Bombay High Court
Mulchand Narotam vs Maneckchand Harjivan on 30 November, 1905
Equivalent citations: (1906)8BOMLR8
JUDGMENT Lawrence Jenkins, K.C.I.E., C.J.
1. This is a suit for a dissolution of partnership, accounts, and contribution.
2. To appreciate the difficulties that arise in the case it is necessary to make a short statement of the facts.
3. The partnership commenced on the 8th December 1894, with nine members. Of these, Narottam Kanji died on the 30th of January 1895, and Morar Nichha on the following 12th September.
4. Prima facie death involves a dissolution of partnership; and by Section 261, it is provided that the estate of a partner, who has died, is not, in the absence of an express agreement, liable in respect of any obligation incurred by the firm after his death. So that under that section, even if the partnership continued after the death of a partner, still his estate is not liable in respect of subsequent obligation in the absence of an express agreement.
5. Now the agreement determining the rights and liabilities of the partners is Exhibit No. 74; and there can be no question, nor is it disputed that this agreement contemplates a continuation of the partnership notwithstanding the death of one of the partners. Express provision is made for that contingency.
6. But, as we have said, to make the estate of the deceased partner liable, there must be express agreement to that effect. Is there such an agreement? If so, where is it to be found? In Clause 9. But as we read Clause 9, there is not to be found there an express agreement imposing liability on the estate of the deceased partner in respect of obligation incurred after his death.
7. For the provision entitling the heirs of the deceased partner to come into the partnership in place of the deceased partner under whom they claim as heirs, does not in our opinion impose an obligation on the estate. If and so far as it becomes operative, it makes the heirs partners, and as such personally liable. But liability cannot be imposed upon an heir unless he assents to it. So that in order to render any heir of a deceased partner liable towards the other partners, it is necessary to establish that the heir had come in and become apartner, or in other words, had in the circumstances of this case taken an advantage of the liberty reserved in his favour of joining the partnership in the place of the partner dying.
8. It appears to us therefore that the case must be sent back for reconsideration.
9. In the first place there must be an issue to determine whether any and which of the heirs of Narottam joined the partnership so as to become members thereof, and if so, from what date respectively.
10. No such inquiry, in our opinion, would be of any use in respect of the heirs of Morar; because they admittedly are even now minors, and so it has been impossible for them to take upon themselves the liability of the partnership.
11. On this part of the case there should be a finding as to who at the date of the dissolution of the 21st January 1902 were members of the partnership.
12. Then in taking accounts we think they should, in the first instance, be taken up to the death of Narottam on the 30th of January 1895, then up to the 12th September 1895, and then up to the present time.
13. The purpose of taking these particular periods is that it may be ascertained what the state of the partnership affairs was at the dates of the death of Narottam and Morar respectively,
14. In directing the accounts to be taken in this way, we do not at this stage decide that the statute of limitations does not afford an answer to any claim that might otherwise be made against the estates of Narottam and Morar respectively. We leave that question still open.
15. As the parties so desire, we vary the decree of the lower Court and pass a preliminary decree in the terms indicated and we send back the case for taking of accounts and for passing of such further orders as may be necessary after accounts have been taken.
16. We leave the costs to be dealt with by the Court below.
17. As we have been asked by all parties to lay down the general principles by which the lower Court should be guided irrespective of what has hitherto happened, it is unnecessary to deal with the cross-objections.