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P. Kunchachumma and ors. Vs. the Chalapuram Bank Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKerala High Court
Decided On
Case NumberA.S. No. 547 of 1952 (M)
Judge
Reported inAIR1958Ker318
ActsPartnership Act, 1932 - Sections 30
AppellantP. Kunchachumma and ors.
RespondentThe Chalapuram Bank Ltd. and anr.
Appellant Advocate M.K. Nambiar,; N. Sundara Iyer and; V.R. Venkitakrishnan
Respondent Advocate K. Kuttikrishna Menon,; V. Balakrishna Eradi and; B. Poc
Cases ReferredJafferali Bhalao v. Standard Bank of South Africa Ltd.
Excerpt:
.....- plaintiff not entitled to have decree against defendant no. 7. - - b32 the certified extract from the birth register relating to cheriamunda amsom, ponnani taluk filed by the defendants themselves shows that the 7th defendant was born on 7-6-1931. the genuineness of this document has not been challenged and the said exhibit clearly shows that on 7-6-1931 a male child was born to hyder hajee and on the same date the birth has been reported by the father himself. ..i am clearly of opinion thatadmission to the benefits of partnership means something more than the mere incident of birth in a particular family. the rulings referred to above clearly show that there must be positive proof about the admission of the 7th defendant to the benefits of the partnership. a-4 clearly shows..........sum of rs. 14,053-7-3 together with interest thereon. the 1st defendant was a firm by name m/s. p. hyder hajee sons. the 2nd defendant was the widow and defendants 3 to 7 were the children of one p. hyder hajee, deceased. the plaintiff alleged that the defendants 2 to 7 constituted a partnership and were carrying on business in the name of messrs. p. hyder hajee sons (1st defendant). in the course of such business, the defendants desired the plaintiff bank to give them credit and over-draft through the 3rd defendant who was also authorised to represent them and the firm. all the defendants agreed to hold themselves jointly and severally liable for all the borrowings of the 3rd defendant. it was also stated that in pursuance of such agreement and undertaking, the 3rd defendant executed.....
Judgment:

Vaidialingam, J.

1. This is an appeal by defendants 2 and 4 to 7 against the decree and judgment of the learned Subordinate Judge of Kozhikode, passed against them in O. S. 98 of 1949.

The suit was by the plaintiff, 1st respondent Bank for recovery of a sum of Rs. 14,053-7-3 together with interest thereon. The 1st defendant was a firm by name M/s. P. Hyder Hajee Sons. The 2nd defendant was the widow and defendants 3 to 7 were the children of one P. Hyder Hajee, deceased. The plaintiff alleged that the defendants 2 to 7 constituted a partnership and were carrying on business in the name of Messrs. P. Hyder Hajee Sons (1st defendant). In the course of such business, the defendants desired the plaintiff Bank to give them credit and over-draft through the 3rd defendant who was also authorised to represent them and the firm. All the defendants agreed to hold themselves jointly and severally liable for all the borrowings of the 3rd defendant. It was also stated that in pursuance of such agreement and undertaking, the 3rd defendant executed two promissory notes, one or. 3-12-1947 for Rs. 15,009/- and the other on 9-7-1948 for Rs. 4,000/- for and on behalf of the firm. By way of collateral security, goods also has been pledged withthe plaintiff. According to the plaintiff, they had realised a sum of Rs. 6,700/- by sale of the same goods and balance amount was due to them from the defendants.

2. The defendants 2 and 4 to 7 filed a joint written statement contesting the claim of the plaintiff. They denied that there was ever a partnership by name 'P. Hyder Hajee Sons' nor were they partners of any such firm. Hyder Hajee, the husband of the 2nd defendant and the father of defendants 3 to 7 was having business of his own and he died in or about August 1942. Sometime belore his death, the said Hyder Hajee took one of his sons, the 3rd defendant alone as a partner and both of them were trading under the name of 'P. Hyder Hajee Son'. After the death of Hyder Hajee, the 3rd defendant alone has been carrying on a trade in the said firm name and that none of these defendants had any right in the same. In or about September 1947, the said 3rd defendant and the plaintiff's agent got an agreement in English the contents of which they were not aware, and had them signed by these defendants. The 6th and 7th defendants were minors to the knowledge of the plaintiff and in spite of that they were also made to execute those documents. They allege collusion and fraud on the part of the 3rd defendant and the plaintiff to get them involved in a liability which was exclusively that of the 3rd defendant. It is only subsequently that they have come to know that in the agreements executed by them in favour of the plaintiff they have been described as merchants carrying on business in the name of 'Hyder Hajee and Sons' which is not true. Regarding another letter dated 30-9-1947 written by these defendants, along with the 3rd defendant, they allege it was again due to the manoeuvre of the plaintiff's agent and 3rd defendant. In the end, they contended that they have absolutely no liability to the plaintiff in any manner.

