BANWARI LAL Vs. SHAIKH SHUKRULLAH

JUDGEMENT

(1.) This and the analogous appeal (No. 60 of 1933) under Letters Patent are against a decree of a learned Judge of this Court in a suit for dissolution of partnership, for accounts and other incidental reliefs. The facts are as follows: The plaintiffs and defendant 6 who style themselves as Messrs. Nuri Mian & Co. are the owners of two sugar factories; one known as Nuri Sugar Factory is at Bhatni in the district of Gorakhpur in the United Provinces and the other named Deshi Sugar Factory is at Siwan in this province. The Bhatni factory is a composite one, that is to say, it manufactures sugar in the cane season directly from the cane and in other seasons by melting molasses, while the Siwan factory is a refinery and works with molasses only.

(2.) In about the year 1927 the owners were involved in financial difficulties and the factories had been mortgaged with the Imperial Bank of India. They therefore approached defendants 1 to 3 and father of defendants 4 and 5 for financial assistance. The negotiations culminated in two deeds, one a deed of partnership dated 15 October 1927, between the owners and defendants 1 to 3, and another an indenture between the owners on the one part and defendants 1 to 3 and father of defendants 4 and 5 on the other part and is dated 27 October 1925. It is not necessary to give here the detailed terms of these two deeds. So much of them as are relevant to the questions involved in this appeal will be stated at appropriate places. At present it is enough to state that defendants 1 to 3 and father of defendants 4 and 5 advanced to the plaintiffs and defendant 6 a sum of Rs. 5,75,000 at 9 per cent, per annum interest in order to enable them to pay up the dues of the Imperial Bank of India and other creditors.

(3.) The owners mortgaged the factories to them. It was arranged that the capital for the working of the factories would be supplied by defendants 1 to 3 as partners of the owners and that both the factories would be worked to their fullest capacities. The entire control of the staff and management was given to defendants 1 to 3 by the deed of partnership. It was arranged that the parties would share profit and loss half and half and out of the share of the profits of the owners three-fourths would go towards the liquidation of the mortgage debt, namely Rs. 5,75,000 and its interest and the remaining one-fourth of it would be paid to the owners. It was also arranged that owners would keep agents who would supervise the accounts and works of the factories. The arrangement was to last for five years; but if by that time the mortgage money, namely Rs. 5,75,000 with interest, would not be satisfied it would continue till its satisfaction.