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Gordhandas Baldeodas Vs. Bhulabhai Ranchhoddas - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 1873 of 1930
Judge
Reported inAIR1932Bom316; (1932)34BOMLR623
AppellantGordhandas Baldeodas
RespondentBhulabhai Ranchhoddas
Excerpt:
.....the defendant firm was dissolved on may 11, 1926, being 2ndchaitra samvat 1982 as alleged by them. the dissolution must be established as an act of the parties, or from circumstances leading clearly to such an inference. the defendants, in my opinion, have failed to prove that, in the absence of such notice, the partners in the plaintiffs' firm or either of them had notice of the alleged dissolution. 358 i am asked to infer as was done in that case from the close relationship existing between maneklal and mohanlal that mohanlal was well aware of the dissolution of the firm, the facts found in that case were much stronger than those which have been proved to exist in the present case......each other frequently maneklal must have informed mohanlal of the dissolution of the defendant firm, maneklal has not been called to give evidence in this case. mohanlal has denied that maneklal ever informed him of the dissolution of the firm. the onus was on the defendants to prove that notice of dissolution was given to the plaintiffs, it is common ground that no public notice was given of the dissolution of the firm. the defendants, in my opinion, have failed to prove that, in the absence of such notice, the partners in the plaintiffs' firm or either of them had notice of the alleged dissolution.6. reliance is placed on behalf of the defendants on the case of premji ludha v. dossadoongersey i.l.r (1886) bom. 358 i am asked to infer as was done in that case from the close.....
Judgment:

Mirza, J.

1. The plaintiffs, who are shroffs and merchants, claim from the defendants a sum of Rs. 3,274-7-3 with interest on Rs 3,128-5-3 at six per cent, from August 10,1930, till judgment. The claim is made in respect of an account which subsisted between the two firms. BhulabhaiChhotalal, who was a partner in the defendant firm, has appeared on behalf of the firm and raised certain defences to the suit. The other partner Maneklal has not appeared and has evinced no interest in these proceedings.

2. Exhibit A shows that the account which subsisted between the two firms was in the nature of a mutual, open and current account, That account is for the Samvat year 1982. According to the evidence of Gordhandas Baldeodas, Maneklal made up the accounts of his firm with him and executed a writing Exhibit B, whereby he acknowledged the indebtedness of the defendant firm on an adjustment of account up to date in a sum of Rs. 3,096-4-6 and agreed on behalf of the defendant firm that the amount so found due should be paid to the plaintiff's by yearly instalments of Rs. 500, the first instalment being payable on October 26, 1927, and in default of payment of the first instalment the plaintiffs were tobecome entitled to recover the whole amount together with interest. Default was committed in payment of the first instalment and the plaintiffs are now suing for the whole amount due to them under this agreement, Since the execution of Exhibit B, the defendants have paid to the plaintiffs a sum of Rs. 25 in cash on January 9, 1928, and a sum of Rs. 500 being the proceeds of a hundi on January 10, 1928. The hundi and the cash, according to the evidence of Gordhandas Baldeodas, were sent by Maneklal of the defendant firm with a messenger who brought with him a covering letter which was in the handwriting of Maneklal and was on behalf of the defendant firm giving instructions that the amount of the hundi when realised as well as the sum of Rs. 25 paid in cash should be credited to the defendants in the defendants' account with the plaintiffs. This letter according to Gordhandas is missing. The date of Exhibit B is October 16, 1926. The accounts, ExhibitsD.E.F. and G show that the defendants' account in the plaintiffs' books has remained open but with the exception of the two credit items of Rs. 25 and Rs. 500 in the account for Samvat year 1984, balances have been carried forward from year to year with the addition of interest, there having been no fresh transactions. The character of the account as a current, mutual and open account seems to have been continued at any rate till 1984 Samvat when there are credit items in addition to debit items in the account. Exhibit H is a notice addressed by the plaintiffs to the two partners in the defendant firm calling upon them to pay up the sum of Rs. 3,070-4-0 with further interest. This letter is dated July 2 and 3, 1929. To this letter there is no reply by either partner.

3. The main contentions on behalf of the defendant firm are that at the date of Exhibit B the defendant firm was dissolved to the knowledge of the plaintiffs and that Maneklal had noauthority express or implied, to bind the defendant firm by an acknowledgment of the nature of Exhibit B, It was further contended that at the date of the dissolution the defendant firm handed over to the plaintiffs the remaining goods they had with them of the value of Rs. 500 and three decrees of the Court of Small Causes in their favour against third parties in liquidation of the plaintiffs' claim against the defendants. Gordhandas Baldeodas stated that the particulars of the plaintiffs' claim annexed to the plaint were correct. He was not cross-examined with regard to the correctness of the account and it may be taken as conceded that the accounts for which the plaintiffs are suing are correct. The defendants also, contend that the plaintiffs' claim is time-barred.

