Case Commentary:

“Mohd Laiquiddin v Kamala Devi Misra”

3.1 Law of Contract

Submitted by:

Ayush Yadav

UID: UG2018-22

B.A.LL.B.(Hons.) II Year- III Semester

Submitted to:

Dr. Manish Yadav

(Assistant Professor of Law)

MAHARASHTRA NATIONAL LAW UNIVERSITY, NAGPUR

Contents
Tables of Cases................................................................................................................................3
Introduction......................................................................................................................................3
RESEARCH METHODOLOGY....................................................................................................4
a.) Research Design-....................................................................................................................4
Research question........................................................................................................................5
Limitations:..................................................................................................................................5
Facts of the case...............................................................................................................................6
Question of Law..............................................................................................................................7
Procedural history............................................................................................................................7
Analysis...........................................................................................................................................8
Dissolution of partnership in the event of death of one partner...................................................8
The Property of the firm...............................................................................................................9
Conclusion……………………………………………………………………………………….11

Bibliography..................................................................................................................................12
Reference……………………………………………………………………………………...…12

Annexure........................................................................................................................................12
Tables of Cases

1 Abdul Hak v Tumulari Vykuntam 1927 AIR 1927

2 CIT Madhya Pradesh v Seth Gobindram sugar mills AIR 1966 SCC 24

3 S Parvathammal v CIT 1987 163 ITR 1761.

4 N khanderwali Saheb v N Gudu Sahib(2003) 3 SCC 229.

5 Narayana v Krishnatappa (1966) 3 SCR 400.

6  Boda Narayana Murthy & Sons v. Valluri Venkata Suguna [AIR 1978 AP 257].

Introduction
In the landmark judgment of Mohd Laiquiddin v Kamala Devi Misra the Supreme court laid out
an important facet relating to the dissolution of partnership in the event of death of one partner
out of the two. In this particular judgment the Supreme court held that the immediate and
inevitable death of a member of partner results into automatic dissolution of the firm. Once the
partnership is dissolved, all the future transactions and relations of the surviving parties to each
other and with the representative of deceased must be determined by fresh agreement or by the
decree pronounced by the judge. It is the principle of common law, the death of one partner will
operate to dissolve all the existing rights and liabilities. Dissolution of partnership is considered
to be of private nature and thus presumed to be taken notice of every one. The English court
went only so far as to hold that neither estate of the deceased partner nor his heir or
representatives be bound on a contract entered into in the firm name subsequent to his death. In
Indian law it is stated under Sec 42(c) of the Indian Partnership Act. The case discusses the
conduct of the business and the properties of the firm. The case has helped to form substantial
reasoning as to what effect the clause under partnership agreement are enforceable.

The case also highlights that after the dissolution of the firm what happens to the property and
profits incurred from the business. In the light of this Honorable bench of Supreme court took
various cases in consideration and interprets section 14 of Indian Partnership act. In treating the
present subject the court considered the law applicable and the precedence to the dissolution of
partnership.

RESEARCH METHODOLOGY

a.) Research Design-

The research method so used to write this research paper is doctrinal. It is doctrinal in the sense
that it comes from the credible sources herein, books, articles published in renowned and
justified WebPages and Journals. The project also uses deductive reasoning for research. The
source of information also consists of theoretical knowledge the researcher possesses as a law
student. The research is directed towards case commentary on Mohd. Laiquiddin Ali v Kamala
Devi Misra(dead). The work discusses at length in this case, its origin, different aspects, case
laws related to it, and much more. The data so used is qualitative, as in the form of established
theory and criticism. The data is excerpted from Journals, Articles, and e –law websites. The
sources so used are secondary in nature and can be treated as library-based experiment. To make
the research paper, the instructions given by the. Research Supervisor have been followed. The
whole research paper is done in an organized way. Firstly, the necessary chapters have been
selected then only possible efforts have been made to collect information required for each
chapter.

