- (1.) Prior to November 1948, one Padamsi Haridas carried on his profession as a chartered accountant in the name of Devidas Vithaldas and Co. By a deed of partnership, dated November 30, 1948, he took one Amratlal Parikh as a partner, reserving, however, to himself all the rights and interests in the goodwill of that business.
(2.) On January 2, 1951, he retired from the said partnership. Clause (1) of the Deed of Dissolution executed on that occasion provided that the said partnership shall be deemed to have been dissolved as from December 31, 1950, but the business shall, as from that date, be carried on in the said name by the said Amratlal alone. Cl. (2) of the said deed ran as follows :- "2. The goodwill of the late partnership belonged to the said Padamsi alone. He has agreed to sell the name to the said Amratlal. As consideration for and in full satisfaction of the purchase price of the goodwill of the said late partnership the said Amritlal shall- (a) pay to the said Padamsi for and during the term of his natural life a share of eight annas in the rupee in the net profits of the said business or profession which the said Amratlal shall hereafter carry on in the said name of Devidas Vithaldas and Co. (b) on and after the death of the said Padamsi, pay to Bai Premlata, the wife of the said Padamsi (if she be then surviving), for and during the term of her natural life a share of eight annas in the rupee in the net profits of the said business or profession which the said Amratlal shall hereafter carry on in the name of Devidas Vithaldas and Co. and (c) on and after the death of the said Padamsi as well as his said wife Bai Premlata, pay to Subhas the son of the said Padamsi for and during the term of his natural life a share of eight annas in the rupee in the net profits of the said business or profession which the said Amratlal shall hereafter carry on in the name of Devidas Vithaldas and Co." Clause (3) provided that nothing contained in the deed shall constitute or be deemed to constitute any future partnership between the parties to the deed or between the said Amratlal and the said Bai Premlata or the said Subhas in respect of the business to be carried on by Amratlal in the name of Devidas Vithaldas and Co. Clause (4) declared that accounts had been made up between the parties, and that neither party had any claim against the other except as provided in said clause (2). By Cl. (5) it was made clear that the said Amratlal shall henceforth remain liable for all the obligations and liabilities which might be incurred in respect of the said business to be carried on in the name of Devidas Vithaldas and Co., and he shall accordingly indemnify the said Padamsi against all actions, claims, demands, costs, charges and expenses whatsoever in respect of the same or in any other manner relating to the premises. Lastly, clause (6) provided that in the event of Amratlal transferring or assigning his said business to any person or persons, or carrying on the said business in partnership with some other person or persons or remaining otherwise interested or concerned directly or indirectly in the business or profession of chartered accountants by whomsoever carried on in the name of Devidas Vithaldas and Co., or any other name resembling or similar thereto, or in the event of any of the heirs or legal representatives or nominees of Amratlal carrying on the said business or profession in the name of Devidas Vithaldas and Co., then in any such events they and "so long as any such business be carried on in the name style and firm of Devidas Vithaldas and Co. or any other name resembling or similar thereto, the assignees of the said Amritlal and/or the said Amritlal and/or any such other person or persons as aforesaid carrying on such business under the name style and firm of Devidas Vithaldas and Co. shall as aforesaid pay to the said Padamsi or his said wife Bai Premlata or his said son Subhas for and during the terms of their respective lives the said eight annas share in the rupee in the net profits of any such business as in hereinbefore directed to be paid by the said Amratlal under Cl. 2 hereto..........". The clause next provided that "the said Amratlal shall not assign or transfer or otherwise dispose of the said business or the goodwill thereof or bequeath the same to any person whomsoever nor enter into any partnership or other arrangement with any other person or persons for carrying on the said business in the said name ...................except with a condition that the provision of this Agreement shall be accepted by such person or persons or his legatees or successors or legal representatives, and with a further condition that any such person or persons or successors or legatees or legal representatives shall forthwith after being interested in any such business and whenever required by the said Padamsi or by his wife Bai Premlata or his said son Subhas as the case may be, enter into an agreement with any of the last three named this agreement". By his letter dated October 13, 1955. Padamsi agreed to reduce the said share of eight annas in a rupee to five annas four pies.
(3.) Amratlal carried on the said business in the name of Devidas Vithaldas and Co. as the sole proprietor thereof till October 17, 1955. Payments made by him during this period under Cls. (2) and (6) of the said deed of dissolution were added back in his assessments as capital payments. On October 18, 1955, he entered into partnership with one Chandrakant V. Parikh. The deed of Partnership executed then by him and the said Chandrakant Parikh recited that the said Amratlal till then was carrying on the business in the name of Devidas Vithaldas and Co., that the goodwill of the said business belonged solely to the said Padamsi which he, the said Amratlal, had "bought" in consideration of his agreeing to pay a share of eight annas in the rupee to Padamsi, and after him his wife and then his son as aforesaid. Clause (5) of the deed then provided :- "The parties hereto shall pay 0/5/4 share in profits in a rupee as and by way of purchase price of goodwill of the said firm to the said Shri Padamsi Haridas or to his wife or to his son as stated in detail hereinbefore, instead of Re. 0/8/0 share in a rupee as agreed by the party of the First Part and Shri Padamsi Haridas. The said Shri Padamsi Haridas has agreed to this reduction in his share mutually with Shri Amratlal Kashandas Parikh and Shri Chandrakant V. Parekh. After the said share of 0/5/4 in a rupee is paid up as stated above the balance of the profit and loss of the firm shall be divided in two equal proportions between the parties of the First and the Second Part".;