56)Hal

dir
am Bhuj
i
awal
avAnandKumarDeepakKumar(
2000)3SCC250

ITisclearthatthesuitinquest i
onisbasedoninfri
ngementofst atut
oryri
ghtsundert heTr ade
Mar ksAct.Iti
salsobasedupont hecommonl awprinciplesoft
ortappli
cabletopassing-off
acti
ons.Thesui tisnotforenf orcementofanyri
ghtarisingoutofacontractenteredintobyor
onbehal foftheunregisteredfir
m withthi
rdpart
iesi
nt hecourseofthefirm'sbusiness
tr
ansactions.Thesuitis,therefore,
notbarr
edbySect i
on69( 2)ofthePartnershi
pAct ,1932.

Bythatorder,
theHighCour thadsummar i
l
ydismissedthatappealoftheappel
lantsagainstthe
orderofaSingleJudge.Theappellant
swantedtheplai
nttobereject
edont hegroundt hatthe
pl
ainti
ffwasanunr egi
ster
edpar t
nershi
ponthedateofthesui t
,andit
ssubsequentr egist
rati
on
couldnotcuretheini
ti
aldefect.

TheSupr
emeCour
tjudgmentwasbasedont
hef
oll
owi
ngpoi
nts/
reasons:

Fol
lowingRaptokasBret
tCo.Lt
dvs.GaneshPropert
y1998(7)SCC184,itmustbehel
dthata
sui
tisnotbarr
edbySect i
on69(
2)ofthePart
nershi
pAct,1932i
fastat
utoryr
ightoracommon
l
awr i
ghtisenf
or ced.

I
tiswell sett
ledthatapassi
ng-offact
ionisacommonlawactionbasedontor
t.Henceasui
tfor
perpet
ual inj
uncti
ontorestr
aintheopposit
epart
ynottopass-
offi
tsgoodsasthoseoft
he
pl
ainti
ff
sbyusi ngthel
att
er'
strademar k,
andfordamagesisanacti
onatcommonl awandis
notbarredbySect i
on69(2).

Ifther el
i
ef sofpermanentinjunct
ionordamagesarebeingcl
aimedont hebasi
sofar egi
ster
ed
trademar kandi tsinfr
ingement,t
hesuiti
stobetreat
edasonebasedonast atutoryr
ightunder
theTr adeMar ksActandi snotbar r
edbySecti
on69(2).I
nbot
ht hesesi
tuat
ions, t
he
unregisteredpartnershipi
nthiscasecannotbesai
dtobeenforcinganyri
ghtarisingf
rom a
contract.

I
twasont hebasisoftheReportoftheSpeci
alCommittee( 1930-
31)thatthePartnershi
pAct
,
1932waspassedbyt heLegisl
atur
e.Para16oftheRepor tstat
esthattheBill
seeksto
over
comecer t
aindi
ffi
cult
ybymaki ngregi
str
ati
onopti
onal ,
andbycr eat
inginducement st
o
regi
sterwhi
chonlybearuponfir
msi nasubstant
ial
andf air
lypermanentwayofbusi ness.

Para17oftheSpeci
alCommitt
eeRepor t
,int
eral
ia,
saysthatanyf ir
m whichisnotr
egistered
wil
lbeunablet
oenforcei
tscl
aim agai
nstthi
rdpart
iesinthecivi
lcourt
,andanypartnerwhoi s
notregi
ster
edwil
lbeunabl
etoenforcehiscl
aimseitheragainstthi
rdparti
esoragainstfel
low
part
ners.

Theri
ghtthati
ssoughtt
obeenfor
cedbytheunregi
steredfi
rm andwhi
chi
sbarr
edmustbea
ri
ghtar
isi
ngoutofacontr
actwi
thathi
rdpar
tyinrespectofthefi
rm'
sbusi
nesst
ransact
ions.

Thereal
cruxofthequest
ionisthattheLegi
slat
urewhenitusedthewor
ds`ar
isi
ngoutofa
cont
ract
'inSect
ion69(
2),i
tisrefer
ri
ngtoacont r
actent
eredint
oincour
seofbusi
ness
t
ransact
ionsbyt
heunr
egi
ster
edplai
nti
fff
ir
m wit
hit
scust
omer s,andthei
deai
stopr
otect
t
hoseincommercewhodealwit
hsuchapartner
shi
pfi
rminbusiness.

Sect
ion69(2)isnotat
tr
actedt
oanyandev er
ycontr
actwhichi
sref
err
edtoi ntheplai
ntasthe
sour
ceoftitl
etoanassetownedbythefir
m.Ift
heplai
nt,
inthepr
esentcase, r
efer
redtosucha
cont
racti
tcouldonlybeasahist
ori
calf
act.I
thasnobeari
ngontheri
ghtwhi chisastatut
ory
ri
ght
.Hencet hesui
twil
lbemaint
ainabl
e.

ThePar t
nershipActhasnotpr escr
ibedthatthetransact i
onsorcont ractsenter
edintobyaf i
rm
withathir
dpar tyarebadinlawifthef i
rmisanunr egisteredfir
m.Ont heotherhand,ifthefi
rm
i
snotr egi
steredondat eofsuit,
andt hesuiti
stoenf orcear ightari
singoutofacont ractwith
thethi
rdparty-def
endantinthecour seofit
sbusiness, t
heni twillbeopent otheplai
ntif
ftoseek
withdr
awal oftheplai
ntwithleave,andfil
eafreshsui tafterregi
strat
ionoft hefi
rm subjectof
coursetothelawofl i
mi t
ati
onandsubj ecttotheprov i
sionsoft heLimi t
ati
onAct.

51)Jagdi
shChandr
aGupt
avKaj
ari
aTr
ader
s(I
ndi
a)Lt
d,AI
R1964SC1882

Aclausei nadeedofpar tner

shipprovidedthatincaseofdisputebet
weent hepart
ner
s;t
he
mat t
erwillberefer
redtoarbit
rati
on.Adi sput
ehav i
ngar i
sen,onepar
tnerappoi
ntedan
arbi
trat
ort owhichtheotherpartnergavenor esponse.Anactionwasthencommencedto
enforcethearbit
rati
onclauseoft heagreement.

