SortMyLawSchool | Header Banner
SortMyLawSchool | Header Banner
  1. Home
  2. / Subject
  3. /Partnership

SALIGRAM RUPLAL KHANNA V. KANWAR RAJNATH

SALIGRAM RUPLAL KHANNA V. KANWAR RAJNATH

 AIR 1974 SC 1094 

FACTS

  • The case involves a dispute over the dissolution of a partnership and rendition of accounts between two plaintiff-appellants (Saligram Ruplal Khanna and Pessumal Atalrai Shahani) and a defendant-respondent (Kanwar Rajnath).
  • The partnership operated under the name "Shri Ambernath Mills Corporation" (SAMCO), managing three mills in Ambernath, along with other properties and factories.
  • The partnership originated when the Custodian of Evacuee Property granted a lease of the mills to the appellants and the respondent on August 30, 1952.
  • The partnership agreement stipulated each partner's contribution, with the respondent designated as the managing partner.
  • Disputes arose over rent payments and other financial obligations, leading to a notice from the Custodian to cancel the lease in 1954.
  • The partnership attempted to challenge the cancellation but ultimately surrendered possession of the mills to the Custodian in 1954.
  • Subsequently, the respondent negotiated with the Central Government for compensation claims related to the mills.
  • The appellants alleged an oral agreement to continue the partnership for acquiring and exploiting the mills, but the respondent denied such agreement.
  • The trial court held that no partnership existed after the lease cancellation and the claim for rendition of accounts was barred by limitation.
  • The Division Bench affirmed the trial court's decision, rejecting the plaintiffs' arguments regarding the continuation of the partnership and the application of trust principles.

ISSUE

  • whether there was an implied agreement to continue the partnership after the ownership of the mills vested in one of the partners
  • whether the suit for rendition of accounts was within the statutory limitation period. 

JUDGEMENT

  • The court rejects the arguments presented by Mr. Desai affirms the findings of the trial court and the appellate bench regarding the dissolution of the partnership and the limitation of the suit for rendition of accounts.

LEGAL ANALYSIS

  • The court rejects the argument presented by Mr. Desai that there was an implied agreement between the parties to continue the partnership even after the ownership of the mills vested in the respondent. The court points out that no such case was made in the trial court or on appeal. Moreover, the terms of the lease agreement and subsequent documents indicate otherwise.
  • The court highlights two documents - an agreement dated September 20, 1957, and a letter dated December 18, 1959 - which contradict the implied agreement theory. These documents suggest that there was no intention for the mills to be run in partnership if acquired by the respondent.
  • The court establishes that the partnership was for a fixed term of five years, linked to the lease period of the mills. As the lease was terminated and subsequent efforts to acquire ownership failed, the partnership was dissolved by operation of law. The court also addresses the completion of pending transactions and winding up of business after dissolution.
  • The court briefly mentions correspondence between the parties, indicating that while one party had hopes and expectations regarding the acquisition of the mills, the other party did not make any commitments. This correspondence, however, does not affect the court's decision on the dissolution of the partnership.

COMMENTARIES RATIO

  • The completion of the transaction would cover the taking of necessary steps in connection with the adjudication in a court of law of any dispute to which a firm before its dissolution is a party.