Partnership accounting requires competing partners to disgorge all profits, while periodic adjustments remain rebuttable in final accounts.

Periodic Bantan adjustments in a partnership are described as prima facie bases for accounting, rather than conclusive settlements: a party challenging an adjustment at the annual Nikash must establish error. In a partnership without a fixed term, dissolution requires communication of notice to the other partners; continued participation in the business may support continuance. A partner conducting, without consent, a competing business of the same nature must account to the firm for all resulting profits, and a stipulated penalty does not replace that obligation. Account-book production should be addressed during the accounting inquiry, with adverse evidentiary consequences potentially arising after proper notice and non-production.

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Issues: (i) Whether the appeal was competently constituted following the death of a co-appellant; (ii) Whether the periodic Bantan adjustments conclusively precluded accounts being taken; (iii) Whether the partnership stood dissolved at the end of 1320 B.E. or continued until the end of 1321 B.E.; (iv) Whether partners conducting a competing salt business were liable to account for its profits and whether liability was limited to Rs. 5,000; (v) Whether findings and directions concerning custody and production of account books could be made at the preliminary stage.

Issue (i): Whether the appeal was competently constituted following the death of a co-appellant.

Analysis: Although the deceased partner's legal representatives did not seek impleadment as appellants within the prescribed period, all interested persons were before the Court after they were added as respondents. The Court also recognised inherent power to add them as respondents. Further, the suit had been instituted in the firm name under the procedural provisions governing suits by firms.

Conclusion: The preliminary objection to the competency of the appeal failed, in favour of the appellants.

Issue (ii): Whether the periodic Bantan adjustments conclusively precluded accounts being taken.

Analysis: A Bantan adjusted inter se liabilities arising from unequal appropriation of salt, whereas a Nikash was the wider annual adjustment covering customer balances and expenditure. A Bantan made in the parties' presence and acquiesced in could not be lightly reopened; however, it was not conclusive, and a party challenging it at Nikash bore the burden of establishing error.

Conclusion: The Bantans were not final settlements barring accounts, but were to be used as the prima facie basis of the accounting unless error was proved, against the appellants.

Issue (iii): Whether the partnership stood dissolved at the end of 1320 B.E. or continued until the end of 1321 B.E.

Analysis: In a partnership without a fixed term, dissolution by a partner requires communication of notice to the other partners. No effective written or reliable oral notice was established, and the alleged retiring partners continued to take salt and participate in the business. The evidence therefore supported continuance of the partnership. Accounts in a dissolution suit must reflect the true period established by the evidence and serve all partners' interests.

Conclusion: No effective dissolution occurred at the end of 1320 B.E.; the partnership continued until the end of 1321 B.E., against the appellants.

Issue (iv): Whether partners conducting a competing salt business were liable to account for its profits and whether liability was limited to Rs. 5,000.

Analysis: Section 259 of the Indian Contract Act requires a partner who, without consent, carries on a business of the same nature competing with the firm to account for all resulting profits and compensate the firm for loss. The separate transactions were of precisely the same nature as the partnership business. The stipulated Rs. 5,000 was a penalty and did not replace the obligation to account for profits.

Conclusion: Partners who conducted the competing salt business were liable to account to the firm for all profits; recovery was not limited to Rs. 5,000, against the appellants.

Issue (v): Whether findings and directions concerning custody and production of account books could be made at the preliminary stage.

Analysis: Each partner must render true accounts and full information affecting the partnership under Section 257 of the Indian Contract Act. Production of books should be addressed during the accounting inquiry through notice under Section 66 of the Indian Evidence Act. Upon non-production by a person shown to have custody or control, an adverse inference under Section 114 Illustration (g) may arise, with the evidentiary consequences stated in Section 134. The prescribed procedure had not been followed, and certain books were then in court records and were offered for production.

Conclusion: The finding on custody of account books and the consequential production direction were set aside; appropriate production directions were to be made during the accounting inquiry, in favour of the appellants.

Final Conclusion: The accounting framework was varied to treat the Bantans as prima facie rather than conclusive adjustments, and the premature account-book direction was removed; the remaining determinations governing the partnership accounts remained effective.

Ratio Decidendi: A periodic partnership adjustment is prima facie binding but not conclusive in a final accounting, and a partner who carries on an unconsented competing business must account to the firm for its entire profits.

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