SAMUEL NADAR Vs. THANGAYYA NADAR

JUDGEMENT

(1.) This is an appeal against the decree of the Subordinate Judge of Devakottai in A.S. No. 31 of 1937. The plaintiff (appellant) filed the suit out of which this second appeal arises for dissolution of a partnership which he and the defendant are said to have been carrying on. The business of the partnership consisted in the running of a chit transaction, both the partners acting as stake-holders. The chit was to be conducted for a period of fifty months. Two prizes were to be taken by the stake- holders and the remaining forty-eight were to be open to the other subscribers. The person who offered the lowest bid was given the prize. The suit has been dismissed by the lower appellate Court as barred by limitation.

(2.) The chit started on 13 March, 1924 and the fifty months expired on 14th May, 1928. The present suit was filed on 13 February, 1933. If the adventure or undertaking of carrying on a chit fund was completed by the end of the fiftieth month, then there were was a dissolution of the partnership under Section 42 of the Indian Partnership Act. That would be on 14 May, 1928. If there was a dissolution on that date, then under Art. 106 of the Second Schedule of the Indian Limitation Act a suit for an account would have to be filed within three years from that date, unless in the meanwhile there were acknowledgments within three years of each other. The lower appellate Court held that the business of the partnership or the undertaking or adventure as mentioned in Sec. 42 (b) came to an end on the expiry of the fifty months during which the chit was to run. If this is conceded, the rest follows. The lower appellate Court says: Ordinarily a chit to run for SO months by two persons in partnership is an adventure which terminates at the 50 month, or it is a partnership for a particular period.

(3.) This is a thorough misunderstanding of the nature of the partnership. When two persons form themselves into a partnership for the purpose of carrying on a chit transaction, the chit may come to an end on the expiry of the fiftieth month; but as between the two persons who are joint stake-holders the adventure or undertaking does not come to an end immediately, for monies due to the partnership from the subscribers have to be collected. If it is a case of single stake-holder there is no trouble; he will collect all the monies due from the subscribers who drew the prizes. But in a case where two persons form themselves into a partnership and the partnership is the stake-holder, then the partnership business does not cease or terminate with the fiftieth month or earlier if the auction of the chits every month comes to an end earlier for other reasons. Very much more has to be done; all the monies due to the partnership have to be collected and the liabilities have to be discharged and it is only then that the business can be said to come to an end. As between the two the relationship of partners continues until the termination of the business of the partnership, that is, until all the assets of the partnership are realised and the liabilities paid. It is this initial misunderstanding of the nature of the business namely, that the partnership business came to an end at the termination of the fiftieth month, that has led the lower appellate Court to hold that the suit is barred. As held by a Bench of this Court in Katta Gundayya V/s. Katta Siddappa (1938) 1 M.L.J. 574 : 45 L.W. 749, a suit for taking the accounts of a partnership: ... would not be barred unless the defendant makes out that there has been a dissolution of the partnership more than three years prior to the institution of the suit. The onus of making out such dissolution is upon the defendant and it is well established that the mere fact that after a particular date no further business was done will not amount to a dissolution of the partnership.