ALURI APPAMMA Vs. BALAJI LAL LALA

JUDGEMENT

(1.) Defendants 1, 2 and 5 are the appellants in this Second Appeal. The suit was filed by the plaintiff for dissolution of partnership and for taking of accounts. The case of the plaintiff is that he, Alluri Punnayya, defendants 2 to 5 and some others entered into a partnership for working a ground-nut factory under the name and style of Sri Anjaneya Ground-nut Factory. Out of a total of 10 1/8 shares, the plaintiff had 1 1/2 shares in the firm. He filed O.S. No. 67 of 1938 on the file of the Court of the District Munsif, Guntur, for dissolution of the firm of "'Sri Anjaneya Ground-nut factory and for rendition of accounts. There was a preliminary decree in that suit on 27th March, 1942, followed by a final decree, dated 24th April, 1944. Before the passing of the preliminary decree, the factory together with the machinery was purchased by the 5th defendant who, in his turn, sold it to the 8th defendant. The purchasers, viz., defendants 5 and 8, were impleaded as parties to O.S. No. 57 of 1938 in the same rank in which they have now been impleaded in the present suit. The defendants 1, 2, 5 and 8 along with others formed a new partnership called Jayalakshmi Ground-nut Factory and have been working this factory with the machinery purchased by the defendants 5 and 8 from the Sri Anjaneya Ground-nut Factory. Before the new partnership began to work, the 8th defendant gave a notice Exhibit P-1, dated 24th November, 1938, to the plaintiff either asking him to join the new partnership or for his valuing the machinery and taking his share of the price of the machinery. The plaintiff did not intimate to the defendants that he was going to be a partner of the new firm. Though a commissioner was appointed in O.S. No. 57 of 1938 to value the partnership assets, the commissioner expressed his inability to arrive at a satisfactory valuation of the machinery. The Court, instead of taking steps to have a fresh commissioner appointed or having the machinery valued by a competent appraiser passed a final decree adjusting the rights of the partners leaving the plaintiff's right to a share of the machinery to be adjudicated in a fresh suit. The Court also further went on to observe that it might be that the plaintiff was a partner of the new firm of Jayalakshmi Factory though that was not his case. This was an extremely unsatisfactory form of disposal of O.S. No. 57 of 1938. In a. suit for dissolution of the partnership, the partnership assets have to be valued, the accounts of the partnership have to be taken, the liabilities of the partnership have to be ascertained, their discharge has to be provided for and the balance of the partnership assets should be directed to be divided between the partners according to their shares. This however was not done and the plaintiff was directed to a separate suit. This direction was wholly erroneous in law and should have been appealed against by the plaintiff. Unfortunately, he was not properly advised and he left the matters there.

(2.) On 26th January, 1946, he brought the present suit for dissolution of the new partnership of Jayalakshmi Ground-nut Factory impleading the partners of that partnership as defendants to the suit. He was not a partner of the new firm and being a stranger to the partnership, he could not have sued for its dissolution or for accounts. He should have worked out his rights in O.S. No. 57 of 1938, and the rule of law is stated thus by the Judicial Committee in Gopala Chetty v. Vijayaraghavachariar,. (1922) 43 M.L.J. 305 : L.R. 49 I.A. 181 : I.L.R. 45 Mad. 378 (P.C.). at page 389 :

(3.) These are the only exceptional cases where, after a suit for dissolution of partnership and the taking of accounts has been decided, a partner's share to an asset of the partnership can be recovered. In the present case, the plaintiff could only have a right of suit against his quondam partners for the value of the machinery sold by them to the 5th defendant. If a suit for the recovery of the value of the plaintiff's share of the machinery had been instituted on 26th January, 1946, the date when the plaint was filed, it would have been barred. The plaintiff cannot frame his suit as one for the dissolution of a partnership of which he was not a member and claim not only the value of his share of the machinery but also the profits of the new firm according to his share in the old partnership. If without a decree for dissolution of partnership the surviving partners had merely used the partnership assets in the business of a new firm constituted by them, then it might be that the plaintiff would be entitled to a suit for accounts of the profits made by the surviving partners by using the assets of the old firm. That is not the present case. For these reasons, I am of the opinion that the decision of the lower Appellate Court is erroneous and that the decree of the learned District Munsif should be restored. Since the plaintiff does not appear and oppose this Second Appeal, there will be no order as to costs in this Second Appeal or in the appellate Court. No leave. Appeal allowed.