R RAMCHANDRA NAIDU Vs. MALANG HYATH BATCHA SAIB

JUDGEMENT

(1.) This is a suit filed by the heirs of one Tirumalasami Naidu for taking partnership accounts. By a deed of partnership, dated the 7th January 1901 (Exhibit Q), the 1st defendant, Tirumalasami Naidu (whose heirs the plaintiffs claim to be), the late Muthuswami Naidu, the late Abdul Rahiman Sahib and one Kothandaramiah Chetti entered into a partnership agreement for carrying on business for five years from 1st January 1901. On the expiry of that period Kothandaramiah Chetti left the partnership and a fresh deed of partnership (Exhibit R, dated 29th January 1906) was entered into between the 1st defendant, the deceased Tirumalasami Naidu and the deceased Muthusami Naidu whereby they agreed to carry on business under the name and style of M.A. Hyath Batcha Sahib and Co., for a further period of five years from the 1st January 1906 with the option to continue the partnership thereafter on the same terms. Kothandaramiah Chetti, who was a partner in the business previous to the 29th January 1906, executed a release deed (Exhibit III, dated 31st January 1906) in favour of the other partners. The partnership under Exhibit It went on for five years and on the 23rd February 1911 the parties to Exhibit Reentered into a fresh deed of partnership (Exhibit S). The important terms were that they should carry on the business for five years from 1st January 1911 under the name, style and firm of M.A. Hyath Batoha Sahib & Co., that the capital of the partnership should in the first instance be Rs. 3 lakhs and be laid out by Malang Abdul Rahiman Sahib and Malang Hyath Batcha Sahib, that the other two partners should have the option of laying out capital, that the capital laid out by them and the other two partners should carry interest at 9 per cent.per annum, that the profits of the firm should be divided into 18 shares, nine of which should be paid to Abdul Rahiman and Hyath Batcha, five shares to Muthusami Naidu and four shares to Tirumalasami Naidu, that the accounts of the partnership should be made up at the end of every year and the losses borne by the partners in the proportion of profits to which they are entitled, that the business should be carried under the management of Hyath Batcha Sahib, Muthusami Naidu and Tirumalasami Naidu and that in case of difference of opinion the decision should rest with the majority. The business went on under this deed of partnership. In 1913 Abdul Rahiman Sahib (one of the partners) died leaving him surviving the 2nd defendant his son, third defendant his widow and the 5th defendant his daughter as his legal rapresentatives and the other partners continued to carry on the business under the same conditions as before. Tirumalasami Naidu died in November 1915 leaving the 1st plaintiff his brother and defendants Nos. 2 to 6 his sons, and Muthu-sami Naidu died in February 1916 leaving the 4th defendant his son and legal representative.

(2.) The case for the plaintiffs is that the 1st plaintiff is the undivided brother and plaintiffs Nos. 2 to 6 are the undivided sons of the late Tirumalasami Naidu and that they are entitled to an account of the partnership and to payment of what is due to Tirumalasami Naidu. It is alleged in the plaint that the three partnerships referred to above are really one partnership, the business under each deed being only a continuation of the business done under the preceding document, that a sum of a lakh of rupees, deposited with Graham and Co. as security, is a partnership asset, that Rs. 25,000 kept as a sinking fund in suspense account is to be brought into the partnership account, that the periodical taking of accounts, for the ascertainment of profits and. losses not having been complete, the plaintiffs are entitled to an account from the commencement, that the good will of the business is a partnership asset in which the, plaintiffs are interested and entitled to a share and that the defendants have not complied with the plaintiffs demand for an account and for payment of what is due.

(3.) The first defendant filed a written statement admitting the deeds of partnership referred to in the plaint but pleading that Tirumalasami Naidu was only a working partner who had no interest in the good will, that the interests of the first plaintiff and the other plaintiffs are adverse, that the first plaintiff has no claim to the amount due to Tirumalasami Naidu, that the accounts of the partnership were, according to the practice of the firm, settled every year, the last settlement being of the 31st December 1915, that the plaintiffs are not entitled to re-open the accounts which were taken and the correctness of which has been admitted by Tirumalasami Naidu, that, as regards the one lakh of rupees with Graham & Co., the same has been credited and brought into account in the annual taking of profits and losses that as regards the sinking fond it was a reserve against bad debts, that once in three or four year s at settlements of accounts the sinking fund was set off against bad debts and thus the same was reduced, that the amount standing to the credit of the reserve fund on 31st December 1914 was Rs. 20,312-7-11 without making allowance for depreciation of book and other debts and that the defendants are not liable to account on the footing of wilful default nor should accounts be taken from 1901 as alleged in the plaint. The 1st defendant admits that the amount due to Tirumalasami Naidu was about Rs. 71,717-11-9 on the 31st December 1915 and states that he was unable to pay the amount of anybody as one Govindarajulu Naidu (another brother of Tirumalasami Naidu) Objected to payment being made and claimed interest on the moneys himself.