132. The Madras High Court in case of Babu alias Govindoss
Krishnadoss (supra) has held that the rights of the representative of the
deceased partner in one of the property and does not rest merely on
contract, and the surviving partners, who have the right and duty to
realize the partnership property, hold a fiduciary relationship towards
the deceased partner's representatives as regards his interest in the
partnership property. The Madras High Court in the said judgment
referred to a judgment in case of In re Bourne in which it was held that
when a partner dies and the partnership comes to an end, it is not only
the right, but the duty, of the surviving partner to realize the assets for
the purpose of winding up the partnership affairs, including the
payment of the partnership debts. In our view, the said Mohamed
Shafik who continued the use of the partnership assets even after the
suit firm having been dissolved by operation of law as far back in the
year 1982 failed in fiduciary duties toward the legal representatives and
estate of the said deceased partner Yakubali. Such fiduciary duty
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continued till the properties held in trust are distributed to all the
partners and the estate of the deceased partner. We are in agreement
with the views expressed by the Madras High Court.
132. The Madras High Court in case of Babu alias Govindoss
Krishnadoss (supra) has held that the rights of the representative of the
deceased partner in one of the property and does not rest merely on
contract, and the surviving partners, who have the right and duty to
realize the partnership property, hold a fiduciary relationship towards
the deceased partner's representatives as regards his interest in the
partnership property. The Madras High Court in the said judgment
referred to a judgment in case of In re Bourne in which it was held that
when a partner dies and the partnership comes to an end, it is not only
the right, but the duty, of the surviving partner to realize the assets for
the purpose of winding up the partnership affairs, including the
payment of the partnership debts. In our view, the said Mohamed
Shafik who continued the use of the partnership assets even after the
suit firm having been dissolved by operation of law as far back in the
year 1982 failed in fiduciary duties toward the legal representatives and
estate of the said deceased partner Yakubali. Such fiduciary duty
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app-28.20.doc
continued till the properties held in trust are distributed to all the
partners and the estate of the deceased partner. We are in agreement
with the views expressed by the Madras High Court.
132. The Madras High Court in case of Babu alias Govindoss
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Krishnadoss (supra) has held that the rights of the representative of the
deceased partner in one of the property and does not rest merely on
contract, and the surviving partners, who have the right and duty to
realize the partnership property, hold a fiduciary relationship towards
the deceased partner's representatives as regards his interest in the
partnership property. The Madras High Court in the said judgment
referred to a judgment in case of In re Bourne in which it was held that
when a partner dies and the partnership comes to an end, it is not only
the right, but the duty, of the surviving partner to realize the assets for
the purpose of winding up the partnership affairs, including the
payment of the partnership debts. In our view, the said Mohamed
Shafik who continued the use of the partnership assets even after the
suit firm having been dissolved by operation of law as far back in the
year 1982 failed in fiduciary duties toward the legal representatives and
estate of the said deceased partner Yakubali. Such fiduciary duty
continued till the properties held in trust are distributed to all the
partners and the estate of the deceased partner. We are in agreement
with the views expressed by the Madras High Court.
132. The Madras High Court in case of Babu alias Govindoss
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Krishnadoss (supra) has held that the rights of the representative of the
deceased partner in one of the property and does not rest merely on
contract, and the surviving partners, who have the right and duty to
realize the partnership property, hold a fiduciary relationship towards
the deceased partner's representatives as regards his interest in the
partnership property. The Madras High Court in the said judgment
referred to a judgment in case of In re Bourne in which it was held that
when a partner dies and the partnership comes to an end, it is not only
the right, but the duty, of the surviving partner to realize the assets for
the purpose of winding up the partnership affairs, including the
payment of the partnership debts. In our view, the said Mohamed
Shafik who continued the use of the partnership assets even after the
suit firm having been dissolved by operation of law as far back in the
year 1982 failed in fiduciary duties toward the legal representatives and
estate of the said deceased partner Yakubali. Such fiduciary duty
continued till the properties held in trust are distributed to all the
partners and the estate of the deceased partner. We are in agreement
with the views expressed by the Madras High Court.