3. The 3rd defendant filed a separate written statement. He denied that defendants 2 to 7 ever constituted partnership or were carrying on business in the name of 'P. Hyder Hajee Sons'. According to him, he became a partner with his father about three years prior to his father's death and when ho became such a partner, the business carried on by his father under the name of 'P. Hyder Hajee', was changed into 'P. Hyder Hajee and Sons'. Subsequent to his father's death in about 1942 he has been carrying on his business absolutely by himself under the name of 'P. Hyder Hajee Son'. He admitted having had dealings with the plaintiff as proprietor of 'P. Hyder Hajee Son'. In or about September 1947, the Bank represented to him that it was necessary to get a written admission from his mother and brothers about his absolute right in his business and to have suitable documents executed by them. Believing the Bank's representations he signed the papers got ready by the Bank without reading them along with his mother and brothers. It is only now that he understood that the documents recited that there' was a firm of 'Hyder Hajee Sons' carried on by himself in partnership along with the other defendants. Virtually, he attributed fraud to the Bank officials in getting ready those documents. He admitted the execution of the two pronotes referred to in the plaint but stated that they represented his individual transaction as proprietor of his own firm 'P; Hyder Hajee Son'.

He alsocontended that there was no firm by the name of 'P. Hyder Hajee Sons' at any time in existence, nor was there such a partnership as alleged by the plaintiff. He also contended that there was some sort of adjustments between him and the plaintiff. On all these grounds the 3rd defendant also disputed his liability to the suit claim.

4. The learned Subordinate Judge has accepted the evidence adduced on behalf of the plaintiff and came to the conclusion that the plea of adjustment of the suit claim set up by the 3rd defendant was false. The learned Judge held that it is not proved that the plaintiff Bank ever agreed to receive the amount due to them at 4 annas in the rupee. Regarding the contention of all the defendants attributing fraud to the bank officials in getting the agreement referred to in the plaint and marked as Ext. A4, the learned Judge held that the said document was not brought about by collusion, fraud or misrepresentation of the plaintiff-bank. The learned Judge has very carefully considered the entire evidence on this point and held that it is too much to believe that these defendants would have blindly signed the several documents merely at the instance of the bank officials. He has accepted the evidence adduced in this behalf by the bank and he has also held that there is absolutely no reason to conclude that the plaintiff bank or its official had any motive to get papers signed by these defendants.

5. On the question of the liability of all the defendants as partners on the promissory notes executed by the 3rd defendant, the learned Judge after a consideration of the documentary and oral evidence, held that it was not possible to uphold the contentions of the defendants that after the death of Hyder Hajee, the 3rd defendant alone was carrying on business in his individual name as 'P. Hyder Hajee Son'. He held that even prior to the date of the promissory-notes Ext. A1 and A3, the trade was being done as a partnership under the name of 'P. Hyder Hajee Son' and also sometimes as 'P. Hyder Hajee and Son'. After also referring to certain cheques and; other documents where the 3rd defendant has signed as a partner of 'P. Hyder Hajee Sons' the learned Judge came to the conclusion that the trade carried on is not the individual trade of the 3rd defendant but a partnership trade.

6. On the question as to who all were partners of this partnership, the learned Judge held that among the defendants, the 7th deft, was a minor. The learned Judge held that the defendants 2 and 4 to 6 were partners along with the 3rd defendant in the partnership and that the 7th defendant should be considered to have been admitted to the benefits of the partnership by the other partners. As the 7th defendant had not, within 6 months after obtaining knowledge about his admission to the benefits of a partnership, elected not to disclaim liability to become a partner by giving public notice, the Judge held that all the defendants 2 to 7 constituted the suit partnership and were personally liable for the liabilities incurred by the 3rd defendant on behalf of the firm.

7. The learned Judge also held that though the defendants are agriculturists they are not entitled to reopen the transactions, as they are not renewals of any prior transaction; but awarded against the defendants the suit claim with 5 1/2 per cent, interest.

