Grandhe Gangayya vs Grandhe Venkataramiah and Others

Kumaraswami Sastsi, J.—The question for decision is whether it is open to a member of a Hindu family, who has become divided in status,

to sue for dissolution at partnership entered into between the managing member of the family and strangers, when the family was joint.

Sections 254 and 265 of the Indian Contract Act only contemplate suits by one of the partners (as defined in Section 239) for dissolution of

partnership and the taking of the partnership accounts, and there is nothing in the Act which confers such right of suit on a person merely by reason

of his being entitled to a share in the interests of one of the partners in the firm. Such a person cannot be in a better position than a sub-partner and

it is settled law that he has no right to ask for dissolution of partnership or the taking of the partnership accounts, there being no contract or privity

except between him and the partner with whom he is a sub partner.

In the present case the plaintiff was not admitted as a partner in the firm during his minority so as to enable him to the benefit of Section 247 of

the Contract Act, or after he became a major so as to make him a partner within the meaning of Section 239. The only ground On which he

became a partner in the firm is that he became in law a partner of the firm when the managing member of the family entered into the contract of

partnership with the 3rd defendant or when, owing to a partition between himself and the other members of the family, he became entitled to a

specific divided share in the joint family properties.

It is well settled that a contract of partnership between a member of a joint family and a stranger does not make every member of the joint

family, which the managing member represents, a partner so as to clothe him with all the rights and obligations of a partner as defined in Section

239 of the Contract Act. I need only refer to Sokkanadha Vannimundar v. Sokkanadha Vannimundar 28 MS. 344, Ramanathan Chetty v.

Yegappa Chetty 32 Ind. Cas. 427 and Vadilal Lallubhai v. Shah Khushal Dalpatram 4 Bom. L.R. 968. It is no doubt true that as between the

members of the undivided family and the co parcener who enters into a contract of partnership for the benefit of the family they will be entitled to

call upon him to account for the profits earned by him from the partnership and to share in such profits, but this will not place them in any position

of direct contractual relationship with the other partners of the firm. Nor would the fact that the entire assets of the joint family might be available to

the creditor of the firm make any difference. The position of the plaintiff in the present case cannot be higher than that of a sub-partner. The

managing member of an undivided family, though he has the power of representing the interests of the other members, is not their agent in the strict

sense of the term so as to clothe the other members of the family with all the rights of principals in respect of contracts entered into by their agent.

His position is, as pointed out by their Lordships of the Privy Council in Annamalai Chetty v. Murugasa Chetty 26 M. 544, more analogous to that

of a trustee.

If a member of a joint family does not become ipso facto a partner by reason of the contract of partnership entered into between a member of

his family, it is difficult to see on what ground a partition would place him in a better position. Reliance has been placed by Mr. Seetharama Row

on the observations of their Lordships of the Privy Council in Joopoody Sharayya v. Pulavarti Lakshmanaswamy 19 Ind. Cas. 513 : 17 C.W.N.

1006 : 25 M.L.J. 128 to the effect that different person� arose in law on a partition between the members of a joint family, one of whom was

carrying on business in partnership with a stranger so as to entitle the stranger to refuse alliance in partnership with the divided members. What their

Lordships were considering was the question of fact as to when a partnership became dissolved so as to attract the provisions of Article 106 of the

Limitation Act, and I entirely agree with the observations of Courts Trotter and Srinivasa Aiyangar, JJ., in Ramanathan Chetty v. Yegappa Chetty

32 Ind. Cas. 427 to the effect that their Lordships cannot be taken to have overruled the decisions of the Indian Courts as to the position of a co-

parcener in relation to a partnership entered into by one of the members of the family.

When there has been a partition between the members of a joint family, all that the divided co-parcener can do is to call upon the managing

member or co-parcener partner of the firm to get in the assets which would be due to him as a partner by proper proceedings against its partners

and divide it between them in the proportion of, their shares in the joint family property. If he refuses or neglects to do so, their remedy is to treat

the interest of the co-parcener in the firm as joint family assets and to sue for partition. In such a suit the assets can be realized by the appointment

of a Receiver who, as representing the partner co-parcener, can, by appropriate proceedings, get in what may be due to him. It has been argued

that this procedure will lead to a multiplicity of actions, but looking at the question from the mere standpoint of convenience, I think it would be

mischievous to hold that a co-parcener can interfere with the affairs of the partnership, simply because he has on partition got a specific share in the

interests of one of the partners and to treat him as a partner because of a partition with which the other partners have no concern. In oases of mere

change of status, which according to the recent decision of the Privy Council can be effected by a mere unilateral declaration of intention, the

position is still more complicated, as it may well be that on the actual partition of the various items of joint family property the interest of the family

in the business may go to some other co-parceners. I do not think that any consideration of inconvenience to the members of a joint family should

affect the settled rules of law as to the rights and obligations of partners inter se,

I am of opinion that the decision of Mr. Justice Spencer is right and would dismiss the Letters Patent Appeal with costs.

Wallis, C J.

I agree.

Bakewell, J.

I agree.