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TMI Blog1965 (3) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... Orissa High Courts [ 1957 (9) TMI 78 - ORISSA HIGH COURT] held that coparcenership is a necessary qualification for the managership of a joint Hindu family and as a widow is not admittedly a coparcener, she has no legal qualifications to become the manager of a joint Hindu family. - We are clearly of the opinion that the Madras view is correct. Status of HUF and Firm after the minor son becomes major - HELD THAT:- After Venkatlal became a major, there was no obstacle in his representing his branch of the family in the partnership. Indeed, it was conceded in the High Court that there was a partnership from December 13, 1949, when Venkatlal attained majority. Having regard to the said circumstances and the concession, we must hold that from December 13, 1949, the business was carried on in partnership between Venkatlal, representing his branch of the family, and Bachhulal, representing his branch of the family. For the assessment year 1950-51 the status of the assessee was that of a firm within the meaning of section 16(1)(b) of the Income-tax Act, 1922.The Tribunal misdirected itself in law in reaching the conclusion that the parties could not be regarded as partners. Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de another order assessing the income of the business of the firm as that of an association of persons. Against the said orders, two appeals---one being Appeal No. 21 of 1955-56 against the order refusing registration and the other being Appeal No. 24 of 1955-56 against the order of assessment----were filed to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner dismissed both the appeals. In the appeal against the order of assessment, the Appellate Assistant Commissioner exhaustively considered the question whether there was any partnership between the members of the two families after the death of Nandlal and came to the conclusion that in fact as well as in law such partnership did not exist. Two separate appeals, being Income-tax Appeal No. 8328 of 1957-58 and Income-tax Appeal No. 8329 of 1957-58, preferred to the Income-tax Appellate Tribunal against the orders of the Appellate Assistant Commissioner were dismissed. The assessee made two applications to the Tribunal for referring certain questions of law to the High Court, but they were dismissed. Thereafter, at the instance of the assessee, the High Court directed the Tribunal to submit the following tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns upon section 42 of the Indian Partnership Act, 1932 (9 of 1932), the material part of which reads: "Subject to contract between the partners a firm is dissolved by the death of a partner. " While for the appellant the learned Attorney-General contended that section 42 applied only to a partnership consisting of more than two partners, for the respondent Mr. Karkhanis argued that the section did not impose any such limitation and that on its terms it equally applied to a partnership comprising of only two partners. It was argued that the contract mentioned in the overriding clause was a contract between the partners and that, if the parties to the contract agreed that in the event of death of either of them his successor would be inducted in his place, the said contract would be binding on the surviving member. On the death of one of the partners, it was said, his heir would be automatically inducted into the partnership, though after such entry he might opt to get out of it. This conclusion, the argument proceeded, was also supported by section 31 of the Partnership Act. Section 31 of the Partnership Act reads : " 31. (1) Subject to contract between the partners and to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtnership of two partners which is dissolved by the death of one of them, for, in that event, there is no partnership at all for any new partner to be inducted into it without the consent of others. There is a conflict of judicial decisions on this question. The decision of the Allahabad High Court in Ram Kumar v. Kishori Lal is not of any practical help to decide the present case. There, from the conduct of the surviving partner and the heirs of the deceased partner after the death of the said partner, the contract between the original partners that the partnership should not be dissolved on the death of any of them was inferred. Though the partnership there was only between two partners, the question of the inapplicability of section 42(c) of the Partnership Act to such a partnership was neither raised nor decided therein. The same criticism applies to the decision of the Nagpur High Court in Chainkaran Sidhakaran Oswal v. Radhakisan Vishwanath Dixit. This question was directly raised and clearly answered by a Division Bench of the Allahabad High Court in Mt. Sughra v. Babu against the legality of such a term of a contract of partnership consisting of only two partners. Agarwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est that by reason of the contract between the original partners, the heirs of the deceased partner enter the field simultaneously with the removal by death of the other partner from the partnership. This implies that personality of the deceased partner projects into that of his heirs, with the result that there is a continuity of the partnership without any interregnum. There is no support either on authority or on principle for such a legal position. In law and in fact there is an interregnum between the death of one and the succession to him. We accept the view of the Allahabad and Madras High Courts and reject the view expressed by the Nagpur and Calcutta High Courts. The result of the discussion is that the partnership between Nandlal and Bachhulal came to an end on the death of Nandlal on December 9, 1945. The next question is whether after the death of Nandlal a new partnership was entered into between the representatives of the two branches of the families, i.e., Nandlal's and Bachhulal's. Before we consider this question it is as well that we advert to incidental questions of law that were raised. One is whether the widow of Nandlal could under Hindu law be a karta o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be the manager of the joint family for she is not a coparcener." The view expressed by the Madras High Court is in accordance with well settled principles of Hindu law, while that expressed by the Nagpur High Court is in direct conflict with them. We are clearly of the opinion that the Madras view is correct. Another principle which is also equally well settled may be noticed. A joint Hindu family as such cannot be a partner in a firm, but it may, through its karta, enter into a valid partnership with a stranger or with the karta of another family. This court in Kshetra Mohan Sanyasi Charan Sadhukhan v. Commissioner of Excess Profits Tax pointed out that when two kartas of different families constituted a partnership the other members of the families did not become partners, though the kartas might be accountable to them. The question, therefore, is whether after the death of Nandlal the representatives of the two families constituted a new partnership and carried on the business of the sugar mills. Admittedly, no fresh partnership deed was executed between Banarsibai, acting as the guardian of the minors in Nandlal's branch of the family, and Bachhulal. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent with any such partnership between Banarsibai and Bachhulal. After the death of Nandlal, Banarsibai and Shantibai applied to Jaora District Court for the appointment of guardians to look after the properties and the persons of the two minors ; and on January 21, 1946, four persons other than these two widows were appointed as guardians of the minors. If Banarsibai was acting as a guardian of the minors representing the family in the business, she would not have applied for the appointment of others as guardians. On October 4, 1952, a partnership deed was drawn up between Bachhulal on the one hand and the minors represented by the said four guardians on the other. If Banarsibai was the representative of the family in the business, this document would not have come into being. Banarsibai also had no place in another partnership deed which was executed on March 27, 1953, between Venkatlal represented by the aforesaid guardians and Bachhulal. The evidence, therefore, demonstrates beyond any reasonable doubt that Banarsibai was nowhere in the picture and that Bachhulal carried on the business of the sugar mills on behalf of the two families. Nor is there any evidence to show that fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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