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Chaturbhuj Durgadas Factory Vs. Damodar Jamnadas Zawar and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case NumberA.F.O.D. No. 735 of 1954
Judge
Reported in(1958)60BOMLR1329
ActsCode of Civil Procedure (CPC), 1908 - Order 40, Rule 1
AppellantChaturbhuj Durgadas Factory
RespondentDamodar Jamnadas Zawar and ors.
Appellant AdvocateR.B. Kotwal, Adv.
Respondent AdvocateK.J. Abhyankar, Adv. for ;V.S. Desai and H.R. Gokhale, Advs.
Excerpt:
civil procedure code (act v of 1908), order xl, rule 1 - receiver appointed in suit for dissolution of partnership given all powers under cls. (a) to (d) of order xl, rule 1--whether such receiver entitled to execute and renew promissory notes and make part payments saving limitation--whether receiver so appointed has all the powers of the partnership or merely of an individual partner.;where a receiver is appointed in a suit for dissolution of partnership and under order xl, rule 1, of the civil procedure code, 1908, he is authorised to recover out standings and make payments and to execute documents on behalf of the partnership, he is entitled not only to execute and renew promissory notes but to make part payments so as to save the bar of limitation.;whitley v. lowe, (1858) 25 beav......gokhale, j.(1) this is an appeal by the plaintiff chaturbhuj durgadas factory at dharangaon against the dismissal of its suit by the court of the civil judge, senior division, at jalgaon, district east khandesh. the suit was for recovering rs. 25,000 and costs from defendant no. 1 and defendants no. 2 to 5 in respect of certain dealings between the plaintiff and a cloth shop named jamnadas radhakisan shop, which according to the plaintiff was of the ownership of the deceased father of defendant no. 1 jamnadas jugaikishore, of defendant no. 1 damodar and of vithaldas jamnadas, the deceased brother of defendant no. 1, and of defendants nos. 2 to 5. there was another cloth shop belonging to the defendants and that was named bhagirath gangadhar, but we are not concerned in this case with.....
Judgment:

Gokhale, J.