4. The defendants, in my opinion, have failed to prove that the defendant firm was dissolved on May 11, 1926, being 2ndChaitra Samvat 1982 as alleged by them. The defendants rely upon certain account books which they have produced showing that they were not written up after the 2nd Chaitra 1982. The rough cash book has not been produced. The fair cash book shows that it was not written up from day to day but from month to month. There is nothing in the books of account to show that a formal dissolution of the firm had been effected or its affairs finally wound up. Bhulabhai Chhotalal states in his evidence that the shop where the business of the defendants was being carried on was originally at Bhuleshwar. On March 14, 1926, it was shifted to Laxmi Narayan building where it continued for two months and three days. After the business was stopped Maneklal hired the business premises for his own residence and continued there up to May 11, 1926. The onus was on the defendants to prove the dissolution, In my opinion they have not discharged the burden. The dissolution is said to have taken place about the middle of a commercial year which is not very usual. It is contended that as the defendants had become defaulters and were unable to pay their debts their business became ipso facto closed. A dissolution of a partnership cannot necessarily be inferred from a circumstance that it is unable to pay its growing liabilities. The dissolution must be established as an act of the parties, or from circumstances leading clearly to such an inference. I am unable to infer a dissolution from the mere circumstance, if that circumstance can be said to be proved, that the business was stopped after May 11, 1926. According toMohanlal Chhotalal he nbticed the closing of the shop for the first time at the end of Samvat year 1982 or the beginning of 1983corresponding with November 4/5, 1926. Both he and his partner Gordhandas Baldeodas have stated that neither of them had any notice of the dissolution at the date of Exhibit B.

5. Reliance is placed on behalf of the defendants on Section 21(2) of the Indian Limitation Act by which it is provided that no partner will be chargeable by reason only of a written acknowledgment signed by any partner. No doubt, if the knowledge of the alleged dissolution could be brought home to the plaintiffs, they would not be allowed to rely upon Exhibit B as againstBhulabhai Chhotalal without proving that Maneklal had express authority from Bhulabhai to pass the acknowledgment, The defendants want the Court to infer that because Maneklal and Mohanlal were brothers and were meeting each other frequently Maneklal must have informed Mohanlal of the dissolution of the defendant firm, Maneklal has not been called to give evidence in this case. Mohanlal has denied that Maneklal ever informed him of the dissolution of the firm. The onus was on the defendants to prove that notice of dissolution was given to the plaintiffs, It is common ground that no public notice was given of the dissolution of the firm. The defendants, in my opinion, have failed to prove that, in the absence of such notice, the partners in the plaintiffs' firm or either of them had notice of the alleged dissolution.

6. Reliance is placed on behalf of the defendants on the case of Premji Ludha v. DossaDoongersey I.L.R (1886) Bom. 358 I am asked to infer as was done in that case from the close relationship existing between Maneklal and Mohanlal that Mohanlal was well aware of the dissolution of the firm, The facts found in that case were much stronger than those which have been proved to exist in the present case. That case was distinguished by me inKrishnabai v. Varjivandas (1929) 32 Bom. L.R. 201 with reference to its bearing on Section 264 of the Indian Contract Act. I am unable to agree that the analogy of Premji Ludha v. Dossa Doongersey is applicable to the facts of the present case. It has also been contended on behalf of the defendants that even in the absence of a notice of dissolution,Section 21(2) of the Indian Limitation Act would be an effective bar to this suit. The case of Premji Ludha v. Dossa Doongersey is an authority so far as this Court is concerned for the proposition that the meaning to be given to the word 'only' in Section 21(2) of the Indian Limitation Act is that it must also be shown that the partner signing the acknowledgment had authority, express or implied, to do so and that in a going mercantile concern such agency is to be presumed as an ordinary rule. If further authorities were needed in support of the proposition I would refer to Dalsukhram v. Kalidas I.L.R. (1901) Bom. 42 : 3 Bom. L.R. 484 and Gadu Bibi v.Parsotam I.L.R. (1888) All. 418 According to the Madras decisions, evidence of authority from the other partners seems to be necessary and may not be presumed even in a mercantile concern: seeValasubramania Pillai v. S.V.R.R.M. Ramanathan Chettiar I.L.R. (1908) Mad. 421 Shaik Mohideen Sahib v. Official Assignee of Madras I.L.R. (1911)Mad. 142 K.R.V. Firm v. Seetharamaswami I.L.R. (1913) Mad. 146 and Veeranna v. Veerabhadraswami I.L.R. (1918)Mad. 427 In this connection I am bound by the authority of our own Courts, In the absence of proof of a dissolution and knowledge of such dissolution on the part of the plaintiffs, I must hold that so far as the plaintiffs are concerned the defendant firm must be deemed to have been a going mercantile concern at the date of Exhibit B, and that Maneklal who signed Exhibit B in the name of the defendant firm must be presumed to have had authority from his partner Bhulabhai Chhotalal to sign the acknowledgment on behalf of the firm.

7. The suit, in my opinion, is otherwise in time. The suit is based upon Exh, B, and the cause of action under Exh. B did not arise until default was made in the payment of the first instalment which was made payable on October 26, 1927. The plaint in this suit was filed on August 28, 1930, which is within three years of that date. If the account between the parties is deemed to be current, mutual and open, which, in my opinion, it is, the suit would still be in time as that mutual, open and current account was continued up to Samvat 1984 Further, if the suit can be said to be in respect of the amount found due as under Exh. B, there was a part-payment of Rs. 525 in Samvat year 1984, and I see no reason to disbelieve the evidence of Gordbandas Baldeodas that the hundi and cash sent at the time were accompanied by a letter in the handwriting of Maneklal which letter has since been misplaced.


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