Katta Gundayya and Others vs Katta Siddappa and Others

Varadachariar, J.—This appeal arises out of a suit for partition. The first plaintiff and the other defendants are their sons and grandsons. Till

1915, the two branches constituted an undivided Hindu family which was possessed of extensive properties, movable and immovable. They had

also a family business. In 1915 partition between the two branches began and the parties have gone on dividing portions of the properties, from

time to time, sometimes by arrangement between themselves and sometimes through arbitrators. Some movables, some immovables and various

outstandings remained undivided even at the date of the plaint in this suit which was filed in 1931. After the division began in 1915, the family trade

continued to be carried on till 1922, though it appears that from 1920 the defendants began to do business on their own account as well. After

1922 it is admitted that no further business was carried on in common. On the other hand, the plaintiffs'' branch also began to do business on its

own account from 1922. Between 1922 and the date of the institution of this suit, the outstandings due to the family were being collected by the

first plaintiff or the first defendant according to convenience; such collections have sometimes been divided between them as and when they were

made but on other occasions the parties seemed to have retained in their own hands the amounts respectively collected by them. This suit was

accordingly instituted by the plaintiff''s branch for a partition of the immovable properties still remaining undivided, for a division of the outstandings

remaining uncollected and for the appointment of a commissioner to take accounts of the collections respectively made by the two branches with a

view to direct one party or the other to pay the other''s share of excess collected by such party. The plaint refers to the properties still remaining

undivided as ""coparcenary"" property. This is not an accurate description; and the arguments both in the Court below and before us have

proceeded on the footing that in 1915 the parties must be regarded as having become divided in status; but according to the plaintiff''s case, there

can be no doubt that the suit properties are properties belonging in common to a family which had become divided in status.

As regards some of the immovable properties of which partition was claimed, there was little or no dispute. As regards items 31 to 83 of the

plaint schedule, the defendants contended that the properties themselves must be held to belong exclusively to the defendants'' branch, the plaintiffs

being at best only entitled to a share of the amount due under the decree in O.S. No. 57 of 1918 in execution of which these properties were

purchased by the first defendant. In answer to prayer for the division of outstandings and for the appointment of a commissioner to take an account

of the collections made by each party, the defendants raised a plea of limitation, contending that after 1915 the first plaintiff and the first defendant

must be deemed to have carried on the business only as partners, that the partnership was dissolved in 1922 and that any claim for the taking of

the accounts thereof must therefore be deemed to be governed by Article 106 of the Limitation Act. A further defence to the claim for the taking of

accounts was raised with reference to the order passed in E.P. No. 26 of 1927 in O.S. No. 27 of 1925 on the file of the Sub-Court. A prayer

made by the present defendant as decree-holders in that suit for the taking of accounts had been disallowed by the executing Court. Hence it was

said that the matter must be taken to have been concluded by that order. These three pleas were overruled by the lower Court and a preliminary

decree for partition and for the taking of the necessary accounts was passed; hence this appeal by the defendants.

It may be convenient to deal at the outset with the question of limitation, because in one view that plea will also bear upon the plaintiffs'' claim in

respect of the debt which formed the subject-matter of O.S. No. 57 of 1918 which led to the purchase of items 31 to 83. Relying upon the

observations of the Judicial Committee in Mst. Jatti v. Banwari Lal (1923) 45 M.L.J. 355 : L.R. 50 IndAp 192 : ILR 4 Lah 350 (P.C.) and Babu

v. The Official Assignee of Madras (1934) 67 M.L.J. 167 : L.R. 61 IndAp 257 : ILR 57 Mad. 931 (P.C.), Mr. Krishnaswamy Aiyangar, on

behalf of the appellants, contended that the Court below was not right in holding that the relationship between the parties was only that of tenants in

common and that the proper view was that so far as the family business was concerned their relationship after 1915 was that of partners. As

pointed out by the learned District Judge the facts of the cases before the Privy Council were different from the facts of the present case. Where all

the property belonging to a joint Hindu family has formed the subject of partition, it is reasonable to presume that any further conduct of business

by some or all of the members of the original joint family must be the result of a contract between them; and such contract will in law be regarded