Theot herpar
tnercont
endedt
hatt
hefi
rm wasnotregi
ster
edandther
efor
ethesui
tshoul
dbe
dismissed.TheSupremeCour
thel
dthatt
hesuitwasnotmaint
ainabl
eandtheCour
tobserv
ed
that

"
Iti
simpossibl
etothi
nkthatt
heri
ghttoproceedtoarbi
trat
ioni
snotoneoft heri
ght
swhichare
f
oundedont heagr
eementofpar
ti
es.Thewor dofsecti
on69(3)orot
herproceedi
ngstoenf
orce
ari
ght'
ari
singfr
om acontr
act
'ar
esuffi
cientt
ocov ert
hepresentmatt
er"
.

I
far
bit
rat
ionproceedi
ngswereal
lowed,unr
egist
eredfi
rm would,bypr
ovi
dingf
orar
bit
rat
ioni
n
t
hepart
nershi
pdeed,toescapet
hedisabi
li
tycontai
nedinthesecti
on.

(
50)CI
TvJay
lakshmi
Rice&Oi
lMi
l
lsCont
ract
orcO.
,AI
R1971SC1015

Heldthatregist
rati
oni scompl eteonl
ywhentherequi
rementsofS59arecompl i
edwi th.Afi
rm
cannotbesai dtober egist
eredwhent hestat
ementprescr
ibedbyS58andther equir
edf eear
e
senttotheregistr
ar.Ther egistr
ati
onofthefi
rmiseff
ectedonlywhentheentr
yoft he
stat
ementsi srecordedint heregist
eroffi
rmsandthestat
ementisfi
ledbyther egi
str
aras
provi
dedbyS59.
48)S.
V.Chandr
aPandi
anv
.S.
V.Si
val
i
ngaNadar(
1993)1SCC589

6Brother
srunni
ngpart
ner
shi
pf i
rm –di
ssol
utionoffi
rm af
terdi
spute–ref
err
edtoarbi
tr
ati
on–
ar
bit
rator
sgaveawards–div
idedfi
rmimmov ablepr
operti
esinquesti
onamongeachofthem.

Someoft
hedi
sput
ant
sfi
l
edapet
it
ionpr
ayi
ngf
oradi
rect
iont
othear
bit
rat
orst
ofi
l
ethei
rawar
d
i
ncour
t.

Theyalsofil
edanotherpet
it
ionrequest
ingthecour
ttopassadecreeinter
msoft heaward.
Twoot herdi
sputant
sfli
edapet i
ti
onunderSecti
on30oftheArbi
tr
ationActtosetasi
dethe
award.ASingleJudgeheardthesematters.

I
twascont endedbeforehimt hathavi
ngr egardto t heallot
mentofpar t
ner
shippr opert
ies
i
ncludingimmov abl
epr operti
esundert heawar d,I
twasI ncumbentthattheawar dshouldhave
beenr egi
steredasrequiredbySection17( 1)oftheRegistrati
onActandsinceitlacked
regist
rati
on,theCourthadnoj uri
sdict
iont omakei tt
her ul
eoft heCourtandgrantadecr eeIn
terms59t hereof
.TheSi ngleJudgedirectedtakingstepsforgetti
ngtheawardr egister
ed.

I
nthemeanti
me,oneofthearbi
tr
ator
spassedaway
.Attherequest ofsomeoft
hepar
ti
es,
t
hesur
viv
ingarbi
tr
ator
spresent
edtheawardtot
heRegi
str
arforregi
str
ati
on.

Ther
eupononeoft
hebr
other
sser
vedanot
iceont
heRegi
str
arnott
oregi
stert
hedocument
.

Againstt
heor deroft
heSingleJudge,anappealwaspr
efer
redtoDivi
sionBenchandit
rever
sedthefi
ndingoftheSingl
eJudge.Ithel
dthatt
heawardrequi
redregi
str
ati
onunder
secti
on17(1)oftheRegist
rat
ionAct;

andintheabsenceofr
egistr
ati
ont
herewasnoval
idawar
dandtheCour
thadnoj uri
sdi
cti
onto
grantadecreei
nter
msoft heawar
d.Bei
ngaggr
iev
edbythi
sor
der,t
hepresentappeal
swere
fl
iedbyfouroft
hesixbr
others.

Onthequest
ionwhet
hert
heawar
drequi
redr
egi
str
ati
onundersect
ion17(
1)oft
heRegi
str
ati
on
Act

SCset
ti
ngasi
det
her
uli
ngoft
hedi
vi
sionbenchanduphol
dingt
her
uli
ngoft
heSi
ngl
eJudgeof
TChel
d

"Theabov eprovisi
onsmakei tclearthatr
egar dl
essoft hecharact
eroft hepr opert
ybroughtin
bythepar t
nersont heconstituti
onoft hepar t
nership,suchpr opertyshallbecomet heproperty
ofthef i
rm andani ndi
vi
dualpar tnershall
onl ybeent i
tledtohisshar eofpr of
its,
ifany,accrui
ng
tothepar t
nershipfrom t
hereal i
zati
onoft hi
spr opertyandupondi ssoluti
onoft hepartnershi
p
toashar einthemoneyr epresent i
ngt hevalueofthepr opert
y.Iti
swel l-
settl
edthatthefirmis
notal egalenti
ty,i
thasnolegal exist
ence, i
tismer elyacompendi ousnameandhence, the
partnershi
ppropertywouldv estinall t
hepar t
nersoft hef i
rm.Accor di
ngly,eachandev ery
partnerofthefirm wouldhaveani nter
estinthepropert
yorassetoft hefi
rm butduri
ngits
subsi st
encenopar tnercandeal wi
thanypor t
ionofthepropert
yasbel ongingtohi
m, norcanhe
assignhi si
nterestinanyspecif
icitem t
hereoftoanyone.Onat r
uereadingoftheawar dasa
whol e,ther
ewasnodoubtt hatitessenti
all
ydealtwit
hthedistr
ibuti
onoft hesurpl
uspropert
ies
belongingtothedi ssol
vedfir
ms.Theawar d,t
herefor
e,didnotrequi
reregistr
ati
onunders.17(1)
oftheRegi str
ationAct."

