1991 (7) TMI 1

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....ried on business at Varanasi in the name of Badal Ram Laxmi Narain. The family had no capital of its own and had been running the business with the help of borrowed money. On October 20, 1951, there was a partial partition in the family. As a result thereof, the business of the family was partitioned between the members of the family. The members formed themselves into a partnership and continued the same business. On the date of partition, there was a debit balance of Rs. 1,75,310 in the capital account of the family. This debit balance was transferred in equal proportions to the personal accounts of the three partners of the firm. The newly formed firm took over the business assets as well as the liabilities of the Hindu undivided family.....

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.... been any such transaction, appropriate entries in the books of account of the Hindu undivided family would have been made. The Hindu undivided family should have credited the amount in its account in respect of the price paid for the goodwill and since there were no such entries, there could not be any inference that the firm has taken over the liability of Rs. 1,75,310 for the sale of goodwill. The High Court also has observed that the partners of the firm were bound to take over the liability of the Hindu undivided family because the liability was that of the family of which they were members and, on partition, every member became liable to discharge the debt according to his share. Clause (iii) of section 36(1) applies only where cap....