PAMURU VISHNU VINODH REDDY versus CHILLAKURU CHANDRASEKHARA REDDY AND ORS.

Citation: [2003] 2 S.C.R. 57 · Decided: 17-02-2003 · Supreme Court of India · Bench: SHIVARAJ V. PATIL · Disposal: Dismissed

Judgment (excerpt)

PAMURU VISHNU VINODH REDDY 
A 
v. 
CHILLAKURU CHANDRASEKHARA REDDY AND ORS. 
FEBRUARY 17, 2003 
[SHIVARAJ V. PATIL AND K.G. BALAKRISHNAN, JJ.] 
B 
Partnership Act, 1932-Sections 32 and 37-Share of the retiring 
partner-Ascertainment-Relevant date-Date of retirement or the date on 
which Commissioner made valuation of the share-Held: Relevant date for C 
ascertainment of retiring partner's share is the date on which he ceased to be 
a partner since cause of action for the retiring partner arose on the date of 
his retirement from p.:irtnership firm and on this date liability of other partners 
also arose. 
Plaintiff-retiring partner filed suit for dissolution and accounting of D 
partnership assets of the firm after retirement. The suit was decreed. In 
the first appeal, High Court set aside the decree and directed the 
defendant-other partners to pay amount .due (o plaintiff towards his share 
in the assets of the firm without resorting to sale of such assets. It .also 
directed to decide date for valuation of plaintifrs share. Thereafter, SLP E 
was filed which was dismissed as withdrawn. Trial Court then appointed 
a Commissioner. Thereafter appellant-plaintifPs son filed an application 
for deciding the date on which valuation of plaintifrs share was to be made 
since the plaintiff expired. District Judge allowed the application holding 
that the date on which Commissioner values the property would be the 
relevant date. However, the High Court held that relevant date was the F 
date on which plaintiff ceased to be a partner. Hence the present appeal 
Appellant contended that the High Court was not justified in 
reversing the order of the trial court; that the date on which the 
Commissioner valued the property of the partnership firm as the relevant 
date for ascertaining the value of the share of the plaintiff in the firm; G 
that the High Court committed an error in holding that the plaintiff had 
admittedly retired from the partnership firm on 5.4.1971, the date on 
which an agreement to sell his share was entered into although neither 
the value of the share was ascertained nor was it paid till date; that the 
57 
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58 
SUPREME COURT REPORTS 
[2003] 2 S.C.R. 
A High Court in the first appeal granted relief of rendering of accounts of 
partnership firm from S.4.1971 till date itself indicated that the plaintiff 
continued to be partner of the firm; and that the share of the plaintiff 
was being utilized by the partnership firm and had earned profits. 
B 
Dismissing the appeal, the Court 
HELD: I.I. The plaintiff had retired from the firm on S.4.1971 after 
selling his share in the partnership firm. Once he had retired from the 
firm, he had no right to claim any further share in the profits of the firm. 
A finding of fact is also recorded that the defendants had not paid the 
C value of the share of the plaintiff pursuant to the agreement for retiring 
from the firm. If the defendants have failed to pay the value of the share 
of the plaintiff as agreed to, it has become a debt on the defendants and 
the plaintiff is entitled to recover the same with interest. After the 
retirement from the partnership firm and particularly when the firm was 
reconstituted with new partners, there was no question of using the 
D plaintifrs share for earning profit in the reconstituted firm: [66-A, BJ 
1.2. There is no nexus or reason to say that the relevant date for 
valuation of the share of the plaintiff is the date when the Commissioner 
valued his share, that too after long lapse of time and taking note of the 
E events that the plaintiff had retired from the firm on S.4.1971 having sold 
his share and the firm had been reconstituted with new partners. When 
the plaintiff retired from the partnership firm on S.4.1971, his share could 
be valued as on that date which stands to reason. Once the valuation is 
made as on that date, for any delay in payment he is to b~ compensated 
by awarding interest as is evident from Section 37 of the Partnership Act 
F itself. The value of the share of the plaintiff on the date of his retirement 
from the firm could be regarded as a pure debt with effect from the date 
on which he ceased to be a partner as per the agreement entered into 
between the parties. Otherwise the result would be that he was deemed to 
have been continued as partner of the firm even after he retired from the 
G firm by selling his share. If consideration was not paid as per the 
agreement, he could enforce it as 

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