46)M/
sJuggi
l
alKaml
apatv
.M/
sSewChandBagr
ee,
AIR1960Cal
443

Commer ci
al –liabil
ity–Sect ion45(1)ofPar t
ner shipAct,1932–awar dholdersdidnotadmit
thatther ewasdi ssolutionoffir
m –underSect ion45not withstandingdissol
utionoffi
rmliabi
l
ity
ofpar tnerscont inuesunt il
publicnoti
cegivenofdi ssolut
ion–Pr ovi
sotoSect i
on45( 1)
exempt sestateofpar tnerwhodi esoradjudi
cat edinsolv
entorr eti
resfrom f
irmifactdoneafter
dateonwhi chheceasest obepar t
nerindependent ly–ProvisotoSect i
on45( 1)appl
iedand
othertwopr eviouspar tnersnotliabl
etopaydecr etalamount–appl i
cati
ondismissed.When
appellantsent eredi ntocontractthetwopr evi
ouspar t
ner
swer enotknownt othem.

(
45)Sant
ir
anj
anDasGupt
av.Dasur
am Mur
zamul
l
,AI
R1973SC48

Accor di
ngt ot hepl aintiff
-appellanthehadami ll
atNoj ai wherehewascar ryingonhi smilli
ng
business.Thedef endant srepr esentedt ohi mt hatifthemi ll
ingbusi nesswascar ri
edoni n
partnershipwi ththem t hent hepl ai
ntif
fwoul dmakel argeprof i
tsandont hatr epresentati
onand
assuranceheent er edintoapar tnershipwi t
ht hedef endantsonoraboutJanuar y10, 1948.The
partnershipbusi ness, t
oquot ethepl ai
nt" commencedf r
om aboutt hemi ddleofJanuar y,1948
andt hewor kcont inuedupt o10t hSept ember ,1948" .Somedi sputesar oseandonorabout
Nov ember6, 1948Mur zamul l
Agar wal tol
dt hepl aint
iffthatthebusi nessi npar tnershipwasno
l
ongerpossi ble.InSept ember1951t hepl ai
ntiffinsti
tutedthepr esentsui tfordi ssoluti
onof
partnership.Besi desot herl egal obj
ectionst akenbyt hedef endantsi ntheirwr ittenstatementi t
waspl eadedt hatt herewasnopar t
nershipbet weent hepar ti
esandt hattherewasonl yami ll
i
ng
agreementdat edJanuar y11, 1948bet weent hem underwhi chthedef endant swer eget ti
ng
paddymi l
ledint hepl ai
ntiff
'sricemi ll
sf orwhicht hedueshadal lalongbeenpai dtot heplainti
ff
Inaccor dancewi tht hemi ll
ingcont ract.

TCdecreedinf
avorofpl
aint
if
f.HCr
ever
seddeci
sion.SCuphel
dHCdeci
sion.Hel
dno
par
tner
ship.

SCObser
vat
ions:

(
i) Norecor
dofterms&conditi
onsofpar
tner
shi
p.
(
ii
) Nomaint
enanceofaccount
sofpart
ner
shipbusi
ness
(i
i
i) Noaccountofpar
tnershi
popenedi
nanybank
(i
v) Nowr i
tt
eninfor
mationconvey
edtoDeput
yDir
ect
orofpr
ocur
ementwr
ttot
henewl
y
creat
edpar
tner
shi
p.

(
44)Sal
i
gram Rupl
alKhannav
.KanwarRaj
nat
h,AI
R1974SC1094

Apar tnershipconsi
st i
ngoft heappell
antsandt her espondenthadent eredi
ntoal ease
agreementwi t
htheCust odianofEv acueeProper t
yi nrespectofami ll
andt ookpossessionof
themi llon31stAugust ,1952.Theper i
odofpar tnershipwasf or5y earsbei
ngt heperi
odofthe
saidlease.Thepar tnershavingfai
ledtopayonei nstall
mentofr enttheCustodianservedonthe
partnersashowcausenot i
ceon12- 2-54whyt hel easeshouldnotbet erminated.Onaccountof
certai
nf inanci
aldif
ficul
ti
est hepart
iesenter
edi ntoasecondagr eementonFebr uar
y24,1954.

Disputeshav i
ngarisenbet weenappell
antsandt herespondent,
theappellant
sfil
edasui ton
December20.1960al l
egingthataft
ertheterminati
onoftheleasebytheCust odi
anonMay25,
1954t hetwoappel lantsandtherespon-denthador all
yagreednottodissolv
ethepar tner
shi
p
i
nspi teoftheterminationoftheleaseandpr ay
edf oradeclarat
iont
hatt hepart
nershipbetween
them andt herespondentwasst il
lsubsist
ingont heter
msandcondi ti
onssetouti nthe
partnershi
pdeeddat ed24thFebruary,
1954.

Theyal
sopr
ayedf
orr
endi
ti
onoft
hepar
tner
shi
paccount
s.

Therespondenton.theotherhandal
legedt
hatther
ewasnooralagr
eementbet
weent
he
par
ti
esandt hattheclai
m f orr
endi
ti
onofaccountswasbar
redbyli
mit
ati
on.

Thetr
ial
cour
thel
dthatt
heappel
lant
shadfai
l
edt opr
ovethatther
ewasanor
alagr
eement
bet
weenthepar
ti
esandthatt
heclai
mforr
endit
ionofaccount
swasbarr
edbyli
mit
ati
on.

Onappeal
theHi
ghCour
tuphel
dthef
indi
ngsoft
het
ri
alcour
t.

