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Judgment
Vepa Ramesam, Kt., C.J.—This Second Appeal arises out of a suit brought by one Kothandapani Chetty for directing accounts to be taken
of a partnership entered into between the plaintiff and the West Coast Company, the partners of which are the 1st defendant and the husband of
the 2nd defendant. The partnership related to the working of timber in certain forests. The date of the partnership is 8th, December, 1918. The
husband of the 2nd defendant Srinivasaraghavacharya died in April, 1920. The present suit was filed on 14th July, 1925, against the 1st defendant,
one of the original partners, defendants 2 to 5, the legal representatives of the deceased Srinivasaraghavacharya, and the 6th and 7th defendants,
vendees of the leasehold property from the 1st defendant and Srinivasaraghavacharya. 26 issues were framed in the case, but all the issues were
not tried. The suit was disposed of with reference to the findings of the Subordinate Judge on issues 7, 8, 10, 12 and 18 only. Issues 7 and 8 relate
to the question whether the partnership was dissolved prior to suit. Issue 10 raises the question of the amount contributed by the plaintiff to the
partnership. Issue 12 raises the question whether the suit is barred by limitation. Issue 18 relates to the question whether the defendants are liable
to account to the plaintiff for his share in the plaint-mentioned property. On these issues the Subordinate Judge found that the suit is barred by
limitation on the ground that the suit is one for taking the accounts of a dissolved partnership and therefore is governed by Article 106 and not by
Article 120 of the Limitation Act as it would have been if it was really a suit for dissolving a partnership. There was an appeal and the District
Judge of South Malabar held that the Subordinate Judge rightly dismissed the suit on the ground that it was barred under Article 106. The plaintiff
files this Second Appeal.
In second appeal Mr. T. M. Krishnaswami Aiyar, the learned Advocate for the appellant, put forward three contentions : first, that the suit was
based on certain fraudulent acts of the 1st defendant and Srinivasaraghavacharya and that these fraudulent acts of the partners gave the plaintiff a
right to seek dissolution of the partnership within six years from the date the cause of action arose. One of the fraudulent acts mentioned in the
plaint is the sale of the leasehold property, in which the timber forest was situate, by sale deed dated 14th July, 1919. Plaintiff contends that the
suit, which was filed on 14th July, 1925, i.e., within 6 years from the sale, is therefore * within time. He also contends that the right to sue for an
account within six years was not cut down by the death of Srinivasaraghavacharya. The obvious reply to this contention is that we have to look at
the real nature of the suit that is filed in Court in determining whether a particular Article of the Limitation Act is applicable. When
Srinivasaraghavacharya died in 1920, u/s 253 of the Indian Contract Act the partnership was dissolved by his death, subject to the argument to be
noticed under the second heading. If the partnership was dissolved in April, 1920, there was no undis-solved partnership, for the dissolution of
which the plaintiff had to file a suit. The partnership was dissolved by operation of law, and if the plaintiff wants to recover any amount on the
taking of the accounts of the partnership, the suit is really for taking the accounts of a dissolved partnership. The first prayer in the plaint, namely,
dissolving the partnership between the plaintiff on the one hand and the 1st defendant and the said Srinivasaraghavacharya on the other,"" is a
prayer which was neither necessary nor a relief to which he was entitled. The suit is really only for the taking of the ''accounts of a dissolved
partnership, and by adding a redundant prayer he cannot convert the real nature of his suit, which is one for taking the accounts of a dissolved
partnership, into one for dissolving a partnership. Mr. Krishnaswami Aiyar argues that even if the partnership had been dissolved by the death of
Srinivasaraghavacharya, on account of the fraudulent act of selling the leasehold property in July, 1919, he was entitled to the relief of dissolving
the partnership as and from July, 1919. He is not satisfied with the dissolution of the partnership in April, 1920, by the death of
Srinivasaraghavacharya and he wants the dissolution as and from July, 1919, and for this purpose he argues that he can ask for dissolution of
partnership. I do not think that this contention is well founded. A suit for dissolution of partnership is always for dissolution as and from the date of
judgment or at the earliest from the date of the plaint. If instead of asking for dissolution earlier, the plaintiff waits for some time and then brings a
suit, the relief to which he is entitled is only from the date of the suit or judgment. Vide Daniel''s Chancery Practice, Vol. II, p. 1301. It is true that
there may be cases in which the Court may declare that the partnership is dissolved from a fixed date; but that only applies to cases where it is
possible to say that the partnership was dissolved as and from a fixed date by operation of law, though it may not have been known to the parties
at the time the suit was filed, such as a case of the death of a partner or bankruptcy in English law and similar circumstances. But where a party
seeks the aid of a Court in dissolving the partnership, that principle does not apply, and the observation of James, L.J. in Lyon v. Tweddell (1881)
17 Ch. Dn. 529 must only be construed to mean that sometimes Courts may dissolve a partnership earlier than the judgment, i.e., from the date of
the issue of writ of summons or at the earliest from the date of the plaint. Mr. Krishna-swami Aiyar''s argument on the first point must therefore be
disallowed.
