1980 PLP 1283 (CLC)

This appeal involves the determination of an important point as to whether the assignee of a partner's share, is liable for rendition of accounts.

2. In this respect the learned. trial Court recorded its findings on Issue No. 3 in favour of the appellant and held that the suit against respondent No. 1, was maintainable. Accordingly, the learned trial Court dissolved the firm and passed a preliminary decree for rendition of accounts in favour of the appellant. The first appeal filed by respondent No. 1, was, however, accepted by the learned Additional District Judge who relying on section 29 of the Partnership Act and Malik Muhammad Ishaque v. Messrs Erose Theatre (P L D 1977 SC 109), reversed these findings, ordered the deletion of the name of respondent No. 1, from the plaint and remanded the case to the learned trial Court, for fresh decision, in accordance with law.

3. On behalf of the plaintiff-appellant, the only argument advanced by his learned counsel was that respondent No. 1, was in possession of the partnership property, managed the business, kept the accounts with him and was thus liable to render accounts. He questioned the learned first appellate Court's reliance on section 29 of the Partnership Act to urge that when an assignee utilizes the partnership property, possesses the book of accounts, this section is not a bar in casting a liability on him to render accounts to the other partner. It was further submitted that the ruling in Malik Muhammad Ishaque v. Messrs Erose Theatres, supported the appellant inasmuch as in that case the liability of a transferee of share from a partner, for rendition of accounts, was maintained even by the Supreme Court.

4. A suit for rendition of accounts lies only in specific cases, when a special relationship, such as Principal and Agent, bailor and bailee, guardian and ward, partner or trustee or receiver, subsists between the parties. The existence of fiduciary relationship between a plaintiff and defendant and the latter's obligation to render accounts, are sine qua non for maintainability of such a suit. It must be remembered that mutual confidence and trust, confined in one another by the partners, are the foundation of the partnership and a partner has no right to foist an outsider on the firm by alienation of his share in his favour, without consent of other partners. An assignee is thus, stranger to the other partners and has no footing in the firm file is an agent of the assignor and the latter by transferring his share does not stand absolved of his statutory responsibility as a partner.

5. According to the language of section 29, an assignee during the continuance of the partnership has no right to interfere in the conduct of business or to inspect the account books of the firm, or to sue for accounts. However, on dissolution of the firm he is entitled to receive the share or the assets of the transferor and to have the accounts taken from the date of dissolution, for ascertaining such share. Obviously, therefore, respondent No. 1, did not stand in such relation to the appellant so as to cast are obligation on him to render accounts to the appellant. Merely, because the respondent managed the firm's business or was in possession of partner ship property, he could not be required to render accounts.

6. The case may also be examined from another angle. As observed above, section 29 disentitled respondent No. 1 to interfere in the conduct of business. If he acted in violation of law, such violation could not have given rise to any statutory obligation, enforceable at law, within the frame work of the Partnership Act. At the most, he could be sued for a specific amount for causing loss to the partnership property.

7. As regards the appellant's reliance on Malik Muhammad Ishaque v. Messrs Erose Theatres, the facts of this case are that on the death of one of the partners, namely, Qasim Muhammad Ishaq and his family, who were appellants before the Supreme Court got assigned to them the deceased's share in the partnership from his legal heirs and so also from his widow, who was a partner in the firm in her own right. The assignors, later on, filed a suit against Muhammad lshaque, his son, his wife and others, inter alia, for precision of deeds of assignment, delivery of possession of Erose 'Theatres and a direction to lshaque's for rendition of accounts. The suit was tried on the original side of the Karachi Bench of the erst while West Pakistan High Court, and a learned Single Judge, in addition to grant of some other relief, also passed a decree against Ishaque's and others for accounts. Their this inability was maintained even in L. P. A. The appeal filed by Muhammad Ishaque and others before the Supreme Court also failed. At page 143 of the report it has been laid down that . "It follows, therefore, that the legal position of the assignees has been correctly described by the High Court, namely, that the matter is governed entirely by section 29 of the Partnership Act, with the result that the assignees were not entitled to interfere in the conduct of the business or to require accounts or to inspect the books of the firm, but only entitled to receive -the shares of the profits of the transferring partner or partners, and to accept the account of profits agreed to by the partners. Their right and interest in the event of the dissolution of the firm or their transferors ceasing to be partners in the firm, shall be governed by subsection (2) of section 29 of the Act." A perusal of this authority would demostrate that the point as to the assignee's liability to render accounts has neither been mooted nor dis cussed therein. In Queen v. Leatham (1). Earl of Halsbury observed that :- A case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it." In this view of the matter I venture to maintain that there is no decision on a question of law or an enunciation of law, to give a binding authority to this ruling, within the meaning of Article 189 of the Constitution for the purpose of the instant appeal.

8. It is correct that in a suit for account the assignee is not a neces sary party. In para. 903 of Volume 24 of the Laws of England (Second Edition), it has been laid down that :- "The assignee of a share in a partnership is not, during the continu ance of the partnership a necessary party to an action against the other partners for an account, but after the dissolution of the partnership he may become so." But I feel that in the circumstances of the case, presence of respondent No. 1 before the Court, shall be helpful for an effectual and complete adjudication of the appellant's suit. He is, therefore, a proper party and striking off his name by the learned first appellate Court, was not justified. Except the above modification the impugned judgment and decree do not require any interference, and are accordingly upheld.

9. With the above observations this appeal is dismissed and as some what unusual point had to be determined in this appeal, the parties are left to bear their own costs. M. A. K. Appeal dismissed.