Chettiar as on 23rd May 1927 with subsequent interest at a fair rate.”
Paragraph 22(g) of the plaint prays for a decree directing “the defendants to pay the plaintiffs their share of the profits and assets of the firm and the amounts used by the defendants with interest at a fair rate.” The plaintiffs were all along living in Karaikudi, Ramnad District, while the, business was being done in Burma. All that is proved by the correspondence and the accounts is, that after the death of Valliappa Chettiar, sundry sums were remitted to the plaintiffs for their family expenses by the agent of the dissolved RM. P., firm at Theinzig pursuant to letters written by Venkatachala. The plaintiffs had no idea of the state of accounts after the death of Valliappa and no accounts were sent to them. The first plaintiff was a minor till 1936 and has always been a mentally defective person. His mother and the second plaintiff were womenfolk who had no knowledge of the firm's affairs. The third plaintiff was impleaded only during the trial as the legal representative of his adoptive mother, the second plaintiff, who died pending the suit. It is not therefore possible to say that in these circumstances the plaintiffs have definitely elected to claim profits and forego interest with full knowledge of their lights. No person can be required to elect without a clear knowledge of the funds or properties or rights between which he has to elect and election can be postponed till the accounts of the properties or funds concerned have been taken. The election made before the party has had an opportunity of ascertaining his rights and their value will not be binding or irrevocable. This very question was considered in the decision reported in Ramakrishna Iyer v. Muthusami Iyer and this Court held that a retiring partner is not bound to make his election as to whether he would claim a share of the profits made with the use of his share of the partnership assets since the date of the dissolution of the firm or interest, until the share of the profits that would fall to him has been ascertained; in other words, his final election could be postponed until the accounts of the business subsequent to his retirement have been taken. The plaintiffs in the present case now find that it would be more advantageous to them to take interest instead of profits and we hold that they are entitled to do so.
As regards the rate of interest, the Court below has awarded 6 per cent or the nadappu rate whichever is less. Mr. Bashyam contends that it is not obligatory on the Court to award 6 per cent interest in a case not directly governed by S. 37 of the Partnership Act. This is no doubt true, but having regard to the fact that interest at 9 per cent was awarded in similar circumstances in Veerappa Chetti v. Muthiah Chetti at 6 per cent in Ahmed Musaji Saleji v. Hashim Ibrahim Saleji and at 7½ per cent in Hajee Summar Sait v. Mahomed Husshum Sait , we consider that the rate of interest awarded by the Court below is just and proper and its discretion has been rightly exercised in the matter of awarding interest.
The law is clear that the claim of the representative of a deceased partner must be for profits alone or interest alone. A mixed claim is inadmissible and there cannot be a claim for profits for part of the time over which the dealings extended and interest as to the other part [See Vyse v. Foster ]. In view of the fact that the plaintiffs have now definitely elected to claim interest and abandon their right to an account of the profits, if any, made after dissolution by the surviving partners with the assets of RM. P., firm, we do not consider it necessary to discuss the propriety or otherwise of the several dealings of the surviving partners in the course of their conduct of the business after the dissolution of the firm. They would be relevant only if an account of the profits made subsequent to dissolution has to be taken. Whether the surviving partners were justified in transferring the assets of the dissolved firm to their own private money-lending business started in Theinzigin 1930, whether they were justified in lending large amounts from their own Rangoon shop to the dissolved firm to enable it to continue and expand its business and whether they were justified in purchasing lands of considerable value and extent after the date of dissolution, are all matters, which, though considered at some length in the judgment of the Court below, are not now material in view of the plaintiffs' claim being only for interest.
