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Gurram Subbarayudu (Died) Gurram Subbamma and ors. Vs. Moto Pothula Narasimham (Died) Garre Venkaiah and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberSecond Appeal No. 595 of 1968
Judge
Reported inAIR1974AP307
ActsPartnership Act, 1932 - Sections 5, 18, 19 and 25; Negotiable Instruments Act - Sections 16 (2)
AppellantGurram Subbarayudu (Died) Gurram Subbamma and ors.
RespondentMoto Pothula Narasimham (Died) Garre Venkaiah and ors.
Appellant AdvocateT. Bali Reddy, Adv.
Respondent AdvocateN. Ramamohana Rao, Adv.
Excerpt:
.....of debt incurred for and on behalf of firm - as per sections 5, 18 and 19 other partners in firm liable for acts of one of the partner - partners cannot deny their liability to pay - held, appellant entitled to recover amount. - cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools (conditions of service) regulations act, (3 of 1978) held, school run by the cantonment board is a primary school and it is not a school recognised by any such board comparable to the divisional board or the state board. the school tribunal constituted under section 8 of the..........is not valid and supported by consideration, that defendants 3 to 5 being non-executants under the suit promissory note the plaintiff is not entitled to a decree as against them, that the suit pronote is also time barred and the defendants cannot be held personaly liable for the suit amount.3. on all the contentions, appropriate issues were framed and the court held against defendants in these issues and the suit was decreed .4. in appeal before the subordinate judge by defendants 3 to 5 the rest of the contentions pressed was that the plaintiff who is an endorsee of the suit promissory note is not entitled to proceed against the non-executants thereto, nor can he plead any liability on the part of the non-executants on the basis of the original debt, for he did not obtain the assignment.....
Judgment:

1. The only point that arises for the consideration in this appeal is whether in a suit by a transferee of a pronote for recovery of monies due on the pronote executed by the managing partner of a firm, the others partners of the firm can be made liable.

2. One Palwadi Hanumantharao the 2nd defendant for an on behalf of the firm Palwadi Hanumaiah Son and Co., executed a pronote Exhibit A-2 in renewal of prior pronotes evidenced by Exhibits X-1 to X-3 for Rs. 1,000/- on 1-8-1949 in favour of 1st defendant. The 1st defendant transferred this pronote by an endorsement Exhibit A-1 for consideration in favour of the plaintiff on 20-5-1961 and the endorsee has filed the suit claiming the money due against the partners of the firm of Hanumaiah Son and Company, defendants 2 to 5. While the 2nd defendant the managing partner of the firm, in his written statement admitted the execution of the promissory note as a partner of the firm of P. Hanumaiah son and Company and passing of the consideration thereunder , defendants 3 to 5 , the other partners in their written statement contended that the 2nd defendant was not the managing partner of the firm and the firm itself was dissolved to the knowledge of the plaintiff and the 2nd defendant had no authority to renew any debts of the firm, that the plaintiff is not a holder in due course, that the transfer is not valid and supported by consideration, that defendants 3 to 5 being non-executants under the suit promissory note the plaintiff is not entitled to a decree as against them, that the suit pronote is also time barred and the defendants cannot be held personaly liable for the suit amount.

3. On all the contentions, appropriate issues were framed and the Court held against defendants in these issues and the suit was decreed .

4. In appeal before the Subordinate Judge by defendants 3 to 5 the rest of the contentions pressed was that the plaintiff who is an endorsee of the suit promissory note is not entitled to proceed against the non-executants thereto, nor can he plead any liability on the part of the non-executants on the basis of the original debt, for he did not obtain the assignment of the debt. This contention was upheld by the Subordinate Judge relying on the decision in Maruthamuthu Naicker v. Kadir Badsha , AIR 1938 Mad 377 (FB) and Ramakrishnareddy v. Sitaramireddy, : AIR1962AP255 and the decree as against defendants 3 to 5 partners of the firm was therefore set aside and the decree as against the firm and the managing partners of the firm 2nd defendant was confirmed. Hence this appeal by the plaintiff.