as one in the nature of a partnership. But where, as in the present case, it is clear that only some properties of the family were divided and other

properties belonging to the family including the family trade were not brought into the division at all, the mere fact that even such partial division will

in law amount to a division of status between the parties will not justify the view that the mutual relationship of the members to and in respect of the

family business which theretofore rested upon status of birth must thereafter be treated as one resting on contract, so as to involve the notion of a

partnership. Section 5 of the Partnership Act clearly recognises this antithesis. The present suit is in form and in substance one for a division of

property which admittedly had not heretobefore been divided between the parties and a prayer for the taking of the account #of the assets

including the outstandings due to that business is as reasonably incidental to a suit for partition as to a suit for dissolution of partnership. We would

be importing an unnecessary fiction in the present case if we should hold that in 1915 the parties intended to substitute a contractual relationship

between themselves in respect of the family business in place of the old relationship founded on status. That that status became one of tenancy in

common in place of the old coparcenary status does not attract the further result that the status must be held to have so far changed as to give rise

to a relationship by contract. There is in this case the further fact, that even in 1915, there were major sons of the 1st'' plaintiff and major sons of

the 1st defendant who equally with the 1st defendant and the 1st plaintiff were interested in the assets of the trade as well as in the other properties

belonging to the family. It is not suggested that these sons were partners in any sense known to the law; if so, their relation in respect of the trade

and its assets must be only that of co-owners. There is no justification for implying that they authorised the 1st plaintiff and the 1st defendant to

enter into a partnership on their behalf as well.

The subsequent conduct of the parties, as noticed in the judgment of the learned District Judge is also more consistent with the hypothesis that

they regarded themselves as co-owners who went on dividing from stage to stage various items of properties movable and immovable as and when

they found convenient to divide them. With reference to the trade assets it appears that they divided various outstandings as and when they were

collected. Similarly, with reference to the trade liabilities, they renewed their debts to strangers by executing separate documents for their

respective shares as and when occasion arose. What is spoken of in the evidence as the taking over by the new business of the assets and liabilities

of the old seems only to refer to the way the accounts were made up. In this state of the evidence we do not see any reason for implying a

contractual relationship between some of the members of the family in respect of what was admittedly a portion of the family assets. It is not

contended that a business cannot be carried on by certain members as co-owners (not being partners). Such a conception is well known in respect

of the family businesses carried on by Dayabhaga families. The division of status in 1915 only put an end to the right of survivorship between the

two branches and involved no other legal consequence. Mr. Krishnaswami Aiyar contended that the admitted fact of the family business having

been carried on since 1915 in the joint names of the 1st plaintiff and the 1st defendant was a clear indication that the parties meant it to be different

from the old business which was carried on in the sole name of the 1st defendant. The change of name is sufficiently accounted for by the division

in status because, from that date, the first defendant ceased to be legally entitled to be in sole charge of the business as he was during the joint

stage and the change of name was effected with a view to make it clear that both the brothers were in joint management. It will be begging the

question to import a legal distinction merely by using the words ''do'' and ''new'' as if they were two different concerns. We are accordingly of

opinion that the lower Court rightly applied Article 120 of the Limitation Act to the case and rejected the defendant''s contention that Article 106

should be held to be applicable.

We may add that even if it should be assumed that in 1915 the relationship of partners came into existence between the 1st plaintiff and the 1st

defendant, the present suit would not be barred unless the defendants also make out that there has been a dissolution of the partnership more than

3 years prior to the institution of the suit. The onus of making out such a dissolution is on the defendants; and it is well established that the mere fact

that after a particular date no further business was done will not amount to a dissolution of the partnership. See Haramohan Poddar v. Sudarson

Poddar (1920) 25 C.W.N. 847, Sathappa Chetti v. Subramanian Chetti (1927) 53 M.L.J. 245 (P.C.), Din Muhammad v. Kanshi Rams AIR

1930 Lah. 378 and Srinivasalu Naidu v. Ramakrishna Naidu (1932) 37 L.W. 288. There has been in this case no death or bankruptcy or any

other event which of itself works a dissolution as a matter of law. All that is contended for on behalf of the defendants is that the conduct of the

parties subsequent to 1922 must be held to give rise to an inference of dissolution by common consent. We have already stated that the mere

discontinuance of the business does not lead to this inference. It is said that the starting of separate businesses by the parties is a factor to be

considered; but its significance cannot be very much in this case because as already stated, the defendants'' branch began a separate business even

in 1920 and it is nobody''s suggestion that the joint business was dissolved then.