(1) This is an appeal by the plaintiff Chaturbhuj Durgadas Factory at Dharangaon against the dismissal of its suit by the Court of the Civil Judge, Senior Division, at Jalgaon, District East Khandesh. The suit was for recovering Rs. 25,000 and costs from defendant No. 1 and defendants No. 2 to 5 in respect of certain dealings between the plaintiff and a cloth shop named Jamnadas Radhakisan Shop, which according to the plaintiff was of the ownership of the deceased father of defendant No. 1 Jamnadas Jugaikishore, of defendant No. 1 Damodar and of Vithaldas Jamnadas, the deceased brother of defendant No. 1, and of defendants Nos. 2 to 5. There was another cloth shop belonging to the defendants and that was named Bhagirath Gangadhar, but we are not concerned in this case with latter shop. The original partners of Jamnadas Radhakisan were Jamnadas Jugalkishore, father of defendant No.1, Radhakisan Jankidas, the father of defendants No. 3 to 5, and it would appear that this shop was being managed by Radhakisan Junkidas and as managing partner he borrowed from the plaintiff Rs. 5,000 and passed a pro-note for that amount on 18th December 1925. On 25th February 1926, Radhakisan took a further loan of Rs. 700 for the purpose of Jamnadas Radhakisan shop and it would appear that in respect of certain purchases of ghee and grass an amount of Rs. 13 was debited in the plaintiff's account against the shop of Jamnadas Radhakisan on 13th June 1926. It would seem that the plaintiff factory also purchased from time to time certain clothe from the defendants' cloth shop, totalling an amount of Rs. 579 and odd inclusive of interest. Some time in 1927 Jumnadas, the father of defendant No. 1 along with his two sons Vithal and Damodar (Defendant No. 1.) filed Special Suit No. 853 of 1927 against the managing partner Radhakisan Jankidas and his two sons Bhagirath and Gangadhar for dissolution of the two shops belonging to them and a preliminary decree was passed in that suit declaring that the partnership was dissolved as from 1st October 1927. On 7th November 1927, on the application of the plaintiff Jamnadas and with the consent of the defendants in that suit, Jamnadas Jugalkishore was appointed a receiver of both the cloth shops belonging to the defendants and it would appear that very wide powers were conferred on the receiver under O. 40, Rule 1, of the Civil Procedure Code. On the 22nd March 1929, the receiver made up an account of the advances together with the interest due to the plaintiff and after deducting the price of the cloth purchased by the plaintiff from the defendants' cloth shop, and paying an amount of Rs. 1,085 towards plaintiff's dues on that day, a balance of Rs. 5,500 was found due to the plaintiff and the receiver executed a pro-note in favour of the plaintiff on the same day and that pro-note is Exhibit 57. Then on 21st February 1932, accounts were again made and an amount of Rs. 225-15-0 seems to have been paid to the plaintiff on that day and for the balance of Rs. 6,900 a pro-note in favour of the plaintiff was duly executed by the receiver Jamnadas and that pro-note is Exhibit 58. On 19th January 1935, accounts were taken again, an amount of Rs. 257-5-9 was paid and for the balance of Rs. 8,775 the receiver executed a fresh pro-note in favour of the plaintiff on that day and that pro-note is Exhibit 59. Then again, on 2nd January 1938 accounts were made by the receiver in respect of dues of the plaintiff and an amount of Rs. 324-1-3 was paid on that day and a fresh pro-note came to be executed which is Exhibit 60. It would appear that the payment of Rs. 324-12-3 was endorsed on the previous pro-note (Exhibit 59). On 21s December 1940, accounts were again made between the plaintiff and the receiver and, on the same day, a promissory note was passed by the receiver in favour of the plaintiff in respect of the dues found payable to the plaintiff totalling an amount of Rs. 13,936-12-0 and that pro-note is Exhibit 65. The fact that accounts were taken on 21st December 1940 appears also from the endorsement on the earlier pro-note (Exhibit 60). On 25th November 1943, Rs. 100 were paid by the receiver to the plaintiff and the fact of this payment was endorsed on Exhibit 65, the pro-note dated 21st December 1940, and that endorsement is signed by Jamnadas as receiver. There was a further payment of Rs. 100 made by the receiver to the plaintiff on 24th October 1946, and that was also endorsed on Exhibit 65 and that was singed by Jamnadas as receiver. It would appear that after these two payments, on 1st March 1949 a final decree came to be passed in Special Suit No. 853 of 1927 for dissolution of partnership, filed by Jamnadas Jugalkishore, but the receiver was not discharged but was continued. Thereafter on 4th October 1949, an amount of Rs. 50 was paid by the receiver Jamnadas to the plaintiff and he endorsed that payment on the pro-note (Exhibit 65) and he signed that endorsement but did not describe himself as receiver. In 1950, Jamnadas Jugalkishore, the receiver, died. As moneys due to the plaintiff in respect of the pro-note (Exhibit 65) were not paid by defendant No. 1 as well as the other defendants, the plaintiff gave a notice to the defendants on 30th June 1951, which is Exhibit 75, and filed the present suit on 3rd October 1951. The plaintiff based the present suit on the pro-note executed by the deceased Jamnadas on 21st December 1940 (Exhibit 65) and claimed that the suit was in time against the defendants by virtue of the three payments made by Jamnadas. He, however, made an alternative claim that in case the suit on the pro-note was held to be not maintainable, he based the claim on the original debt and it was alleged that in view of the various pronotes executed by the deceased Jamnadas Jugalkishore and also in view of the acknowledgment of debt made by him by making part payment from time to time, in respect of which endorsements were signed by him, the suit would be in time. It is however, worth noting that so far as the plaintiff's claim on the original debt is concerned, that was subsequently restricted by he plaintiff in the course of the hearing of the suit against defendant No. 1 only (Ex. 96).

(2) The suit was resisted by the defendants on several grounds, but for the purposes of this appeal it is necessary to note only three defences. It was contended in the first instance that Jamnadas Jugalkishore was a receiver and had no authority to execute pro-notes or acknowledge debts as a receiver. Secondly, it was also contended that the repayments alleged to have been made were not actually made. It was further contended that the payment of Rs. 50 by Jamnadas on 4th October 1949 was not made by him as a receiver because that payment was made after the final decree and Jamnadas was not thereafter a receiver. It was therefore contended that that payment of Rs. 50 did not save limitation. So far as defendant No. 1 is concerned, in respect of the claim on the original debt made against him, he also urged that Jamnadas had executed pro-notes and endorsed the payments in his capacity as a receiver and had expressly excluded his personal liability to pay the debt and, therefore, according to defendant No. 1, he would not be liable to the plaintiff on the original debt.

