K.M. Venkatachala Chetty vs N.D. Natesa Chetty

Alfred Henry Lionel Leach, C.J.—The suit out of which this appeal arises was one for the dissolution of a partnership and for the taking of

the accounts thereof. The respondent was the plaintiff. He claimed that in 1927 he and the appellant entered into a partnership for the purpose of

supplying goods to jails and other institutions in this presidency, the appellant providing the finance and the respondent doing the work. The

appellant denied that the relation between them constituted a partnership. His case was that the respondent was merely an employee who was to

be remunerated on the basis of a share in the profits. The learned Judge held that there was in fact a partnership and passed a preliminary decree

for the taking of accounts. In directing the Official Referee to take the accounts the learned Judge stated that any item of expenditure which was

shown to be for an unlawful purpose was to be excluded. The reason for this direction was that bribes had been given to officials of various

institutions in order to ensure that contracts were placed with the partnership. The appellant contends that the learned trial Judge was wrong in

holding that there was a partnership and that he also erred in giving this direction to the Official Referee.

The question whether a partnership existed is one of pure fact, and the evidence consisted merely of the oral testimony of the parties. The

learned trial Judge who had the advantage of seeing the parties in the witness-box accepted the testimony of the respondent. We have not the

advantage which the learned trial Judge had in this respect and before this decision can be varied it must be shown that he was not justified in his

conclusion. No reason has been advanced why we should accept the appellant''s word in preference to that of the respondent, and not having

heard their evidence we must accept the decision of the learned trial Judge as being correct.

With regard to the direction of the learned trial Judge to the Official Referee, it appears that the appellant had himself paid bribes to officials and

had entered those payments in the partnership books as items of expenditure. It also appears that the appellant supplied funds to the respondent

for the purpose of the partnership and that the respondent applied part of the funds so supplied to him in payment of other bribes. The learned trial

Judge was of the opinion that illegal payments of this nature could not be taken into account in ascertaining the shares of profits. In his opinion, if

either party had been foolish enough to give a bribe in the hope that his partner would bear his share of the expenditure he could not use the Court

to recover that share. We are in entire agreement with this decision.

The learned advocate for the appellant has quoted to us the case of Joti Prasad v. Hardwari Mal I.L.R.(1930) 53 All. 54 but the facts of that

case were quite different from the facts in the present case. There the partnership capital had been utilized for the payment of bribes with the

consent of the partners and the money had left the firm for this purpose with their joint consent. Therefore it was not possible, without taking into

consideration these outgoings, to decide the true position between the partners. In the present case, it is not a question of the partnership capital

having been paid away in this way. The appellant wanted the Court to allow him to debit the partnership with moneys which he spent by way of

bribes. He is not entitled to do so, and we consider the direction of the learned trial Judge, to be a very proper one. Just as the appellant will not

be entitled to credit for the sums paid by him as bribes the respondent will not obtain credit for the sums paid by him in this way.

The appeal will be dismissed with costs in favour of the respondent.