Hidayatullah, J. -
(1.)This appeal with special leave has been filed by Messrs. Bhaichand Amolukh & Co. (referred to in this judgment as the firm) against the judgment and order of the High Court of Bombay, by which the High Court asked for a reference on question of law but declined to include therein a question or questions which, the firm contended, also arose out of the Tribunals order.
(2.)The facts leading up to the appeal may be stated shortly. One Bhaichand Amolukh Vora, father of Chhotalal Bhaichand, started a firm in 1910, to work as principal agents for a number of insurance companies. In that firm, in addition to Bhaichand Vora and Chhotalal Bhaichand, one Nathubhai Patel was also a partner. Bhaichand Vora died in 1948, and the two surviving partners continued as the firm. Nathubhai Patel died in 1949, and it is stated that the firm thereafter consisted of Chhotalal Bhaichand and his wife, Bai Lalitaben. In the years that followed, the business of the firm was treated as the sole business of Chhotalal Bhaichand to which no objection was taken, because, as is now explained, the income of the wife would, in any event, have been included in the income of Chhotalal Bhaichand under section 16 (3) of the Income Tax Act. In June 1950, the Insurance (Amendment) Act, 1950 (No. 67 of 1950), came into force, which amended the Insurance Act 1938 (No. 4 of 1938), by adding a new section (42B) by which the insurers were prohibited after the expiration of seven years from the commencement of Act No. 67 of 1950, from appointing, or transacting any insurance business in India through a principal agent. Contracts between an insurer and a principal agent were also required to be in writing, and the model terms contained in Part I of the Sixth Schedule to the Act were to be deemed to be incorporated in and form part of every such contract.
(3.)The case of the firm is that Chhotalal Bhaichand, realising that the business of principal agents was to come to an end after the expiry of sever years, looked for other sources of employment and accepted a job as assistant manager of the New India Assurance company. He withdrew from the firm, and the old firm was reconstituted from January 1, 1953, though the deed of partnership was executed on April 22, 1953. By this deed, the partnership consisted of three persons with shares as follows :
(1) Bai Manibai (mother of Chhotalal Bhaichand) - 5 annas in the rupee.
(2) Mr. Khambatta - 3 annas in the rupee.
(3) Mr. Premchand D. Parikh - 3 annas in the rupee.
(4) Two minor sons of Chhotalal Bhaichand, Jayant and Harshad, were also admitted to the benefits of the partnership to the extent of 1 1/2 annas in the rupee, each.