1981 (11) TMI 190 - HC - Companies Law

Summary

Issues:
1. Suit for accounts and recovery of amount due to plaintiff.
2. Dispute over partnership dissolution and concealed profits.
3. Legal implications of concealed profits in relation to tax evasion and public policy.

Analysis:
1. The plaintiff filed a second appeal seeking recovery of an amount due to him from defendants in a suit for accounts. The trial court decreed the suit, but the lower appellate court dismissed it. The dispute arose from a partnership in a Kerana business where the plaintiff and another individual were initially given the business by defendants. The partnership dissolved in 1958, leading to disagreements and the filing of the suit for recovery.

2. The defense claimed that the partnership was dissolved by agreement, with accounting done, revealing stock, cash, and debts. The plaintiff was alleged to have voluntarily retired, promising to pay due amounts. A commissioner's inventory showed concealed profits. The trial court found the plaintiff entitled to a specific amount after adjustments, leading to the decree for recovery. The lower appellate court focused on the figure of concealed profits, determining only a portion reached one defendant, resulting in the dismissal of the suit.

3. The judgment highlighted the issue of concealed profits and its implications on tax evasion and public policy. The court expressed concern over aiding tax evasion by enforcing recovery of concealed profits. It emphasized that agreements involving evasion of taxes are void and unenforceable, as they go against public policy. The court concluded that agreements to conceal profits for tax evasion purposes are unlawful and cannot be enforced by the court. The appeal was dismissed, emphasizing the illegality of agreements aimed at evading taxes and the importance of upholding public policy.