Supreme Court of India
M.O.H. Uduman And Ors vs M.O.H. Aslum on 13 November, 1990
Equivalent citations: 1991 AIR 1020, 1990 SCR SUPL. (2) 663, AIR 1991 SUPREME COURT 1020, 1991 (1) SCC 412, (1991) IJR 469 (SC), (1991) 1 JT 138 (SC), 1991 (1) JT 138, 1991 (1) UJ (SC) 203, (1991) 1 MAD LJ 46, (1990) 2 MAD LW 642, (1994) 1 BANKLJ 392, (1991) 2 CIVLJ 371, (1991) 1 CURCC 1
PETITIONER:
M.O.H. UDUMAN AND ORS.
Vs.
RESPONDENT:
M.O.H. ASLUM
DATE OF JUDGMENT13/11/1990
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
SHARMA, L.M. (J)
CITATION:
1991 AIR 1020 1990 SCR Supl. (2) 663
1991 SCC (1) 412 JT 1991 (1) 138
1990 SCALE (2)1045
ACT:
Indian Partnership Act, 1932: Sections 39 and 40 and
French Civil Code Article 1865--Duration of partnership
provided for--Then not partnership at will--Rights of part-
ners--What are--Contract of partnership to be read as a
whole.
HEADNOTE:
The appellants/defendants 1-3 and the respondent/plain-
tiff are sons of the 4th appellant/defendant--their mother.
Their father M.O. Hassan Kuthus Marican started the proprie-
tory concern M/s Hassan Tithus Marican doing import and
export and other business in Pondicherry on July 20, 1962, a
partnership consisting of the appellants the respondent and
the father Ex. B1 was constituted and was registered as per
the provisions of the French Law and the business was car-
ried on. By relinquishment deed Ex. B2 dated August 1, 1968
their father retired from the partnership. Thereafter the
appellants and the respondent continued the business in
terms of Ex. B2.
Due to some misunderstanding arisen in 1973, the re-
spondent in May 1978 laid the suit for dissolution of the
partnership and for accounting etc.
As per the respondent the partnership is at will and by
issue of notice dissolving the partnership, it stood dis-
solved with effect from the date of the receipt of the
notice by the appellants. Whereas the appellants contended
that under the French Law, the partnership is not at will,
the contract operates as law and that in terms of contract
Ex. B1 & Ex B2 the respondent has to relinquish his share in
favour of the appellants and take the value thereof without
dissolving the firm.
The Trial Court held that the partnership is not at
will. So the suit for dissolving the partnership was not
maintainable and that for accounting etc. other remedies are
left open. The suit was dismissed, and was affirmed on
appeal by a learned single Judge.
The Division Bench held that the partnership is at will
and the respondent can seek its dissolution. It was further
held that the rights of
664
the parties are governed by the Indian Partnership Act (9 of
1932) and the suit was maintainable. Accordingly the appeal
was allowed and the suit was restored to file and the Trial
Court directed to try the suit on merits expeditiously.
Hence this appeal.
Appeal Allowed, the Court,
HELD: The only question that needs decision is whether
the partnership in question is a partnership at will. The
trial court and the Learned Single Judge held in favour of
the appellants but the Division Bench held that the Indian
Partnership Act would apply because the Pondicherry (Laws)
Regulation 7 of 1963 was made in exercise of the powers
under Article 240 of the Indian Constitution extending the
Partnership Act to Pondicherry/Union Territory on and from
October 1, 1963. Sec. 69 had come into force from July 1,
1964. Though Ex. B1 was made in accordance with the Civil
Code of France 1804, the cause of action to lay the suit had
arisen to the respondent in 1978 by which time the 'Act' was
in operation. Thereafter rights and remedies of the parties
are to be regulated by the provisions of the Act. [667E-G]
According to the appellants the provisions of the French
Civil Code and the Code of Commerce touching partnership do
have a bearing to cull out the intention of the parties
manifested in the relevant clauses of the Partnership deed
Ex. B1 and B2 which suggest that the partnership in question
is not at will but one in perpetuity. The respondent con-
tended that there is no express embargo in the French Law to
treat a partnership at will. The contract is treated as law.
Clause IV treats the partnership as at will. But the part-
nership at will cannot be put to an end if the notice of
dissolution was not issued in good faith and at an opportune
moment. [668A-B]
Article 1865 of the French Civil Code postulates that a
partnership ends under 5 conditions (1) expiration of time
of partnership, (2) termination of the business, (3) death
of any partner, (4) insolvency of anyone of the partners,
and (5) one or more partners have expressed a desire to
cease being in partnership, Article 1869 provides that a
partnership can be dissolved at the will of the partners but
does not apply to partnership where the duration has been
fixed. Article 18 of the Code of Commerce provides that the
contract is regulated by the Civil Law and by the agreements
of the parties. Article 1134 makes that the agreement legal-
ly formed take the place of law and for those who have made
them. The contract can be rescinded only with their mutual
consent for the reasons authorised by law and done in good
faith. [668C-D; F-H]
665
A conjoint reading of the provisions of the French Civil
Code, Code of Commerce clearly manifest that normally a
partnership ends on happening of one of the five events
mentioned in Article 1865. If the contract is time bound
partnership ends by the expiration of time for which the
partnership was made. Undoubtedly, partnership at will can
be put to an end by the issue of notice provided it was
issued in good faith and at an opportune moment but is
subject to the terms of the contract between the parties.
Since the parties are governed by Indian Partnership Act,
the rights of the parties are to adjudicated accordingly.
The High Court on consideration of the relevant clauses
of the deed and section 7 of the 'Act' held that partnership
is at will. CI. 4 and 5 state that the partnership will be
brought to an end at will but at the same time state that
partnership will continue till there are two partners.
[669B-E; H]
Section 7 of the 'Act' deals with partnership at will
contemplating two exceptions': (a) when partnership is for
specified period, (b) where there is a provision in the
contract for the determination of the partnership. Section
32(1) deals with the retirement of the partner either with
consent or according to an express agreement (c) where the
partnership is at will, by giving notice in writing to all
of his partners of his intention to retire. Section 40 gives
right to the partners to dissolve the partnership by agree-
ment with the consent of all the partners or in accordance
with the contract between the partners. Under Section 43
when partnership is at will, the firm may be dissolved by
any partners giving notice in writing to all the other
partners of his intention to dissolve the firm which stands
dissolved by operation of sub section (2) thereof from the
date mentioned in the notice and if no date is mentioned
from the date of Communication of the notice. [670G; 671A;
B; D-E]
It is a settled cannon of construction that a contract
of partnership must be read as a whole and the intention of
the parties must be gathered from the language used in the
Contract by adopting harmonious construction of all the
clauses contained therein. The cardinal principle is to be
as certain the intention of the parties to the contract
through the words they have used, which are key to open the
mind of the makers. It is seldom that any technical or
pedantic rule of construction can be brought to bear on
their construction. [671G-H]
The contract of partnership in the instant case, is
consistent with the French Civil Code. But since the parties
are governed by the provisions of the 'Act', it would apply
to the facts of the case and the rights are to be adjudicat-
ed accordingly. [674H]
666
The duration of the partnership has been expressly
provided in the deed, namely, that the partnership will
continue "till there are two partners" and that, therefore,
it is not a partnership at will. Thereby the respondent has
no right to dissolve the partnership except to seek account-
ing for the period in dispute or his right to withdraw or
retire from partnership and to take the value of his share
in the partnership either by mutual agreement or at law in
terms of the partnership deeds Ex. B1 and B2. [674B-C]
JUDGMENT:
