Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 09 September 2026

Case Overview

  • Parties: Appellants V. Sumitra Reddy & Anr.; Respondent K. Ranganadha Reddy (legal representative of the deceased Kasireddy Lakshmi Narayana Reddy).
  • Partnership: M/s Viraj Constructions formed in 1964 by five partners – Kasireddy Lakshmi Narayana Reddy, Vallappareddy Sundara Ram Reddy, Vardhireddy Mohan Krishna Reddy, Vallappareddy Kodanda Ram Reddy, and Vallappareddy Sumitra Reddy. A new partner, Vardhireddy Dashrat Rami Reddy, was admitted on 13‑Dec‑1968, altering profit‑loss shares to 25%, 17%, 10%, 15%, 16% and 17% respectively.
  • Business: Construction works for Indian Railways; partnership was at‑will, governed by a deed dated 31‑Dec‑1964 and a revised deed dated 13‑Dec‑1968.
  • Asset: Ac. 3.27 guntas of land (Survey Nos. 28/1‑3) at Begumpet, Hyderabad, purchased either on 25‑Jun‑1966 or 05‑Sep‑1975 in the firm’s name.
  • Retirement & Promissory Note: Kasireddy Lakshmi Narayana Reddy retired by notice dated 03‑Mar‑1970, effective 01‑Apr‑1970. A promissory note of Rs 22,500 was executed on 17‑Jul‑1970 at 12% p.a. interest. Non‑payment led to civil suit O.S. No. 128 of 1975, dismissed on 04‑May‑1979, confirming the partnership remained undissolved.
  • Subsequent Proceedings: First appeal (ASSR No. 90685 of 1979) dismissed 02‑Nov‑1983; legal notice dated 15‑Oct‑1983 demanding dissolution and account settlement; O.S. No. 1601 of 1983 filed for rendition of accounts and payment of due amount with interest at 12% p.a.
  • Preliminary Decree (06‑Nov‑1995): Plaintiff entitled to 0.25 % share of capital, defendants to render accounts up to 31‑Mar‑1970, interest at 12% p.a., and costs of Rs 4,788 awarded to plaintiff.
  • High Court Modification (28‑Mar‑2001): Partnership dissolved on 18‑Oct‑1983 (notice of dissolution); defendants to render accounts up to that date; plaintiff entitled to share of profits with 12% interest.
  • Commissioner Appointments & Interlocutory Applications: Various applications (IA No. 1247/2001, IA No. 655/2003, IA No. 892/2005) led to appointment of Advocate Shri J. Prabhakar as Commissioner (order dated 25‑Nov‑2002). Review order (26‑Apr‑2004) limited plaintiff to profit share only; set aside by High Court in CMA No. 1485 of 2004.
  • High Court Judgment (30‑Jan‑2009): Set aside review order, held that movable and immovable assets must be valued; plaintiff entitled to 25 % of asset value after liabilities; Commissioner to assess value and, if partners do not pay, to sell the land by public auction.
  • Trial Court Rejection (28‑Apr‑2010): Dismissed IA No. 541 of 2009, holding plaintiff entitled only to value as on 18‑Oct‑1983, not to compel sale.
  • Civil Revision (09‑Apr‑2012): High Court set aside the 28‑Apr‑2010 order, directing that unless parties settle, the Advocate‑Commissioner shall sell the land by public auction, deposit proceeds, and the trial court shall pass final decree within six months for payment of 25 % of sale proceeds to plaintiff after discharge of liabilities.
  • Supreme Court Appeal (Civil Appeal No. 8167 of 2017): Appellants challenged the 09‑Apr‑2012 judgment. The Supreme Court examined Sections 46, 47, 48 of the Indian Partnership Act, the concept of partnership at‑will, and the relevance of the dissolution date versus valuation date.
  • Supreme Court Findings: (i) On dissolution, each partner is entitled to settlement of accounts as of the dissolution date and a share of the residual assets after liabilities (Section 46). (ii) The right to the value of assets is not limited to the date of dissolution; valuation may be done when the Commissioner assesses it. (iii) The High Court’s directions for sale and distribution are consistent with law.

Final Outcome

  • The Supreme Court dismissed the civil appeal, fully upholding the High Court’s 09‑Apr‑2012 judgment.
  • All interim stay orders issued in the related special leave petition were vacated.
  • The Advocate‑Commissioner must proceed with public auction of the 3.27 gunta land, deposit sale proceeds with the trial court, and the trial court shall pass the final decree within six months, directing payment of 25 % of the proceeds to the plaintiff (respondent No. 1) after settling any partnership liabilities.
  • No order as to costs was made.

Topics: Partnership Dissolution, Asset Valuation & Sale