1966 (8) TMI 78 - HC - Indian Laws

Summary

Issues Involved:
1. Date of dissolution of the partnership.
2. Whether the partnership was a partnership at will.
3. Interpretation of Clause 7 of the partnership deed.
4. Validity of the notice of dissolution under Section 43 of the Partnership Act.

Issue-wise Detailed Analysis:

1. Date of Dissolution of the Partnership:
The primary issue for determination was the date of dissolution of a partnership constituted of the plaintiffs and the defendants. The partnership was formed by a deed dated 4th July 1954, and the plaintiffs issued a notice on 15th December 1956 to dissolve the partnership. The trial court held that the partnership was dissolved on 18th December 1956, the date when the notice was received by the defendants.

2. Whether the Partnership was a Partnership at Will:
The controversy centered around whether the partnership was a partnership at will, as defined under Section 7 of the Partnership Act. According to Section 7, a partnership is at will if there is no provision in the contract for the duration or determination of the partnership. The trial court concluded that the partnership was at will, as Clause 6 of the partnership deed explicitly stated that the duration of the partnership was not fixed, making it a partnership at will.

3. Interpretation of Clause 7 of the Partnership Deed:
Defendants Nos. 5 to 7 contended that Clause 7 of the partnership deed, which dealt with the retirement of a partner, constituted a provision for the determination of the partnership. They argued that retirement equated to dissolution, thereby disrupting the jural relationship among all partners. However, the court rejected this contention, stating that retirement of a partner does not dissolve the partnership but merely severs the relationship between the retiring partner and the continuing partners. The partnership continues with the remaining partners, and thus, Clause 7 did not constitute a provision for the determination of the partnership.

4. Validity of the Notice of Dissolution under Section 43 of the Partnership Act:
The notice dated 15th December 1956 was given under Section 43 of the Partnership Act, which allows dissolution of a partnership at will by notice. The court held that since the partnership was a partnership at will, the notice effectively dissolved the partnership from the date of its receipt by the defendants, i.e., 18th December 1956.

Conclusion:
The court concluded that the partnership was a partnership at will and was validly dissolved on 18th December 1956 by the notice given by the plaintiff. The trial court's decision to pass a preliminary decree based on this dissolution date was upheld. The appeal was dismissed, and the appellant was ordered to pay the costs of the appeal to the respondents in three separate sets, with no costs awarded to respondent No. 5, who supported the appellant.

Judgment:
Appeal dismissed.