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Abdulalli BadrudIn Vs. Eanchodlal Trikamlal - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberFirst Appeal No. 277 of 1914
Judge
Reported in(1917)19BOMLR86
AppellantAbdulalli Badrudin
RespondentEanchodlal Trikamlal
Excerpt:
.....been brought to recover the debt thus acknowledged, it was contended that the vahivatdar had no authority from his partners to acknowledge the debt after the institution of a suit for dissolution of partnership, and that such acknowledgment was not binding on the partnership :-- ;that the effect of the order of appointment being that the two vahivatdars, who were members of the partnership, should carry on the partnership as the duly authorised agents on behalf of the parties to the suit, each of them had authority to do all such acts as would ordinarily be performed or are capable of being performed by any member of the partnership during the currency of the business. - - 24,000 of which was payable to his creditor one jethalal, in respect of which jethalal was satisfied by the..........was outstanding at the time of the so-called promissory note sued upon by the plaintiffs in this suit. the promissory note was executed in 1908, after the institution of a suit for the dissolution of the partnership of earjulla nurbhai. it is in similar terms to the bakee which was at that time outstanding, being an acknowledgment of indebtedness upon taking accounts with a promise to pay on demand.3. the question is whether the person making that so-called promissory note at that time had authority to bind the partners, who are defendants in this suit, or their representatives. a charge of fraud was put forward in the written statements that haideralli, the person making the promissory note, had colluded with the plaintiff's to pass it and got a balance struck by the plaintiffs for.....
Judgment:

Basil Scott, Kt., C.J.

1. The plaintiff sued to recover Rs. 11,817-14-6, with further interest at six per cent, from date of suit until realization, and costs from the estate of the defendants, being the parties interested in the firm of Farjulla Nurbhai, a dissolution of which had been decreed by the Court at Godhra in a partnership suit in the year 1909. The claim was based upon an original liability of the firm of Farjulla Nurbhai to the plaintiffs' father Tricumlal Damodardas for Rs. 9,826 which is found credited in the firm's books to Tricumlal Damodardas under date Shravan Vad 3rd 1950, and debited in the firm's accounts of Farjulla Nurbhai. The details of the cash entry show that it was paid on account of the Ras or joint account of four persons Tricumlal Damodar and Jalalbhai Karmulabhai and Sulemanjj. Lukmanji and Badruddin Sarafali. That was a joint account in which Tricumlal Damodar and Jalalbhai Karmulabhai. were entitled to the 1/4th share each, and Sulemanji Lukmanji and Badruddin Sarafali, which was the name under which the partners of Farjulla Nurbhai went for the purpose of this particular joint transaction, were interested in the 1/4th share each. The joint account was in respect of a sum of Rs. 33,000 and odd advanced to a certain Thakor, Rs. 24,000 of which was payable to his creditor one Jethalal, in respect of which Jethalal was satisfied by the persons interested in the joint account. Rs. 9,826 represents apparently the sura advanced by Tricumlal Damodar to the firm of Farjulla Nurbhai to enable them to satisfy their liability as participants in this joint transaction. It does not appear to us upon the entries which have been referred to that the contention advanced for the appellants should be accepted, namely that Rs. 9,826 was advanced not only to the firm of Farjulla Nurbhai, but to them jointly with Tricumlal Damodar, the person to whom the money is credited, and his other co-lenders in the transaction with the Thakor. We read the accounts as showing that the liability of Rs. 9,826 rested upon the firm of Farjulla Nurbhai, and that Tricumlal Damodar remained the creditor for the whole amount. The firm of Farjulla Nurbhai never paid the sum due to Tricumlal, but as is abundantly proved to have .been the custom in their firm, they executed acknowledgments from time to time to save limitation, such acknowledgments being signed by one or other of the partners. The practice was not confined to transactions with Tricumlal Damodar, for the evidence of the witness No. 77 shows that it was followed with regard to various other creditors, and that the Bakees were signed by different members of the partnership.

2. Carrying on the history of this transaction of Rs. 9,826 we find a Bakee, Exhibit 119, entered in the Interest book of the plaintiff's firm for Rs. 9,179-13-9 found to be due on taking accounts signed in the name of the firm Farjulla Nurbhai, by the hand of Sulemanji Lukmanji, with a promise to pay the sum on demand. That is in 1952. There is another similar Bakee in 1955, the 3rd in 1958 and the 4th in 1961. That Bakee of 1961 was the Bakee which was outstanding at the time of the so-called promissory note sued upon by the plaintiffs in this suit. The promissory note was executed in 1908, after the institution of a suit for the dissolution of the partnership of Earjulla Nurbhai. It is in similar terms to the Bakee which was at that time outstanding, being an acknowledgment of indebtedness upon taking accounts with a promise to pay on demand.

3. The question is whether the person making that so-called promissory note at that time had authority to bind the partners, who are defendants in this suit, or their representatives. A charge of fraud was put forward in the written statements that Haideralli, the person making the promissory note, had colluded with the plaintiff's to pass it and got a balance struck by the plaintiffs for the amount that was stolen from the Pitha-Khata. We do not find, however, that any issue was raised upon this allegation, and no charge of fraud was specifically made or gone into in the lower Court, although there was a quantity of evidence recorded, which might possibly have some bearing on the question of fraud or no fraud, if that were the question before the Court. We do not think that having regard to the issues in the case, we should allow the question of fraud to be gone into at this stage.

4. The question, therefore, resolves itself into this: Had Haidaralli authority at the time he made the promissory note or Bakee, to make it, so as to bind the other persons interested in the firm.

