1. The plaintiff brought a suit in the Court of the Munsif, Civil Station, for the recovery of Rs. 3,000/- from the defendant. His case was that he and the defendant agreed to run a taxi in partnership and for that purpose obtained a Ford V '8' Sedan on pledge for Rs. 8,500/- from one Joseph. The plaintiff is said to have contributed Rs. 3,000/- and the defendant Rs. 5,500/-. They began to ply the taxi for hire from 10-3-1945; the plaintiff was looking after the service and paying the defendant a ten annas share of the profits. The terms of the partnership were later on reduced to writing in the form of an agreement Ex. A dated 1-7-45 which was prepared in duplicate with a copy to each party. Subsequently the defendant is said to have sent for the car to his house on 3-12-46 and returned it to Joseph and collected from him the entire sum of Rs. 8,500/- without the knowledge or consent of the plaintiff. On demand by the plaintiff the defendant is said to have agreed to pay him Rs. 3,000/- being his part of the amount of the sum received from Joseph but failed to do so and hence the suit.
2. The defendant completely denied that he ever entered into a partnership arrangement with the plaintiff, the contribution by plaintiff of Rs. 3,000/- or the subsequent promise to pay the same to the plaintiff. The plaintiff had some time in June 1946, approached the defendant and invited him to do jointly with him, some business of importing leather goods and in that connection he requested the defendant to sign some typewritten paper on a false representation that such a deed was necessary to get goods intended for that partnership. This suit had been filed because the defendant who used to accommodate the plaintiff with some advances for his business now and then stopped doing so. He further pleaded that the suit was not maintainable as the alleged firm was not registered as required by law. The learned Munsif decreed the suit. He held that the partnership arrangement put forward by the plaintiff was true, that exhibit A was genuine and was not obtained under the circumstances pleaded by the defendant and that the latter had promised to pay the plaintiff Rs. 3,000/- as stated in the plaint. He further held that the suit as brought was maintainable and that the plaintiff was entitled to recover the sum as claimed. On appeal however by the defendant, the District Judge, Civil Station, Bangalore set aside that judgment. He did not record his findings on the issues of fact; but he held that the suit was not maintainable. The plaintiff has come up in second appeal.
3. Sri K.N. Srinivasan, learned counsel for the appellant and Sri S. Govinda Rao, learned counsel for the respondent, have argued the appeal fully before me.
4. For the appellant it is contended that the story of the respondent that he executed the suit agreement, Exhibit A, under the circumstances pleaded by him is thoroughly improbable and unworthy of credit. I think there is considerable force in that contention.
(After discussing evidence His Lordship concluded as follows:) The plaintiff has, I think, therefore clearly proved the partnership and the subsequent promise of the defendant to pay Rs. 3000/- as found by the learned Munsiff.
5. It is contended by Sri S. Govinda Rao, the learned counsel for the respondent, that the plaintiff should have brought a suit for dissolution of the partnership and for accounts and that the suit for recovery of a specific sum of money is not maintainable against an alleged partner. The firm was constituted for a single and particular undertaking or venture. It has come to an end as the taxi has ceased to belong to the firm or available for running on partnership basis as a result of the defendant's own action. The defendant does not say there is any subsisting partnership to be dissolved by the court or that there are any accounts to be gone into between them. In fact he denies the very existence of a partnership. In these circumstances it appears meaningless to expect a suit to be filed for dissolution and taking of accounts.
6. Moreover the plaintiff does not claim the sum of Rs. 3000/- only as on a dissolution of the partnership. His case is that subsequent to the dissolution, which the defendant himself brought about, the defendant had received from Joseph the full amount for which the taxi had been pledged to both of them and that the defendant is bound to pay the plaintiff the sum which he had advanced towards the pledge and that the defendant has also promised to so pay it.
7. Shri Govinda Rao next contends that the plaintiff's suit even on the basis of such a claim is barred under Section 69(1) of the Indian Partnership Act as has been held by the learned District Judge. Section 69(1) provides that no suit to enforce a right arising from a contract or conferred by that Act shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. In this connection reliance is placed on -- 'Patel S.H. v. Hussein Bhai Mahomed', AIR 1937 Bom 225, where the plaintiff and defendant were partners in a business carried on in a firm name. The partnership had been dissolved. Subsequent to the dissolution the income-tax authorities made an assessment against the plaintiff on account of the firm.