The partnership stood dissolved on 23rd May 1927 and according to our finding, there has been no subsequent settlement of accounts between the plaintiffs and the surviving partners. The partnership accounts from 1926 down to the institution of the suit have been filed in Court and the genuineness of these accounts is not impeached. An account will have to be taken of the property and effects as well as of the debts and liabilities of the RM. P., firm as they stood on 23rd May 1927. The account must be kept open so as to let in all transactions whether by way of realisation of assets and outstandings or by way of payment of debts and discharge of liabilities occurring in the course of the actual winding up, the surviving partners retaining their authority to complete the transactions begun but unfinished on the date of dissolution and to realise the assets and wind up the affairs of the firm and no further. The accounts will have to be settled by Court in the manner laid down by S. 48 of the Partnership Act and the surplus assets, if any, will have to be divided between the partners according to their respective shares. We have already held that the plaintiffs are entitled to interest on so much and so much only of their share of the assets of the dissolved RM. P., firm as has been used by the surviving partners for continuing the business after dissolution. Interest at the rate of 6 per cent or at nadappu rate, whichever is lower, has been awarded by the lower Court and there is no appeal against the rate of interest fixed by the lower Court.
Mr. Bhashyam for the appellants has taken objection to the lower Court's direction for accounting on the footing of wilful default, which means that the surviving partners are liable to account for all assets and outstandings which they have neglected to collect or realise irrespective of whether they have actually collected or realised them. There is no room for holding that the defendants have been guilty of any fraud. The use by the surviving partners of the assets of a firm dissolved by the death of a partner, for the purpose of continuing the business in which they themselves own a substantial share, is not a fraudulent breach of trust. The plaintiffs in this case are only entitled to have the usual accounts and enquiries and not an accounting on the footing of wilful default. The plaintiffs cannot call upon the defendants to account for outstandings not actually realised or collected by alleging that with a higher degree of diligence and care than has been exhibited by the defendants the outstandings could have been realised. In particular, the plaintiffs cannot hold the defendants liable to account to them for the cash value of the lands, gardens and building on the basis of the prices they would have fetched if they had been sold in 1927 on the ground that they acted improperly in neglecting to sell them soon after dissolution. The existing assets will have to be valued as they are and divided. If, however, the surviving partners had taken over the lands of the RM. P. firm as they stood at the date of dissolution or any part of such lands at a valuation and the plaintiffs are now willing to accept the valuation at which the surviving partners took over those lands, there is no need to re-open the transaction.
Mr. Bhashyam next contended that Narayanan Chetti the elder brother of the first defendant who was managing the RM. P. firm and Ramaswami Chetti the agent who was managing the firm's affairs on the spot are both dead and the onus is on the plaintiffs to prove specifically that they are entitled to a definite sum or sums of money from the defendants.
He referred to the decisions in Venkatacharyulu v. Mohana Panda , Appa Rao v. Subba Rao and Purushotham v. Ramakrishna as establishing that the legal representatives of an agent or a partner are not directly liable to render accounts or vouch them and the onus is on the plaintiffs to allege and prove their right to any specific sums that might be claimed by them. But this argument ignores the fact that the 1st defendant was an original partner when the RM. P. firm started business in 1925 and he is one of the defendants in this suit. He is or ought to be in a position to prove what realisations or disbursements have been actually made and to render an account. Further, the plaintiffs themselves are the legal representatives of Valliappa who died on 23rd May 1927 and are not in a position to know the exact nature of the dealings subsequent to the dissolution of the firm. The only difference in substance between the position of an agent and that of the legal representative in the matter of accountability is that the initial burden of proof in the latter case rests on the party claiming an account. It is equally the duty of the legal representative of an agent or partner, to produce all accounts and vouchers in his possession and also to pay out of the assets, the moneys due from the estate of the deceased agent or partner. In taking the accounts the Commissioner as well as the Court, will have regard to the circumstances mentioned above in arriving at a conclusion on the merits of the objections raised with reference to particular items in the account. We have dealt with the various contentions raised by the learned Counsel on both sides in this appeal and the result is that subject to the modifications we have indicated above, the decree of the lower Court will be affirmed. As the appellants have substantially failed in this Court, they must pay the costs of the respondents in this appeal.
N.R.R