(3) The trial Court held that the plaintiff proved the pro-note (Exhibit 65) dated 21st December 1940 and also the payments and acknowledgments made by the deceased Jamnadas as mentioned in the pro-note. It came to the conclusion that the deceased Jamnadas was not a receiver of the shop 'Jamnadas Radhakisan' on 4th October 1949. It also held that Jamnadas as a receiver had no authority to pass pro-notes, to renew them and to acknowledge the liability and to make part payments as alleged by the plaintiff. It, therefore, held that the plaintiff's suit was not in time so far as it was based on Exhibit 65. But as against defendant No. 1, the trial Court gave a finding that the plaintiff's suit was within limitation so far as the suit was based on the pro-note (Exhibit 65). So far as the plaintiffs suit on the original debt was concerned, it was held that the suit was not maintainable and was not in time even regarding defendant No. 1. As I have already pointed out, the plaintiff ultimately confined his claim on the original debt against defendant No. 1 only. In view of these findings, it was held by the trial Court that none of the defendants was liable to pay the suit claim and consequently dismissed the plaintiff's suit. That is why the plaintiff filed the present appeal against the dismissal of his suit by the trial Court.

(4) In this appeal, Mr. Kotwa, the learned Advocate appearing on behalf of the appellant-plaintiff, has contended that the learned trial Judge has taken a wrong view of the powers conferred on Jamnadas Jugalkishore as receiver and it is urged that since Jamnadas Juglkishore had full powers under O. 40, Rule 1 (d) of the Civil Procedure Code, he was competent not only to execute pro-notes and renew them but also to make part payments so as to save limitation against the defendants. Mr. Kotwal further contends hat the learned trial Judge was wrong in his view that the amount of Rs. 50, the last payment made by Jamnadas on 4th October 1949, was not paid by him as a receiver since his appointment had not been in fact terminated after the final decree. It was lastly contended by him that on the alternative claim the learned Judge's view that defendant No. 1 was not liable was also erroneous. We may mention that the findings of the trial Court that the plaintiff proved the execution of the pro-note (Exhibit 65) dated 21st December 1940 and also the payments and acknowledgments made by the deceased Jamnadas have not been challenged before us on behalf of the respondents in this appeal.

(5) In order to examine the arguments of Mr. Kotwal as regards the powers conferred on the receiver Jamnadas, it is necessary to mention certain facts. I have already stated that a preliminary decree came to be passed in Special Suit No. 853 of 1927 filed by Jamnadas Jugalkishore for dissolution of the partnership and the partnership was declared to be dissolved as from 1st October 1927. Thereafter an application was filed on behalf of the plaintiff in that suit, Jamnadas Jugalkishore, which is Exhibit 71, on 28th October 1927, in which it was stated that the goods of the partnership were worth about Rs. 10,000 and there were considerable monetary dealings also and it was neither possible nor profitable for both the plaintiff and the defendant to continue the said partnership shop, and that if the entire property of the partnership shop was kept in the hands of the defendants, the plaintiff would be put to irreparable loss. That is why Jamnadas applied for the appointment of a receiver to take charge of the suit property under O. 40, R. 1, of the Civil Procedure Code and prayed that the receiver may be given all the powers under the provisions of the Civil Procedure Code. To that application, the defendants in that suit gave a reply on 7th November 1927 (Exhibit 72), in which they stated that plaintiff Jamnadas Jugalkishore should be appointed a receiver for the goods of the partnership and in connection with the debts due to and from the partnership and of goods of cloth in both the shops. It was further stated that the receiver should sell the said goods by public auction after proper publicity, and after taking permission of the Court, and in the auction sale both the plaintiff and the defendants should be permitted to bid. It was then stated that Jamnadas as a receiver should recover the debts of the shops and should pay the same as usual towards the debts which Jamnadas Radhakisan and Gangadhar Bhagirath shops owed to others and for which suits were pending. On the same day, the Court passed an order appointing Jamnadas Jagalkishore, the plaintiff in that suit, as a receiver of both the shops Radhakisan Jamnadas and Bhagirath Gangadhar under O. 40, R. 1, of the Civil Procedure Code. It was further stated that the receiver need not furnish security but he should report to the Court of his having taken possession of the property and e should take orders from the Court for further management of the partnership property. Mr. Kotwal's contention on the basis of these documents is that Jamnadas Jugalkishore remained no longer merely a partner, but he was a receiver appointed in the suit, invested with powers of the widest amplitude as contemplated under clause (d) of O. 40, R. 1, of the Civil Procedure Code; and Mr. Kotwal's contention is that in view of these very wide powers, the learned trial Judge was wrong in his view that the receiver had no authority to execute the pro-notes or to renew them or to make part payments so as to prevent the bar of limitation. We must accept this submission of Mr. Kotwas.

