Sokkanadha Vannimundar v. Sokkanadha Vannimundar

On the 5th August 1893, one Kandasami obtained from one Natesa Pillay a sub-lease of a fishery right and on the 18th August 1893 agreed with the plaintiff to hold the right in partnership with him. Kandasami and defendants were members of a joint Hindu family, of which defendants Nos. 1 and 2 and Kandasami were at the time the only major members, the rest being minors. The sub-lease was not obtained for the benefit of Kandasami alone, it having been intended that all the members of the family should have the benefit thereof. A very short time after the sub-lessees began to exercise their right disputes arose between them and Natesa Pillay and Ayyakutti Muthiryan who also claimed to be a sub-lessee under Natesa Pillay. Litigation ensued and Original Suit No. 466 of 1893 was instituted by Kandasami against Natesa Pillay and Ayyakutti Muttiryau. Pending the suit Kandasami died on the 31st January 1895. The suit having been continued by the first defendant as next friend of Kandasami's son, the present sixth defendant an infant, a compromise was, on the 25th August 1896, entered into whereby Natesa Pillay undertook to pay Rs. 1,800 in discharge of all liability. The plaintiff alleges that at the same time the first defendant entered into an arrangement with Ayyakutti Mnthiriyan, whereby the former was to receive Rs. 2,300 in settlement of all disputes and that the two sums aggregating Rs. 4,100 were, as assets of the partnership, received by the defendants subsequent to the date of the compromise aforesaid. He claims a, moiety of this amount as the share to which he is entitled according to the arrangement made when he was admitted as a partner, and prays that the partnership he dissolved and accounts be taken.

The Subordinate Judge granted the prayer. On appeal the District Judge reversed the decree and dismissed the suit on the ground that it was barred by limitation, the suit having been instituted on the 24th August 1899 or more than three years from the death of Kandasami.

It was urged on behalf of the plaintiff-appellant that Kandasami's death did not dissolve the partnership, but this cannot be upheld. It is scarcely necessary to say that a joint Hindu family though at times spoken of by Judges as a corporation cannot, as contended for the plaintiff, be taken as a legal person in the strict sense of the term so as to constitute a partnership such as the present one subsisting between the plaintiff on the one hand, and a real corporation on the other. No doubt when business is carried on by the members of a joint family for the benefit of the family without a contract among the members constituting themselves actual partners, the legal relation subsisting between them may have some sort of resemblance to that of partners, but it is not identical with it. The death of a member of a family thus engaged in business has in truth no other effect upon the rights of the surviving members in the business than to enlarge their interest to the extent of the share to which the deceased was entitled in his lifetime if he left no male issue, and if he left such issue, then to enlarge the shares of such issue similarly. It is to such result that the observations of Mr. Justice Melvill in Samalbhai Nathubhai v. Someshvar, Mangal and Harkisan(1) on which reliance was placed on behalf of the plaintiff should be taken to refer. Therefore whether the contract of partnership entered into between the plaintiff and Kandasami be taken as creating that relation only between the two or between the plaintiff on the one hand and the adult members of the family on the other or again between the plaintiff and all the members of the family including the minors, the death of Kandasami necessarily caused a dissolution of the relation which was the creature of a contract as between the plaintiff on the one hand and the rest on the other. Consequently the suit viewed as one for a general account and a share of the profits was under article 106 of the second schedule to the Limitation Act out of time unless a fresh contract to continue the business could be inferred from the conduct of the parties. Owing to the dispute and litigation already referred to, nothing was done in pursuance of the sub-lease which was the subject of partnership, after Kandasami's death beyond the continuance of the litigation, and as the Subordinate Judge in effect found that the plaintiff and the defendants together conducted the litigation, it is a question whether a contract to continue the partnership was not made out. This view of the case has not been considered by the District Judge and, if it should prevail the suit for a general account, would be sustainable going back to the 18th August 1893, as it was brought within three years from the date of the compromise and the alleged receipt by the defendants of the partnership assets as in the absence of anything to the contrary, the partnership should at least till the date of the compromise be taken to have gone on.

Apart from this it was contended on behalf of the plaintiff that, even on the footing that a suit for a general account was out of time, the plaintiff is entitled to his share of the assets of the partnership received by the defendants subsequent to the compromise subject to due allowances, as the claim for such relief is within time. Whether in point of fact the defendants have received any and what assets subsequent to the compromise has not been tried and the question is, assuming they did so receive, is the plaintiff entitled to maintain a suit for his share notwithstanding that a suit for a general account and a share of the profits is time barred? Merwanji Hormusji v. Rustomji Burjorji is a clear and direct authority in favour of answering the question in the affirmative. There Latham, J., relied upon the observations of the Lord Chancellor, Lord Colonsay and Lord Chelmsford in Knox v. Gye(2) and the view taken of the effect of those observations by Green, J., in Dayal Jairaj v. Khatav Ladha(3). No doubt in Rivett Carnac v. Goculdas(4) Candy, J., intimated that were the question res integra he would not have been prepared to take the view adopted by Latham, J., and in the appeal against the decree made by Candy, J., the Appellate Court refrained from expressing any opinion on the point. There is, however, absolutely nothing in the judgment of the Judicial Committee in the same case (Bhugwan Das Mitharam v. Rivett Carnac(5)) when it went before that tribunal to indicate that this point was in any way considered by their Lordships: their decision resting altogether upon the ground that the suit there for a general account was within time. Our attention was not drawn to any authority other than that of the dictum of Candy, J., already referred to against the view of the law expressed by Latham, J., and as that view appears to us to be amply supported by the observations of the majority of the lawlords quoted and commented on at length in his judgment by Latham, J., we think we ought to follow that view. Even on principle it would seem that this conclusion is the better one, for why should the fact that a suit for a general account is no longer maintainable be used to secure to some of the partners exclusively the benefit of realization of assets made under circumstances which raise no question of limitation with reference to a claim strictly confined to a share of what was thus realized of course, to allow such a claim to be maintained without the defendant being at liberty to go into the whole accounts and if possible defeat the plaintiff's claim by showing that the net balance is against the plaintiff would he quite unjust. The view we follow avoids such undesirable results while it secures to all the partners their fair and proper shares in assets with reference to which no question of lapse of time is capable of being raised under the law.

We must therefore set aside the decree of the District Judge and remand the case. In doing so it is necessary to point out that the plaintiff should have an opportunity of showing that notwithstanding the dissolution of the partnership on the death of Kandasami he was treated by the defendants as still interested in the business so far as it was carried on. In the plaint no doubt the plaintiff did not set up any contract to the above effect, but with reference to a contention set up by the defendants that the plaintiff had relinquished his interest, an issue was raised and tried as to whether the plaintiff did not continue a partner down to the time of the compromise, and the finding of the Subordinate Judge on the point was in favour of the plaintiff. And in this connection the Subordinate Judge states that the evidence showed that the plaintiff was participating even after Kandasmi's death in the conduct of the litigation which resulted in the compromise. This circumstance, if true, would be a piece of evidence as to an implied agreement between the parties to continue the business, with the plaintiff as a partner. If the conclusion with reference to this question should be in favour of the plaintiff then a decree for a general account will have to be given. If the finding should he against the plaintiff the case must be proceeded with, nevertheless with a view to the determination of the plaintiff's right to a share in the assets said to have been received subsequent to the compromise on the principles laid down in the judgment of Latham, J., referred to above.

Costs will abide and follow the result.