5. The contention on behalf of the appellants is that he had no authority, and is based upon the fact, that the partnership was a partnership at will, that a suit for dissolution was filed in March 1908, and that by the filing of the suit the plaintiffs there-in ipso facto dissolved the partnership. The suit, however, was a suit for dissolution by the Court, and the Court in its decree declared that the partnership should be dissolved as from a certain date in 1909 subsequent to the passing of the promissory note sued upon. The plaintiffs and all the parties to that suit are bound by that decree, and the dissolution must be taken to have been not before the year 1909. The partnership, therefore, was not dissolved at the time of the promissory note. Then it is said that at all events the authority of the partners to act as partners had ceased prior to the making of the promissory note, because the learned Judge at Godhra had passed an interim order making Haidaralli and another partner Tyaballi Vahivatdars of the firm for all the parties, to sell the goods, and in the first place to pay the expenses incurred during their management, and to utilize the surplus in paying off the four admitted creditors of the firm, as to whom it was agreed by all the parties that they were creditors of the firm who should be paid off. The learned Judge stated in his order that the two Vahivatdars were to 'do Vahivat on behalf of all the parties, and not as representatives of separate interests'. They were ' to do the Vahivat of the business of the firm in the way specified above'. That was merely an interim order, but it was subsequently extended on the 11th July 1908, that is to say, three months after it was made, so that the arrangement should continue until the final decision of the Court or further order, No further order was made until two months later when a Receiver was appointed.

6. What then is the meaning of the order which appoints the two Vahivatdars to do Vahivat on behalf of all parties, and not as representatives of separate interests, such Vahivat being the Vahivat of the business of the firm. It appears to me that that order implies that the two Vahivatdars who are members of the partnership shall carry on the partnership as the only authorized agents on behalf of the parties to the suit, that is to say, no act was to be done by any other partners than these two. Each of the two Vahivatdars would have authority to do all such acts as would ordinarily be performed or capable of being performed by any member of the partnership during the Currency of the business,

7. Now even if there were no special evidence as to the manner of dealing with outstanding debts in this partnership, it may be taken as the law that a partner has authority on behalf of himself and other partners to apply the assets in making payments on account of outstanding debts which would have the effect of preventing them from being barred by limitation, and upon the same principle he would have authority to pass acknowledgments which would have the effect of staving off the claims of creditors, and on the other hand would save the claims from being barred by limitation. That these two classes of acts rest on the same principle appears from the decision of Lord Justice Farwell in Read v. Price [1909] 2 K. B. 724

8. But in addition to the ordinary authority implied among partners, we have the special facts of this case, already alluded to, which establish beyond controversy that it was the custom of individual partners to pass acknowledgments to creditors in order to carry on the liabilities which the firm was not prepared at the time to satisfy, and with regard to the particular creditor Tricumlal Damodar, that practice was continued over a long series of years.

9. It has been contended, however, by Mr. Eao on behalf of the appellants that although that may be the ordinary rule among partners, still even though there is no dissolution at the time the promissory note is made, the order of the Court appointing two partners Vahivatdars places them in a different position, and prevents them from acting as agents of their copartners, but makes them merely the servants of the Court whose hands are tied and who are not at liberty to take any steps without reference to or permission from the Court. It appears to me that that argument is inconsistent with the terms of the order, which, as I have already pointed out, says that the two Vahivatdars are to do Vahivat on behalf of all the parties. It can hardly be under these circumstances contended that they are not agents of the partners for the purpose of carrying on the partnership business. Even upon the English authorities I should be prepared to hold that the act done by Haideralli in this case was an act which he would be justified in performing without reference to the Court Which appointed him Vahivatdar, because it was one of the ordinary acts of the firm, which was reasonably necessary for carrying on the business of the firm without being liable to the inconvenience of a suit, and possibly an attachment at the instance of the plaintiff's. It was not a case in which any fresh liability was incurred by the Vahivatdar. He was merely acknowledging an existing one, and I do not think that a Court would ever be disposed to hold that the manager was not entitled to acknowledge the just debts of the firm, if by so doing he would stave off inconvenient litigation in Court. In this connection I may refer to In re British Power Traction and Lighting Co. Ltd. (1907) 1 Ch. 528, as illustrating the attitude which the Court will take up with regard to the acts of managers.

10 For these reasons I think the decision of the lower Court is right and that the appeal should be dismissed with costs.

Heaton J.

11. We are dealing here, purely with the point of limitation, when once We have arrived at an understanding that the money sued for is undoubtedly due. That it is so due there can be no doubt, because although an allegation of fraudulent or collusive dealing was made, no issue on that point was raised, and it is too late now for the appellants to make use of the evidence on the record for the purpose of convincing; us that there was fraud or collusion in the matter of the promissory note or acknowledgment with which we are concerned. The evidence whatever it amounts to was not adduced for that purpose. There, has not been a trial on that: matter. I take it, therefore, that this money was undoubtedly due and must be paid, unless the claim is barred by the law of limitation. It is not barred if the defendant No. 9 Haidaralli had authority to sign this document, whether you call it a promissory note or an acknowledgment. Whether he had such authority depends in this particular case on the terms of the order made by the Judge at Godhra in the partnership suit which was filed in 1908. We have read this order repeatedly, and had it commented on at considerable length and in considerable detail. I read it as meaning that the partnership business was to be continued as a going concern at least for a time under the management of those who were defendants Nos. 1 and 9 in that partnership suit, as if those two persons were the only partners in the partnership. That being so, and having regard to the course of business about which a good deal has been said, and if I may say so has been correctly said, by my Lord the Chief Justice, I have in my own mind no doubt whatever that defendant No. 9 Haidaralli had authority to sign that paper, and that in law, as undoubtedly in justice, that paper saves limitation in this case and makes the debt sued for legally recoverable.


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