(6) O. 40, R. 1(d) of the Civil Procedure Code empowers the Court

'to confer upon the receiver all such powers, as to bringing and defending suits and for the realisation, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has', and it would appear from the order of the Court passed on Exhibit 71 that no limitation was placed on the powers of the receiver except that he had to report to the Court of his having taken possession of the property and that he had to take orders from the Court for further management of the partnership property. In our view, if Jamnadas Jugalkishore had powers mentioned in clause (d) of O. 40, R. 1, and had the power to collect the rents and profits and apply and dispose of such rents and profits and also to execute documents, it would be difficult to hold that he had neither the power to execute pro-notes in favour of the plaintiff in respect of the dues of the plaintiff on taking accounts or to make part-payments which would save the bar of limitation. It is true that it is rarely that receivers are invested with such very wide powers. It is also true that in his reply to Jamnadas' application for appointment of receiver the defendants had not mentioned O. 40, R. 1(d). Nonetheless, the Court passed an order conferring on Jamnadas very wide powers and that order not having been challenged by way of an appeal is binding on all the defendants.

(7) Mr. H. R. Gokhale and Mr. K. J. Abhyankar, appearing on behalf of defendants Nos. 2 to 5 and defendant No. 1 respectively, pointed out that in the reply of the defendants (Exhibit 72) it was stated that the plaintiff, Jamnadas as a receiver should recover the dues of the shop and should pay the same as Vasul towards the debts which Jamnadas Radhakisan and Gangadhar Bhagirath shops owed to others and about which suits were pending and it was contended that Hamnadas as a receiver could have only paid that debts of creditors who had filed suits against the partnership. We are not impressed b this argument, because in the second paragraph of the reply it was stated by the defendants that Jamnadas should be appointed receiver for the goods of the partnership and 'in connection with the debts due to and from the partnership', and in the third paragraph they merely referred to the payment of such debts which would obviously have to be paid urgently by reason of suits having been filed against the partnership shops. Besides, it is to be remembered that no such limitation was imposed on the receiver in the order passed on the same day by of the parties to the suit against the frame of the order appointing Jamnadas Jugalkishore as a receiver with all the powers under O. 40, R. 1.

(8) Then it is contended by Mr. H. R. Gokhale that assuming that Jamnadas as a receiver had all the powers under clause (d) of O. 40, R. 1, he could exercise only those powers which vested in the partners themselves and, says Mr. Gokhale, a partner, after the dissolution of a firm, has no power to renew pro-notes or to make acknowledgments so as to save limitation. According to his submission, the powers which the 'owner himself has' referred to in O. 40, R. 1(d), must have reference to the powers of a partner and in the case of a dissolved firm a partner would not have any such power executing pro-notes or acknowledging debts. We are not prepared t accepts this contention that when a receiver is appointed n a suit for dissolution of partnership with full powers under O. 40, R. 1(d), the term 'the owner' in clause (d) of O. 40, R. 1, would refer to individual partners and not to the partnership itself. The dissolution of a firm leads to the dissolution of partnership as between partners, but the partnership itself subsists, though only for the purpose of winding up its business and adjusting the rights of the partners inter se. See Motilal v. Sarupchand 38 Bom LR 1058 : AIR 1937 Bom 81. The receiver appointed by the Court and on whom the powers under cl.(d) of O. 40, R. 1, are conferred will have all the powers of the partnership itself, subject to the superintendence of the Court; and Mr. Gokhale concedes that the partnership as a whole had the right of executing pro-notes and making acknowledgments of debts. It may be that Jamnadas and the other partners acting as ex-partners could not have executed or renewed pro-notes or acknowledged the debts of the pro-notes so as to bind the other partners. But, in this case, Jamnadas represented the partnership itself as a receiver and as such had the power of making payments and executing the necessary documents representing the partnership. The authority of the receiver must depend on the nature of the powers with which he is invested, and as I have already stated, all the powers under clause (d) of O. 40. R. 1, of the Civil Procedure Code were conferred upon Jamnadas, and he executed the pro-notes and made the part-payments by virtue of these powers.