Aim(s) and Objective(s)- The aim of this research paper is to understand this case in detail.
Another aim is to understand the case laws associated with the concept related to this case
commentary.

The objective(s) of this research paper is as follows:

 To understand the concept of dissolution of partnership

 To evaluate the various case laws associated with this case.

Research questions
What are the grounds for the dissolution of partnership between two partners?

How the property of firm is divided after the dissolution of partnership?

What is the effect if there is a certain clause for the minimum time period of partnership?

Limitations:
The limitation of the study are those characteristics of design or methodology that impacted or
influenced the application or interpretation of the results of the researcher‘s study. The research
is limited to educational purposes only. Only that information could be furnished which was
available and the availability of which could be authenticated. The researcher was unable to do
empirical research due to non-availability of proper resources, time, and restriction of the domain
of research.
 Mohd. Laiquiddin & Anr... Appellant;

Versus

Kamala Devi Misra... Respondents;

Full Citation- SCC 407 (2010)

Civil Appeal No. 6933 of 2002,6934 of 2002 and 4411-4412 of 2002- decided on 05-01-2010

Composition of the Bench: The Supreme Court of India: Division Bench

Name of the Judges: Tarun Chatarjee , V.S. Sirpurkar

Area of Law: Civil law & others

Facts of the case

In this case, the land belonging to the respondent, Kamala Devi Mishra (original plaintiff), was
agreed to be used by Shri Jai Narayan Mishra (original defendant, since deceased) for the
construction of a cinema theatre. This arrangement was entered into by the execution of a
partnership deed on June 26, 1977 clause 4 of which envisaged that the plaintiff’s share in the
profits would be 2 annas of every rupee in profit and guaranteed a minimum profit of Rs. 2000
per month. The partnership was to continue for a period of 42 years and could be extended for a
further 20 years at the option of the original defendant. Moreover, a clause in the partnership
deed specifically provided that the death of any of the partners would not result in dissolution of
the partnership. 

The defendant never disclosed to the plaintiff as to what amount was due to her on settling the
annual accounts of the firm, mismanaged the firm and manipulated the accounts book. There was
mutual irretrievable distrust between the plaintiff and the defendant which made it impossible for
the partnership firm to continue. Hence, a civil suit was filed against Mohd. Laiquiddin, the
original defendant who insisted on the continuation of the partnership.

The trial court held that the partnership firm was deemed to be dissolved due to the death of the
original plaintiff. The first appellate court held that since there were only two partners in the
firm, and one of the partners had died, there was no scope and possibility to continue the firm. In
the second appeal, the High Court of Andhra Pradesh also held that the partnership firm stood
dissolved at the death of one of the partners. On the death of the original plaintiff and the original
defendant, the legal representatives approached the court under Article 136 of the Indian
Constitution wherein both the appeals were merged.

Question of Law
Whether there had been dissolution of the partnership firm on account of death of one partner
even though there is a clause which compels the either party to continue the partnership?1

Whether the High court was justified in permitting the respondent to remove the removable from
the disputed property, contrary to the deed of partnership entered into between the original
plaintiff and the original defendant?2

Procedural history
The trial court by the judgment dated 17 May 1996 held that the partnership stood dissolved by
the death of original plaintiff. Moreover the court laid its focus on clause 24 of deed of
partnership in which the entire cinema theatre with its associated structure were given to the
plaintiff.

The first appellate court, by an order dated 17th October 2001 dismissed the appeal confirming
the judgment and decree of the trial court and allowed the cross objections filed by the
Appellants.

The high court upheld the decision of trial court concerning the dissolution of firm on the basis
of death of one partner. The high court also concluded that since the dissolution was based on the
death of partner, it would be unjust if plaintiff gets all the property of the firm. So the court
directed to take the respective properties and appellants should pay the value of remaining
portions of structure which could not be removed.

Aggrieved by the decision of High court both the parties filed the present special leave petition
before the Supreme Court of India.

