Official Receiver & Trustee in Bankruptcy of the Property of Kishan Singh Sandu – The Bankrupt v. Mokund Ram Aggarwal, Civ. Case 20-A-65, 28/10/67, Platt J.

Official Receiver & Trustee in Bankruptcy of the Property of Kishan Singh Sandu – The Bankrupt v. Mokund Ram Aggarwal, Civ. Case 20-A-65, 28/10/67, Platt J.

There was provision in a partnership agreement between plaintiff and defendant for its dissolution in the event of an act of bankruptcy on the part of either party. By notice in July, 1965, the Official Receiver and Trustee for the Bankrupt terminated the partnership. The act of bankruptcy occurred in 1960 and Sandhu was adjudged a bankrupt in June, 1962. This action was filed in August, 1965. Article 106 of the Limitation Act requires actions in respect of a partnership to be brought within three years of its dissolution. The only point in question was whether the suit is time-barred.

            Held: (1) Since the act of bankruptcy took place before the enactment of the Law of Contract Ordinance, Cap. 423, the relevant statute is the Indian Contract Act (1872). (2) Sec. 254 of the 1872 Act permits a suit by a partner to dissolve a partnership after a bankruptcy. But, the bankruptcy does not automatically dissolve the partnership. Consequently, the partnership came to an end when notice was given in July, 1965, and the suit is not time-barred. (3) The Court stated, obiter: under the Contract Ordinance now in force, the result in the case would have been different because the adjudication of bankruptcy would in and of itself dissolve the partnership; and an action such as this one would have been time-barred, because over three years had elapsed between the adjudication of bankruptcy in June, 1962, and the filing of this suit in August, 1965. [Citing Cap. 423, sec. 213.]