(9) Before I refer to the cases relied upon by Mr. Kotwal, it has to be mentioned that the evidence of Ramnath Hiralal, owner of the plaintiff factory as to the circumstances under which the pro-notes came to be executed and the part payments made by Jamnadas stands uncontradicted. It would appear that the plaintiff and the defendants are close relatives. Jamnadas Jugalkishore was Ramnath's father-in-law one degree removed, while Jamnadas and Radhakisan were cousins. According to the evidence of Ramnath though Special Suit No. 853 of 1927 was going on for 27 years in the Jalgaon Court, he did not file a suit on his debts because of the request made by the defendants, as Jamnadas and Radhakisan were his near relatives. He stated that the defendants did not object to the execution of the various pro-notes in his favour. It would also appear that he was appointed an arbitrator in Special Suit No. 853 of 1927 and acted as such for nearly one year and gave his award in that suit and a decree was passed in pursuance of that award, subject to certain modifications in the trial Court as well as in the High Court. He stated that as the defendants promised to satisfy the debts on the pro-notes he did not file a suit immediately. The plaintiff-firm has produced its accounts and these accounts show the advances made by the plaintiff to the defendants as well as the moneys received from the defendants' shop. The plaintiff Ramnath has not been seriously cross-examined as to the circumstances under which, according to him, the pro-note came to be executed and that part-payment mad by Jamnadas Jugalkishore. This evidence is supported not only by the accounts but by the notice that was given to the defendants on 30th June 1951. None of the defendants went into the witness-box in support of their case. They did not even produce their accounts of the relevant years. It would appear from Exhibit 82 and it accompaniment that only account books of the Samvat Years 1984 to 2004 were shown to the plaintiff and though the account book of the subsequent years were called for they were not produced. It would seem from the notice dated 12th June 1954 that after the defendant showed the plaintiff the accounts up to Samvat years 2002, subsequent accounts were called for but only accounts up to Samvat Year 2004 were shown. It would also appear from certain letter written by the receiver to the plaintiff that the receiver was not able to make satisfactory collections and pay off the dues of the plaintiff. In this connection, Mr. Kotwal invited out attention to Exhibit 61 dated 22nd December 1934, Exhibit 62 dated 4th January 1935 and Exhibit 63 which seems to be of the year 1936. In all these letters, Jamnadas, the receiver. Seems to have assured the plaintiff that as soon as recoveries were made the dues of the plaintiff-factory would be paid. It is clear therefore from the evidence that the plaintiff-factory stayed its hands and did not file a suit against the defendants because of the near relationship of the proprietor of the plaintiff-factory with the defendants and because of the assurances given by the defendants from time to time that he dues of the plaintiff would be paid. In these circumstances, the suggestion made by Mr. H. R. Gokhale that the receiver really exceeded his authority does not seem to be borne out. The receiver had the power to make recoveries and make payments and execute documents on behalf of the partnership and, in our opinion, in the circumstances of this case the receiver does not seem to have acted against the interest of the partnership. Besides it must be remembered that his action was to a certain extent confirmed at the time of the passing of the final decree, and in this connection reference may be made to Exhibit 84, the final decree date 1st March 1949, in which it is stated that the receiver was to pay on behalf of the suit shop the dues of four persons and among them is mentioned the plaintiff-factory Chaturbhuj durgardas Factory, Djarangaon, and it was further ordered that the plaintiff and defendant in that suit should pay half and half to the four creditors 'the amount that may be found due and payable at the foot of the accounts.' It would, therefore, appear that on 1st March 1949 the Court confirmed the action of the receiver regarding the payments made to the plaintiff-factory and no objection seems to have been taken at the time of the final decree to the execution by the receiver of the five pro-notes, and the two part-payments made by him on 25th November 1943 and 24th October 1946 in favour of the plaintiff. The receiver's action in writing off some of the arrears belonging to the partnership seems to be also confirmed in the final decree, and what is still more significant is that, even after the passing of the decree, the appointment of Jamnadas as a receiver of the shop was to continue till the disposal of a certain application made by him and him subsequent discharge. It would, therefore, seem from the evidence on record that the action of the receiver in executing pro-notes in favour of the plaintiff and making payments was not only justified in the circumstances of the case but seems not to have been objected to by the other parties but to have been impliedly confirmed by the Court at the time of passing the final decree on 1st March 1949.

(10) In support of his contention that the receiver in this case was fully empowered to act in the manner that he has done, Mr. Kotwal relied on the statement of law in Halsbury's Laws of England, second edition, Volume 28. at page 59, to the effect that 'where a receiver is empowered to pay debts generally, payment of an instalment may stop the running of the statute.' On the other hand, reliance is placed by the other side on an earlier statement in the same paragraph, viz., that 'a receiver appointed by the Court is not an agent and cannot, therefore, give an acknowledgment of the existence of a debt on behalf of any principal'. That statement, however, is based on a ruling in Whitley v. Lowe (1858) 25 eav. 421. But, in that case, the receiver was only directed to get in the assets of the partnership and to pay the amount of the sums received by him into Court. In Kerr on Receiver, eleventh edition, at page 206, it is stated as follows:-

When a receiver is appointed to manage a partnership concern, he must be guided by the terms of the order of appointment, keeping in mind the general maxim that, as is authority flows from the Court, he must, in every case not covered by the terms of the order appointing him, act under a special order to obtained from the Court.' And at page 223 it is stated that

'if a receiver has power to pay debts, he may pay an instalment of a debt, even though the effect of his doing so may be to stop the Limitation Act from running.'

