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PETITIONER: M.O.H. UDUMAN AND ORS.

       Vs.

RESPONDENT: M.O.H. ASLUM

DATE OF JUDGMENT13/11/1990

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. SHARMA, L.M. (J)

CITATION:  1991 AIR 1020            1990 SCR  Supl. (2) 663  1991 SCC  (1) 412        JT 1991 (1)   138  1990 SCALE  (2)1045

ACT:     Indian  Partnership  Act, 1932: Sections 39 and  40  and French  Civil  Code Article  1865--Duration  of  partnership provided for--Then not partnership at will--Rights of  part- ners--What  are--Contract  of partnership to be  read  as  a whole.

HEADNOTE:     The appellants/defendants 1-3 and the  respondent/plain- tiff are sons of the 4th appellant/defendant--their  mother. Their father M.O. Hassan Kuthus Marican started the proprie- tory  concern  M/s Hassan Tithus Marican  doing  import  and export and other business in Pondicherry on July 20, 1962, a partnership consisting of the appellants the respondent  and the father Ex. B1 was constituted and was registered as  per the  provisions of the French Law and the business was  car- ried on. By relinquishment deed Ex. B2 dated August 1,  1968 their  father retired from the partnership.  Thereafter  the appellants  and  the respondent continued  the  business  in terms of Ex. B2.     Due  to  some misunderstanding arisen in 1973,  the  re- spondent  in May 1978 laid the suit for dissolution  of  the partnership and for accounting etc.     As per the respondent the partnership is at will and  by issue  of notice dissolving the partnership, it  stood  dis- solved  with  effect  from the date of the  receipt  of  the notice  by the appellants. Whereas the appellants  contended that  under the French Law, the partnership is not at  will, the  contract operates as law and that in terms of  contract Ex. B1 & Ex B2 the respondent has to relinquish his share in favour of the appellants and take the value thereof  without dissolving the firm.     The  Trial  Court held that the partnership  is  not  at will.  So  the suit for dissolving the partnership  was  not maintainable and that for accounting etc. other remedies are left  open.  The  suit was dismissed, and  was  affirmed  on appeal by a learned single Judge.     The Division Bench held that the partnership is at  will and the respondent can seek its dissolution. It was  further held that the rights of 664

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the parties are governed by the Indian Partnership Act (9 of 1932) and the suit was maintainable. Accordingly the  appeal was allowed and the suit was restored to file and the  Trial Court  directed  to try the suit  on  merits  expeditiously. Hence this appeal. Appeal Allowed, the Court,     HELD:  The only question that needs decision is  whether the  partnership in question is a partnership at  will.  The trial  court and the Learned Single Judge held in favour  of the  appellants but the Division Bench held that the  Indian Partnership  Act would apply because the Pondicherry  (Laws) Regulation  7  of 1963 was made in exercise  of  the  powers under  Article 240 of the Indian Constitution extending  the Partnership  Act to Pondicherry/Union Territory on and  from October  1, 1963. Sec. 69 had come into force from  July  1, 1964.  Though Ex. B1 was made in accordance with  the  Civil Code of France 1804, the cause of action to lay the suit had arisen to the respondent in 1978 by which time the ’Act’ was in operation. Thereafter rights and remedies of the  parties are to be regulated by the provisions of the Act. [667E-G]     According to the appellants the provisions of the French Civil Code and the Code of Commerce touching partnership  do have  a  bearing to cull out the intention  of  the  parties manifested  in the relevant clauses of the Partnership  deed Ex. B1 and B2 which suggest that the partnership in question is  not at will but one in perpetuity. The  respondent  con- tended that there is no express embargo in the French Law to treat a partnership at will. The contract is treated as law. Clause  IV treats the partnership as at will. But the  part- nership  at  will cannot be put to an end if the  notice  of dissolution was not issued in good faith and at an opportune moment. [668A-B]     Article 1865 of the French Civil Code postulates that  a partnership  ends under 5 conditions (1) expiration of  time of  partnership, (2) termination of the business, (3)  death of  any partner, (4) insolvency of anyone of  the  partners, and  (5)  one or more partners have expressed  a  desire  to cease  being  in partnership, Article 1869 provides  that  a partnership can be dissolved at the will of the partners but does  not apply to partnership where the duration  has  been fixed. Article 18 of the Code of Commerce provides that  the contract is regulated by the Civil Law and by the agreements of the parties. Article 1134 makes that the agreement legal- ly formed take the place of law and for those who have  made them.  The contract can be rescinded only with their  mutual consent  for the reasons authorised by law and done in  good faith. [668C-D; F-H] 665     A conjoint reading of the provisions of the French Civil Code,  Code  of Commerce clearly manifest  that  normally  a partnership  ends  on happening of one of  the  five  events mentioned  in  Article 1865. If the contract is  time  bound partnership  ends  by the expiration of time for  which  the partnership  was made. Undoubtedly, partnership at will  can be  put  to an end by the issue of notice  provided  it  was issued  in  good  faith and at an opportune  moment  but  is subject  to the terms of the contract between  the  parties. Since  the parties are governed by Indian  Partnership  Act, the rights of the parties are to adjudicated accordingly.     The High Court on consideration of the relevant  clauses of the deed and section 7 of the ’Act’ held that partnership is  at will. CI. 4 and 5 state that the partnership will  be brought  to an end at will but at the same time  state  that partnership  will  continue  till there  are  two  partners. [669B-E; H]

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   Section  7 of the ’Act’ deals with partnership  at  will contemplating  two exceptions’: (a) when partnership is  for specified  period,  (b) where there is a  provision  in  the contract  for the determination of the partnership.  Section 32(1)  deals with the retirement of the partner either  with consent  or according to an express agreement (c) where  the partnership  is at will, by giving notice in writing to  all of his partners of his intention to retire. Section 40 gives right to the partners to dissolve the partnership by  agree- ment  with the consent of all the partners or in  accordance with  the  contract between the partners. Under  Section  43 when  partnership is at will, the firm may be  dissolved  by any  partners  giving  notice in writing to  all  the  other partners of his intention to dissolve the firm which  stands dissolved  by operation of sub section (2) thereof from  the date  mentioned  in the notice and if no date  is  mentioned from  the date of Communication of the notice. [670G;  671A; B; D-E]     It  is a settled cannon of construction that a  contract of partnership must be read as a whole and the intention  of the  parties must be gathered from the language used in  the Contract  by  adopting harmonious construction  of  all  the clauses  contained therein. The cardinal principle is to  be as  certain  the intention of the parties  to  the  contract through the words they have used, which are key to open  the mind  of  the  makers. It is seldom that  any  technical  or pedantic  rule  of construction can be brought  to  bear  on their construction. [671G-H]     The  contract  of partnership in the  instant  case,  is consistent with the French Civil Code. But since the parties are governed by the provisions of the ’Act’, it would  apply to the facts of the case and the rights are to be adjudicat- ed accordingly. [674H] 666      The  duration  of the partnership  has  been  expressly provided  in  the deed, namely, that  the  partnership  will continue "till there are two partners" and that,  therefore, it is not a partnership at will. Thereby the respondent  has no right to dissolve the partnership except to seek account- ing  for the period in dispute or his right to  withdraw  or retire  from partnership and to take the value of his  share in  the partnership either by mutual agreement or at law  in terms of the partnership deeds Ex. B1 and B2. [674B-C]

JUDGMENT: