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K. Venkatasubbamma and ors. Vs. K. Subba Rao Nuna Venkatarami Setti and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberCivil Revn. Petn. Nos. 107 and 194 of 1961
Judge
Reported inAIR1964AP462
ActsPartnership Act, 1932 - Sections 28(2), 42 and 47; Limitation Act, 1908 - Sections 3, 19 and 20; Provincial Small Cause Courts Act, 1887 - Sections 25
AppellantK. Venkatasubbamma and ors.
RespondentK. Subba Rao Nuna Venkatarami Setti and ors.
Appellant AdvocateN. Subba Reddy, Adv.
Respondent AdvocateA. Gangadhara Rao and ;Sitaramaraju, Advs.
Excerpt:
.....of partner - partnership business continued by other managing partners - legal representative of deceased partner not liable for acts done by remaining partners - legal representative not bound by acknowledgment or payment towards debt subsequent to death of partner. - - but it is thought to be still good law applicable to the limitation act, 1939, and notwithstanding the repeal of section 14 of the mercantile law amendment act, 1856, that after a dissolution a part payment by a continuing or a surviving partner will not prevent a retired partner or the executors of a deceased partner from availing themselves of the statute; 9. the learned sub-judge further found that the endorsements were made in the ordinary course of partnership business and in the process of its winding up and..........was brought not only against the partners of the firm but also the legal representatives of the deceased partner, ramalingaiah. except 2nd defendant, no other partner contested the suit. of course defendants 7 to 9, the legal representatives of ramalingaiah, had also contested the suit. these defendants disputed the very authority of the 1st defendant for contracting debts and executing the suit promissory note. they further challenged his competence to make endorsements of payment thereon so as to bind the other partners. on the evidence, the learned subordinate judge came to the conclusions as under: that the 1st defendant had borrowed the pronote amount for the purposes of partnership business, that the pronote executed by the 1st defendant was in fact scribed and attested by some.....
Judgment:
ORDER

1. These two revision petitions are from the order dated 10-10-1960 passed by the Subordinate Judge, Nellore in S. C. No. 160/1959. That suit was on the foot of a pronote elated 10-5-1951 executed by the 1st defendant and scribed and attested by two other partners of the firm 'Nune Venkatarami Setti and Company'. The pronote debt was contracted for the purposes of partnership business. A few payments were made by the partners towards the said pronote. One of the attestors Kochi Ramalingaiah, the father of defendants 7 and 8 and husband of 9th defendant died on 20-1-1955. With that the partnership stood dissolved in the eye of law. But its business nevertheless continued to be carried on by the managing partner. Even after the death of Ramalingiah, some payments were made towards the said pronote. These payments with which we are concerned for the purposes of the case were made by the 1st defendant who had also made endorsements on the pronote to that effect. These are Exs. A.8 and A.9 and are dated 27-12-1955 and 2-12-1955 respectively. If these two payments are ignored, evidently the suit on the foot of the pro-note brought on 9-7-1959 would be barred by limitation. This suit was brought not only against the partners of the firm but also the legal representatives of the deceased partner, Ramalingaiah. Except 2nd defendant, no other partner contested the suit. Of course defendants 7 to 9, the legal representatives of Ramalingaiah, had also contested the suit. These defendants disputed the very authority of the 1st defendant for contracting debts and executing the suit promissory note. They further challenged his competence to make endorsements of payment thereon so as to bind the other partners. On the evidence, the learned Subordinate Judge came to the conclusions as under: that the 1st defendant had borrowed the pronote amount for the purposes of partnership business, that the pronote executed by the 1st defendant was in fact scribed and attested by some of the other partners; and that the 1st defendant had authority to contract these debts. He further opined that the 1st defendant was managing the partnership business which was allowed to continue even after the death of Ramalingiah, that he didnot make payments as per endorsements Exs. A.8 and A.9 in the ordinary course of the said business and in its process of winding up and that such acknowledgments of payment should in law bind the other partners. In this view, he decreed the suit as against all the defendants.

