Existing partnership survives later foreign citizenship where FERA imposes regulation, not automatic dissolution, and decree for dissolution may follow admitted facts.

An existing partnership was not automatically dissolved when one partner later acquired foreign citizenship under the Foreign Exchange Regulation Act, 1973, because the Act imposed regulatory control through the Reserve Bank of India rather than an automatic prohibition, and no permission, rejection, or discontinuance order had been made. The contention that the firm was really between two Hindu undivided families was rejected because a Hindu undivided family is not a juristic person capable of being a partner; the partners were the two individuals. On the admitted existence of the partnership and the parties' shares, a preliminary decree for dissolution and appointment of a commissioner for accounts and sale was justified.

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Issues: (i) Whether the partnership stood dissolved on the plaintiff acquiring American citizenship under the Foreign Exchange Regulation Act, 1973. (ii) Whether a preliminary decree for dissolution of partnership was liable to be passed on the admitted facts.

Issue (i): Whether the partnership stood dissolved on the plaintiff acquiring American citizenship under the Foreign Exchange Regulation Act, 1973.

Analysis: The partnership pre-existed the Foreign Exchange Regulation Act, 1973, and had been carried on for years before the plaintiff became an American citizen. Sections 29 and 47 of the Act were held not to automatically dissolve an existing partnership merely because one partner later became a foreign citizen. The Act contemplated regulatory control by the Reserve Bank of India, including permission, rejection, or direction to discontinue, and no such action had been taken. The contention that the partnership was really one between two Hindu undivided families was rejected, as a Hindu undivided family is not a juristic person capable of being a partner; at law, the partners were the two individuals.

Conclusion: The partnership did not stand dissolved under the Foreign Exchange Regulation Act, 1973, and the suit was maintainable.

Issue (ii): Whether a preliminary decree for dissolution of partnership was liable to be passed on the admitted facts.

Analysis: The existence of the partnership and the shares of the parties were not in dispute, and the plaintiff no longer wished to continue the business. In such circumstances, once the alleged statutory bar to the suit failed, the admitted relationship and shares justified passing a preliminary decree for dissolution and appointment of a commissioner for accounts and sale of the partnership business.

Conclusion: A preliminary decree for dissolution of partnership was rightly passed.

Final Conclusion: The plaintiff succeeded in establishing that the partnership survived notwithstanding the plaintiff's change of citizenship, and the court granted dissolution of the firm with directions for accounts and consequential implementation.

Ratio Decidendi: An existing partnership is not automatically dissolved by a partner's subsequent acquisition of foreign citizenship; where the statute only provides regulatory restrictions and no prohibitory order is made, the partnership remains valid and may be dissolved by decree on admitted facts.

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