LexBHAGWANT P. SULAKHE versus DIGAMBAR GOPAL SULAKHE AND ORS.
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169 llllAQIANT P, SULAKllE A V• DlGAllllAR GOPAL SULAKllE AND ORS. SEPTEMBER 30, 1985 [P.N. BHAGIATl, c.J., .AMARENDRA NATH SEN AND o.P. MADON, JJ.] B Joint family property, character of - When it changes - Whether by an unilateral act it is open to any member of the joint family to convert any joint family property into his personal property - Partnership firm formed out of joint family funds and managing agency agreement entered into by such a c partnership firm with another company - Commission received by the co-sharers of the joint family in terms of the managing agency agreement and the remuneration received by them as the managing director treated as the joint family property for all purposes - Whether one of the co-sharers by a simple letter claim the commission remuneration received by . him as his personal o property · till the joint family is disrupted - Position of managing director and the managing agent, explained. One Pandarinath Martand Sulakhe died leaving behind him his sons Vishwanath, Gopal, Govind and Bhagwant and conaiderable properties. Vishwanath died in 1910 leaving behind his so11 E llattatraya, Govind, one of the brothers who constituted a joint family after the death of their father Pandarinath Sulakhe, separated from the joint family in 1914 taking his share of the family properties. However, the other two brothers along with the son of Vishwanath continued to remain joint and lived as members of the joint family till 8.12.1941 on which date Bhsgwsnt intimated llattatraya son of Vishwanath his intention to cause F severance of the joint family status. Prior to it, in the year 1922, a Public Limited Comapny named Lokmanya Mills Ltd. was intended to be floated and with that in view Dattatraya and Bhsgwant entered into a partnership under the name and style of M/s. Sulakhe and Co. with four G outsiders, as per the Partnership Agreement dated 3rd January, 1923. The said Partnership Firm Sulakhe and Co. entered into a Managing Agency agreement on 5.2.1923 with the said Lokmanya Mills Company Ltd. The said agreement was to expire after 35 years. The mill actually went into production in the year 1938. On the basis of the managing agency agreement between the company H 170 SUPREME COURT REPORTS [1985] 5UPP.3 s.c.R. A and the firm Sulakhe & Co,, Dattatraya acted as the managing agent upto 1935 and thereafter Bhagwant became the managing agent. After Bhagwant's appointment as managing agent, Dattatraya was appointed as the Director of the company. At the time when the company was incorporated and its B articles were adopted and also at the time when the comapny entered into tha managing agency agreement with Sulakhe and Co. and when the deed of partnership of the firm was executed Bhagwant and Dattatraya teing members of the joint family, all the 325 shares which was initially purcnased in the company - 200 in the name of Dattatraya and 125 in the name of Bhagwant - plus the 83 further shares - 79 in the name of Bhagwant and 4 in the ~ name of Gopal - were paid for by the joint family out of the joint family funds. Therefore, the entire amount of remuneration which was received by Dati:atraya and Bhagwant not only on account of their shares of coumission under the managing agency agreement on the basis of the partnership deed but also on account of the Director's fees paid to them and also on account of the salary paid to Dattatraya who acted as the managing agent of the company D till 1935, was treated as joint family property. Even after Bhagwant took over as the managing agent in 1935, the position continued to be the same and the remuneration received by him formed part of the joint family income till the dispute raised by him by his letter dated 15th July, 1941. All monies received by Bhagwant and Dattatraya from the company were not only treated as E joint family property, but also were so entered in the books of account of joint family and were so shown in the income tax returns. However by his letter dated 15th July, 1941 Bhagwant informed Dattatraya that the remuneration received by him as the F managing agent of the company on the basis of the managing agency agreement, fees received by him as the director of the company and his income from his profession as a lawyer were his personal income and should be treated as such. He made it clear that he will not in future put any of these incomes into the
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