1
Mohd Laiquiddin & Anr v Kamala Devi Misra (2010) SCC 407.
2
Mohd Laiquiddin & Anr v Kamala Devi Misra (2010) SCC 407.
Analysis
Dissolution of partnership in the event of death of one partner
Section 42(c) 3of Indian Partnership act deals with the dissolution of partnership in the event of
death of one partner
The fact that a partnership is entered into for single adventure and therefore is to last till the
termination of the adventure, does not preclude dissolution by death.4A covenant by a deceased
partner binding his executors to continue the partnership cannot be specifically enforced against
the executors and the effect of death of the partner coupled with the refusal of the executors to
continue the partnership , is the dissolution of the firm. Contract to continue a partnership after
the death of partner may be expressed or implied. 5 The supreme court has held that where one of
the partners died, the firm automatically comes to an end and there is no partnership for third
party or the representatives. If the surviving party wish to continue the partnership he has to
make the fresh agreement with the representative of surviving partner. 6 In order to arrive at the
conclusion that the partnership firm stood dissolved on account of death of one of the partners,
the High Court had rightly placed reliance on Smt. S. Parvathammal v. CIT  wherein this Court
held that in a firm consisting of two partners on account of death of one of the partners, the firm
automatically dissolved and observed as follows:
“A partnership normally dissolves on the death of the partner unless there was an agreement in
the original partnership deed. Even assuming that there was such an agreement in a partnership
consisting of two partners on the death of one of them the partnership automatically comes to an
end and there is no partnership which survives and into which a third party can be introduced.
Hence on the death of S, the original partnership was dissolved. The subsequent taking in of the
assessee as a partner was only as a result of entering into of a new partnership between R and the
assessee. Partnership was not a matter of heritable status but purely one of contract.”7

3
Section 42(c) of Indian Partnership act:- Subject to contract between the partners a firm is dissolved, by the death
of a partner.
4
Abdul Hak v Tumulari Vykuntam 1927 AIR 1927
5
Avtar Singh, LAW OF PARTNERSHIP, 2nd ed. 2008, pp. 117-119.
6
CIT Madhya Pradesh v Seth Gobindram sugar mills AIR 1966 Sc 24
7
S Parvathammal v CIT 1987 163 ITR 1761.
The Property of the firm

Section 14 of Partnership Act 8talks about the property of the firm. The assets of partnership
belongs to and owned by the partners of the firm. So long as partnership continues each partner
is interested in all the assets of the partnership firm as each partner is owner of the assets to the
extent of his share in the partnership 9When one talks about the firm's property or firm’s assets ,
all that is meant is property or assets in which all partners have a joint or common interest. It is
not necessary that every partnership for the purpose of its business should own and utilize its
own partnership property only. It can utilize property owned by other for the purpose of the
business. 10It would become property of the partnership only if there is an agreement , express or
implied , that the property under the agreement of partnership to be treated as partnership
property.11 In the partnership deed, it was clearly mentioned that the “1st party” (original
plaintiff) offered her land towards her two-anna share capital for the construction of cinema
theatre and other allied constructions for running a cinema business. The “2nd party”(Original
defendant) agreed to construct cinema theatre and other allied constructions by procuring the
necessary funds. It was agreed that the 1st party would not be bound to contribute any amount
towards such constructions. In the light of Section 14 of the Act and in the light of the decision
of Boda Narayana Murthy & Sons v. Valluri Venkata Suguna,the High Court held that the land
and the cinema were not the properties of the firm and they were the properties of the respective
parties.12 .Section 48 of Indian Partnership Act states the method of settlement of accounts
between partners. On dissolution of partnership firm. accounts are settled amongst the partners
and the assets of the partnership are distributed amongst the partners as their respective shares in
the partnership firms. Such distribution to individual partner in not a case of transfer of assets of
the firm. The assets which hereinbefore belonged to each partner, will after dissolution of the
firm stand alloted to partners individually.