Di
smi
ssi
ngt
heappeal
,

HELD: -(
1)Noi nferenceofi mpli
edagr eementcanbedr awnf r
om t hemat erialonrecor d.
Accordingtosect ion42oft heIndi
anPar t
ner shi
pAct ,subjectt oacont ractbet weent he
part
nersaf irmisdi ssolvedifconsti
tutedf oraf i
xedt erm bytheexpi r
yoft hatterm.Thi s
provi
sionmakesi tcl earthatunl
ess somecont ractbet weent hepar t
nerst othecont raryis
proved.thefi
rm, ifconst it
utedforaf i
xedt erm woul dbedi ssolv edbyt heexpi ryoft hatterm.
[
371G- H]Inthei nst antcaseitwasi ndicatedi ntheagr eementofpar tnershi pthattheper iodof
part
nershiphadbeenf i
xedat5y earsbecauset hatwast heper i
odoft hel easeoft hemi ll
sand
thel
easewast ermi nat edonMay25, 1954.[ 372B- C]Accor di
ngt os.47oft heIndianPar tnershi
p
Actafterthedissol utionoft hefir
mt heaut hori
tyofeachpar tnert obindt hefirm andt heot her
mut ual rightsandobl igati
onsoft hepar tner
scont inuenotwithstandingt hedi ssolutionsof aras
maybenecessar ytowi ndupt heaf fai
rsoft hefir
m andt ocompl etet r
ansact i
onsbegunbut
unfinishedatt het i
meofdi ssoluti
onbutnotot herwise.Thewor d't
ransact ion'i
nsect ion47
refersnotmer elytoacommer cialtr
ansact i
onofpur chaseandsal ebutwoul dincludeal soall
othermat t
er srel
atingt otheaf f
airsofthepar tnership.Thecompl et i
onofat ransact ionwoul d
cov eral sot hetakingofnecessar ystepsi nconnect i
onwi t
htheadj udicati
onofa
disput et owhi chthef irm beforeitsdissoluti
onwasapar t
y.I
nt hei nstantcaseaf terdi ssoluti
on,
thepar tnershipsubsi stedmer elyforthepur poseofcompl et
ingpendi ngt ransact i
ons, winding
upt hebusi nessand359adj ustingther ight
sofpar t
nersandf orthesepur posesandt heseonl y
theaut hority,r
ightsandobl i
gationsoft hepartnerscont i
nued[ 374B-D, F-G](3)Thesui tfor
renditionofaccount sbr oughtbyt heappel l
antsonDecember20, 1960wasbar redbyl imitati
on.

I
ntheabsenceofacontr
actt
othecont
rar
ytherecoul
dbenosur
viv
aloft
hef
ir
m af
terAugust
30,
1957whent heper
iodofpar
tner
shi
pexpi
red.

43)Vi
shnuChandr
av.Chandr
ikaPr
asadAgr
awal
,AI
R1983SC523

Qbef
oreHC

(i
)whetherthepartner
shipwasapartner
shipatwi
llorforaf
ixeddurat
ion;(
ii
)whet
hert
he
respondent(appel
l
antbef or
eus)wasenti
tl
edforr
etir
ementfrom t
hepartner
shi
porfor
dissol
uti
onoft hefi
rmitself
."

HChel
dthatt
hepar
tner
shi
pwasapar
tner
shi
patwi
l
l.I
stquest
ionwasnotbr
oughtupbef
ore
t
heSC.

Thequestionbef oreSCwaswhet herapar t

nerwasent
itl
edtoret
ir
eonthebasisofpartnershi
p
deed.Thedeedpr ovi
dedthatapartnermayr et
ir
ebygi
vingonemonthnoti
ceandt hatapartner
cannotret
irewithinoneyearofcommencementofbusi nessandifhedoesso,hi
scapitalwill
notbereturned.Heldthatiti
sconsistentwit
hthepr
ovi
sionsofSecti
on31(1)
(b)andthepar t
ner
canreti
reaccordingtothedeed.

(
41)Sy
ndi
cat
eBankv
.R.
S.R.EnggWor
ks(
2003)6SCC265

Thepl ai
nt i
ffappel l
antfil
edtwosui tagai nstther espondent s.Fir
str espondenti nbot hthesui t
s
i
sapar tnershipf i
rm engagedi nengineer i
ngwor ks.RespondentNos.2t o4ar eitspar t
ners.In
thefir
stsui t,O.S.No.1921/ 80hi chwasf i
ledforr ecoveryofRs.59, 775. 95wi thinterestthereon,
theplainti
ffallegedt hatforthepur poseofexpansi onofi ndustryoft her espondent ,aloanofRs.
40,000/-wassanct i
onedi nfavouroft herespondent son5. 12.1974.Thel oanwast ober e-paid
after9mont hsi ninstal
ment s.Theyr espondent shadal soexecut edther equisit
edocument sin
favouroft hepl ainti
ffbank.spondentNos.2and3i nthei
rwr i
tt
enst atementadmi ttedt hatthe
respondent shadbor rowedRs.40, 000/ -fr
om theappel l
ant, buttheycont endedt hatt hefir
st
respondentf irm wasdi ssolvedandt hef ourt
hr espondentt ookov ertheent ir
el i
abili
tyand,
heref
ore,t
heyar
enotli
ablefort
hesuitcl
aim.TheTri
alCourtpassedthedecr
eeonl
yagai
nst
Respondent-
1andRespondent-
4fort
hesuitcl
aim.TCorderwasr eaf
fir
medbytheHC

SCobser
vedanddeci
dedasf
oll
ows.

Undersect i
on32( 2)oftheI ndi
anPartnershipAct,1932t heliabil
i
t yofareti
ringpartneras
againstthethirdpartywoul dbedischargedonlyifthereisanagr eementmadebyt heret
iri
ng
partnerwiththethirdpartyandpar t
nersoft hereconsti
tutedf i
rm, ofcourseanagr eementcould
beimpl i
edbyt hecour seofdealingbetweent hethir
dpar tyandt her e-
constitut
edfirm af
terthe
reti
rementoft hepar t
ner.Itwasheldfurtherthatifacreditortakesanewsecur i
tyfort
hedebt
from thecontinui
ngf i
rm, t
henitshowshi sintenti
ont odeal withthecontinuingpar t
nerfordebts
owedbyt hefir
m.I nabsenceofsuchexpr essorimpliedagr eement ,apublicnoticeisnecessary.

