PANNALAL PAUL Vs. PADMABATI PAUL

JUDGEMENT

(1.) THIS is an appeal from an order refusing to set aside an award. The appellants and the respondents carried on business in co-partnership in Homoeopathic medicines under the name and style of Paul and Co., at No. 82, Clive Street, and another business in paper under the name and style of Hari Narayan Paul and Co., at No. 103. Old China Bazar street. The appellants Pannalal Paul, Chunilal Paul and Lakshman Chandra Paul are the sons of one Hari Narayan Paul, deceased, and each of them had one-fourth share in the profits and losses of the two partnership businesses. The respondent Padmabati is the widow and the respondents Satya Charan Paul and Amar Nath Paul are the minor sons of another son of Hari Narayan Paul and they jointly had one-fourth share in the profits and losses of the two businesses. The respondents instituted a suit in this Court for dissolution and accounts of the two partnerships and for the realisation and distribution of the partnership assets and properties. The respondents also applied for appointment of a receiver. By an order dated January 31, 1956 all disputes in respect of the two partnerships mentioned in the plaint and in the petition for appointment of receiver were referred to the sole arbitration of Mr. D. K. Ghose, Barrister-at-Law. The parties filed their respective statements before the arbitrator and adduced oral and documentary evidence. We are informed that the arbitrator held over one hundred sittings. Several issues were raised in the reference. Eventually, the arbitrator made his award on July 25, 1957. The appellants being dissatisfied with the award moved an application to set it aside. Mallick, J., held that the appellants had made out no ground for setting aside the award and dismissed the application. The appellants have preferred this appeal from that order.

(2.) TO appreciate the arguments addressed before us it is necessary to refer to relevant portions of the impugned award. Clauses 1, 2, 3 and 4 of the award are as follows :

(3.) MR. Sen next contends that the award is in contravention of Sections 46 and 48 of the Indian Partnership Act inasmuch as the entire assets of the dissolved firms have been allotted to the appellants without providing for payment of the liabilities of the dissolved firms out of the assets in the first instance and that consequently the award is in excess of the powers conferred on the arbitrators by the order of reference and is also erroneous in law on the face of it. By Section 46 of the Indian Partnership Act, on the dissolution of the firm, every partner is entitled, as against all the other partners, to have the property of the firm applied in payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners according to their rights. Section 48 of the Indian Partnership Act provides for the mode of settlement of accounts between the partners and for the Order of the application of the assets of the firm on its dissolution. Sub-clause (b) of Section 48 provides that the assets of the dissolved firm shall be applied, in the first instance, in paying the debts of the firm to third parties. Every partner has the right as against the other partners to insist that the assets of the dissolved firm be applied in accordance with the provisions of Sections 46 and 48 of the Indian Partnership Act. Each partner has for that purpose a general lien over the assets of the dissolved firm. By the award in this case the appellants have been allotted all the assets and properties of the dissolved firms and have also been made responsible for all the liabilities thereof. It is expected that the appellants will apply all the assets allotted to them towards discharge of those liabilities. The rights conferred on the appellants by Sections 46 and 48 have in no way been infringed by the award. Far from suffering a prejudice they have obtained an advantage by It. Instead of their general lien over the properties of the dissolved firms they have now obtained the full ownership over those properties. The respondents also were entitled to insist that all the assets of the dissolved firms should be applied in the first instance towards the discharge of those liabilities; they could contend that the award was in contravention of their rights under Sections 46 and 48, inasmuch as it had allotted all those assets to the appellants without providing, in the first instance, for the payment of the liabilities. But the respondents have made no complaint on that account. The appellants are in no way prejudiced by the contravention of the respondents' rights under Sections 46 and 48 and they are not entitled to have the award set aside on that ground.