Judgment
8
Section 14 of Partnership Act :- Subject to contract between the partners, the property of the firm includes all
property and rights and interests in property originally brought into the stock of the firm,or acquired, by purchase or
otherwise, by or for the firm, or for the purposes and in the course of business of the firm, and includes also the
goodwill of the business. Unless the contrary intention appears, property and rights and interests in property
acquired with money belonging to the firm are deemed to have been acquired for the firm.
9
N khanderwali Saheb v N Gudu Sahib(2003) 3 SCC 229.
10
Sujan Suresh Sawant v Kamalakant Shantaram Desa AIR 2004.
11
Pollock and Mulla, THE INDIAN PARTNERSHIP ACT, 7th ed. 2017, p.208.
12
of Boda Narayana Murthy & Sons v. Valluri Venkata Suguna [AIR 1978 AP 257].
In the light of aforementioned case, it is clear that when there are only two partners constituting
the partnership firm, on the death of one of them, the firm is deemed to be dissolved despite the
existence of a clause which says otherwise. A partnership is a contract between the partners.
There cannot be any contract unilaterally without the acceptance by the other partner. The
Appellants, the legal representatives of original plaintiff (since deceased) was not at all interested
in continuing the firm or constitute a fresh firm and they cannot be asked to continue the
partnership, as there is no legal obligation upon them to do so as partnership is not a matter of
heritable status but purely one of contract, which is also clear from the definition of partnership
under section 4 of Indian Partnership Act 13. Therefore, the trial court was justified in holding
that the firm dissolved by virtue of death of one of the partners and the first appellate court as
well as the High Court have taken the correct view in upholding the same.

The court interpreted the judgment given in Narayana v. Krishnatappa on which it ruled that the
partnership property will vest in all the partners and in sense that every partner has an interest in
the property of the partnership n the light of the argument advanced by the learned counsel for
the parties, the relevant provisions of the Act and the clauses of the deed, we do not find any
infirmity in the reasoning given by the learned Judge of the High Court. It is true that there was
no intention from either of the parties to treat these properties as the properties of the firm. A
careful perusal of Clause 24 clearly indicates that the land as well as the building with the
fixtures etc., to be vested with the original plaintiff (since deceased), after the expiry of term of
42 years. It is also true that directing the delivery of the entire property to the appellant would
cause prejudice to the rights of the Respondents and would put him to loss. As noted
hereinabove, the partnership got dissolved on the death of the original plaintiff (since deceased),
it would be reasonable to allow both the parties to take their respective properties. The
Appellants are entitled to the exclusive possession of the land and the Respondents are entitled to
take away the movables from the property and recover the value of the buildings and structure
embedded to the land. It has to be assessed by the technically qualified person. The Appellants
are liable to pay the value of the remaining structures after adjusting the amount if any due to the
Appellants.14
13
section 4 of Indian Partnership act :- Partnership” is the relation between persons who have agreed to share the
profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with
one another are called individually “partners” and collectively a “firm”, and the name under which their business is
carried on is called the “firm name”.
14
Mohd Laiquiddin & Anr v Kamala Devi Misra (2010) SCC 407.
Conclusion

The decision given by the divisional bench of Tarun Chatterjee and V.S. Sirpurkar JJ. in this case
was valid, justified and based on due diligence according to the author. The Honourable judges
examined each and every issue very carefully. They also kept in mind all the contentions of both
the parties, all the relevant provisions of the Act, and all the relevant clauses of the deed while
delivering the judgment. Furthermore, even though a clause in the partnership deed stated that
after the dissolution of the partnership the land along with other movable items would go to the
appellants, the Court opined that the execution of this clause would beget injustice to the
respondents, and thus, it was decided that both the parties were entitled to get their respective
shares that too after evaluation by an expert. This can be seen as a striking example of justice
delivery by the apex court of our country.