It was next said that certain disputes between the parties was referred to arbitration in 1924 and it was contended that as that reference

comprised some of the items relating to the trade, such a reference could have been made only on the footing that the partnership had been

dissolved. We do not think the evidence justifies this conclusion. Some of the items referred to the arbitrators related to claims inter se between the

joint business and the separate business carried on by the defendants'' branch. Other items of the reference related to particular outstandings which

had been collected by one party or the other or were claimed by one party or the other. There is nothing to show that all matters relating to the

business ever formed the subject either of reference to arbitration or of any arrangement between the parties. It therefore seems to us that even if

Article 106 should be held to be applicable to this case, the suit would not be barred, because it has not been shown that there was a dissolution

more than three years prior to the date of the suit.

With reference to the plaintiffs'' claim to items 31 to 83 of the plaint schedule, the material facts are not in dispute. The debt in respect of which

O.S. No. 57 of 1918 was instituted was undoubtedly a debt due to the family. The suit was instituted in the first defendant''s sole name, because

the accounts of the period, when the debt became due, stood in the first defendant''s name as he was at that time the sole manager of the undivided

family. The evidence of P.W. 1 shows that the expenses relating to that suit have been debited to the joint account and it also appears from his

evidence as well as from the entries in the accounts that when some amounts were realised from the judgment-debtor, after the passing of that

decree, the amounts so realised were shared equally by the plaintiffs'' branch and by the defendants'' branch. There can thus be no doubt that the

debt was a common debt and that in instituting the suit and even after obtaining the decree, the first defendant regarded himself as entitled to that

amount for himself and for the plaintiffs'' branch. He must be therefore held to have throughout acted in a representative capacity and a purchase

made in satisfaction of a claim of that kind must in law be regarded as a purchase made by him in his representative character, at any rate in the

absence of clear evidence either that he repudiated that character or that the plaintiffs'' branch repudiated the benefit of the bargain. (See Section

90 of the Trusts Act, Bandhu Ram v. Chintaman Singh (1921) 26 C.W.N. 406 (P.C.), Ganga Sahai v. Kesri (1915) 29 M.L.J. 329 : L.R. 42

IndAp 177 : ILR 37 All. 545 (P.C.), Dwarka Prasad v. Mahadeo Prasad ILR (1930) All. 954 and Jain Glass Works Vs. Secy. of State, . It was

suggested that Ex. V, a notice given by the first plaintiff to the first defendant in 1929, had the effect of limiting the plaintiffs'' claim to the money and

deprived them of any right to contend that the first defendant thereafter acted in a representative capacity. We find nothing in Ex. V to support this

contention. It merely asserts that the amount due under the decree in O.S. No. 57 of 1918 was a common debt and that if the first defendant

should realise the same he must pay the writer his share thereof. No reference could have been made at that time to any purchase of property in

satisfaction of the said debt and much less could there have been any repudiation by the plaintiff of his interest in such property, because the

purchase came to be made only 18 months after the date of Ex. V. It is not suggested that the first defendant gave any reply to Ex. V. There is

accordingly no basis for the argument that the first defendant put forward any exclusive claim to the amount or repudiated his representative

character in respect of the decree amount. The plaintiffs'' branch will of course be bound to repay the defendants'' branch all expenses properly

incurred by the latter in connection with the acquisition of these properties to the extent of the half share of the plaintiffs'' branch. But as against that

liability the plaintiffs will also be entitled to an account of the income derived by the defendants'' branch from these properties. The parties are not

able to say whether such expenses and income have been brought into the joint account or not. If they have not been so brought, the

Commissioner will also take accounts in respect of the same and incorporate its result in his report.

The other portions of judgment are omitted as unnecessary for the report.

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The appeal therefore fails and is dismissed with costs.