It is clear that if a receiver has got the power to recover outstandings and pay debts, he must have the power of making a part payment, though the legal effect of such part-payment might be to save limitation Of course, in doing so he cannot exceed his authority which flows from the order appointing him, and in the absence of such a power he can only act provided he obtains the necessary sanction of the Court appointing him. As we have already seen, the receiver in this case had the fullest powers as contemplated under O. 40, R. 1(d), of the Civil Procedure code and those powers covered not only recovery of outstandings and the payment of debts but also execution of necessary documents as if he were the owner of the partnership property.

(11) In Abdulalli v. Ranchodlal 19 Bom LR 86 : AIR 1916 Bom 119, the facts ere that in a suit for dissolution of a partnership, two of the partners were appointed Vahivatdars by the court to 'di vahivat on behalf of all the parties, and not as representatives of separate interests'. A debt of the partnership having fallen due during the pendency of the suit, it was acknowledged by one of the Vahivatars. Subsequent to this acknowledgment, the Court passed a decree dissolving the partnership as from certain date. It was a custom of the firm that one or other of the partners executed acknowledgments from time to time to save limitation. A creditor having brought a suit to recover the debt thus acknowledged, was met with the plea 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. On these facts, this Court held that the effect of the order of appointment being that the to 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 by any member of the partnership during the currency of the business. This case was distinguished y the trial Court and was also sought to be distinguished by Mr. H. R. Gokhale in this Court on the ground that the order of dissolution of partnership in that case was passed after the Vahivatdar had acknowledged the debt. In out opinion, that would not make any material difference to the legal position. The two Vahivatdars were appointed by the Court to 'do vahivat on behalf of all the parties', so that the management of the partnership was vested in the two Vahivatdars. The custom of the firm was that one or other of the partners used to execute acknowledgments in respect of the debts due to the firm. That is why the acknowledgment given by one of the Vahivatdars was held to be binding on the partnership. In our opinion, this case supports the argument of Mr. Kotwal.

(12) Then reliance is also placed on Lakshumanan v. Sudayappa AIR 1919 Mad 816: 35 Mad LJ 571, in which it was held that an acknowledgement of debt due by a firm under dissolution made by the receiver of the firm was valid to save limitation. It was observed in this case that a receiver may be an agent authorised to made an acknowledgment within the meaning of S. 19. Explanation 2, of the Limitation Act and that the language of the section was general enough to include an agent appointed either by statute or by Court, provided he was authorised under the law to make acknowledgments. In that case, the receiver was appointed to take charge of the property of a certain firm, pending the decision of the suit for dissolution of partnership, with power to collect outstandings and do all things necessary for the realisation and preservation of the assets of the said firm; and it was held that such a receiver was entitled to make acknowledgments, if at the time the acknowledgements were made, they were necessary for the preservation of the firm's assets. It is to be noticed that in the Madras case the receiver was not specifically empowered to make payments put was empowered only to do all things necessary for the preservation of the assets of the firm, and yet it was held that the receiver's act in making acknowledgment may be necessary for the preservation of the estate. As, however, there was no evidence to show whether the acknowledgments made by the receiver were necessary, a finding was called for from the trial Court, and it appears from the report of the case that ultimately the finding was received from the Court below that the acknowledgements by the receiver were acts necessary for the preservation of the estate, and that finding was confirmed by the Madras High Court. In that case also it appears that the receiver was appointed in respect of the firm before the order of dissolution. But that as I have already stated, would not make any difference, because the receiver acts on the authority conferred on him by the order of his appointment; and if his acts fall within the powers conferred on him, the mere fact that he is acting as a receiver of the partnership which had already been dissolved, ought not to make any difference in the legal position.

