Madras High Court
Vincent Antony Jabamalai Fernando And ... vs S.A. Thomas Fernando And Ors. on 4 August, 1977
Equivalent citations: AIR1978MAD90, AIR 1978 MADRAS 90, ILR (1978) 1 MAD 313 1990 MADLW 655, 1990 MADLW 655
JUDGMENT P. Govindan Nair, C.J.
1. This is an appeal by defendants 1 to 5 in a suit instituted for a declaration that the firm of which the plaintiff as well as the appellants were partners stood dissolved with effect from 31-3-1963, for rendition of accounts and for a decree in favour of the plaintiff for the sum found due from the defendants as his share in the assets and profits Of the firm. A preliminary decree was passed in the year 1970, as prayed for and a final decree has been passed by the trial court for a sum of Rs. 63,727-73, as the amount due to the plaintiff and the court further granted interest on that amount at 6 per cent from the date of the plaint. On appeal, this decree has been affirmed by the lower appellate court.
2. In this second appeal before us, counsel for the appellants has raised three points, namely--(1) having allowed e sum of Rs. 23,727-73 as the share due to the plaintiff as representing the capital assets of the firm, a further sum of Rs. 40,000 as representing the share capital contributed by the plaintiff should not have been allowed; (2) no interest should have been awarded on the amount fixed from the date of plaint, and (3) the decision to treat Rs. 5,31,681-88 as representing the assets of the firm is not sustainable.
3. The first point cannot be sustained. After having taken the total of the assets which included the sum of Rs. 1,40,000 contributed by the partners, that amount was deducted as a liability of the firm and it was only the balance that was taken into account for determining the value of the capital assets of the firm. The share of the plaintiff in that regard came to Rs. 23,727-73. Apart from that, the plaintiff is certainly entitled to the contribution that he made to the firm towards the capital, no part of it having been included in the sum of Rupees 23,727-73. It is not disputed that the share capital contributed by the plaintiff was Rs. 40,000 and the assets of the firm were sufficient to direct the payment of this amount. We see no merit in this contention.
4. Regarding the question of interest, counsel for the appellants relied on the decision of the Privy Council reported in Suleman v. Abdul Latif, 59 Mad LJ 121 : (AIR 1930 PC 185). The observations in that decision seemingly support the appellant's contention. The general remarks in the judgment stated that no interest should be awarded in a suit for dissolution till the person suing for dis-solution gets the amount due determined by the decree passed in the case. Their Lordships, therefore, granted interest only from the date of the decree. This decision came up for consideration in a later decision reported in Hakim Rai v. Gangaram AIR 1942 PC 61. The lest paragraph therein referred to the earlier decision of the Privy Council and dealt with the same question of interest. The earlier decision related to a suit that was filed for dissolution of a going concern. The latter one was with reference to a suit in regard to a firm that had been dissolved, the suit having been filed two years after the date of the dissolution. Their Lordships ruled therein that the principle of the earlier decision will apply only to cases where the suit has been filed for dissolution of a going concern.
5. The case of the plaintiff in the suit that was instituted in 1964 was that it must be declared that the firm got dissolved on 31-3-1963, and one of the prayers in the plaint was that a declaration be made to that effect. The plaintiff succeeded and the relief was granted and the preliminary decree passed in 1970 declared that the firm got dissolved on 31-3-19S3. The suit, therefore, was clearly a suit instituted, after the firm got dissolved, for a share due to the plaintiff and the principle of the decision in Hakim Rai v. Gangaram, AIR 1942 PC 61, squarely applied. The interest awarded was not even from 31-3-1963, but only from the date of suit which was in 1964. The rate of 6 per cent interest does not appear to be high. We see no merit to this contention either.
6. The last of the contentions arose out of the following facts-- The firm had business with another firm in Colombo called the 'Morning Star'. The business of that firm was purchased by the firm in question on 31-3-1969 (sic) (31-3-1959). The cash consideration paid for that transaction was Rs. 11,000. Just before the purchase of that firm, the amount that was due from that firm to the firm in question was Rs. 3,72,473-51. A copy of the sale deed has been made available to us. There is no mention about what happened to the amount on the purchase of the business of the firm 'Morning Star' by the present firm for Rs. 11,000. As prudent businessmen and taking ordinary human nature into account and particularly in the absence of any pleadings to the contrary, we have to assume that the firm thought that the assets of the 'Morning Star' firm will cover the amount that firm owed to the suit firm, as well as Rs. 11,000 with duration passed when the purchase was made. After the purchase, it appears that the business in Colombo was continued for sometime until it was wound up on 31-3-1961. As on 31-3-1961, In the account of the firm, it is stated : "Sundry debtors; Morning Star Co., Rs. 5,31,682-88." Counsel for appellants contended that this is an amount of liability which the firm 'Morning Star' owed to the suit firm and that this amount was irrecoverable and should not have been taken into account as has been done by the Commissioner to fix the value of the assets of the firm. In the statement filed by the plaintiff before the Commissioner, it was claimed by the plaintiff that by the closure of firm's business in Colombo, a sum of Rs. 14,74,672 was realised by the firm. In reply to this assertion of the plaintiff, in paras. 8 and 9 of the counter affidavit filed which is exhibited as Ex. P-45, it is stated that the claim of the plaintiff was suitable and that all that was realised was Rs. 5,62,000. In the light of these pleadings, it is idle to contend that the Commissioner should not have taken into account the sum of Rs. 5,31,682-88 as an asset of the firm. This ground taken in the appeal also fails.
7. In the light of the above, we dismiss this appeal with costs.