Itisperhapssel fevidentt hatacr edi

tor
'sr i
ghtswi llnotnor mallybepr ejudicedbyanagr eement
transferr
inganaccr uedl iabili
tyfr
om onepar tnert oanot herunl essthecr editorismadeapar ty
tot heagr eementorassent stoi t
soperation.Ot herwi set heagr eementwi l
l,asr egardshi m,be
stri
ctlyresi nt
erali
asact a.Lor dLindl
eyillustratedt hispr opositionforthef oll
owi ngex ample:--
l
eti tbesupposedt hataf irm ofthreemember s, A,B, andc, i
sindebt edt oD; thatar eti
res,andB
andCei theralone,ortoget herwithanewpar tner ,E, t
akeupont hemselv esthel iabil
it
iesofthe
oldf i
rm.D' sri
ghttoobt ainpay mentf orm A, B, andCi snotaf fectedbyt hebyar rangement ,and
Adoesnotceaset obel iabl etohimf orthedebti nquest i
on.Buti f,
af t
erA' sretirement ,D
accept sashi ssoledebt orsBandC, orB, C, andE( ifEent erst hefi
rm) ,thenA' sl i
abil
itywil
l
hav eceased, andDmustl ookf orpaymentt oBandC, ortoB, CandE, ast hecasemaybe. "

Ther eisnoapr i
oripresumpt i
ont otheeffectthatthecr editorsoff i
rm do,onther et
ir
ementofa
par t
ner,enterint
oanagr eementt odischargehimf rom liabili
ty.Anadopt i
onbyt hecr edi
torof
thenewf ir
m ashi sdebt ordoesnotbyanymeannecessar i
lydepr i
vehim orhisrightsagainst
theol dfi
rm especiall
ywhent hecr edi
torisnotapar tytot hear rangementandt henther eisno
freshagr eementbet weent hecredi t
orandthenewl yconst i
tutedf i
rm.Afterthecredit
orhas
takenanewsecur i
tyf oradebtf r
om acont inui
ngpar tner,itmaybeast r
ongaev idenceofan
i
nt enti
ont olookonlyt hecontinuingpartnerforthepay mentduef ormthef i
rm.

Iti
salsoimportanttonotethati
thaslongbeenrecognizedthatpar
tner
shi
pisnotaspeciesof
j
ointtenancyandthat,i
ntheabsenceofsomecont rar
yagr eement,
ther
eisnosurv
ivorshi
pas
betweenpartners,
atleastsofarasi
tconcernst
heirbenefici
ali
nter
estsi
nthepar
tnership
assets.

Hav
ingdueregardt
othesepri
nci
ples,
theHighCourterr
edinconfi
rmi
ngthejudgmentpassed
byt
hetri
alcour
tandthepl
aint
if
fappell
anthadever
yrightt
oproceedagai
nstallt
hedefendant
s
i
nthesuit
.Hence,
theappeal
sareal
lowedandtheimpugneddecreeismodifi
edtotheext
ent
t
hatther
eshall
beadecreeagai
nstall
ther
espondent
s,namelyrespondent1to4,bot
hthesui
ts.

(
39)Shi
vgoudaRav
jiPat
ilv
.Chandr
akantNeel
kant
hSadal
ge,
AIR1965SC212

Apartnershipfir
m wasbei ngr unwherei
noneoft hepart
ner swasami nor(respondent1)and
wasadmi ttedtothebenef i
tsoft hepart
nershi
p.Thepartnershi
pwasdi ssolvedand
subsequent l
ythemi norpartnerbecameamaj or.However,hedidnotexercisehisopti
onto
becomeapar tnerunderSect i
on30(5)oftheIndi
anPartnershipAct
.[
1]Whent heappell
ant
s
cl
aimedt heirdues,therespondentswereunabletopayt hem andsoall t
hreeofthem weresued
bytheappel l
antsforadjudicati
ngthem forbei
nginsol
vent.

I
ssue:I
srespondent1,whodidnotexer
cisehi
sri
ghtt
obeapar
tnerf
ort
hef
ir
m,apar
tnerunder
Sect
ion30(
5)oftheIndianPar
tner
shipAct?

Judgement

Tr
ial
Cour
t:Decl
aredal
lthepar
tner
sincl
udi
ngt
hemi
nor(
respondent1)i
nsol
vent
.

Hi
ghCour
t:Respondent1wasnotapar
tneroft
hef
ir
m.

Supr
emeCour
t

Content
ion[Theappel
l
ants(cr
edi
tor)]
:Respondent1i
sapartnerofthefi
rm ashedi
dnot
exer
cisehisopti
onnottobeapartneri
nthefir
m underSect
ion30(5).

Hel
d

Underordi
narycir
cumst ancesar espondent1wouldbeapar tnerofthef
ir
m.Howev er,
inthi
s
casehehadat t
ainedmaj ori
tyonlyaftert
hefir
m hadbeendissolved.Aminoraft
eratt
aini
ng
majori
tycannotelectt
obeapar tnerofafir
mt hatdoesnotexist
.HenceSecti
on30oft he
Part
nershi
pActdoesnotappl ytohim.

Appeal
dismi
ssedwi
thcost
s.

36)Scar
fv.Jar
dine(
1882)7A.
C.345

FACTS:Af i
rm consistedoftwopartners,Scar
fandRodgers.Scar
freti
redandBeachj
oinedi
n
hi
splace.Thebusi nesswascar r
iedonasbef oreandnopubli
cnoticeaboutt
hechangeof
par
tnerswasgi ventot hecust
omer softhefir
m.Jardi
newasanol dsuppli
ertot
hefir
m.He
suppli
edthegoodsorder
edwithoutanyideaaboutthechange.Hecamet oknowaboutthe
changewhent hefi
rmfai
ledt
opayt heduesandhewasconsi deri
ngalegalacti
onagai
nstthe
fi
rm.Hepr ef
erredt
osuethenewf i
rm whichsubsequent
lywentbankr
upt.Thenhesuedthe
earl
ierpar
tner
,Scar
f.

HELD: Hehadar ightagainstScarfpr ovi

dedhehadpr oceededagai nsttheoldfirm andpar tners
i
nt hefir
stinstanceitself
.Nowhehadacknowl edgedthenewf i
rm,hecoul dnotrejectits
i
dentityandsueScar f.I
twashel dt hatnovati
onmi ghtinvolveeitherachangeofpar ti
eswi ththe
contractremainingthesameorachangei nthecontractbetweent hesamepar ties.Ani mplied
agreementi spresumedf r
om thef actthatthecredit
or,aft
ert heknowl edgeofthechange, has
broughtasui tagainstthenewf i
rm.Jar dineknewoft hechangeoft heconstit
utionoft hefir
m
whenhesuedandhechoset osuet henewf i
rm.Nowhecoul dnotsuet heol
derf i
rmf orthe
samecauseofact i
onasi tisagainstprinci
plesofnaturaljusticeaswel lasPartnershipAct .

