1992 PLP 1239 (SCMR)

An observation regarding section 37 of the Partnership Act, was also made as follows:‑‑ "We think that the observation made by us above that the effect of section 37 on the last paragraph of the partnership deed was not canvassed before us, makes it clear that there was no question of deciding it directly or indirectly." The Commissioner accordingly submitted his report in two sets, one for 1‑8‑1957 lo 31‑12‑1957 and the other for the period from 1‑1‑1958 to' 31‑12‑1969. An objection taken before the learned Single Judge that the appellant was not entitled to take accounts after 31‑12‑1957 was sustained and it was held that `he was entitled to the profit only upto the date of the dissolution of the partnership vide judgment, dated 16‑2‑1972'. The appellant thereupon filed an L.PA. out of which this appeal has arisen. The learned Judges of the Division Bench no doubt agreed with the appellant's counsel as follows:‑‑ "The observations contained in the first judgment of the L.PA. Bench quoted in para. 3 above seem to support his contention that at the time of passing of preliminary decree the L.PA. Bench directed the rendition of the accounts by the respondent from the date of the Partnership Agreement viz. 1‑8‑1957 `until the respondent/defendant hands over. the share of the plaintiffs/appellants to them or to the Commissioner'." But then they held that the direction had been `substantially altered' in the subsequent order clarification, which order had `attained finality'. In this connection the Bench further observed:‑‑ "It cannot, therefore, be argued that the right of the appellant to rendition of accounts by virtue of section 37 in respect of business carried on after the date of dissolution of the firm was adjudicated." In regard to the applicability, of section 37, the L.PA. Bench expressed:‑‑ "In unambiguous terms the L.PA. Bench has clarified that the effect of section 37 on the last paragraph of the Partnership Deed was not canvassed before them and no decision was given on that directly or indirectly. This in our opinion concludes the matter and there is no room for doubt as urged on behalf of the appellant." On this view of the matter, the appeal was dismissed and the impugned judgment was then brought under challenge before this Court. Leave to appeal was granted to examine:‑‑ "Whether the Letters Patent Bench in its impugned judgment has correctly interpreted the order of its predecessor Bench made on 17‑4‑1969 in regard to the scope of the preliminary decree as to the period for which the rendition of accounts was to .be carried out; Whether the petitioner was in terms of the preliminary decree not entitled to the rendition of accounts upto the time when his share had been paid, and Whether section 37 could not be invoked." ` Section 37 of the Partnership Act with its Proviso relied upon reads as follows:‑‑‑ "Section

37. Right of outgoing partner in certain cases to share subsequent profits.‑‑‑ Where any member of a firm has died or otherwise ceased to be a partner, and the surviving or continuing partners carry on the business of the firm with the property of the firm without any final settlement bf accounts as between them and the. outgoing partner or his estate, then, in the absence of a contract to the contrary, the outgoing partner or his estate is entitled at the option of himself or his representatives to such share of the profits made since he ceased to be a partner as may be attributable to the use of his share of the property of the firm or to interest at the rate of six per cent per annum on the amount of his share in the property of the firm: Provided that where by contract between the partners on option is given to surviving or continuing partners to purchase the interest of a deceased or outgoing partner, and that option is duly exercised, the estate of the deceased partner, or the outgoing partner of his estate, as the case may be, is not entitled to any further or other share of profits; but if any partner assuming to act in exercise of the option does not in all material respects comply with the terms thereof, he is liable to account under the foraging provisions of this section." It is also necessary to reproduce here the relevant clause of the, partnership deed which has remained the subject of dispute between the parties. It reads as follows:‑‑ "That on the dissolution of the partnership in any event, the assets, goodwill etc. thereof shall vest absolutely in Mr. Imamuddin and Mr. Shamsuddin shall be deemed to relinquish all his claim, interest and right in‑the partnership except to the payments on account of capital, any advances made by way of loan and profit earned and due on and upto the date of termination of the partnership.". It did not need much argument or discussion on the question as to whether the afore-noticed clause in the contract does or does not constitute `a contract to the contrary' mentioned in the purview of section

37. The two forums below did treat it as a contract to the contrary in the facts and circumstances of this case. Undoubtedly in a way it is also a finding of fact and despite an effort by the learned counsel to show otherwise we did not feel persuaded to hold otherwise. This point noted in the leave grant order having thus been disposed of, the learned counsel vehemently argued and advanced the other point; namely, whether the order dated 17‑4‑1969 passed by the L.PA. Bench in the first round was correctly interpreted in the final impugned judgment. So fat much emphasis has been laid on what the learned Judges stated in para 7 of the order, dated 17‑4‑1969 which has also been repeatedly reproduced. But it is necessary to understand whether or not any finding of a determinative character had earlier been rendered in favour of the appellant so as to render the Bench finally deciding the matter powerless or functus officio not to examine and decide the same. This very question was faced by the learned Judges who themselves wrote the order, dated 17‑4‑1969. The apprehension that similar point as has been raised from the appellant side and is noted in the leave grant order, might be treated as having been initially examined and decided, was shown by a learned counsel perhaps when the order dated 17‑4‑1969 was being dictated. It was allayed with the following remarks:‑‑ "

at this stage

say that an observation has been made above that according to the appellant the contention raised by the respondent after the judgment of this Court has been indirectly decided. It may be concluded by adding that it is not so. We think that the observation made by us above that the effect V of section 37 of the last paragraph of the partnership deed was not canvassed before us, makes it clear that there was no question of deciding it directly or indirectly." In this view of the matter when the order, dated 17‑4‑1969 contains a clear interpretation itself, it would serve no useful purpose by us to reinterpret the same. On this the learned, counsel could not press the point any further. Same would apply to the other point which though taken at the leave grant stage was not seriously pressed. It related to the effect of the preliminary decree. The real question which remained to be determined was; whether, the appellant is not entitled to any equitable relief either. The learned counsel in this behalf relied on a judgment of this Court in Usman v. Haji Omer Haji Ayub PLD 1966 SC

328. The learned Judges of the L.PA. Bench did examine (in the context of the present case) the rule laid down in the case of Usman. But when questioned in this behalf as to whether on equitable grounds and in particular keeping in view the principles of the Islamic Law, the appellant would not at all be entitled to any profit or benefit on account of the use by the respondent of what belonged to the appellant on Ist January, 1958 and which had not been paid or delivered to him, respondent's learned counsel in fairness agreed that the respondent would be willing to pay profit at the rate of `six per cent from 1‑1‑1958 upto the date of deposit'. The learned counsel for the appellant accepted this offer as total and final settlement of this dispute. Accordingly, except for the afore-recorded undertaking and acceptance this appeal fails and is dismissed. There shall be no order as to costs. M.BA./S‑666/S Appeal dismissed.