The second point argued by him is that the partnership was not dissolved by the death of Srinivasaraghavacharya in April, 1920, because there
is a contract to the contrary in the articles of the partnership. It is not contended before us that a contract, to the contrary should be inferred from
the subsequent conduct of the parties and therefore we have not got to consider that aspect of the case and certain Calcutta decisions which might
be relevant if such a contention were put forward. Ex. A is the deed of partnership. The two relevant clauses contained in it are clauses 8 and 21.
Clause 8 says:
This partnership is in force for the whole period of the lease of sixty years between ''A'' and ''B''.
Clause 21 runs thus:
The interests of ''A'' or ''B'' in this partnership deed are assignable only among themselves or to their legal heirs.
As we read clause 8, it only means that a term is fixed for the partnership. It is true that the term is very long and the parties could not have
contemplated they would be living so long as 60 years from the date of the partnership. All the same wherever a term is fixed in a partnership
deed, it only means that a certain period is fixed and it is not permissible for the Court to infer merely from the term a contract to the contrary
within the meaning of Section 253 of the Contract Act. Lindley in his Principles of Partnership, p. 703, observes:
Death is a contingency which all persons entering into partnership know may unexpectedly put an end to it. If, therefore, they do not expressly
guard against this risk, they may reasonably be treated as contented to incur it: and if death should unexpectedly happen, no return of premium not
expressly provided for can be demanded.
Section 253(10) provides that a partnership, whether entered into for a fixed, term or not, is dissolved by the death of one of the partners and
there is no provision, express or necessarily or reasonably implied in the terms of the deed of partnership, that the partnership should be continued.
After the death of one of the partners the partnership would be put an end to. In this case beyond stating that the partnership is to continue for 60
years, we do not find any attempt was made to make any extra provision for this purpose in Clause 8. Therefore Clause 8 does not help the
parties. Coming to Clause 21, we think it is of less help to the appellant. The object of this clause is to prevent the parties from introducing
outsiders into the partnership. They contemplated the possibility of one of the partners dying and his interest devolving upon his heir. That the
interest of a deceased partner should descend to his heir is a thing which happens by operation of law and which the parties cannot prevent. All
that the parties say in Clause 21 in effect is that, apart from death they should not, by act of parties, allow outsiders to be concerned with the
partnership. The devolution of the interest of one partner to his heir is a thing which has necessarily to be submitted to by the parties: but the clause
does not say that after such devolution the heir should be allowed the option to continue in the partnership if he chooses to. There is no reference,
either express or implied, by which it may be inferred that the parties contemplated that the heir or heirs of dying partners should continue with the
surviving partners and carry on the business of the partnership. It is unnecessary to discuss the several English and Indian cases cited before us in
which the question is raised whether, if such a provision is made, it is an imperative provision or gives only an option to the heir and what legal
consequences flow from such a clause such as Lancaster v. Allsup (1887) 57 L.T. 53, cited by me in Sayyed Abdul Hawk v. Tumuluri Vaikuntam
(1926) 52 M.L.J. 318 and other English cases tending in the same direction. I am therefore of opinion that this contention does not help the
appellant.
We now come to the third contention pressed by Mr. Krishnaswami Aiyar, namely, that in this case the deed of partnership is registered and
therefore Article 116 and not Article 106 applies. It is true that there are some cases in which a liberal interpretation is given to Article 116 and in
the case of claims arising out of contracts contained in registered instruments, Article 116 was held to apply, though it may be perhaps said that
strictly they may not be cases of compensation for breach of the terms of a contract in writing registered. '' But when the cases are carefully
examined, I thinly they are distinguishable. One of the earliest cases is a decision in Ranga Reddi v. Chinna Reddi ILR (1891) Mad. 465 : (1891) 1
M.L.J. 482, a decision of Muthuswami Ayyar and Shephard, JJ. In that case there was a clause in the registered deed of partnership that if losses
were incurred, each party should bear the loss in proportion to his share. The plaintiff alleged that loss had been incurred in the business and sued
to recover his share of the loss. The learned Judges held that by reason of this clause Article 116 was applicable. In answer to the argument that
where there are specific articles only the special article should be applied and not Article 116, they point out that, where there is a registered
instrument, Article 116 displaces certain other specific articles which in the case of an oral or unregistered contract might be applicable. Another
case in which the point arose in respect of a partnership is the decision in Vayiravan Asary Vs. Ponniah and Others, . One of the Judges,
Shephard, J., was also a party to the former judgment, in Ranga Reddi v. Chinna Reddi (1891) Mad. 465 : (1891)1 M.L.J. 482. In that case, the
suit was merely for taking the accounts of the partnership, and the suit was not based upon any particular clause in the deed of partnership. The
learned Judges held that, in spite of the liberal interpretation given to Article 116, some limit must be placed to such liberal interpretation and that,
where the suit is merely for taking the accounts of a partnership, Article 116 is not applicable and Article 106 is the only article applicable. It was
strenuously contended by Mr. Krishnaswami Aiyar that in all partnerships there is an implied term that at the end of the business the partnership
property should be sold, accounts taken and after paying the debts, the net proceeds should be distributed between the parties according to their
shares. No doubt such a principle is implied in every partnership transaction and the rights of parties in the end should be regulated on such
principle. Where one party files a suit for taking the accounts, the other party has got to submit to such a suit on account of such principle. But all
this does not make the suit for taking the accounts a suit for compensation for breach of contract in writing. It is very difficult to say in such a case
that any one of the parties has broken any particular term of the contract. Even if some specific breaches of some clauses in the deed are alleged,
in the main the suit is one for taking the accounts. In the course of taking such accounts, results of breaches made by particular partners may have
to be considered; but the main characteristic of the suit is not altered. In this second appeal it is true that charges are made against defendants that
they are guilty of breach of certain obligations under which they were according to some of the clauses in the deed of partnership; but the main
prayer in the suit is that accounts should be taken of the partnership transactions. The principle of Vayiravan Asary Vs. Ponniah and Others, was
followed in later decisions. In some of the cases arising out of contracts of agency where the conflict was between the application of Article 89 and
Article 115, there being no discussion about Article 116, the cases would not be of help to us in the present appeal. In Hafezuddin Mandal v. Jadu
Nath Saha ILR (1908) Cal. 298, where it was observed by Maclean, C.J., that suits for accounts against an agent may not be aptly described as
suits for compensation for breach of a contract in writing registered, the case finally turned on the application of Article 132, because under the
contract there was a charge on the defendant''s property and therefore that decision again may not be of much use to us now. However there is
one decision which certainly is in favour of the appellant, namely, the decision in Bhagirath v. Prem Chand (1912) 17 C.L.J. 201 : (1912) 16 I.C.
