1974 (5) TMI 118 - SC - Indian Laws

Issues Involved:
1. Dissolution of Partnership
2. Rendition of Accounts
3. Implied Agreement
4. Application of Section 88 of the Indian Trusts Act
5. Limitation Period for Filing Suit

Issue-wise Detailed Analysis:

1. Dissolution of Partnership:
The primary issue was whether the partnership between the appellants and the respondent was dissolved. The partnership agreement dated August 30, 1952, stipulated a five-year term, coinciding with the lease period of Ambernath Mills. The trial judge and the appellate bench concluded that the partnership dissolved either on May 25, 1954, when the lease was canceled, or at the latest on November 10, 1955, when the Supreme Court upheld the Custodian's notice for lease termination. The court emphasized that, in the absence of a contract to the contrary, a firm constituted for a fixed term dissolves upon the expiry of that term, which was August 30, 1957, in this case.

2. Rendition of Accounts:
The appellants sought a rendition of accounts, claiming the partnership continued beyond the lease cancellation. However, the trial judge and the appellate bench held that the claim was barred by limitation. The suit, filed on December 20, 1960, was beyond the three-year limitation period from the date of dissolution, which was determined to be August 30, 1957, at the latest. The court noted that the appellants failed to prove any agreement to continue the partnership beyond the fixed term.

3. Implied Agreement:
The appellants argued for an implied agreement to continue the partnership for acquiring and exploiting the mills. The court found no evidence of such an implied agreement. The conduct and correspondence between the parties did not support the existence of an implied agreement. The court also highlighted that no such case was set up in the trial court or the appeal before the Division Bench. The documents on record, including an agreement dated September 20, 1957, and a bond dated September 21, 1957, indicated that the respondent intended to acquire the mills for himself and not on behalf of the partnership.

4. Application of Section 88 of the Indian Trusts Act:
The appellants contended that the respondent's acquisition of the mills was impressed with a trust in favor of the partnership under Section 88 of the Indian Trusts Act. However, the trial judge and the appellate bench rejected this contention. The court noted that the appellants failed to prove any express or implied agreement that the mills were to be acquired for the partnership. The respondent's actions and the subsequent agreements indicated that the acquisition was for his benefit alone.

5. Limitation Period for Filing Suit:
The court held that the suit for rendition of accounts was barred by limitation. According to Section 42 of the Indian Partnership Act, a firm constituted for a fixed term dissolves upon the expiry of that term unless a contract to the contrary is proved. The partnership in question was for a fixed term of five years, expiring on August 30, 1957. The suit filed on December 20, 1960, was beyond the three-year limitation period for such claims. The court also referenced Section 47 of the Indian Partnership Act, which allows partners to complete transactions begun but unfinished at the time of dissolution, but this did not extend the limitation period for filing the suit.

Conclusion:
The appeal was dismissed, with the court affirming the findings of the trial judge and the appellate bench. The partnership was deemed dissolved by August 30, 1957, at the latest, and the suit for rendition of accounts was barred by limitation. The court found no evidence of an implied agreement to continue the partnership or any trust impressed under Section 88 of the Indian Trusts Act. The appeal was dismissed without costs.

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