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In Re: Vallibhai Adamji - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberInsolvency No. 623 of 1932
Judge
Reported inAIR1933Bom407; (1933)35BOMLR881; 145Ind.Cas.619
AppellantIn Re: Vallibhai Adamji
Excerpt:
.....of partners is considered to be joint, and if a creditor of a firm obtains judgment in an action brought against only one of its partners, he loses his remedy against the other partner or partners when he recovers judgment, even though that judgment remains unsatisfied. it was held that a judgment against one of the two joint debtors, even though it was not satisfied, was a bar to an action against the other. 307 according to that decision, where the obligation was not joint but joint and several, the doctrine that a joint debt was merged in a judgment against one debtor did not apply, and if such a judgment remained unsatisfied, it was not a bar to a suit against the others......for by the defendant jointly with the other. it was held that a judgment against one of the two joint debtors, even though it was not satisfied, was a bar to an action against the other. this rule was held not to apply in the case of a joint and several contract; it was said that a joint and several bond comprised the joint bond of all and the several bonds of each of the obligors, and gave different remedies to the obligee. the rule in king v. hoare was adopted by the majority of the house of lords in kendall v. hamilton (1879) 4 app. cas. 504 lord penzance alone dissenting.3. section 43 of the indian contract act, however, makes the liability on all contracts joint and several, and allows a promisee to sue one or more of the several joint promisors as he chooses, and excludes the.....
Judgment:

B.J. Wadia, J.

1. This is a notice of motion taken out by the applicant Vallibhai Adamji to set aside the adjudication order made on November 7, 1932, adjudicating him and his son Salebhai Vallibhai, both described as 'lately carrying on business in partnership at Taher Building, Koliwada, Mandvi, Bombay, in the name and style of Salebhai Vallibhai and at Saddar Bazaar, Bilaspur, in the name and style of Adamji Kadibhai'. The petitioning creditors had filed a suit on the Original Side of this Court, being suit No. 1107 of 1932, against the son, Salebhai Vallibhai, individually, and a decree was passed against him alone for Rs. 3,326-7-0 on August 10, 1932. The applicant, therefore, contends that there is no debt due and payable by him, and that under Section 13(1) and (4) of the Presidency-towns Insolvency Act it was not competent to the petitioning creditors to get him adjudicated. The petitioning creditors say that they only subsequently learnt that the applicant was a partner with his son, and they further say that they have sufficient evidence to establish the partnership. The applicant's answer is that even assuming that he was a partner, which he denies, the debt due by the firm was merged in the decree obtained by the petitioning creditors against Salebhai, and no debt survives as against him to sustain an adjudication order.

2. Under the English common law the liability of partners is considered to be joint, and if a creditor of a firm obtains judgment in an action brought against only one of its partners, he loses his remedy against the other partner or partners when he recovers judgment, even though that judgment remains unsatisfied. The cause of action being single cannot afterwards be divided into two or more: see Lindley on Partnership, 9th Edn., p. 328. This principle was laid down by Parke B. in King v. Hoare (1844) 13 M. & W. 494 in which case goods were sold and delivered to the defendant jointly with another and were to be paid for by the defendant jointly with the other. It was held that a judgment against one of the two joint debtors, even though it was not satisfied, was a bar to an action against the other. This rule was held not to apply in the case of a joint and several contract; it was said that a joint and several bond comprised the joint bond of all and the several bonds of each of the obligors, and gave different remedies to the obligee. The rule in King v. Hoare was adopted by the majority of the House of Lords in Kendall v. Hamilton (1879) 4 App. Cas. 504 Lord Penzance alone dissenting.