852, where Article 116 was applied to a suit for accounts against the agent, the instrument being registered. But in the face of the decision in
Vayiravan Asary Vs. Ponniah and Others, of this Court, which has not been to this date dissented from, and a subsequent decision of this Court
which I am about to mention, we are unable to agree with that decision. The decision in Jogesh Chandra alias Dhalu Ghose v. Benode Lal Roy 14
C.W.N. 122 : 5 I.C. 59 is distinguishable on the ground that there was a specific stipulation in the contract that the agent should render account
annually. The decision of the Privy Council in 21 CWN 577 (Privy Council) is not of direct help to us because it is a case of rent. Finally we come
to the decision of this Court (Reilly and Anantakrishna Aiyar, JJ.) in Annu v. Somasundara ILR (1930) Mad. 654: (1930) 62 M.L.J. 45. It is true
that that case relates to a contract of agency; but the decision turned on nothing peculiar to the contract of agency but on the nature of a suit for
accounts. After an exhaustive discussion of the relevant cases, the learned Judges were of the opinion that a suit for taking accounts between
parties is not a suit for compensation for breach of contract. And though the discussion turned upon Articles 89, 115 and other corresponding
articles in the matter of agency, we think the principle of that decision applies. In the place of Article 89, we have got Article 106 in the case of
partnership. When there is a specific stipulation in the deed of partnership and the suit is based on a breach of that stipulation, it may be said that
the suit falls under Article 116 as in the case of Ranga Reddi v. Chinna Reddi ILR (1891) Mad. 465 : (1891) 1 M.L.J. 482. Generally speaking, in
cases where accounts are to be taken between the parties the breach of any particular stipulation by one of the parties being a subordinate matter
and the prayer being for the taking of the accounts of the partnership, the reasoning of Anna v. Spmasundara ILR (1930) Mad. 654 : (1930) 62
M.L.J. 45 applies equally to cases of partnership. Agreeing with it we think that the proper article applicable is Article 106 and not Article 116 and
that the suit has been rightly held to be barred.
It may be useful to mention that, as in the case of a suit for accounts against an agent, so also in the case of accounts as between partners the
suit may end in a decree against the plaintiff in favour of the defendant as observed by the Privy Council in (1886) L.R. 13 I.A. 123 (Privy
Council) .
All the contentions urged by the learned Advocate for the appellant fail and the Second Appeal is dismissed with costs. The Advocates'' fee is
to be divided equally between respondents 2 to 5 on the one hand and respondent 8 on the other, and the other costs will be paid to respondents
2 to 5.
Venkatasubba Rao, J.
Questions of some importance have been raised in this second appeal, and I shall deal with them shortly.
The 1st defendant obtained a lease of a forest in 1913. The suit partnership was entered into in 1918 for the purpose of dealing in timber in
that forest. That partnership consisted of the plaintiff, the 1st defendant and one Srinivasaraghavacharya, deceased, now represented by
defendants 2 to 5. The plaintiff alleges that on 14th July, 1919, the 1st defendant illegally transferred his leasehold interest in favour of the 6th
defendant. The suit was filed on 14th July, 1925.
The first question that arises is, what is the article of the Limitation Act that is applicable? It must be mentioned that in April, 1920,
Srinivasaraghavacharya died and by his death the partnership became ipso facto dissolved. Article 106 provides a period of three years for a suit
claiming ""an account and a share of the profits of a dissolved partnership,"" the starting point being the date of the dissolution. It is contended by
Mr. T. M. Krishnaswami Aiyar, the appellant''s (plaintiff''s) learned Counsel, that Article 120 governs the case.'' He puts his argument thus. The
alienation by the 1st defendant of his interest gave the plaintiff the right to claim a dissolution (see Section 254(3) of the Contract Act). That being
the plaintiff''s cause of action, he could file a suit under Article 120 within six years from the date of the accrual of that right. This argument rests
upon a fallacy. No doubt the transfer of his interest by the 1st defendant gave the plaintiff the right to ask the Court to dissolve the partnership, but
that was an option that the plaintiff had and he was not bound to claim a dissolution on that account. In the meantime Srinivasaraghavacharya died
and the partnership became dissolved by operation of law. (See Section 253(10) of the Contract Act.) It would be futile to ask the Court to
dissolve a partnership, which has already become dissolved. The suit then is in substance for an account and a share of the profits of a dissolved
partnership. We are not here concerned with the question as to what the article is that is applicable in respect of a suit to dissolve an existing or a
continuing partnership; nor are we concerned with the kinds of partnership suits that are governed by Article 120. When a partnership, however,
has already become dissolved as in this case, the provision that governs the case is Article 106. In this connection, I may point out that the law
makes a distinction between two kinds of events: on the happening of the events of one kind, the partnership becomes automatically dissolved but
in the case of the events of the other kind, the party must come to Court and seek its aid to get a dissolution. (See Daniel''s Chancery Practice,
Vol. II, pages 1300-1301.) So much for the first contention.
