Hafiz Mohd. Sayeed vs Hakim Haji Abdul Hamid

Shamsher Bahadur, J.—The sole question for determination in this appeal is whether the sale by the Appellant, who is the Custodian of Evacuee Property, Delhi State, Delhi, on behalf of Hakim Hafiz Mohd. Sayeed of one-half share of the business assets of Hamdard Dawakhana in favour of the Respondent Hakim Haji Abdul Hamid included the share of profits which accrued to the evacuee after his migration to Pakis-tan and before the date of sale?

The establishment of Hamdard Dawakhana was originally owned by the two brothers, Hakim Hafiz Mohd. Sayeed and Hakim Haji Abdul Hamid, who is the first Respondent, in equal shares Hakim Haji Mohd. Sayeed having migrated to Pakistan was declared an evacuee by an order of the Assistant Custodian passed on 6th of August, 1949. Thereafter, the same officer by his order of 11th of February, 1950 (Exhibit P-5) declared that the "half share of the Hamdard Dawakhana business, factory and stock in trade" belonging to Mohd. Sayeed was to be notified as an evacuee property In the Extraordinary Gazette of India. The first Respondent, Hakim Abdul Hamid was directed to render the accounts of the Hamdard Dawa-khana on 20th of February, 1950 and to deposit half the income of the establishment in the Central Chest of Custodian Evacuee Property''s office. The first Respondent was also directed to act as Manager of the Hamdard Dawakhana on behalf of the Custodian. On 13th of February, 1950, the Assistant Custodian recorded the order (Exhibit P-9) asking the Assistant Custodian (Moveables) to take over half the share in the factory, stock in trade etc. of the Hamdard Dawakhana and also "necessary surety on the appointment of Hakim Abdul Hamid as manager on behalf of the Custodian etc., as early as possible". Thereafter, the first Respondent moved through his counsel an application on 20th of February, 1950 (Exhibit P-1) that the submission of accounts may be postponed for a month as they were under preparation. On that date, another order was passed by the Assistant Custodian that charge should be taken of the stock of the Hamdard Dawakhana and a security of Rs. 50,000/- should be obtained immadiately from the first Respondent. The security bond for Rs. 50,000/- was lodged by one Shambhu Nath on 28th of February, 1950, and the Respondent in his letter of the same date (Exhibit P-2) expressed his readiness and willingness "to act as a Manager of the evacuee property provided it is without prejudice to his rights to take any legal action by way of appeal revision etc., in order to get the accounts order annulled or modified". It is common ground that the first Respondent continued the business of the Hamdard Dawakhana till the half share of the establishment which had vested in the custodian was transferred to him on payment of Rs. 71,810/-. No transfer deed or sale deed was executed at the time and the only document is the receipt (Exhibit D-2) which was executed by the Assistant Custodian on 22nd of June, 1950. The receipt is worded as follows:

Received from H. Abdul Hamid.... Rs. 71,810/-, an account of sale price of � share of H. Mohd. Sayeed declared evacuee in the business of Hamdard Dawakhana.

Subsequently, the first Respondent was asked by the Appellant to render accounts of the profits which had accrued as the share of the evacuee in the business of Hamdard Dawakhana from 1st of January, 1949, to 22nd of June, 1950. The demand not having been acceded to, the Custodian brought a suit for this purpose on 7th of January, 1953. This suit having been dismissed by the learned Subordinate Judge, the Custodian has come in appeal to this Court.

The decision of this case turns on the question whether the transfer of half share of the business includea the half share of the profits and also the consequential right to ask for accounts? It is not disputed that at the time of sale the assets of the business were valued both by the first Respondent and Hakim (sic)-ui-Rehaman on behalf of the Custodian. The difference in their valuation was slight and half share of the business was computed at Rs. 71,810/- which was paid by the Respondent to the Custodian. The statement of law with regard to the share of partner in such a situation is given in Lindley on Partnership (eleventh edition) at page 42/, in chapter v, dealing with shares in partnerships. According to the proposition:

What Is meant by the share of a partner is his proportion of the partnership assets after they have been an realised and converted into money, and all the partnership debts and liabilities have been paid and discharged. This It is, and this only, which on the death of a partner passes to his representatives or to a legatee of his share....

