KHUSHAL KHEMGAR SHAH & ORS. versus KHORSHED BANU DADIBA BOATWALLA AND ANR.

Citation: [1970] 3 S.C.R. 689 · Decided: 12-02-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed
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Judgment (excerpt)

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689 
KHUSHAL KHEMGAR SHAH & ORS. 
v. 
KHORSHED BANU DADIBA BOATWALLA AND ANR. 
February 12, 1970 
(J.C. SHAH, K. S. HEGDE AND A, N. GROVER, JJ.) 
Partnership Act .1932-Sections 14, 39, 42, 46 and 55-Goodwill--
Nature of. · 
Legal representatives of a partner-If entitled to share in good-will of 
a firm continuing after death of a partner. 
D who was one of eight par'tners in a firm, died on February 20, 1957. 
By virtue of a provision in the partnership deed, the business of the firm. 
was continued by the surviving partners. The respondents, being the 
widow and son of D commenced an action for an account of the partner-
ship between D and the surviving partners, praying for an order for the 
payment of the amount determined to be due to D at the time of his death .. 
A single judge of the High Court passed a preliminary decree directing 
that an account be taken of the partnership as on. February 20, 1957. 
A 
Division Bench, in appeal, modified the decree holding that the respondents 
were entitled only to interest at ·6o/o p.a. on the amount of D's share in 
the assets of the partnership, including good-will. 
In appear to this Court it was contended on behalf of the appellants. 
that the respondents as legal representatives of D were not entitled to a 
share in the value of the good-will of the firm because good-will may be 
taken into account only when there is a dissolution and not otherwise; and. 
furthermore, because D had agreed that his interest in. the good-will wduld 
cease after his death and the business shall be continued by the surviving_ 
partners. 
HELD : Dismissing the appeal, 
It could not be held that in interpreting a deed of partnership, business 
whereof, it is stipulated shall be continued by the surviving partners after· 
the death of a partner, the Court will not award to the legal representatives 
of the deceased partner a share. in the goodwill in the absence of an express 
stipulation to the contrary. The good-will of a firm is an asset of the· 
firm. 
In interpreting the deed of partnership, t~~ Court wi1l insist upon 
some indication that the right to a share in the assets is, by virtue of ·the· 
agreement that the surviving partnerS are entitled to carry on the busine,ss. 
on the death of the partner, to be 
extinguished. 
In the absence of a 
provision expressly made or clearly implied,. the normal rule that the share· 
of a partner in the asse.ts devolves upon his legal representatives will apply 
to the good-will as well as to other assets. [693 F-H] 
There is no indication in . ._ 55 of the Partnership Act that goodwill may 
be taken into account only when there is a general dissolution of the firm, 
and not when the reprensentatives of a partner claim his share in the firn1, 
which by express stipulations is to continue not with •landing the death »f 
a partner. Ncir do ss. 39, 42 and 46 of the Act support such a contention. 
[691 Fl 
Hunter v. Dowling, [1895] 2 Ch. D. 233; Smith v. Nelson 96 Law 
Times Reports 313; ·Bachubai and L.A. Watkins v. Shamji Jadowji, I.L.R. 
9 Born. 536; referred to. 
L8Sup.Cl170-14. 
690 
SUPREME COURT REPORTS 
[1970] 3 s.c.R. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1201 of 
A 
1966. 
Appeal by special leave from the judgment and order dated 
June 24, 1965 of the Bombily High Court in Appeal No. 79 of 
1963. 
F. S. Nariman, K. D. Mehta and I. N. Shroff, for the appellants. 
B 
M. C. Chag/a and A. K. Ve~ma, for the respondents. 
The Judgment of the Court was delivered by 
Shah, J. Dadiba Hormusji Boatwalla was one of the eight 
partners of Messrs Meghji Thobhan & Company-a firm of 
Muccadams and cotton brokers. Boatwalla died. on February 
20, 1957. By virtue of cl. 8 of the deed of partnership the busi-
ness of the firm was continued by the surviving partners. Khorshed 
and Nariman-widow and son respectively of Boatwalla-
obtained letters of adininistration to the estate of Boatwalla and 
commenced an action in the High Court" of Bombay for an account 
of the partnership between Boatwalla and the surviving partners 
and for an order paying to the plaintiffs the amount determined 
to be due to Boatwalla at the time of his death. 
The suit was 
resisted by the surviving partners-who will hereinafter be called 
'the defendants'. Tarkunde, J., passed a preliminary decree dec-
I:iring that qua Boatwalla the partnership stood dissolved on 
February 20, 1957, but not in respect of the surviving partn~fs, 
and directed that an
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