I should add here
that the learned Division bench was guided by the principles of the
Privy Council in Babu @ Govindoss Krishnadoss v. Official Assignee
of Madras, (1934) 67 MLJ 167. The Judicial Committee speaking
through Lord Thankerton held : -
"The deed of partnership was executed on behalf of Krishna Murari by his natural father, Jagdish Prasad. After the adoption, Jagdish Prasad ceased to be the natural guardian of the minor and he had no right to enter into contract on behalf of the minor. In the absence of the consent of the natural guardian of the minor, it is not even possible to hold that the minor was admitted to the benefits of partnership. See Govindoss v. Official Assignee [[1934] I.L.R. 57 Mad. 931.]."
If the family separates, the separation will be deemed to continue unless it is shown that there has been a reunion, and a person who sets up a reunion must prove it, Babu alias Govindoss Krishnadoss v. Official Assignee of Madras (1928) 55 M.L.J. 132. But here we are concerned with a case where the members of the family never in fact separated and the members regarded themselves as being joint even after Narayanan's death. Exs. Kand III show this beyond doubt. Ex.K is an affidavit sworn by the 5th respondent on the 12th December, 1927, in support of an application to bring on the record of a suit which Narayanan had filed the names of his legal representatives. Paragraphs 3, 4 and 5 of this affidavit read as follows:
This statement of the law considered in tlie context in which it occurs, means that the transaction is incidental to and for the purpose of winding up of the partnership. It is not permissible to give it any wider meaning or a general application to analogous cases. In the case of a dissolved partnership, it is settled law that the partners are entitled to an account of the assets of the partnership property free from debts secured or unsecured incurred by the managing partner except in so far as those were incurred for the purpose of winding up or so far as the 'creditors bonafide and reasonably believed that they were so incurred. See Govindoss v. Official Assignee of Madras (1934) 67 M.L.J. 167 : L.R. 61 I.A. 257 : (1934) 67 M.L.J. 167 : L.R. 61 I.A. 257. We need hardly point out that the Partnership Act as such has no application to a joint Hindu family business and a trade or business is like any other asset of the joint family subject to the rules of Hindu law and the limitations on the powers of a manager which arise as a consequence of a partition in the family. As we have already pointed out, partition puts an end to the power of the manager of the family to alienate the interests of the junior members in the family properties even to the extent of discharging pre-partition debts of the family. If we accept Mr. Venkatarama Aiyar's arguments in toto, it would result in the recognition of a power in A to sell B's property for a debf for which both A and B might be liable without reference to B or even against his wishes. Such a power can be exercised only if sanctioned by some statutory provision or well-recognised rule of Hindu law and not on grounds of mere convenience or expediency. Mr. Venkatarama (Aiyar, however, states that the strict rule of Hindu law must be and has been considerably modified to suit fhe exigencies of modern business and to protect the interests of creditors bona fide dealing with the manager of as Hindu trading family. We find it difficult to grasp with precision what, according to him, are the metes and bounds of the field within which an ex-manager of a family business can act so as to bind the interests of the other members.
In the case of Babu alias Govindoss Krishnadoss (supra), the
Hon'ble Court held that "After a dissolution of partnership the rights and
obligations of the partners continue in all things necessary for winding
up the business of the partnership". In the said case the Hon'ble Court
also held that the right of the representatives of the deceased partner is
one of the property and does not rest merely on contract and that the
surviving partners, who have the right and duty to realize the
partnership property, hold a fiduciary relationship towards the
17
deceased partner's representatives as regards his interest in the
partnership property, though the latter have no such right in any
individual asset of the partnership property as will entitle them to
interfere with surviving partners' right to deal with and dispose of any
such asset for the purpose of realization.