3. Section 43 of the Indian Contract Act, however, makes the liability on all contracts joint and several, and allows a promisee to sue one or more of the several joint promisors as he chooses, and excludes the right of any one of them to be sued along with his co-promisor or co-promisors. It was pointed out in Lukmidas Khimji v. Purshotam Haridas, Oodhowji Wallji and Goculdas Jewraz I.L.R. (1882) Bom. 700 that this section was 'one of the series of sections materially altering the rules of English common law as to the devolution of the benefit of and liability on joint contracts, the English rule corresponding to Section 43 being that 'all joint contractors must be sued jointly for a breach of contract''. There is a difference between a joint liability and a joint and several liability. In the case of a joint promise the obligation is single and entire and is extinguished by a judgment and decree in a suit against any one of the joint promisors. In the case of a joint and several promise the position is different. The creditor in that case has as many joint causes of action as there are co-promisors, and can bring as many actions as there are copromisors. It is clear, however, that in no case can a creditor recover more than what is due to him.

4. It has been held in the case of Lukmidas Khimji v. Purshotam Haridas, which was followed by the appeal Court in Motilal Bechardass v. Ghellabhai Hariram I.L.R. (1892) Bom. 6 that Section 43 of the Indian Contract Act applies as much to partners as to other co-contractors. In a later judgment in Lakshmishankar v. Vishnuram I.L.R. (1899) Bom. 77 1 Bom. L.R. 534 Candy J. observed at p. 84 that joint liability was the ordinary incident of a partnership, and that no one partner could change it into joint and several liability without the consent of the other partners. This decision has no reference to Section 43, and the learned Judge had evidently the English common law rule in his mind when he spoke of the liability of partners as joint. The section does apply also in the case of partners, and, as Farran J. pointed out (p. 11) in Motilal v. Ghellabhai, the legislature would have said so in express words, if it had intended to except partners from the provisions of the section.

5. There is, however, a difference of opinion among the different High Courts in India as to the effect of a decree obtained against one co-promisor only on the promisee's right to proceed by a separate suit against the other co-promisor or co-promisors. The earlier decisions in Calcutta and Madras adopted the rule in King v. Hoare, and held that a decree against one was a bar to a subsequent suit against the other or others. It was said that the debt transit in rem judicatam. The appeal Court of Allahabad held differently in Muhammad Askari v. Radhe Ram Singh I.L.R. (1900) All. 307 According to that decision, where the obligation was not joint but joint and several, the doctrine that a joint debt was merged in a judgment against one debtor did not apply, and if such a judgment remained unsatisfied, it was not a bar to a suit against the others. Macleod J. (as he then was) held differently in Shivlal Motilal v. Birdichand Jivraj (1917) 19 Bom. L.R. 370 and his decision was followed by Kajiji J. in Markandrai v. Virendrarai : AIR1917Bom262 . The earlier Madras decision has, however, not been followed in the later decisions of that Court: see Ramanjttiw Naidu v. Aravamudu Aiyangar I.L.R. (1909) Mad. 317 and Mool Chand v. Alwar Chetty I.L.R. (1915) Mad. 548 It appears to me that there can be no res judicata upon a cause of action against a co-promisor, when it has never been before the Court, as his liability is joint and several. There can, therefore, be no merger when a cause of action against the co-promisor has not been sued upon. The result is that a judgment against one joint and several promisor is no bar to a subsequent suit on the contract or obligation against the other or others. The correctness of the decision of Macleod J. in Shivlal Motilal v. Birdiohand Jivraj is disputed by Messrs. Pollock and Mulla in their commentaries on Section 43 of the Indian Contract Act. But even assuming that that decision is binding upon me, and that a subsequent suit is not competent to the promisee after recovering judgment against one of the co-promisors, it is only the remedy of the promisee by a separate and subsequent suit that is barred by reason of the supposed merger of the debt in the decree. The debt, however, is not extinguished nor wiped out, just as it is not extinguished, though the remedy to sue in respect thereof may be barred by the law of limitation. If, therefore, it is proved that the debt in dispute is a partnership debt, its existence will suffice to support an adjudication order against both the father and the son.

6. As the factum of the partnership is denied, I cannot dismiss the notice of motion. I, therefore, direct that the issue, whether the applicant was a partner with his son at all material times, be tried in this Court, and order it to be set down for hearing on February 21 next. Costs of the notice of motion will be costs in the issue.


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