It is next argued that the partnership having been entered into for a fixed term of 60 years, there are clauses in the articles which show that the
parties intended that it was not to be dissolved in the meantime by the death of any of them. Clause 8 which runs thus,
This partnership is in force for the whole period of the lease of sixty years between ''A'' and ''B'',.
is relied upon. This clause does not help the plaintiff in the least. The lease having been taken for 60 years, the same period was naturally fixed as
the term for which the partnership was to subsist. In the face of the express provision contained in Section 253(10) of the Contract Act which
says,
Partnerships, whether entered into for a fixed term or not, are dissolved by the death of any partner,
this argument is of no avail. Then Clause 21, on which reliance is placed, is to the following effect:
The interests of ''A'' or ''B'' in this partnership deed are assignable only among themselves or to their legal heirs.
This clause does no more than give a preferential right to the partners to acquire each other''s shares; this was intended as a safeguard against
strangers being brought in. The operation of Section 253(10) may be excluded, as the opening words of that very section show, by a contract to
the contrary. What is pleaded here is not of course an express contract; but can a contract to the contrary be implied by either necessary or
reasonable inference from the words used? I think not. I need not quote the passage from Lindley, to which the learned Officiating Chief Justice
has referred. I am clearly of the opinion, that a contract to continue the partnership in spite of the death of a partner, has not been shown.
Granting that such a contract to the contrary has been proved, what is the result? Can ""the heirs of the deceased Srinivasaraghavacharya be
compelled by the Court to continue in partnership with the plaintiff? Downs v. Collins (1848) 6 Hare 418 : (1848) 67 E.R. 1228 is an instructive
case on the point. The articles of partnership between two partners contained a covenant that they and their respective executors and
administrators would continue partners for 21 years. It was held in a suit by the executors of the deceased partner against the survivor for a
dissolution, that the provisions for the continuance of the partnership ""could not be enforced in equity by way of specific performance of the
partnership contract against the representatives of a deceased partner, either by way of relief in a suit in which such surviving partner was plaintiff,
or by way of protection in a suit in which he was defendant"". This case was followed by Stirling, J. in Lancaster v. Allsup (1887) 57 L.T. 53. By
the articles of partnership it was provided that the parties should become and be partners and that the partnership should continue for a term of 15
years from a certain date. The action was brought by the representatives of Thomas Lancaster, deceased, to have the affairs of the partnership, in
which he had been a partner in his lifetime, wound up. For the defendant (the surviving partner) it was contended that the words of the'' clause
amounted to an absolute covenant by each partner that the partnership was to continue for 15 years and that, if any partner died, his representative
should stand in his place; in other words, that it was not a mere enabling provision which gave an option to the representatives but was an absolute
and imperative one. Stirling, J. deals with the argument thus:
For the purpose of my decision I will assume that that it is so. Then the question is, is that a contract which the Court will enforce against the
executors?
That question the learned Judge answers in the negative. Following Downs v. Collins (1848) 6 Hare 418 : (1848) 67 E.R. 1228 and another
case to which I need not refer, the learned Judge decided that the death of Thomas Lancaster created a dissolution of the partnership and that it
must be wound up on that footing. He goes on to add,
The judgment will contain a provision, as in Downs v. Collins (1848) 6 Hare 418 : (1848) 67 E.R. 1228, reserving to them their right to prosecute
any claim which they may have in respect of any alleged breach of contract. Except for that, there will be the usual partnership judgment, the assets
to be realised in chambers.
The 3rd defendanfain his written statement (which in this particular has been adopted by the other representatives of the deceased) alleges that
there was not even a concluded agreement of partnership with the plaintiff and further pleads that in any event there was no covenant for the
continuance of the concern after the death of any of the partners. The heirs of Srinivasaraghavacharya must be therefore taken to have declined
from the very beginning to continue as partners with the plaintiff. Even granting then that the clauses are capable of being read as containing a
covenant for continuance as contended for, there can be no doubt that the partnership became dissolved on the death of Srinivasaraghavacharya.
The suit is therefore one in respect of a dissolved partnership, and Article 106, as I have said, governs the case.