8. On these findings the learned Judge decreed' the plaintiff's suit substantially as prayed for.

9. In the appeal before us Mr. M. K. Nambiar, live learned counsel for the appellants has not chosen to seriously attack the findings of the trial court regarding the execution of the documents by the appellants in favour of the plaintiff bank, nor has he attacked the finding of the learned Judge on the question about the applicability of Act IV of 1938. These findings of the trial court are therefore accepted by us and the appeal also has to be decided only on that basis. Though it was contended that the6th defendant also was a minor and as such, will not be liable for the suit claim, the learned Judge has found that the 6th defendant was not a minor on the relevant dates when the suit documents were executed by him along with the other defendants. This finding also has not been attacked by Mr. M. K. Nambiar. Therefore, that finding also is accepted by us and we proceed to decide the appeal on the basis that the 6th defendant was a major during the relevant period. But the learned counsel has contended:

(1) that the finding of the learned Judge about defendants 2 and 4 to 7 carrying on business in partnership with the 3rd defendant is not correcteither in law or on the facts; and

(2) that in any event, the 7th defendant who has been found to be a minor could not be held liable for the suit claim.

Before discussing the contentions raised by Mr. M. K. Nambiar, it may be stated that Mr. K. Kuttikrishna Menon, the learned counsel for the plaintiff-respondent, contended that the finding of the learned Judge about the minority of the 7th defendant is not correct. He contended that the 7th defendant also was a major on all relevant dates and that as he was also a party along with the other defendants in undertaking liabilities for the amounts advanced to 3rd defendant, he would also be liable In his own individual capacity, apart from any question that mayarise by virtue of Section 30 of the Partnership Act. Ext. B32 the certified extract from the birth Register relating to Cheriamunda Amsom, Ponnani Taluk filed by the defendants themselves shows that the 7th defendant was born on 7-6-1931. The genuineness of this document has not been challenged and the said Exhibit clearly shows that on 7-6-1931 a male child was born to Hyder Hajee and on the same date the birth has been reported by the father himself. The 5th defendant, one of the brothers of the 7th defendant, giving evidence as D. W. 2 has stated in evidence that Ext. B32 relates to the 7th defendant. There is no serious cross-examination of D. W. 2 on this point and therefore we accept the finding of the trial court on this point.

10. The first contention of Mr. M. K. Nambiar, as already stated, is that there was no such firm as Messrs. 'P. Hyder Hajee Sons' consisting of defendants 2 to 7 as partners, nor was there ever any partnership business carried on by defendants 2 to 7 jointly as partners. Paragraph 2 of the plaint merelystates that the defendants 2 to 7 constitute a partnership carrying on trading business in the name of Messrs. 'P. Hyder Hajee Sons'. On this point the defendants contended that there was no such partnership business carried on by the defendants 2 to 7 jointly.

11. Mr. Nambiar, learned counsel contended that the only partnership in the family was the one that existed between the father P. Hyder Hajee andhis son the 3rd defendant known as 'P. Hyder Hajee Son'. His further contention was that after the death of the father in or about August 1942 this firm was dissolved and the 3rd defendant, as sole proprietor, was carrying on his business in the old name of 'P. Hyder Hajee Son'. The learned counsel also contended that there is no evidence placed before the court from which it could be legitimately inferred that there was a iresh partnership entered into between defendants 2 and 4 to 7 with the 3rd defendant at any time after the death of the father.

Therefore, the main question that arises for consideration is as to whether there was a partnership between the defendants 2 and 4 to 7 along with the 3rd defendant and if so, when did the said partnership come into existence.

X X XX

(His Lordship then on a consideration of the evidence held that the case of defts. 2 to 6 that there was no partnership as between them at any time could not be accepted, but that there was a partnership as between mem and that the decree of the lower Court against the 1st deft, firm and defts. 2 to 6 personally for the suit claim must be confirmed and then stated:)

12-28. The 2nd contention of Mr. M. K. Nambiar as stated already, is that the 7th defendant, at any rate, will not be liable for the suit claim. The finding of the lower court about the minority of the 7th defendant as on 30-9-1947 has been already accepted by us. The contention of Mr. Nambiar is that a minor cannot be a partner in his own right and that if at all, he can only be admitted to the benefits of a partnership under Section 30 of the Indian Partnership Act with the consent of all the partners for the time being. Once it is proved that a minor has been so admitted to the benefits of partnership, the other rights and liabilities mentioned in the said section will follow.