2. The main point urged by Mr. N. Subbareddi, learned counsel for the petitioners in C. R. P. No. 107/1961 is that the learned Subordinate Judge erred in passing a decree against the legal representatives of the deceased notwithstanding the clear provisions of Section 45 of the Partnership Act. It is unexceptionable that in the absence of a contract to the contrary the death of a partner results in dissolution of the partnership. Section 28(2) provides that where after a partner's death the business is continued in the old firm's name, the continued use of that name or of the deceased partner's name as a part thereof shall not of itself make his legal representative or his estate liable for any act of the firm done after his death. Of course under the clear provisions of Section 47, after the dissolution of the firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners, subject of course to the proviso of that section, continue notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution. Section 45 provides that notwithstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution, until public notice is given of the dissolution. But the proviso to that section makes it abundantly clear that the estate of a partner who dies or who is adjudicated an insolvent, or of a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm, is not liable under the Section for acts done after the date on which he ceases to be a partner. It follows therefore that whatever may he the case with regard to the other partners, the legal representatives of a deceased partner and also some others specifically referred to in the proviso stand on a different footing in relation to the acts done by any of the partners after the dissolution of the firm whether or not public notice is given of the dissolution. That being the case, the legal representatives of a deceased partner cannot be bound by any acknowledgment or payment made towards the debts subsequent to the death of the partner, even though it may be said that the partner as the agent of the firm had implied authority under Section 47 of the Act to acknowledge a debt. This position in law has been discussed and authoritatively laid down in Abdul Gani v. Periyaswami Chetty and Co., : AIR1960Mad495 following the dictum in Rajagopala Pillai v. Krishnasami Chetti, 8 Mad LJ 261. The learned Judges therein observed that after one partner dies, there cannot subsist any relationship of partnership so as to bind the minor legal representatives of a deceased partner and so Section 47 cannot be invoked in a case of that description. While referring to Section 45 they observed that the proviso may be rightly invoked in a case where the act relied upon for holding the estate of a deceased partner liable is an act done after the date on which the partnership ceased. While citing with approval the view taken in Rajagopala Filiai's case. 8 Mad LJ 261 (supra) which was also followed by the Nagpur High Court in Sheoparain v. Babulal, AIR 1925 Nag 268 the learned Judges referred to thefollowing passages of Lindley in his book on Partnership:

'But it is thought to be still good law applicable to the Limitation Act, 1939, and notwithstanding the repeal of Section 14 of the Mercantile Law Amendment Act, 1856, that after a dissolution a part payment by a continuing or a surviving partner will not prevent a retired partner or the executors of a deceased partner from availing themselves of the statute; and the same is true of an aknowledgment.' (Lindley, 11th Edition at p. 338).

The learned Judges distinguished the Bombay decision in Babu v. Dayambai, AIR 1935 Bom 357 cited before them which was based on the provisions of the Contract Act, and held that the L. Rs. of the deceased partners are not bound by the acknowledgment made by the remaining partners after the death of the deceased partner. I respectfully agree with this view based as it is on the clear provisions in Section 45. It is manifest therefore that defendants 7 to 9 who arc the legal representatives of Ramalingaiah cannot be bound by the payments made by the managing partner after the death of the said Ramalingaiah.

3. The case however is different with the 2nddefendant who was himself a partner. It is not denied that no public notice was given with regard to dissolution. On the evidence adduced, the trial Court came to the conclusion that even after the death of Ramalingiah the business of the firm was continued by the 1st defendant who in that capacity made the endorsements of payments, Exs. A.8 and A.9. The learned Sub-Judge further found that the endorsements were made in the ordinary course of partnership business and in the process of its winding up and such payments would therefore hind the other partners as well under theclear provisions of Section 47 of the Partnership Act. In this state of affairs, defendant No. 2 cannot escape his liability in common with the other partners. Of course, defendants 7 to 9 cannot be made liable.

4. Though plaintiff is thus not entitled to any relief against defendants 7 to 9, it is nevertheless urged that the mistake of the trial Court in decreeing the claim against defendants 7 to 9 cannot be corrected in revision as it is attributable only to misapplication of law of limitation and has not resulted in miscarriage of justice. For this proposition, he relies on the decision of Pedda Malliah v. Adigopala Barahmayya, : AIR1960AP89 where Seshachalapathi, J., observed thus:

'It had been repeatedly held that interference with the decision of Court under Section 25 of the Provincial Small Cause Courts Act is wholly discretionary, and should not be resorted to except in cases where justice has failed. I am fortified in this view by the decision of a very eminent Judge B. K. Mukherjea (as he then was). The learned Judge has held in Govinda Chandra v. Brojendra Mohan, AIR 1946 Cal 526 at p. 528 that where the trial Court has misapplied the Law of Limitation, interference under Section 25 of the Provincial Small Cause Courts Act is not called for where justice has been done.'

