for establishing a partnership where the capital exceeds onethousand rupees.
Thus in the instant case, the plaintiff had to plead in his plaintbefore Court could proceed any further, that after the expiry of theagreement No. 210, (a) the partnership continued on the sameterms and conditions set out there, (b) that the share capital wasless than Rs. 1000/-.
In paragraph 3 of the plaint, the plaintiff has averred the saidpartnership business was accordingly carried on, on the termsand conditions of the said partnership agreement. Under the saidpartnership agreement a sum of Rs. 1500/- per mensem waspayable to the plaintiff”.
Sivasamiv. Vinayagamoorthy (Dr. Ranaraja.J.)
In paragraph 4 he states:
"After the expiration of the period provided in the said partnershipagreement on 31st December 1990, the plaintiff and defendantscarried on the same business on the same terms and conditionswithout entering into a fresh agreement in writing. The
partnership is therefore in Law and in fact a partnership at will from1st January 1991”.
'It is important that the agreement records the capital requiredto be contributed by each partner and the proportions in whichone's contribution is to be owned. The capital should beexpressed to be so much money; and if one of the partners is tocontribute lands or goods instead of money, such lands or goodsshould have a value set upon them and their value in moneyshould be considered as his contribution”.
“By capital of a partnership is meant the aggregate of the sumscontributed by its members for the purpose of commencing orcarrying on a partnership business and intended to be risked bythem in the business. The capital of a partnership is not thereforethe same as its property: The capital is a sum fixed by theagreement of the partners. The amount of each partners’ capitalought…always to be accurately stated, in order to avoid disputeson a final adjustment of account, and it is more important where■ the capitals of the partners are unequal, for if there is no evidenceas to the amounts contributed by them, the shares of the wholeassets will be treated as equal” – See Lindley and Banks onPartnership 16th Ed. Pg. 156-157, 422.
The agreement 210 makes no mention of the capital of thepartnership and therefore does not comply with the requirements of apartnership agreement. The need to specify the capital of thepartnership is of greater importance in this country, in view of theaforesaid provisions of the Prevention of Frauds Ordinance, whichhas been enacted to provide more effectually for the prevention offrauds and perjuries. The agreement 210 is not in compliance with
Sri Lanka Law Reports
[1997] 2 Sri L.R.
the partnership in Law. The plaintiff cannot therefore pray for thedissolution of a purported partnership at will, which he claims is anextension, of what is now clear, of an invalid partnership agreementfrom it’s very inception.
The plaintiff challenges the decision of the Judge to consider thevalue of the action stated in the plaint for the purpose of stamp dutyas the basis for concluding that the partnership capital exceededRs. 1000/-. The plaintiff cannot adduce such an argument, when theburden of proving that the alleged partnership at will was in fact valid,although not in writing, as the capital was less than Rs. 1000/-, lay onhim. Similarly, the plaintiff cannot claim that he had a right to anopportunity to lead oral evidence on the partnership capital, when thelaw requires the capital contributed by the partners to be recorded inthe partnership agreement on which he endeavours to base thepartnership at will. The plaintiff could not have surmounted this legalimpediment, even if was allowed to tender further written submissionson 10.10.94, because those submissions which are filed of record, donot in any event, make reference to the legal requirement that apartnership agreement must record the capital contributed by thepartners and the proportions, in which the contributed capital to beowned.
The Judgment of the learned District Judge is affirmed. The •appeal is dismissed without costs.
Appeal dismissed.