Ther
ear
eexcept
ionst
other
uleest
abl
i
shedi
ntheSCARFv
s.JARDI
NEcaseasgi
venbel
ow:

a) Deat
hofapar
tnerconst
it
utessuf
fi
cientnot
icebyi
tsel
f.

b) Insolv
encyofapar
tneri
sal
sosuf
fi
cientnot
iceandat
tract
sSect
ion42oft
heI
ndi
an
Par
tnershi
pAct.

c) Ifonehasbeenadormantorsl
eepingf
rom begi
nni
ngt oend,
noti
cecanbedi
spensedwi
th
asnei
thert
hecustomer
snorthecli
ent
sknowofhi spar
ti
cipat
ioni
nthefi
rm.

I
nEngli
shl
aw, Part
ner
shi
pbyholdi
ngoutisr
eferr
edt
oasappar
entpar
tner
shi
pinst
eadandt
he
l
egal
provi
sionsinbot
hcount
ri
esarever
ysimil
ar.

InSMITHvs.BAILEY2QB432, i
twasdecidedt
hatthel
i
abil
i
tyonthepr
incipl
eofEstoppel
ext
endsonlyonaccountofcr
editgi
vent
ot hef
ir
m andnott
otor
tsorci
v i
lwrongscommi t
tedon
behal
foft
hef i
rm.

35)SnowWhi
teFoodPr
oduct
sLt
dv.SohanLal
,AI
R1964Cal
.239

Clerkoffir
m( SohanLal)enter
edi nt
onegot i
ationonbehalfofthefir
m wit
hSnowWhi teLt
dfor
carr
y i
ngtheirgoods.Goodswer enotdeliv
er edbutwerewr ongful
l
ydisposedof
fandconvert
ed
totheirusebySohanLal .I
nasui tfi
ledagainstthefi
rm hedeniedthathehadeverbeena
partnerofthefi
rm.

Courthowev erhel
dthathehel dhi
mselfoutasapar t
nerofthefi
rm duri
ngnegoti
ati
onswi t
h
SnowWhi teLtd.Het al
kedlikeapart
neroneinauthori
tyandbehavedsobef or
etheSnowWhi te
Ltd.Moreoverthefactthatherepr
esentedthefi
rm wasalsoadmi t
tedbyhim.Invar
iouslet
ter
s
writ
tentoSnowWhi t
eLt d(duri
ngnegoti
ati
ons)hesignedthelet
tersasifapart
nerofthefi
rm.
34)TowerCabi
netCo.
,Lt
dv.I
ngr
am(
1949)1KBD1032

Fact
s:

TowerCabi
netsoughtmoneyf
rom Mer
ry¶sCo.±t
hepr
iceofgoodssol
danddel
i
ver
edi
n
Januar
y1948

TowerCabi
netbr
oughtact
ionagai
nstI
ngr
am ±al
l
egedhewasapar
tnerofMer
ry

Januar
y,1946±I
ngr
am andChr
ist
masf
orm par
tner
shi
pundernameof"
Mer
ry¶s"

Apr
il,
1947(di
ssol
uti
onofpart
nershi
p)±part
iesagr
eedtodi
ssol
vepar
tner
shi
pandI
ngr
am gav
e
not
icetof
ir
m¶sbankersthathadceasedt
obeapar tner

Ingr
am arr
angedwit
hChri
stmast
onotif
ythosedeali
ngwitht
hef i
rmthathewasnol
onger
associ
atedwit
hthefi
rm,
butChri
stmasdidnotputadinnewspaper

Dur
ing'
thepart
ner
shi
p'±f
ir
m¶snot
epaperhadbot
hnamesatt
het
opandi
ndi
cat
edt
hatbot
h
wer
epartner
s

Af
ter'
di
ssol
uti
on'
±newnot
epaperpr
int
edandonl
yChr
ist
mas¶nameputonas"
Dir
ect
or"

Januar
y,1948(
aft
erdi
ssoluti
on)±Chr
ist
massendor
dert
oTowerCabi
netonol
dnot
epaper
wit
hbothnamesaspartners

Not
e:Chri
stmasdidnothaveIngr
am¶saut
hor
it
ytousepaperandi
tsusewasi
ndi
rectconf
li
ct
wi
tharr
angementsofdissol
uti
on

TowerCabi
netbr
oughtact
ionagai
nstI
ngr
am asapar
tneroft
hef
ir
m

I
ssue:
IsI
ngr
am l
i
abl
eundert
he"
hol
dingout
"pr
inci
pleorasan"
appar
entpar
tner
"oft
hef
ir
m?

Deci
si
on:
Ingr
am notl
i
abl
e

I
ngr
am di
dnotbywor
dsorspokenorwr
it
tenorbyconductr
epr
esenthi
msel
ftobeapar
tnerof
t
hefi
rm

Also±"«orwhoknowi
ngl
ysuf
fershimsel
ftobesorepr
esent
ed"±I
ngr
am hadNOknowl
edge
thatChr
ist
masusedtheol
dnotepaperwi
thhisnameonit

"Knowingl
ysuff
ers"=doesnotref
ert
obei
ngnegl
i
gentorcar
elessi
nnotseei
ngt
hatal
lthe
notepaperhadbeendest
royedwhenhel
eft
RATIO:Holdi
ngoutpr
inciple±''
'Anindiv
idualwil
lonl
ybedeemedt obe" hol
dingoutasa
par
tner"(
andther
efor
eliableforthepartner
ship¶sdebt
s/obl
igat
ions)wheretheperson"by
wordsorspokenorwrit
tenconduct "r
epresent
shimselftobeapartneror"who''
'
knowingly
suf
fers'
''
hi
mselft
obesor epr
esented"

(
33)Haml
ynv
.Houst
on&Co.(
1903)1K.
B.81

Def
endant
’sf
ir
m consi
stedoft
wopar
tner
s(1act
ive+1dor
mant
)