I am in respectful agreement that the power of revision under Section 25 of the Provincial Small Cause Courts Act is indeed discretionary and has to be exercised only in cases where the orders passed are not in accordance with law. Certainly, an order would not he in accordance with law if it contravenes the mandatory provisions of law. The Court there not only may but also virtually has a duty to exercise its discretion to make the order in conformity with law. As has been observed by the Supreme Court in Manindra Land and Building Corporation Ltd. v. Bhuthnath Banerjee, Unreported Supreme Court Judgment in C. A. 524 of 1962 D/- 2-5-1963 : (now reported in : [1964]3SCR495 ).

'Section 3 of the Limitation Act enjoins a Court to dismiss any suit instituted, appeal preferred and application made, after the period of limitation prescribed therefor by the 1st Schedule irrespective of the fact whether the opponent had set up the plea of limitation or not. It is the duty of the Court not to proceed with the application if it is made beyond the period of limitation prescribed. The Court has no choice and if in construing the necessary provision of the Limitation Act or in determining which provision of the Limitation Act applies, the Subordinate Court comes to an erroneous decision, it is open to the Court in revision to interfere with that conclusion as that conclusion led the Court to assume or not to assume the jurisdiction to proceed with the determination of that matter.'

The above observations, it may be remembered, were made in a case concerned with the powers under Section 115 Civil Procedure Code. The powers under Section 25 of the Provincial Small Cause Courts Act are still wider as they can be invoked even though no question of jurisdiction is involved. I may refer in this behalf to the following observations in Hari Shanker v. Girdhari Lal, AIR 1963 SC 698 at p. 701:

'Under Section 115 of the Code of Civil Procedure the High Court's powers are limited to see whether in a case decided, there has been an assumption of jurisdiction where none existed, or a refusal of jurisdiction where it did, or there has been material irregularity or illegality in the exercise of that jurisdiction. The right there is confined to jurisdiction and jurisdiction alone. In other Acts, the power is not so limited, and the High Court is enabled to call for the record of a case to satisfy itself that the decision therein is according to Law and to quash such order in relation to the case, as it thinks fit. ......

The section we are dealing with, is almost the same as Section 25 of the Provincial Small Cause Courts Act. That Section has been considered by the High Courts in numerous cases and diverse interpretations have been given. The powers that it is said to confer would make a broad spectrum commencing, at one end, with the view that only substantial errors of Law can be corrected under it, and ending, at the other, with a power of interference a little better than what an appeal gives. It is useless to discuss those cases in some of which the observations were probably made under compulsion of certain unusual facts. It is sufficient to say that we consider that the most accurate ex-position of the meaning of such section is that of Beaumont, C. J., (as he then was) in Bell and Co., Ltd. v. Wamau Hemraj, 40 Bom LR 125 : (AIR 1938 Bom 223) where the learned Chief Justice dealing with Section 25 of the Provincial Small Cause Courts Act observed:. 'The object of Section 25 is to enable the High Court to see that there has been no miscarriage of justice, that the decision was given according to law. The section does not enumerate the cases in which the Court may interfere in revision, as does Section 115 of the Code of Civil Procedure, and I certainly do not propose to attempt an exhaustive definition of the circumstances which may justify such interference; but instances which readily occur to the mind are cases in which the Court which made the order had no jurisdiction, or in which the Court has based its decision on the evidence which should not have been admitted, or cases where the unsuccessful party has not been given a proper opportunity of being heard, or the burden of proof has been placed on the wrong shoulders. Wherever the Court comes to the conclusion that the unsuccessful party has not had a proper trial according to Law, then the Court can interfere. But, in my opinion, the Court ought not to interfere merely because it thinks that possibly the Judge who heard the case may have arrived at a conclusion which the High Court would not have arrived at.''

5. Thus the powers of the High Court under Section 25 of the Provincial Small Cause Courts Act are not limited to the question of jurisdiction but extend to the power to see whether the judgment has been rendered according to law. Section 3 of the Limitation Act being mandatory it is indisputable that it has to be obeyed in full. Any decision contrary to that Section must be open to interference in exercise of the powers of revision. In this view of the matter I hold that the decree against defendant No. 2 must be upheld and that passed against defendants 7 to 9 must be set aside.

6. I, therefore, allow the C. R. P. No. 107/61 and dismiss C. R. P. No. 194/01. The petitioners in C. R. P. 107/61 and the respondent in C. R. P. No. 194/61 will be entitled to their costs in the respective petitions. The position as a result is that the decree-holder can enforce his decree against all the defendants except defendants 7 to 9.


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