(13) In Krishnayya v. Seetharamayya AIR 1937 Mad 764 a partner was appointed as receiver, in a suit for dissolution of partnership for collecting the assets of the partnership and for payment of the debts due to others and to do other acts. During his receivership, the partner wrote a letter signed by him, acknowledging liability of the firm in respect of a certain debt, with a view to preventing the creditor from filing a suit and thus to avoid unnecessary expense to the partnership; and it was held by the Madras High Court that as the receiver was authorised to make part payment of debts due by the firm, which had the effect of stopping the statute of limitation from running, he must be deemed to be acting within his power in acknowledging a debt for and on behalf of the partners of the firm and the acknowledgment of liability was therefore operative even as against the other partners. On the facts of this case, it is not clear whether at the time the receiver made the acknowledgments, the partnership had been dissolved or not by the order of the Court. This case, however, clearly supports the contention of Mr. Kotwal.

(14) Our attention has been also drawn to the ruling in Baij Nath Ram Goenka v. Hem Chunder Bose, 10 Cal WN 959 wherein it was held that a receiver appointed in an administrative suit instituted by a creditor of a deceased person against this executor is not an agent of the executor within the meaning of section 19, Limitation Act, but is the agent and an officer of the Court. The case, however, does not assist the defendants because in the case another creditor of the estate had applied to rank as such and the receiver submitted a statement in the presence of the executor admitting the debt due to the applicant, but the court after some time directed the applicant to bring a fresh suit. In that suit that other creditor was met with the plea that the claim was barred by limitation and the court held that in the face of the admission made in his presence by the receiver, the executor was estopped from setting up the par of Limitation. This case, therefore, is not against the contention raised on behalf of the plaintiff.

(15) Mr. H. R. Gokhale tried to rely on an observation of Mr. Justice B. J. Wadia in 38 Bom LR 1058: AIR 1937 Bom 81 where the learned Judge stated that a partner had no authority to acknowledge a debt, or by his act or admission to involve his co-partners in any new legal liability. In that case, in the winding up of a dissolved firm, a partner had tried to create a novation in respect of a debt owing to the firm, and it was held that it was not permissible to the partner, on his own authority, to allow, by means of a 'havala', moneys due to the partnership by one firm to be paid by another firm with which his co-partners had no concern. This case is clearly distinguishable from the fact of the present case, because it was not concerned with the powers of a receiver, and the partner in accepting the 'havala' of another firm was merely acting as a partner and not as a receiver.

(16) In our opinion, therefore, the position in law seems to be that if a receiver is authorised to recover outstanding and make payments and to execute documents on behalf of the partnership, then he would be entitled not only to execute and renew pro-notes but to make part payments so as to save he bar of limitation, and in this case that is what the receiver Jamnadas has done. The view of the learned Judge, therefore, that Jamnadas had no authority to pass pro-notes or to renew them as to acknowledge the debt or to make part payments so as to save limitation, and that therefore the suit was not in time is incorrect.

(17) Then there is other point which was urged by Mr. H. R. Gokhale and Mr. Abhyankar in connection with the payment of R. 50 by Jamnadas on 4th October 1949, and the contention raised was that that payment was not made by Jamnadas in his capacity as a receiver, and for this reliance is placed on the three endorsements made on Exhibit 65, the pro-note dated 21st December 1940. As I have already stated, after this pro-note was executed by Jamnadas as a receiver Rs. 100 were paid by him on 25th November 1943 and the endorsement is signed by him in his capacity as a receiver. Another amount of Rs. 100 was paid by him on 24th October 1946 and an endorsement in respect of that was also signed by him as a receiver, but the amount of Rs. 50 which was paid by Jamnadas on 4th October 1949 was endorsed by him on the pro-note (Exhibit 65) and that endorsement bears only his signature and it is not described as being made in the capacity of a receiver. It was also urged that the final decree having been passed on 1st March 1949, the receivership of Jamnadas came to an end, and that is why when he made the payment on the October 1949 he has not described himself as a receiver. And Mr. H. R. Gokhale further contended that it was for the plaintiff to prove that on 4th October 1949 when Jamnadas paid R. 50 he acted and could act as the receiver of the partnership. Now, in this connection it must be stated that in the plaint it was distinctly stated in paragraph 5 that Jamnadas Jugalkishore, in the capacity of receiver, paid Rs. 50 to the plaintiff of 4th October 1949 in respect of the pro-note dated 21st December 1940. To this the reply of defendants Nos. 2 to 5 in the written statement (Exhibit 30) was that on 4th October 1949 the deceased Jamnadas had no longer remained a receiver and the signature put by him on that date was not n the capacity of a receiver. The learned Judge seems to have accepted the case of the defendants and has stated that

'With the passing of the final decree the appointment of Jamnadas as a receiver must have come to an end. Automatically the powers conferred on him by the Court at Exhibit 71 must have also come to and.'