This is of course, subject to any contrary intention which may be evinced by the contract between the parties concerned. The assets of a partnership include not only the stock In trade and goodwill but also the profits which have already accrued and have been thrown in the common account. It would be useful to manor to the leading English authority of the House of Lords in Rodaguez v. Speyer Brothers 1919 AC 59, to which reference has been made in Lindley on Partnership at page 427 said lord. Finalay at page 68:

There is another consideration to be taken into account if the co-contractors were partners. When a debt due to the first is got in no partner has any definite share or interest in that debt, his right is merely to have the money so received applied, together with the other assets, in discharging the liabilities of the firm, and to receive his share of any surplus there may be when the liquidation has been completed. His interest can be finally ascertained only when the liquidation has been completed, and it consists of his share of the surplus. He may be benefited as a consequence of the action by the reduction of his indebtness to the firm as a whole or conceivably by his getting some part of any surplus when the winding up has been completed. But he has no right to any part of the sum recovered.

The same position was expressed differently by Lord Atkinson at page 89:

At law the partners are joint tenants of debts due to the partnership. In equity they are, as between them-selves, treated as tenants in common of such debts. For the purposes of the winding up of the partnersnip affairs after dissolution each partner is the agent of the others, and thus each stands to the others in a fiduciary relation,

In Re Rhagg Easten v. Boyd (1938) 3 All ER 314, it was held by Simonds J. (as Lord Simonds then was) that the goodwill of a partnership business included undrawn profits due or to become due in respect of work done or in progress at his death and also items which are inseparably connected with the business. It cannot be legitimately argued that the first Respondent had to account separately for the profits which had accrued to the evacuee after his migration and before the date of sale. All this is deemed to have been included in the partnership business half share of which was sold to the first Respondent. The learned Counsel for the Appellant conceded eventually that the proposition in Lindley on Partnership, to which I have adverted, and approved in a Full Bench of the Lanore High Court of Din Mohammad, Ram Lall and Cornelius J. in Ajudhia Pershad v. Sham Sunder AIR 1947 Lah 13, leaves no scope for the contention that in absence of a contrary intention it must be assumed that the share of profits cannot be asked for by a suit for accounts. So far as the contrary intention is concerned, the counsel has placed strong reliance on the order of Mr. Achhru Ram as custodian General delivered on 23rd of December, 1950. This order (Exhibit P-6) was given long after the receipt (Exhibit D-z) was executed and it was mentioned therein that the assets of the Hamdard Dawakhana as they existed on 23rd of February, 1950, included the following items:

(1) Medicines Rs. 1,39,000/- (2) Machinery Rs. 30,000/- (3) Furniture Rs. 10,000/- (4) Bardana. Rs. 9,500/-

the total coming to Rs. 1,88,500/- Mr. Achhru Ram observed that the break-up valuation of the assets did not seem to include the share of profits which had accrued to Hakim. Mohd. sayeed and therefore made an order that an account should be rendered by the first Respondent for the period before 23rd of February, 1950. The counsel for the Appellant has not been able to show that the Custodian-General had any authority to pass the order on which reliance has been placed. The matter cannot, therefore, be regarded as, res judicata it was open for the Appellant to produce evidence on which Mr. Achhru Ram placed reliance but in the absence of such evidence on record, no notice can be taken of this order. The counsel has relied on the amendment which has been introduced in Section 48 of the Administration of Evacuee Property Act, 1950, and the amendment of Evacuee Property (Amendment) Act, 1956. The law governing the subject is the Administration of Evacuee Property Act, 1950, and the amendment of Section 48 on which reliance has been placed is not to be given any retrospective effect. The amendment which was introduced by Act 91 of 1956 says that:

Any sum payable to the Government or to the custodian In respect of any evacuee "property, under any agreement, express or implied, lease or other document or otherwise howsoever, may be recovered in the same manner" as an arrear of land revenue.

It may be conceded that the words "otherwise" may Include the direction which has been given by Mr. Achhru Ram in his order of 23rd of December, 1950, out the first Respondent could not be asked to produce accounts in respect of a sale which had been completed on 22nd of June, 1950, under the law as it was on 23rd of December, 1950 when Mr. Achhru Ram passed the order and no subsequent amendment can validate the directions given therein. In our opinion, it has been rightly held by the Court below that Exhibit P. 6 is not a document on which the foundation for the Plaintiff''s claim can be laid.

It is finally contended on behalf of the Appellant that both parties having laid the dispute before Mr. Achhru Ram the directions given by him have a binding force. There can be no conferment by consent of jurisdiction where none exists and as it is incontrovertible that the direction with regard to accounts is not warranted by any provision of the Administration of Evacuee (property Act, 1950, the order surfers from the detect of Jurisdiction and effect cannot be given to it even it it is assumed that the parties had agreed to accept this finding.

In this view of the matter, there is no force in this appeal which fails and is dismissed. We would, how-ever, leave the parties to bear their own costs of this litigation throughout.

D.K. Mahajan, J.

I agree.