CHENNURU GAVARARAJU CHETTY versus CHENNURU SILARAMAMURTY CHETTY AND OTHERS

Citation: [1959] SUPP. 1 S.C.R. 73 · Decided: 06-10-1958 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

(1) S.C.R. SUPREME COURT REPORTS 
73 
the legal representative out of the estate of the 
z9'' 
deceased. In our opinion, therefore, where the High Pranab Kumar 
Court thinks it fit and proper to entertain a.n applica.-
Milr1a 
tion in revisio~ or ca.lie for the record suo motu, it has 
v. 
the power to examine the whole question of the Thi s1a11 of w111 
correctness, propriety or legality of the sentence of8 '"'"' IS- ,.,."'"" 
fine, which necessarily involves examining the order 
5,;:; J. 
of conviction itself from that point of view. 
For the reasons aforesaid, we a.How the appeal, and 
remit the case to the High Court to be des.It with in 
accordance with law . 
• 
Appeal allowed. 
CHENNURU GAV ARARAJU CHETTY 
v. 
CHENNURU SILARAMAMURTY CHETTY 
AND OTHERS 
(B. P. SINHA, JAFEB IMAM and J. L. KAPUR, JJ.) 
Lease, Renewal of-Manufacture of sal:t-Lessees, i,f fiduciaries 
of ·quondam partners-Constructive trust-Test-Presumption-
Indian Trusts :Act, z88a (II of z88a), ss. 88, 90-Madras Salt Act, 
z889 (Mad. 4 of z889). 
' 
The appellant, defendant No. I in the suit, from which the 
appeal arises, and the father of defendants. 2 to 7, as the highest 
bidders, obtained a seventeen years' lease of a salt factory 
from the Government and the license to manufacture and sell 
salt under the Madras Salt Act, 1889. They entered into a 
partnership with the plaintiffs to carry on their business for the 
period of the lease. On the death of their father, defendants 2 
to 7 were admitted into the partnership. The partnership agree-
ment made no provision for the continuation of the partnership 
on expiry of the lease or for the acquisition of a fresh lease on 
behalf of the partnership. The lease expired, the license came 
to an end and the partnership stood automatically dissolved, 
The Government changed its old policy of granting leases to the 
highest bidders and adopted one of renewing them in favour of 
previous lessees in whom they had confidence. The appellant 
10 
Oo1ob1r 6. 
74 
SUPREM.E COURT liEPORTS 
(1959] Supp. 
i95S 
and defendants 2 to 7 applied for the renewal of the lease that 
stood in their names. The plaintiffs also applied for a grant of 
Chen""'" 
it to them. No premium was called for and none had to be 
Gav"'"'''j" Clietty paid. 1'he }{evenuc Authorities chose to renew the lease in 
'"· 
favour of the appellant and the said defendants for a further 
Cliennuru 
period of 25 years. The plaintiffs filed the suit claiming that the 
Silarafn;n111trty renewal of the lease was an asset of the dissolved partnership. 
Chetty 
The trial Court found against them but the High Court on appeal 
""'' Other.< 
reversed that finding. The suit was instituted months before 
the renewal of the lease and years before the renewal of the 
license, which alone could enable the licensee to manufacture 
and sell salt. The Courts.below found that the allegation of the 
plaintiffs that the goodwill and assets of the firm had been utilis-
ed for obtaining the renewal of the lease was unfounded, as they 
had failed to prove that a partnership firm.at all existed. It was 
also found that during the last three years.of the existence of 
the partnership, the parties had fallen apart and lost mutual 
confidence. The question for decision was whether s. 88 of the 
Indian Trusts Act applied and the renewal of the lease in favour 
of the appellant and the said defendants for running the salt 
factory could be treated as an asset of the dissol\'ed partnership 
between the contesting parties. 
Held, that in order that a case might be brought within the 
purview of s. S8 of the Indian Trusts Act, it must be shown 
either that (I) a person had a fiduciary character and was thus 
in duty bound to protect the interests of others or that (2) he had 
placed himself in such a position as to render his interest ad\·erse 
to those of the others and had thereby obtained a pecuniary 
interest which he must hold for their benefit as well. 
As in the 
instant case the fiduciary character of the partners came to an 
end with the termination of the original lease and of the partner-
ship business along with it, there could no longer be any subsist-
ing interest in a partner which another was bound to protect 
nor could one partner be said to have availed of his character as 
a partner when he obtained the fresh lease. 
Section 88 of the 
Indian Trusts Act or the illustrations (d) or (e) thereto could, 
therefore, have no application, nor could s. 90 of the Ac

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