MAHAMMAD KAMIL Vs. HAJI HEDAYATULLA

JUDGEMENT

(1.) This is an appeal by the plaintiffs in a suit for dissolution of partnership, for appointment of a Receiver and for incidental reliefs. The partnership business was carried on by Fazil and Hedayatulla. Fazil died on the 3 August 1915. leaving the plaintiffs as his representatives, who commenced the present litigation on the 13 September 1916, with a view to take the partnership accounts. The District Judge has made a decree for dissolution and has directed the accounts to be taken from the 11 October 1913 to the 3 August 1915, inasmuah as the accounts had been settled up to the 10 October 1913. He has, however, omitted to give directions as to the profits which may have resulted from the business subsequent to the death of Fazil, and this raises the real point in controversy in the present appeal.

(2.) We are of opinion that there is no room for doubt or discussion that the partnership was dissolved by the death of Fazil on the 3 August 1915, by virtue of the operation of Clause (10) of Section 253 of the Indian Contract Act. It has, no doubt, been suggested on behalf of the appellants that there was a contract to the contrary, and reference has been made to the terms of the trust deed executed by Fazil on the day previous to his death. It is asserted that by that deed the trustees had been appointed by Fazil to carry on the business and that Hedayatulla had assented to this arrangement. But Hedayatulla was not a party to this deed, he appears to have affixed his signature thereto only as an attesting witness. The deed, on the face of it, consequently, does not show that Hedayatulla had assented to this arrangement and that there was a contract to the contrary within the meaning of Section 253. On the other hand, the oral evidence shows that Hedayatulla was not an assenting party. After the execution of the deed, Hedayatulla is. reported to have said that he would not carry on the business jointly, unless his remuneration was fixed, and subsequently the trustees appointed by the deed did in fast refuse to carry on the business. It is impossible, in these circumstances, to hold that there was a concluded agreement between Fazil and Hedayatulla such as would nullify the effect of the rule contained in Clause (10) of Section 253 of the Indian Contract Act. We must hence proceed on the assumption that the District Judge has correctly held that the partnership was dissolved on the 3 August 1915.

(3.) The plaintiffs have argued that as the business has been carried on since the death of Fazil, the defendant, who has carried on the business, is bound to account for the profits made and to share them with the plaintiffs. In support of this position, reliance has been placed upon the judgment of the Judicial Committee in Ahmed Musaji V/s. Hashim Ebrahirm . In our opinion the plaintiffs are entitled to a share in the profits made out of the business since the death of Fazil. The principle applicable to cases of this character was enunciated by Lord Elden in Brown V/s. De Tastet (1821) Jacob 284 : 23 R.R. 59 : 37 E.R. 858. There on the death of one partner the surviving partner retained the capital and. employed it in the trade.. He was ordered to account for the profits derived from it and to make proper allowance for the management of the business. A similar view was adopted by Hall, V.C., in Yates V/s. Finn (1880) 13 Ch. D. 839 : 49 L.J. Ch. 188 : 28 W. B. 387, where he stated the correct principle to be applied (in the absence of other special circumstances affecting the rights of the deceased partner on the one hand and the surviving partner on the other) in the following terms: "The representatives of the deceased partner are entitled to say to the surviving partner, you have been using our testator's money in trade, and making profits by the use of it, and we are, therefore, entitled to an account of the profits you have made by continuing that money in the concern and trading with it, The profits may well be regarded as accretions, to the property which has yielded them and ought to belong to the owner of such property, in accordance with the maxim accessorium sequitur suum principals, the accessory right follows the principal, see Crawshay V/s. Collins (1808) 15 Ves. 218 : 10 R.R. 61 : 33 E.R. 736, Heathcote V/s. Hulme (1819) 1 Jac. & W. 122 : 20 R.R. 248 : 37 E.R. 322. It may be observed that the rule thus laid down has been incorporated in Section 42 of the Partnership Act of 1890. The provisions of that Act are not applicable in this country: but the rule itself is manifestly consistent with the principles of justice, equity and good conscience.