JAMPA SATTIRAJU Vs. KALLEPARA VENKATASATYAM

JUDGEMENT

(1.) The plaintiffs and the defendants were partners and had advanced various sums of money to the partnership. The plaintiffs filed the present suit for accounts, and after the preliminary decree had been passed and the matter was in the hands of the Commissioner, who was directed to take accounts, the defendants filed an application asking the Court to direct the Commissioner to work out the individual debts of the partners in accordance with the provisions of the Madras Agriculturists Relief Act. The petition was dismissed on the ground that although all the partners were agriculturists; the Act could not apply to a partnership or to money advanced by partners to their business.

(2.) The defendants case, as put in this Court, is that from the very inception, these debts were debts within the meaning of Section 3(3) of the Act. It seems to me that this argument cannot be accepted. When the money was advanced, it was advanced to the partnership and although a partnership has no corporate existence, yet one can speak of partnership assets and these advances were intended to be assets of the partnership. The right of the partners to recover these advances could only arise upon a dissolution of the partnership. No obligation arose, at the time the advances to the partnership were made, to return upon demand of otherwise the money so advanced. A debt implies a legal liability to repay; and while the partnership was in being, there was no legal liability on the other partners to repay the advances made to the partnership. The only way in which the advance could be recovered was by the equitable action of the Court at the time of the dissolution of the partnership. Even then, there is no obligation to one partner by the other partners with regard to individual advances. The partner who made the advance has merely an equitable right to have the advance repaid out of the assets of the partnership.

(3.) A further difficulty that arises in accepting the contention of the learned advocate for the petitioners is that until the Court passed a final decree--or at any rate had passed orders after receiving the Commissioner's report and hearing objections thereon--it was impossible to know what amount should be paid to the various partners. Until all the disputes arising between the partners had been considered and adjudicated upon by the Court, there could have been no debt and therefore nothing to which the Act could be applied. Until the final decree was passed, there was no debt by one partner to another.