Bibliography
 Avtar Singh, LAW OF PARTNERSHIP, 2nd ed. (2008)
 Pollock and Mulla, THE INDIAN PARTNERSHIP ACT, 7th ed. 2017

References
1. (June,24,2019, 7:18 PM), http://lawstreetindia.com/experts/column?sid=207.
2. (June, 24,2019, 10:45 PM), http://kanoon.nearlaw.com/2017/10/17/dissolution-
partnership contracts/.
3. (June, 25, 2019, 4:15 PM),http://articleonlegalissues.blogspot.com/2010/12/dissolution
-of-contract-comparative.html.
4. (June,25, 2019,11:22 PM), http://research-chronicler.com/resinv/pdf/v2i1/2112.pdf.
5. ( June,25,2019, 5:05 PM),https://www.scconline.com/Default.aspx.
Annexure
Name of the case (with Mohd. Laiquiddin and Anr. v. Kamala Devi Mishra (Smt.)
citation) (Dead) and Ors., (2010) 2 SCC 407
Composition of the Bench Supreme Court of India: 2-Judge Bench
Name of Judges J. Tarun Chatterjee and J. V.S. Sirpurkar
Area of Law Civil Law
Brief facts of the case The plaintiff and the defendant had entered into a partnership
by virtue of a deed. The property belonged to the original
plaintiff whereas the cinema hall constructed upon it with all
its fixtures was owned by the defendant. There arose mutual
irretriavable distrust between the parties during the course of
business. Meanwhile, one of the partners died. The death of a
partner gave rise to several issues that have been debated
upon in the Courts.
Jurisdiction Special Leave Petition (Article 136 of the Constitution of
India)
Question(s) of law 1) What happens to the partnership after the death of a
partner if the firm consists only of two partners?
2) How is the division of property of the firm to be
performed after the dissolution of partnership?
Reliance on Relevant:
1) Statutes 1) The Indian Partnership Act, 1932
2) Precedents 2) Arjun Kanoji Tankar v. Santaram Kanoji Tankar,
(1969) 3 SCC 555
Arm Group Enterprises Ltd. V. Waldorf Restaurant,
(2003) 6 SCC 423
Chandra Singh v. State of Rajasthan, (2003) 6 SCC
545
CIT v. Dewas Cine Corp., AIR 1968 SC 676
Miles v. Clarke, (1953) 1 All ER 779 (Ch)
S. Parvathammal v. CIT, (1987) 163 ITR 161 (Mad)
Santakumari v. Lakshmi Amma Janaki Amma, (2000)
7 SCC 60
 S.V. Chandran Pandian v. S. V. Sivalinga Nadar,
(1993) 1 SCC 589.

Legal Issues for determination  Whether the High Court was justified in permitting
the respondents in raising a question for the first time
in second appeal, which was not raised in the pleading
before the trial court or the first appellate court?
 Whether the High Court of Andhra Pradesh was
justified in holding that there had been dissolution of
partnership firm on account of death of a partner?
 Whether the High Court was justified in permitting
the respondents to remove the movables from the
disputed property, contrary to the deed of partnership
entered into between the original plaintiff and the
original defendant?

Impugning the correctness of On no grounds

the judgment on the grounds
of
Question of interpretation of 1) Relevant Provisions of the Indian Partnership Act,
1932
2) Relevant Clauses of the partnership deed entered into
by both the parties
Federal disputes on fact or I. S. 4 & 42(c) of the Indian Partnership Act, 1932
law II. Clauses 11, 13, 21, 22 & 24 of the Partnership
Deed
Methodology of judging the The facts of the case were verified and the provisions of the
issues involved Indian Partnership Act as well as clauses of partnership deed
were analyzed carefully.
The opinion of the Court is Unanimous as on judgment
Ratio The partnership is deemed to be dissolved after the death of
one of the partners. As regards the property of the firm, the
 appellants were entitled to get the land whereas the
respondents were entitled to get the movable items of the
cinema hall and monetary compensation for all items which
cannot be safely removed.
Whether the majority has None
issued any new principle(s)/
rules
The majority decision is A just social and economic order.
towards establishing
Student’s own remarks The decision of the Court is based on the principles of justice
and equity. Both the parties have been given their deseved
share, therefore, establishing justice.