TMI Blog1990 (11) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 (a translation copy in English is Ex. B1/a) was constituted and was registered as per the provisions of the French Law and the business was carried on. By relinquishment deed, Ex. B2 dated August 1, 1968 their father had retired from the partnership. Thereafter the appellants and the respondent continued the business in terms of Ex. B2. When misunderstanding between the parties had arisen, as pleaded by the respondent, in 1973 and in May, 1978, the respondent laid the suit for dissolution of the partnership and for accounting etc. It is the respondent's case that the partnership is at will and by issue of notice dissolving the partnership, it stood dissolved with effect from the date of the receipt of the notice by the appellants. He sought to have his share in the partnership ascertained and decree granted accordingly. The appellants contended that under the French Law the partnership is not at will. The contract operates as Law. In terms of the contract Ex. B1 and B2, the respondent has to relinquish his share in favour of the appellants and to take the value thereof without dissolving the firm. One of the issues raised was the maintainability of the suit which was tried as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the French Civil Code would be looked into to construe the covenants in the partnership deed, Shri Krishna Murthy Iyer, the learned Senior Counsel for the respondent contended that there is no express embargo in the French Law to treat a partnership at will and the contract is treated as law. In that light Clause IV treats the partnership as at will. But the partnership at will cannot be put to an end to if the notice of dissolution was not issued in good faith and that it was not an opportune moment. 5. Article 1865 in Chapter IV of the French Civil Code postulates that a partnership ends (1) by the expiration of the time for which the partnership was made; (2) by the destruction of the subject matter or the termination of the business; (3) by the death of any of the partners; (4) by the civil death, interdiction of insolvency of one of the partners and (5) by the fact that one or more of the partners have expressed a desire to cease being in partnership. Article 1869 provides that if the partnership articles contain provisions stipulating that the partners shall, in the case of the death of one of the partners continue the partnership with his heir, or that the partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the terms thereof. It is undoubted that a partnership at will can be put to an end by issue of the notice provided it was issued in good faith and at an opportune moment. But it is subject to the contract of the parties. Therefore we hold that the contract of partnership 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 adjudicated accordingly. 8. The further contention of Shri Parasaran is that Clause (5) of the contract of partnership (Ex. B1) envisages that the partnership would continue notwithstanding one of several partners withdrew from partnership. The continuing partners should pay to the withdrawing partners or to the heirs of the deceased partner, only the value of the share of the retiring or deceased partner according to the last inventory. This was reiterated under Ex. B2 after retirement of their father. Clause (12, thereof expressly prohibited the parties to assign his/their share to the third parties without the consent of the continuing partners which would clearly indicate that the partnership is not at will and the Division Bench committ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one, without the assent of other partners . The other clauses are not relevant for consideration and hence omitted. 11. Section 7 of the Act deals with partnership at will, which reads thus: Where no provision is made by contract between the partners for the duration of their partnership, or for the determination of their partnership, the partnership is partnership at will. 12. This Section contemplates two exceptions to a partnership at will. The first one is where there is provision made in the deed of the partnership for the duration of the partnership; (2) where there is provision in the contract for the determination of the partnership; in either of these cases, the partnership is not at will. Duration of Partnership may be express or may in given circumstances be implied. Section 11(1) of the Act postulates that subject to the provisions of the Act the mutual rights and duties of partners of a firm may be determined by contract between the partners and such contract may be express or implied by course of dealings. Section 32(1) deals with the retirement of a partner (a) with the consent of the other partners; (b) in accordance with an express agreement by the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, therefore, is whether Ex. B-1 B-2 partnership deeds expressly indicate the intention of the parties regarding the duration of the partnership? If not, whether it can be implied from the terms of the contracts. The relevant clauses have already been referred to. Clause (4) of the Contract empowers a partner to put an end to partnership at will if the exercise of the right to dissolve the partnership is given acceptance as contended for by Shri Krishnamurthy Iyer, the rest of the clauses in the contract get nullified. If the contention of Shri Parasaran is accepted that under Clause (5) of the Contract, the partnership will continue in perpetuity and the only right to the outgoing partner is the right to retirement and to payment of his share in the partnership is accepted, Clause (4) would be rendered nugatory. The right to continue the business by the firm as an on-going one would be discernible from Clauses (6) to (9) so long as the objects are lawful. Clauses (10) to (12) would lend an added assurance by imposing express limitations on the outgoing partners or the heirs of the deceased partner to receive only the benefits derived by the firm upto the date of withdrawal or de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of the mills. The accounts were to be settled once in every year. In case of either partner relinquishing his rights of the management, it shall be forwarded to the other partners but it shall not be transferred. It was also further provided that the two partners would carry on the affairs of the firm by rotation once in four years and the income earned thereby shall be divided between the partners every year. In that context when it was contended that there was no duration provided under the contract and that, therefore, Under Section 7 of the Act, the contract was treated to be a partnership at will, it was held at page 1007 thus: our attention was drawn in this case to a clause which lays down that either partner may withdraw from the partnership by relinquishing his right of management to the other partner. That however does not make the partnership at will, for the essence of a partnership at will is that it is open to either partner to dissolve the partnership by giving notice. Relinquishment of one partner's interest in favour of the other, which is provided in this contract, is a very different matter. It is true that in this particular case there were only two pa ..... 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