1924 JTR(SC) 76
1924 AIR(PC) 93
Privy Council
Ameer Ali, Sir John Edge, Carson, Justice Parmoor , JJ.
Haji Hedayetulla -Appellant
Versus
Mahomed Kamil and others -Resopndent
P.C.A. No. 38 of 1922 from Bengal Appeal No. 15 of 1921
Decided On : 06-12-1924
When a business continues after a partner's death, the deceased partner's representatives are entitled to their share of profits until the final decree, subject to fair remuneration for the surviving partner's management. Courts will not unnecessarily restrict the accounting commissioner's discretion in such matters.
Act
Referred
:CONTRACT ACT
: S.253
(A) Partnership Law - Termination of partnership upon death of a partner - Accounting of profits - Continuation of business - Representatives of deceased partner entitled to share of profits from date of death until final decree, subject to fair remuneration for the managing partner for management of the business.
(B) Discretion of Commissioner - Order for taking accounts - Court will not interfere with or fetter the discretion of the Commissioner in taking accounts provided the order is in the proper form and allows for just allowances and fair remuneration.
Facts of the case:
A partnership terminated upon the death of one of the partners. Although the partnership ended, the business continued to be carried on. The representatives of the deceased partner brought an action for the taking of proper accounts. The lower court ordered that accounts of the profits be taken from the date of the partner's death until the date of the final decree, allowing for fair remuneration to the defendant for managing the business, and granting the representatives the same share as the deceased partner would have taken had the partnership not been dissolved.
Findings of Court:
The order made by the lower court was proper. The business is to be regarded as a continuing business from the date of the partner's death until the final decree.
Issues: Whether the order for accounting of profits from the date of the partner's death to the final decree was proper and whether further directions were necessary to limit the discretion of the Commissioner.
Ratio Decidendi: Where a business continues after the death of a partner, the representatives of the deceased are entitled to the share of profits the partner would have received, provided that the managing partner is given fair remuneration for their efforts. The court will not fetter the discretion of the accounting commissioner if the order is properly framed.
Result: Appeal dismissed.
(B) Discretion of Commissioner - Order for taking accounts - Court will not interfere with or fetter the discretion of the Commissioner in taking accounts provided the order is in the proper form and allows for just allowances and fair remuneration.
Facts of the case:
A partnership terminated upon the death of one of the partners. Although the partnership ended, the business continued to be carried on. The representatives of the deceased partner brought an action for the taking of proper accounts. The lower court ordered that accounts of the profits be taken from the date of the partner's death until the date of the final decree, allowing for fair remuneration to the defendant for managing the business, and granting the representatives the same share as the deceased partner would have taken had the partnership not been dissolved.
Findings of Court:
The order made by the lower court was proper. The business is to be regarded as a continuing business from the date of the partner's death until the final decree.
Issues: Whether the order for accounting of profits from the date of the partner's death to the final decree was proper and whether further directions were necessary to limit the discretion of the Commissioner.
Ratio Decidendi: Where a business continues after the death of a partner, the representatives of the deceased are entitled to the share of profits the partner would have received, provided that the managing partner is given fair remuneration for their efforts. The court will not fetter the discretion of the accounting commissioner if the order is properly framed.
Result: Appeal dismissed.
Watkins and Hunter, W.W. Box and Co., A. Majid, W. Wallach
Lord Parmoor :-
Their Lordships do not think it necessary to call on Counsel for the respondents. It is possible to state quite shortly what is the advice which they will feel called upon to tender to His Majesty in this case.
There was a partnership carried on between the defendant, who is the appellant, and one Mahomed Fazil. This partnership terminated on August 3rd 1915, on the death of Mahomed Fazil. Accounts had already been taken in this partnership up to some date in 1913, so that it was not necessary to reopen them. The order of the first Court was that a further account should be taken up to the date in 1915 at which Mahomed Fazil died; but for some reason no order was made for taking any subsequent accounts. It is clear that after Fazil's death the old business was continued, although it became a partnership at will.
This action was brought by the representatives of Fazil against the appellant in order that proper accounts might be taken. The Court of Appeal made an order :-
"that accounts be taken of the profits of the business since the death of Fazil on the 3rd August. 1915, up to the date when the final decree is made, all just allowance, including fair remuneration, to be allowed in favour of the defendant for managing the business. And it is further ordered that the plaintiffs as representatives of Fazil will be entitled to the same share as Fazil would have taken if the partnership had not been dissolved, and the profits will be assessed on the basis of what may be found due to Fazil at the time of his death"
In the opinion of their Lordships this order was a proper order to make. Although the partnership terminated on the death of Mahomed Fazil the same business has been carried on. Certain suggestions have been made by the Counsel on behalf of the appellant asking the Board to give some direction which might interfere with or fetter the discretion which the order gives to the Commissioner before whom the accounts will be brought. Their Lordships are of the opinion that no such direction should be given. It appears to them that the order as made is in the proper form in leaving all matters of account within the discretion of the Commissioner subject to the direction that all just allowance shall be made including fair remuneration for management of the business and to the further order that the respondents as representatives of Fazil will be entitled to the same share as Fazil would have taken if the partnership had not been dissolved. The business is to be regarded up to the date of the final decree as a continuing business although Mahomed Fazil died in 1915. They have only to add that if exception is sought to be taken to any ruling of the Commissioner the person who seeks to make the complaint can apply to the Court. No order or instructions are required from their Lordships. It is a matter of ordinary procedure, but it must not be taken that their Lordships suggest that any such application will be required or should be made
Their Lordships will humbly advise His Majesty that the appeal should be dismissed with costs.
Appeal dismissed.