Then remains the third and last contention, that the articles of partnership having been registered under the Registration Act, the article
applicable is not Article 106 but Article 116. The latter article cannot apply unless the suit is ""for compensation for the breach of a contract in
writing registered"". 21 CWN 577 (Privy Council) , so strongly relied upon by the appellant, does not seem to help him. In that case their Lordships
of the Judicial Committee held that, when rent was claimed under a registered instrument, Article 116 and not Article 110 applied. Their judgment
appears to have been based on two grounds: first, that the large body of decisions, which applied Article 116 must be followed and secondly, that
the omission from Article 116 of the words which occur in Article 115, namely, ""and not herein specially provided for,"" is critical. This decision is
no doubt an authority for the position, that a suit for rent can properly be described as a suit ""for compensation for the breach of a contract,"" but
there is nothing in that case to warrant the view that a suit in respect of a dissolved partnership is a suit of that description. Nor can I accede to the
contention that Ratnasabapathy v. Devasigamony ILR (1928) Mad. 105 : (1928) 56 M.L.J. 10 supports the appellant. That was a suit for the
recovery of a debt due under a personal covenant contained in a mortgage deed, and it was held that such a suit was governed by Article 116. In
the case of a contract for the payment of a debt, what the Court decrees on breach is strictly compensation. But a suit for an account of a
dissolved partnership cannot, without great violence to the language be described as a suit ""for compensation for the breach of a contract"". What
are the kinds of relief which are granted in such a suit? The partnership accounts are directed to be taken, the assets to be realised,'' the
outstandings to be collected, the properties to be sold and the debts to be paid off; the balance, if there be found any, is ordered to be divided
between the parties; if the concern ends in a loss (and that is important), the plaintiff is directed, equally with the defendants, to bear his share of it.
The construction must not be strained to include cases plainly omitted from the natural meaning of the words--that is a well-known canon of
interpretation. See Maxwell on Interpretation of Statutes, 7th Edn. (1929), p. 59. Several cases dealing with suits against agents have been cited
before us and they have been referred to in the judgment just pronounced by the learned Officiating Chief Justice. I do not propose to deal with
them, but I must remark that such of them (whether they support the appellant or not), as have not recognised the distinction pointed out by the
Judicial Committee in 21 CWN 577 (Privy Council) between Article 115 and Art.. 116 cannot be of much value. But Annu v. Somasundara ILR
(1930) Mad. 654 : (1930) 62 M.L.J. 45 is not open to this criticism and it has been held in that case that a suit for an account against an agent
cannot be regarded as a suit ""for compensation for the breach of a contract"". We are here concerned with a case of partnership and not with a
case of agency; but still the analogy is useful. As to direct authority, two cases have been cited before us. In Ranga Reddi v. Chinna Reddi ILR
(1891) Mad. 465 : (1891) 1 M.L.J. 482 there was a partnership deed, which provided for the liability of a partner to pay the loss and the suit was
brought on an account stated, which showed what the actual amount of the loss was. It was held that Article 116 applied. The reason is thus
stated:
The contract of partnership contains an express stipulation that the parties should, according to their shares, pay the loss, and thus the origin of the
obligation now in suit was a registered contract. The account stated had reference to the registered contract and did not constitute in itself an
independent contract.
The second of the cases referred to, namely, Vayiravan Asary Vs. Ponniah and Others, , was a suit for an account and share of the profits of a
partnership. Although the partnership was entered into under a registered agreement, it was held that the suit was governed by the three-year rule
under Article 106. Shephard, J. was a party to both these decisions. In the second case, the earlier one was distinguished on the ground that the
learned Judges were not prepared to say that
the article can be stretched to cover every case in which the plaintiff''s claim may in its origin be referred to a contractual relation which is
expressed in a registered instrument.
Vayiravan Asary Vs. Ponniah and Others, has stood unquestioned from 1898 and I agree with the conclusion arrived at in that case, although,
I for my part, would prefer to rest my judgment upon the ground that a suit in respect of a dissolved partnership is not a suit ""for compensation for
the breach of a contract"". The third contention is also therefore disallowed.
In the result, the second appeal fails and I agree in the order proposed by the learned Officiating Chief Justice.