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Issues Involved
1. Enforceability of the restriction imposed by Clause 3 of the partnership agreement. 2. Plaintiff's entitlement to the relief of injunction. 3. Plaintiff's entitlement to the relief in respect of accounts. 4. Suit's compliance with the limitation period. Analysis of the Judgment 1. Enforceability of the Restriction Imposed by Clause 3 of the Partnership Agreement The main point of contention was whether Clause 3 of the partnership agreement, which prevented either partner from taking up the selling agency after the partnership ended, was enforceable. The court examined Section 27 of the Indian Contract Act and Section 54 of the Indian Partnership Act. Section 27 generally voids agreements in restraint of trade, with an exception for the sale of goodwill. Section 54 allows partners to agree not to carry on a similar business within specified limits upon dissolution of the firm if the restrictions are reasonable. The court found that the disputed clause restrained the same business, not a similar business, and did not specify any temporal or geographical limits. The court concluded that the word "similar" in Section 54 does not include "same" and that the agreement did not fall within the intended scope of Section 54. Consequently, the court held that Clause 3 was not enforceable. 2. Plaintiff's Entitlement to the Relief of Injunction The court observed that if Clause 3 were enforceable, there would be no reason why the plaintiff should not be granted an injunction restraining the defendants from carrying on the selling agency business. However, since Clause 3 was found unenforceable, the plaintiff was not entitled to an injunction. 3. Plaintiff's Entitlement to the Relief in Respect of Accounts The court considered Section 88 of the Indian Trusts Act, which requires a fiduciary to hold any pecuniary advantage gained for the benefit of the person whose interests they were supposed to protect. The court concluded that Deva Sharma did not obtain the selling agency in his character as a partner of the plaintiff. The British India Corporation had terminated the selling agency agreement, and all parties knew the partnership would end on 31-12-1945. The court found no evidence of collusion between Deva Sharma and the Corporation that would invoke Section 88. Therefore, the plaintiff was not entitled to relief in respect of accounts. 4. Suit's Compliance with the Limitation Period The court noted that there was no argument presented that the suit was not within time, hence it was affirmed that the suit was within the limitation period. Conclusion The court concluded that Clause 3 of the partnership agreement was not enforceable, the plaintiff was not entitled to an injunction or relief in respect of accounts, and the suit was within the limitation period. The appeal was allowed, and each party was ordered to bear their own costs.
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