1944 (12) TMI 7 - HC - Indian Laws

Court rules shares belong to individual partners post partnership dissolution, statute of limitations not a bar

Soonderdas Thakersey Versus Bai Laxmibai

The court ruled in favor of the plaintiffs, determining that the legal owner of the shares was not acting as an express trustee. It was held that the ... - Issues:1. Whether the shares purchased by a partnership firm belong to the individual partners after dissolution of the partnership.2. Whether the legal owner of the shares acted as a trustee for the other partners.3. Whether the statute of limitation applies to the case.Detailed Analysis:1. The case involved shares purchased by a partnership firm, where after the dissolution of the partnership, a dispute arose regarding the ownership of the shares. The plaintiffs, who were partners in the firm, claimed that the shares belonged to them individually after the dissolution. The defendants, who were the legal representatives of the deceased partner, contested this claim, leading to the current suit for a declaration of ownership and transfer of shares.2. The main contention was whether the legal owner of the shares acted as a trustee for the other partners. The plaintiffs argued that the legal owner held the shares in trust for them after a decree declared them as the owners. They relied on the provision of Section 10 of the Indian Limitation Act, which deals with suits against express trustees. The court analyzed the nature of trust, distinguishing between express, constructive, and resulting trusts, and concluded that the legal owner was not an express trustee based on the specific circumstances of the case.3. The application of the statute of limitation was a crucial aspect of the case. The plaintiffs sought to rely on Section 10 of the Indian Limitation Act to argue that the statute of limitation did not bar their suit against the legal representatives of the deceased partner. The court examined relevant precedents, including the case of Soar v. Ashwell, to determine the applicability of the statute of limitation in cases involving trusts. Ultimately, the court held that the legal owner was not an express trustee, and hence, Section 10 of the Indian Limitation Act did not apply in this scenario.In conclusion, the court ruled in favor of the plaintiffs, deciding that the legal owner of the shares was not acting as an express trustee and that the statute of limitation did not prevent the plaintiffs from claiming ownership of the shares after the dissolution of the partnership.