P A R RAMASWAMI CHETTIAR Vs. SRINIVASA IYER

JUDGEMENT

(1.) Before each appeal is dealt with separately, the undisputed facts common to the appeals may be briefly stated. The first defendant and his sons defendants 2 to 4, Nattukottai Chetties by caste, were members of a joint Hindu trading family, which carried on business under the name of P.A.R, Firm. On the 1 September, 1923, the third defendant filed a suit for partition " of the family property, impleading as defendants, the other members of the coparcenary. On the 26 February, 1924, the second defendant filed his written statement, praying also for partition. On the 14 July, 1927, a preliminary decree foe partition was made. The defendants were natives of India, but the business was being carried on at Colomba. By a power-of-attorney dated the 11 October, 1916, the fourth defendant and one Subbiah Pillai were constituted as the first defendant's agents for the purpose of conducting the business. The next power-of-attorney that has been filed, is dated the March, 1925, and was granted by the first defendant in favour of one Ponnuswami. There is some oral evidence to the effect that one Shanmugam Pillai acted as agent for some time; when he did so, does not appear But as nothing turns upon it, I need not refer to it further

(2.) It is common ground that the third defendant became divided in status on the date of his plaint; likewise the second defendant on the date of his written statement. The promissory notes sued on came into existence subsequent to the second defendant's written statement and before the passing of the preliminary decree. In Appeal 298 of 1928 it was the fourth defendant, acting as the first, that executed the promissory note; in other two Appeals 137 of 1929 and 454 of 1930, the endorsements were made (it is with the endorsements we are concerned) by Ponnuswami Pillai, purporting to derive his authority from the power-of- atlorney in his favour. The question in each case is, does the disruption of the joint family affect the liability of the coparceners and if so, to what extent? What is the true legal conception of the trade or business first in relation to the coparcenary and secondly in regard to the strangers who deal with the family? - this is the point that these appeals raises. In one case (Appeal 454 of 1930) the Subordinate Judge has held that the members of a coparcenary, ipso facto by reason of their status become members of a partnership and that when they become divided, the disruption of the family automatically bring about the dissolution of the partnership. In the other two cases (Appeals 137 of 1929 and 298 of 1928) the Subordinate Judge, who tried them, has expressed a different view, which, in my opinion, embodies the correct principle. The trade or business is an asset of the joint family and must be treated as any other property belonging to it. It is a distinct heritable asset, descending like other heritable property. Where as an ordinary partnership is dissolved by the death of a partner, the interest of the family in the trade passes by survivorship.

(3.) Again unlike a partner, a coparcener is not entitled to ask for accounts of past profits. Further a partner of an ordinary firm may, in the absence of special restriction, bind by his acts the other members of the partnership; but in the case of a trading family it is the manager alone, unless a special arrangement exists, that can take part in the business and bind by his acts his coparceners. The true legal position therefore is, that as between the coparceners, the fact that the family is engaged in trade does not convert it in relation to that trade, into a partnership. That being so when the family becomes severed, the family trade (whether it happens to be the sole item possessed by the family or one of several items) is held by the manager, who has in respect of it the same duties and the same powers, as in respect of any other similar property of the coparcenary. His powers are not those of a manager of a joint family but of a co-owner or tenant in common in management. In other words, on division the right he possesses, is merely to preserve the trade so that it may not as an item of the family property be destroyed. If for the purpose of preserving it, it becomes necessary to enter into fresh engagements, he may do so, but the object must be the preservation of the trade and not the continuing of it. It is also incidental to the trade being treated as an asset of the family, that the absence of notice on the part of those dealing with the manager is immaterial. A stranger acting on the belief that the family R is joint, may turn out to be mistaken, but in dealing with a member of a Hindu family, he does so at his peril.