The learned Judge, however, seems to have lost sight of the recitals in the final decree (Exhibit 84) to which I have already referred, wherein it was distinctly stated as follows:

'As per application Exhibit 9 the plaintiff No. 1 was appointed receiver of the suit shop. Even after the passing of the decree, the appointment of Jamnadas as a receiver of the shop Jamnadas Radhakisan shall continue till the disposal of his application Exhibit 1083 and his subsequent discharge. This decree shall not prejudice the rights and responsibilities f the receiver.'

It is clear, therefore, that under the final decree itself, the receivership of Jamnadas was not terminated and he was not given a discharge.

(18) Mr. Kotwal argued that a receivership could not come to an end without an order of discharge by the Court which appointed the receiver and in support of his argument he relied on Rami Reddi v. Subbaramiah ILR 52 Mad 967: AIR 1930 Mad 67 Mr. Kotwal stated that there was no order of discharge in the present case and none produced by the Defendant. Mr. Kotwal also invited out attention to paragraphs 189 and 191 of Halsbury's Laws f England, second edition, Volume 28, at pages 93 and 94, where it is stated that

'When a receiver has been appointed on an interlocutory application without any limit of time, it is not necessary to provide for the continuance of his appointment in the final judgment. The silence of the judgment does not operate as a discharge of the receiver or determination of his powers,' and further that with certain exceptions, a receiver can only be discharged by an order of the Court. Reference may also be usefully made in this connection to the statement of the law in the Americal Corpus Juris Secundum. Vol. 75, S. 93, at pages 739-740, where it is stated as follows:-

'The mere termination of the suit by abatement, dismissal, discontinuance, or otherwise does not ipso facto operate to discharge the receiver; he is not relieved from his duties and responsibility to the Court, such as the duty of holding and protecting the property in his hands as receiver, until it shall be taken from his possession by an order of the Court: he may be continued when it is necessary for the protection of rights properly involved and brought to the cognizance of the Court; and where rights of other creditors are acquired under a proceeding in which a receiver is appointed, plaintiff has no absolute right to discontinue the proceedings and discharge the receiver: it being proper for the Court to continue the receiver if the circumstances are such as to require this course for the protection of the interests if such parties.'

It is further stated in S. 94, at page 740:

'A receiver should not be discharge until he has fully complied with the orders of the Court. Thus, where the Court has ordered the receiver to pay certain items of indebtendness, it will not discharge him until after he has complied with the order.'

(19) As we have already seen, in the decree a provision was made for the payment of four creditors, including the present plaintiff, and the receiver was required to pay on behalf of the suit shop the four creditors mentioned and it was further stated that the debts of these creditors including the plaintiff-factory were to be paid half and half by Jamnadas, the plaintiff in that suit, and the defendants. What is more, the final decree itself continued Jamnadas as the receiver. It could not be said therefore that Jamnadas could not have signed as a receiver in endorsing the payment of Rs. 50 on the pro-note Exhibit 65 on 4th October 1949 as he had ceased to be a receiver. The account books of the plaintiff show that Rs. 50 were credited on 6th October 1949 as having been paid by Jamnadas as a receiver of Radhakisan Jamnadas shop on 4th October 1949. Ramnath, the proprietor of the plaintiff-factory, stated on oat that Jamnadas was appointed in 1927 to 1950 in which year he died. Now, this statement of his , on which there has been no cross-examination, shows that Jamnadas continued to work as a receiver till his death in 1950. He has also stated that Rs. 50 were paid by Jamnadas as a receiver, and as Jamnadas was a receiver he did not think it necessary to get his signature as such received in connection with that endorsement. In this he is supported by the extract from the daily cash book (Exhibit 64) which shows that Rs. 50 were credited as having been received from Jamnadas Jugalkishore, the receiver of the shop Radhakisan Jamnadas, in respect of the pro-note. on 4th October 1949. The pro-note Exhibit 65 itself was executed by Jamnadas as a Receiver. As against this, the defendants have led not evidence whatever and have scrupulously avoided the witness-box. We, therefore, discharge with the finding of the learned trial Judge that the plaintiff has failed to prove that Jamnadas was a receiver of the shop 'Jamnadas Radakisan' on 4th October 1949.

(20) In view of these findings, we must hold that the plaintiff's claim on the basis of the pronote (Exhibit 65) is within time and a decree as claimed by him will have to be passed against defendants Nos. 1 to 5.

(The rest of the judgment is not material to this report.)

(21) Appeal allowed.


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