K V SANTHANAKRISHNA NAIDU Vs. KSCHELLAPPA AIYAR

JUDGEMENT

(1.) This is an appeal from the judgment of the learned Chief Justice of this High Court sitting on the Original Side. A suit was brought by two persons who were carrying on a dramatic company business in Madras against one Chellappier who was also a partner of theirs in that business. Of the three persons the 1 plaintiff was the manager of the business, the 2nd plaintiff and his brother, the defendant, were both of them actors. They entered into partnership for the period of three years from 1919 to 1922. One of the conditions of the partnership was that the defendant should continue as a member for the period of three years and continue to act for the company. A clause was put into the partnership deed Ex. B which runs as follows: Should any of us three go away from our company within the period mentioned above, he shall not only lose all the rights which he may be entitled to in respect of the said company but also be liable to pay damages which may be claimed by the others.

(2.) The plaintiffs allege that the defendant did not present himself for performance on the stage and that he refused to carry out his term of the contract namely to continue to perform for three years and so he is liable in damages which they assess at about Rupees 57,000. Now among the various pleas raised it is sufficient to notice one as the case proceeded on that one plea alone and that is the plea raised in the 1 issue:--"Is the plaintiffs suit as framed not maintainable?" The plea of the defendant was that as the plaintiffs and the defendant were partners in a partnership concern a suit for damages alone without a suit for general accounts was not maintainable. That would be a valid plea to take, for no suit can ordinarily be maintained by one partner against the other partners for partial accounts without suing for a dissolution of partnership and for general accounts, for it will lead to unnecessary multiplicity of suits. There are no doubt some special exceptions to that general rule. The answer of the plaintiffs in this case is that they are entitled to maintain the suit because the defendant having refused to perform his part of the contract of partnership, has ceased to be a partner and therefore this suit should be looked upon not as a suit between partners but as a suit by two persons against a stranger. This argument does not seem to be correct. In the plaint there is no allegation that the defendant ceased to be a partner. On the other hand the plaint proceeds on the footing that the defendant committed a breach of the contract and therefore has become liable in damages without saying anything about the forfeiture of the defendant's rights in the partnership business.

(3.) The learned vakil for the appellant contends that on the construction of the first clause of Ex. B above referred to the defendant has forfeited his rights in the company and therefore has ceased to be a partner. Such a plea has apparently advisedly not been put in the plaint itself for there are difficulties in the way of supporting that plea. In the first place there is no allegation in the plaint that the defendant separated from the plaintiffs which act is necessary for Clause 1 of Ex. B to apply. His merely staying away from acting will not amount to a separation. In the second place it is very deubtful whether the forfeiture clause can be given effect to at all. It seems to be on the face of it a penal clause which was not apparently intended to be enforced but was held in terrorem over the heads of the parties so that they may not fail to carry out the terms of the contract; to give effect to it would mean that if the defendant had acted for two years and 11 months and 29 days and did not act for one day then there should be a forfeiture of all his rights which would not have been intended by the parties. It follows therefore that we must proceed in dealing with this case as if the defendant continued as a partner. That being so, this suit is clearly by two partners against 3 partner for damages for breach of certain covenants in the partnership deed, namely, his covenant that he would continue to act on we stage for three years. In such a case as that there is no difficulty whatever in bringing a suit for general accounts and debiting the defaulting partner with any loss that might have been incurred by his action, in the general account. Such was the case which their Lordships of the Privy Council had to deal with in Krishnamachariar v. Sankara Sah A. I. R. 1921 P. C. 91 (P. C.) But that does not justify a suit being brought for damages alone against the partner. In fact if the suit for damages alone regarding one item is allowed to be maintained, then it may be that a partner may be decreed to pay a sum of money whereas when the general accounts are taken and the whole profits ascertained payment may be due to him. It is to avoid such difficulty and to avoid multiplicity of suits it is insisted that a suit between partners should be a suit for general accounts.