K.P.A. VELLAYAPPA NADAR (DEAD) THROUGH LRS. versus BHAGIRATHI AMMAL AND OTHERS

Citation: [1996] SUPP. 8 S.C.R. 531 · Decided: 06-11-1996 · Supreme Court of India · Bench: K. RAMASWAMY, G.B. PATTANAIK · Disposal: Appeal(s) allowed

Judgment (excerpt)

K.P.A. VELLAYAPPA NADAR (DEAD) THROUGH LRS. 
A 
v. 
BHAGIRATHI AMMAL AND OTHERS 
NOVEMBER 6, 1996 
[K. RAMASWAMY AND G.B. PATTANAIK, JJ.] 
B 
Partnership Act, 1932 : 
S.4-Partnershi~Suit for dissolution and rendition of accounts-
Partnership constituted in March 1954 replaced by another partnership 
constituted in Feb. 1970 taking in two new partners and one of the earlier C 
partner (appellant) stepping out of the partnership due to old age-One of 
the members of the partnership died in May I 972-Suit laid by respondents 
in I 97 3 for dissolution of the partnership and for rendition of account by 
appellant-Plea of appellant that he having stepped out of partnership 
and new partnership having been constituted in Feb. 1970, he was not 
liable to render accounts, accepted by trial court but rejected by High D 
Court-Held-Partnership mutually stood dissolved on Feb. I 4, I 970 and 
the new partnership had come into existence under Ex. B-1 on I 4th Feb. 
I 970 to which admittedly the appellant was not a partner; nor is it claimed 
that he was being paid any profits out of the business carried on thereafler-
High Court was not right in holding the appellant liable to render accounts. E 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2566 of 
I 980. 
From the Judgment and decree dated 3.4.8.0 of the Madras High 
Court in Appeal No. I80 of 1976. 
F 
S. Balakrishnan, S. Prasad and Raymond for the Appellant. 
A._T.M. Sampath for the Respondents. 
The following Order of the Court was delivered : 
G 
Substitution allowed. 
The decision impugned herein is a reversing judgment of the Madras 
High Court in Appeal No. 180176, dated April 3, 1980. This appeal by H 
531 
532 
SUPREMECOURTREPORTS [1996] SUPP.8 S.C.R. 
A special leave relaties to an action which took place between the filing of 
the suit by the respondent for dissolution and rendition of accounts by the 
appellant. 
· 
The admitted position is that one N.A.P. Alagiri Raja, son of Pappu 
Raja, and Raja Ramalinga Raja, two brothers and the appellant, K.P.A. 
B Vellayappa Nadar a stranger, since dead, admittedly, were partners of"N.A. 
Pappuraja Sons" started way back in 1943. The partnership agreement was 
reduced to writing for the first time under Ex. A-2, dated March 31, 1954. 
Another admitted fact is that on February 15, 1970, another partnership was 
constituted under Ex. B-1 consisting of the.first two partners and their sons, 
together four, with the same partnership business in the same place and with 
C the same registration number of the partnership firm with the Registrar of 
the Firms. Raja Ramalinga Raja died on May 31, 1972. Thereon, the 
respondent laid the suit for dissolution of the partnership firm and for 
rendition of accounts by the appellant on April 26, 1973. The case of the 
appellant is that due to his old age, viz., 70 years as on February 14, 1970, 
there was mutual agreement by which the appellant had stepped out from 
D the partnership business leaving all assets and liabilities with the two partners. 
His right to share in the goodwill was mutually agreed to the set-off against 
liabilities falling within his share. The partnership under Ex.A-2 mutually 
stood dissolved on February 14, 1970 settling the accounts between the 
partners. The new partnership came into existence on February 15, 1970 
under Ex. B-l. Therefore, there is no liability on his part to render any 
E accounts or to bear any losses incurred by the new partnership firm under 
Ex. B-1 to which he was not a member on and from February 15, 1970. The 
trial Court recorded the findings as under : 
F 
G 
H 
"The question relating to the goodwill and Vilasam and fixed 
assets of the business of"Pappuraja and Sons" were discussed. 
In the end, in view of all these facts, it was agreed ( 1) that 
the first plaintiff and his brother should take over the business 
as a running concern; and (2) that the amounts shown as 
debits against the defendant should be considered to have 
been wiped out as having been set out against this defendant's 
share in the goodwill and in the share of profits really made 
for the above 2 years. It was on this understanding that the 
firm was dissolved on 14.2.1970 by consent of all parties 
concerned. The first plaintiff and his brother and others from 
their family started their business in the same vilasam with 
the same R.C.No. and in the same premises from 15.2.1970 
in pursuance of the above conclusion. Thus, the firm was 
K.P.A. VELLA Y APPA 

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