Onesi deoft hedef endant'

sbusinessasgr ainmer chant swast oobt ai
n, bylawf ulmeans,
i
nf or
mat i
onabouti tscompet i
tors'acti
vit
ies.Houst on, apartnerint hef i
rm, obtained
confident i
alinformat i
onont hepl ai
ntif
fHaml y n'
sbusi nessbybr i
bingoneofHaml y n'
s
empl oyees.Hel d: Thefir
m wasl iableforthelosssuf f
eredbyHaml yn.Ifitwaswi t
hint hescope
ofHoust on'saut hori
tytoobtainthei nf
ormat ionbyl egiti
matemeans, thenf orthepur poseof
vicari
ousl iabil
it
yi twaswi t
hinthescopeofhi saut horitytoobt ainitbyi l
legiti
mat emeansand
thefirm wasl i
ableaccor di
ngly.Thiswasont hebr oad' ri
sk'pri
nci pl
e: t
hepr incipal having
selectedt heagent ,
andbeingt heper sonwhowi l
lhavet hebenef itofhisef fortsifsuccessf ul,
it
i
snotunj ustheshoul dbearther iskoftheagent' exceedi nghisaut horityinmat tersincidentalt
o
thedoi ngoft heact stheper f
ormanceofwhi chhasbeendel egatedt ohi m'.Itwasconceded
thatat ortorev enacr i
memaynotbeout sidet hescopeofaut hori
tyofapar tneroragent .

(
32)Rhodesv
.Moul
es(
1895)1Ch.236(
CA)

-Rewwasasolici
tori
napart
nershi
pwi t
hMessrsHughesandMaster
man.MrRhodeswasa
cl
ientoft
hef
ir
m andthefi
rm hadactedforhi
m onpr
evi
ousoccasi
ons.

-MrRhodeswantedtobor
rowsomemoneyonapr
oper
tyandaskedRewashi
ssol
i
cit
ort
o
assi
sthi
mtoaffectt
hemortgage.

-Somecli
ent
softhefi
rm,theMoul
es,
wer
ewill
i
ngt ol
endthemoney.Assecuri
tyforthe
mort
gage,MrRhodesgav
eRewsomesharecert
if
icat
esandtheseweremisappr
opriatedby
Rew.

-Oneofthequestionsfacingthecourtwaswhet
hertheot
hert
wopar t
ner
swerel
iablef
orRew’
s
acti
ons.Thecourthel
dt hatthepart
nerswer
ejoi
ntl
yandsever
all
yli
abl
efort
hevalueoft
he
sharesunderpar
t(a)andpar t(b)
.

-Thejudgesai
dthat‘
theinf
erencethatt
hepl
aint
if
f’
scer
ti
fi
cat
eswer
erecei
vedbyt
hef
ir
min
thecourseofi
tsbusi
ness’wasjust
ifi
ed.
(
31)Hol
mev
.Hammond(
1872)L.
R.7Ex.218:
41L.
J.Ex.157

5personsent eredintopar t
nershi
pfor7y earsandagreedtosharetheprofi
tsandlosses
equall
y–f ur
theragreedifanyoneoft hem diedbefor
et heexpi
ryofthesaidperi
odof7y ears
theotherswoul dcontinuethebusinessandpayt heshar eoft
heprofi
tsofthedeceasedtohis
executors.Ont hedeathofoneoft hepar t
nersthesur
v i
vorsconti
nuedthebusiness–The
executorsofthedeceasedwhodi dnott akeanyparti
nt hemanagementoft hebusinesswere
paid1/ 5t
hshar eofthepr ofi
tsmadesincet hedeat
hoft hedeceasedpartner
.Theplaint
if
fsued
theexecutorsoft hedeceasedt omaket hem li
abl
einrespectofacontractenter
edintobythe
survi
vingpartnersafterthedeathofthedeceased.

Cour thel
dthatinordertoconst
it
utepar t
ner
shipther
emustbeanagr eementexpressor
i
mpl ied.I
ntheabsenceofi tt
heexecutorscannotsai
dtohavebecomepar t
ners,
mer elyby
receivi
ngprofi
ts.Noev i
dencetoestabl
ishcontr
actofpar
tner
shi
pbet weentheexecutorsand
thesur vi
vi
ngpartners.Nomutualagencybetweenthem.Henceexecutor
scouldnotbemade
l
iable.

29)Tr
imbl
ev.Gol
dber
g(1906)AC494(
PC)

Twopar tnersofapar tnershipoft hr

eewhi chwasf ormedt opurchaseandr esalecertain
properti
esofagent lemancal l
edHal l
ardconsistingof5, 500sharesinacompanycal ledSi gma
Syndicateandof'standsorpl otsofland,purchasedot herstandsbelongingtot heSyndi cate
andmadepr ofi
ts,
andt hequest i
onar osewhet hertheseot herstandspurchasedbyt het wo
partner
swer epartnershippr opertyi
nwhi chtheirthirdpartnerwasentit
ledtobenef it
,andt he
Priv
yCounci lhel
dt hatast hepur chasewasnotwi thinthescopeoft hepar t
nershipandast he
subjectofthepurchasewasnotapar tofthebusi nessoft hepartner
ship,oranunder takingin
ri
valrywiththepartnership,orindeedconnect edwi thiti
nanypr opersense, t
hepr opertycould
notber egardedaspar tnershipproperty.

(
23)Mi
l
esv
.Cl
arke(
1953)1Al
lER779

Clar
kecarr
iedonbusinessasaphotographeratpr
emisesofwhichheownedt heleasefor
sevenyear
sfrom 1948.I
n1950heandMi l
es,whowasaf r
eelancephotogr
apherenteredint
o
part
ner
shipbywhichallthepr
ofi
tsweretobesharedequall
y.Milesbr
oughtwithhim his
per
sonal
connecti
on.Thepart
nersquar
rel
ed,
andadi
sput
ear
oseast
owhet
hert
hef
oll
owi
ng
i
temsconst
it
utedpart
nershi
pproper
ty;

(
i)t
heconsumabl
est
ock-
in-
tr
ade

(
ii
)theper
sonal
connect
ionbr
oughti
nbyeachpar
tner

(
ii
i)t
hel
easeoft
hepr
emi
ses

(
iv)t
hef
urni
tur
e,f
it
ti
ngsandequi
pmentoft
hest
udi
os.