5. In Sadasukh Janki Das v. Sir Kishen Pershad, AIR 1918 PC 146 it was pointed out that it is of the utmost importance that the name of a person or firm to be charged upon a negotiable instrument should be clearly stated on the face or on the back of the document so that the responsibility is made plain and can be instantly recognised as the document passes from hand to hand and that it is not sufficient that the principal's name should be 'in some way' disclosed. It must be disclosed in such a way that on any fair interpretation of the instrument his name is the real name of the person liable upon the instrument . In AIR 1938 Mad 377 (FB) also it was pointed out that it is a fundamental principle of the relating to negotiable instruments that no one whose name does not appear on the instrument can be held liable thereon. The above cases dealt with the liability of the members of the joint family for the debt incurred on a pronote by a karta of a family. It is in that connection that the above caution was administered. It was also pointed out in that case that where the endorsement on the pronote is in blank it only operates to transfer the property in the instrument and does not operate as an assignment of the debt, but the endorsement may operate to assign, the debt as well when it is so worded and the requirements of the law with regard to stamping are complied with ; but unless there is an endorsement of this nature the endorsee has rights merely on the instrument. Therefore in the case of an ordinary endorsement. the endorsee cannot sue the non-executant copartners on the ground of their liability under the Hindu-Law. It is clear also from the judgment that it is open to the original promise to so frame the suit , to make the other members of the joint family liable both on the original debt as well as on the promissory note but if he endorses the promissory note, unless there is a specific endorsement of the debt as well.

6. In : AIR1962AP255 which is also a case of the other members of the Hindu Joint family being sought to the made liable in a suit by an endorsee for collection , the same principle was reiterated and it was held that as an endorsement in that case was merely for collection, he can only sue for the debt due on the pronote and cannot seek to make the other members of the Joint Hindu Family of the promissory liable on the basis of the original debt . In Narayan Rajaram Keshav v. Prabhakar Keshav. : AIR1951Bom345 which is again a case of an endorsee filing a suit for the recovery of the monies due on the pronote and seeking to make other members of the Joint family liable, it was held that where the original debt in respect of which the promissory note was passed is not assigned to the endorsee of the promissory note, the endorsee can only sue on the promissory note itself and not on the debt.

7. The facts in the case under appeal , do not attract the above principles . Here the promissory note was executed by the managing partner of a firm and it has been found by the trial Court that the debt was incurred for an on behalf of the firm and therefore its partners are liable. This was not challenged in first appeal. This was not challenged in first appeal. The executor or the maker of the pronote is always is liable for the debt due under it. It is clear from Sections 5, 18, and 19 of the Partnership Act that the order partners are liable for the acts of one of the partners of a firm. Under Section 22 of the Act, on act done or instrument executed by a partner on behalf of the firm shall be done or executed in the firm name which will bind the firm and the other partners, and under Section 25 , every partner is liable jointly with all the other partners and also severally , for all acts of the firm done while he is a partner. The trial Court has found that the suit pronote was executed by the 2nd defendant as the managing partner of the firm and the monies drawn were utilised for the purpose of the firm. Therefore every partner is liable. As pointed out in AIR 1918 PC 146 the liability of the firm was made clear in the pronote itself under Section 16(2) of the Negotiable Instruments Act. the endorsee stands in the same footing as the payee. Under Section 50 of the said Act, the endorsement of a negotiable instrument followed by the delivery transfers to the endorsee the property therein with the right of further negotiation ; but the endorsement may, by express words restrict or exclude such right, or may merely constitute the endorsee an agent to endorse the instrument or to receive its contends for the endorser or for some other specified person. There is no such restriction here. Therefore in this case, the plaintiff who is the endorsee has a right to a decree making the partners of the firm also liable for the amount due as those liable under the promissory note itself as makers being the partners of the firm. The original promise i.e. the 1st defendant could have laid the suit on the not Exhibit A-2 as it is in renewal of prior debts and need not have sued on the original debt and the question of his transferring the original debt does not arise. Therefore the principles laid down in AIR 1938 Mad 377 (FB) have been misapplied to the facts of this case by the Subordinate Judge in first appeal. The plaintiff will therefore be entitled to a decree as prayed for by him against defendants 3 to 5 also. The judgment and decree and the Subordinate Judge are therefore set aside and those of the District Munsif are confirmed.

8. This Second Appeal is allowed with costs throughout . No leave .

9. Appeal allowed .


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