P S NAGARANJAN Vs. ROBERT HOTZ
HIGH COURT OF PUNJAB AND HARYANA
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Khosla, J. -
(1.) This is a defendant's appeal in a suit under Section 37, Partnership Act. The plaintiff Robert Hotz represents the estate of A. H. Pook deceased. He was appointed administrator of Pook's estate by an order of this Court on 18-9-1949. According to the plaint Pook and the defendant Nagarajan were partners of a firm of chemists named Bliss and Cotton which had branches at Simla and at New Delhi. The partnership was started on 1-1-41 and Pook died on 26-4-1943. The defendant as the surviving partner, however, carried on the business of the firm and continues to do so till the present day. He made large profits from the business and when asked to render accounts refused to do so. He did, however, pay a sum of Rs. 18,344-13-0 into the account of Pook's estate as the share of Pook's profits. The plaintiff therefore prayed for a declaration from the Court dissolving the partnership of the firm and a decree for rendi-tion of accounts of the partnership firm. It is scarcely necessary to mention that the plaintiff also claimed reliefs regarding the appointment of, Receiver and the costs of the suit.
(2.) The defendant resisted the plaintiff's claim and pleaded that the partnership firm stood dissolved automatically on the death of Pook on 26-4-1943. Thereafter he had taken accounts of the business, had prepared a balance-sheet and had set apart Pook's share. He had then continued the business in his own name and therefore the profits accruing from this business belonged solely to him. On a demand being made he had paid a sum of Rs. 18,344-13-0 representing the amount due to Pook dues for the period of the partnership which ended with his death in April 1943. He further contended that the suit was barred by time. On these pleadings the trial Court framed the following issues:
"(1) Whether the partnership continued even after the death of Mr. A. H. Pook, on 26-4-1943, and what is its effect? (2) Whether the suit is within time?" The issues unfortunately are not very clearly worded but there is no doubt that both parties knew the real points in dispute. It cannot be contended that the partnership continued after Pook's death. The allegation of the plaintiff was that the surviving partner continued the business and therefore he is liable to render accounts under the provisions of Section 37, Partnership Act.
(3.) With regard to the first issue there can be no doubt that the defendant carried on the business of the firm as before after Pook's death and pleaded that the partnership firm stood under the same name and style. Both branches of the firm continued at Simla and at New Delhi respectively. The defendant's allegation is that on Pook's death he struck a balance-sheet and separated Pook's share of the profits. Nothing, however, was done with regard to the capital investment. The capital of the firm at that time consisted of--(1) the stock-in-trade, (2) the goodwill of the firm, and (3) a number of Defence Bonds which had been purchased by the partners jointly. These were assets of the firm which at the time of Pook's death were in the hands of the defendant. He continued to use these assets and the business of the firm continued to bring him profits. Even the profits due to Pook were not paid into a separate account at once. The defendant has admitted that he could not withdraw large sums of money from the assets of the firm at once and the amounts were paid into a separate Savings Bank Account gradually and in instalments. Therefore on the defendant's own showing even the profits due to Pook re-mained in his hands and were used by him after Pook's death. D. W. 4 the Manager of Bliss and Cotton, Delhi, stated that the amounts standing in the name of Mr. Pook were removed "by and by because it was not possible to remove them at once." The sum of Rs. 18,344-13-0 represented the profits due to Pook together with interest and these undoubtedly were paid into the account of his estate but no account was given of the assets of the firm. It was pleaded by the defendant that the firm had contracted certain loans and it was this money with which the business was carried on. The loans were subsequently paid off by the defendant himself. But this again is a matter of accounting. The loans were contracted by the partnership. As the business was carried on assets were acquired including the goodwill of the firm and even though monies were owing to some creditors it cannot be said that on Pook's death the firm was not in a solvent state. I must therefore hold that the business of the firm was continued by the surviving partner after it stood dissolved on Pook's death.;
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