The plaintiff paid the entire tax and sued the defendant for contribution. Beaumont C.J. held that the language of sub-sections (1) and (2) of Section 69, Partnership Act, is wide enough to cover suits relating to a dissolved firm and sub-section (1) covers a suit by a plaintiff suing in respect of a right vested in him or acquired by him as a partner in a firm and it is not essential that the firm should be actually in existence at the date when the suit was instituted. He however observed that had the assessment been made on the plaintiff and defendant by name so that the assessment showed on the face of it that the defendant was liable for a part of the amount the plaintiff might have been entitled to recover the excess amounts he had paid on behalf of the defendant under Section 70 or Section 69 of the Contract Act. But as the case stood the plaintiff had to base his claim on the relationship arising out of the partnership and he could not therefore recover.
In that case there was also no agreement relied on between the partners by which one of them promised to pay the sum to the other nor was it in the nature of an ascertained liability after or at the time of the dissolution. The claim for payment was therefore construed in that case as based on the relationship of partnership and arising directly under the provisions of the Partnership Act. That case was followed by Grille J. of the Nagpur High Court in -- 'Chhotelal Nanakram v. Gopaldas Gulabdas' . He held that the words in Sub-section (1) 'suing as a partner in a firm' include a suit on a cause of action which is based on a right acquired solely as a partner in a firm, and hence if a firm is unregistered, no suit for money on the basis of a transaction in the unregistered partnership can be brought.
The plaintiff claimed in that case that the partnership had been dissolved and that on his own calculation the defendant owed him a specified sum of money as the latter's share of the loss. This sum, the learned Judge pointed out, could only be ascertained on the terms of the partnership. An account was apparently necessary to be taken between the partners before that liability could be ascertained. In -- 'Bajranglal Maniram v. Anandilal Ramchandra', AIR 1944 Nag 124, a Bench consisting of Grille C.J. and Puranik J. were dealing with a case where the plaintiff stated that on the dissolution of a partnership by efflux of time, there had been a settlement of account and the total loss in the partnership ascertained. The liability of the defendant who owned a four anna share in the partnership had also been found at a certain sum. The defendant had accepted the settlement of accounts and the amount of loss payable by him and agreed to pay it and had also made some part payments. When he was sued for the balance he raised the bar of section 69(1).
Their Lordships having come to the conclusion that the settlement of accounts between the partners of a dissolved partnership accompanied by a promise to pay the amount found due affords a fresh cause of action on which a suit could be based, observed that Section 69(1) had no application to such a suit. The suit was not one by or on behalf of any person suing as a partner in a firm but one by a person entitled to recover an amount on the basis of a settled account. As such it was not governedby section 69(1). The terms of the partnershipno longer entered into the consideration in suchsuit and the fact that the partnership was anregistered (unregistered?) firm had no bearingon the suit as laid.
-- 'ILR (1940) Nag 130' was distinguished by them as being a suit brought on the basis of the partnership transaction and not based _on a subsequent or different cause of action arising after the dissolution. Their Lordships referred with approval and followed -- 'Abdul Subhan v. Abdul Ravoof', AIR 1942 Mad 707, where it has been laid down that Section 69 has to be strictly construed and that the bar of that section does not extend to suits for recovery of money due on a contract entered into after dissolution and the taking of accounts. -- 'AIR 1937 Bom 225' and -- 'Appaya Nijlingappa v. Subrao Babaji', AIR 1938 Bom 108 have also been distinguished in -- 'AIR 1942 Mad 707' which last case is strongly relied on by the appellant. That was a suit for money agreed to be paid by one partner to another under an agreement entered into between the partners after the dissolution or at the time of the dissolution under which some definite amount was payable by one partner to another.
8. I think the present is an even stronger case than that of the plaintiff in -- 'Abdul Subhan v. Abdul Ravoof', AIR 1942 Mad 707 and -- 'Bajranglal Maniram v. Anandilal Ramchandra', AIR 1944 Nag 124. Here both the partners had taken a car on pledge, the plaintiff advancing Rs. 3000/- and the defendant Rs. 5500/-. They apparently continued to be co-owners of the taxi to the extent of the amounts advanced by each. When one of them recovered from the pawnor the full amount for which it had been pledged, he could only hold the plaintiff's share of it for and on his behalf and was bound to pay him the amount which belonged to him. It is not even the case for the defendant that the car or its proceeds were part of the capital of a partnership. I think therefore there is no substance in the contention either that the suit is not maintainable in the form in which it is brought or that Section 69(1) of the Indian Partnership Act is a bar to It.
9. In the result, this appeal is allowed, the judgment and decree of the learned District Judge_ are set aside and those of the learned Munsiff restored with costs throughout.
10. Appeal allowed.