ItwasheldbytheChancer yDivi
sionthatnomor eagr
eementbet weenthepart
iesshoul
dbe
supposedthatwasabsol utel
ynecessarytogiv
ebusinesseffi
cacytotherel
ati
onshipbet
ween
thepart
ies.Accor
dingl
y ,
sincetheonlyagreementwasast otheshareoftheprofi
tsonl
ythe
consumablestock-
in-t
radeshouldber egar
dedaspartnershi
ppropert
y.

(
16)Hol
mev
.Hammond(
1872)7Ex.218:
41L.
J.Ex.157

5personsenteredintopar
tner ship–deci dedt ocarryonbusinessfor7years–ondeat hagreed
topayshareofdeceasedt othei rexecut
er s–t heplaint
if
fsuedtheexecutorsofthedeceased
tomaket hem l
i
ableinrespectofacont ractent er
edintobythesurvivi
ngparti
esafterdeathof
deceased–Cour theldnoagr eementexpr essedorimpl i
edbetweenexecutorsandpar t
ners
whichisessent
ialforapartnership–execut orsdonotbecomepar t
nersbymer el
yreceivi
ng
profi
ts–noev i
denceofcont ractofpar t
ner shi
pbet weenexecutors&partners–nomut ual
agencybetweenthem –Henceexecut orsnotl i
able.

14)Mol
l
ow,
Mar
ch&Cov
.TheCour
tofWar
ds(
1872)L.
R.4P.
C.419

HinduRaj aadv ancedl argesumsofmoneyt oBr it

ishf ir
m –Raj awasgi venext ensi
v epowersof
controlov erbusinessandhewast ogetcommi ssi ononpr of i
tsunt i
ltherepaymentofhi sloan
with12%i nterestthereon.–Fi rm enteredi ntocont ractwi t
hMol l
ow, March&Cobutf ail
edto
ful
fil
lit
scont ract–companysuedbot hf ir
m &Raj a,takingthem t obepar tnersont hegroundof
parti
cipationi nthenetpr of
itsofbusiness–cour tobser vedt hatthewhol escopeoft he
agreementandal litstermsoughtt obel ookedatbef oreanypr esumpt i
onofi ntenti
onof
partnershipbemade.–Asi nCoxvHi ckmant her ealobjectiveher ewast ogi v
eRaj aasecur i
ty
forthecr editextendedbyhi mt othef i
rm, theref orenoi ntentt ocreateapar tnership–
Partnershipr equiresacommuni t
yofi nterestandnotaconf l
ictofthem –t hei nter
estofthe
fi
rm andt hatoft heRaj awer eatconflictandpr ov i
sionsoft heagr eementwer edesi gnedto
protecttheRaj a’
si nt
erest–Cour tobser vedev enwhenpar t
iescall t
hemsel vespartnersin
agreementbet weent hem, thi
sdoesnotconst ituteapar tnershipifthetruerelati
oni snotthatof
partners–power sofRaj aofcont rolonly( notinitiativepower s).
(
13)Coxv
.Hi
ckman(
1860)8H.
L.C.268

S&Si ronmer chantsi npartnership–suf feredf inancialembarrassment–madeacompr omise

wi t
hcr editorsunderwhi chthef i
rmspr oper tywasassi gnedtoaf ewcr edit
orsselectedas
trustees–t heywer eempower edtocar r
yont hebusi nesstodividet heneti ncomeamong
creditorsinar at
eablepr oporti
on&af tert hedebt shadbeendi schar gedt hebusinesswoul dbe
returnedt oS&S.–Coxwasoneoft het rusteesal thoughhenev eract ed–ot hertr
ustees
continuedt hebusiness–t heypur chasedcer tai
ngoodsf rom thepl aintif
fHi ckmanandgav e
him abi l
l ofexchangef orthepr i
ce–t hebi l
lremai ningunpaidHi ckmanbr oughtanact ion
againstt het r
usteesi ncludi
ngCoxf ort hepr i
ce–i twashel dthatal t
hought hecreditor
swer e
sharingpr of i
tsandt hebusi nesswasbei ngmanagedbyt hetrust ee,stillt
her el
ati
onship
betweenS&Sononehandandt hecredi t
or sont heot herhandwasofadebt or&creditorand
nott hatofpar tnershiphencet hey( i
ncl udingCox)coul dnotbemadel iabl
e–f ur
thertr
ust ees
wer emer eagent sofS&Sandwer enotpr incipalshencet herewasnomut ualagency–S&S
wer epr i
ncipleshencebusi nessst i
llbelongedt oS&Sandnott ot rust ees.

(
2)K.
D.Kamat
h&Cov
.CI
T(1971)2SCC873

Appel l
antcar ry
ingonabusi nesswi th6par tners–deeddat edMarch20, 1959–busi ness
carr
iedonsi nceOct1, 1958asperdeed–par tnershipregdunderPar t
nershipAct1932–
appliedf orr
egistrati
onu/ s26AI TActf orassessmenty ear1959–60–I TOr ejectedappl icat
ion
contendi ngthatdeedwasnotgenui neandf ir
m wasasol epropri
etorshipingui seofa
part
ner ship–Cour theld–mer enomencl at
urei ndeednotenought oconst it
utepar tnership–
Twoessesnt ialconditi
onst obesat isfi
edare( i)Agreementt oshareprof i
tsaswel laslossesof
thebusi ness( i
i)Businessmustbecar r
iedoutbyal loranyoft hem actingf orall–Factt hat
exclusivecont r
ol i
sunderonepar t
ner&onl yhecanoper atebankaccountorbor rowonbehal f
ofthef i
rmi snotdest r
uctiv
et othet heoryofpar tnershi
ppr ovidedtheabov et wocondi ti
onsar e
sati
sf i
ed–t wocondi ti
onsabov ear esat i
sfi
ed–t heoryofagencyi ssat i
sfied( onepar tneracting
forall+pr of
it/l
ossshar i
nginratio)–r egist
rati
onu/ s26AofI TActsust ai
ned.