29. Mr. Nambiar contends that in order to make a minor liable for a partnership the plaintiff must prove that a minor has been admitted to the benefits of partnership. In this case, he contends that there is no evidence at all let in by the plaintiff to prove this fact. Mr. Nambiar has also referred us to certain decisions bearing on this aspect of the matter.

30. In Sanyasi Charan Mandal v. Krishnadhan Banerji, 43 Mad LJ 41: (AIR 1922 PC 237) (A) their Lordships considering the corresponding Section 247 of the Contract Act observe as follows at p. 46 (of Mad LJ) : (at p. 239 of AIR) :

'To bring this Section into play it must be proved that the minor has been admitted to the benefits of the partnership. This is a fact to be established by evidence'.

Again in Babu v. Official Assignee Madras, AIR 1934 PC 138 (B) their Lordships observe at p. 143 as follows:

'Such an act of admission to partnership must be proved.'

In that case the learned Judges of the Madras High Court had observed that they can draw an inference that the other partners admitted a minor, to the benefits of a partnership. Their Lordships differed from the Madras High Court and held that no such inference could legitimately be made in the absence of more positive evidence on that matter. In Venkataratna Iyer v. Balayya AIR 1936 Mad 595 (C) their Lordships Mr. Justice Varadachariarand Mockett, JJ. considering Section 247 of the Contract Act observe as follows at p. 596 :

'There must be some positive conduct from which the court can infer that the regular partners intended to admit to the benefit of the partnership certain minor members. The mere fact that everybody concerned assumed by some error of law thatall the children in the family, whether majors or minors, were in some manner interested in the business does not, it seems to us, suffice to bring Section 247 into operation.'

The learned counsel also relied upon the decision in The Official Assignee of Madras v. Palaniappa Chetty, 35 Mad LJ 473: (AIR 1919 Mad 690) (D). At page 487 (of Mad LJ): (at P. 697 of AIR) Justice Spencer agreeing with the learned Chief Justiceobserves as follows:

'But as I observed in Gangayya v. Venkatramiah 34 Mad LJ 271: (AIR 1918 Mad 37) (E), a definite and conscious act on the part of other partners is needed for admitting a minor to the benefits of the partnership...... ....I am clearly of opinion thatadmission to the benefits of partnership means something more than the mere incident of Birth in a particular family. .........

At page 488 (of Mad LJ): (at P. 697 of AIR) the learned Judge again observes as follows;

'So also it would appear that not every minor born in a trading family would, as a matter of course be admitted to the benefits of partnership, but that there must he some agreement on the part of the partners to admit him, some 'consentient act' as Mr. Justice Sale calls it in Latchmanan Chetty v. Sivaprakasam Mudaliar ILR 26 Cal 349 (F).'

Mr. Nambiar also referred in to the decisions in Lachhmi Narain v. Beni Ram, AIR 1931 AIR 327 (G): Venkatasuryanarayana v. Ramayya, 40 Mad LJ 153: (AIR 1921 Mad 98) (H) and A. A. Khan v. Ameer Khan, AIR 1952 Mys 131 (I) for the proposition that there must be a partnership already in existence before a minor could be admitted to the benefits of that partnership. We are not referring in detail to these last mentioned decisions, in view of our finding already recorded that there was a partnership between defendants 2 to 6 after the death of P. Hyder Hajee.

31. Mr. K. Kuttikrishna Menon, learned counsel for the respondent relied upon the decision of the Privy Council in Jafferali Bhalao v. Standard Bank of South Africa Ltd., AIR 1928 PC 135 (J). But that case will not really assist Mr. K. Kuttikrishna Menon in his contention because in that case, their Lordships found as a fact that the guardian of the minors had the power under the will executed by the father of the minors to make them partners in the business that was carried on by the family. In this view, their Lordships held that the minors had been admitted to the benefit of the partnership. Mr. K. Kuttikrishna Menon also contended that on the basis of Exts. A 32, A 33, A 34 and A 4 the minor 7th defendant must be considered to have been admitted to the benefits of the suit partnership.

He also contended that the minor, after the statements contained in the above documents has not taken any action by way of giving public notice of his election not to become a partner in the firm. Section 30 Clause 5, Partnership Act provides that at any time within six months of his attaining majority or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later, such person may give public notice that he has elected to become or that he has elected not to become a partner in the firm, and such notice shall determine his position as regards the firm. The proviso to the said clause states that if he fails to give such notice, he shall become a partner in the firm on the ex-piry of the said six months. Section 72 of the Act gives the manner of giving public notice. Mr. K. Kuttikrishna Menon, also however, contends that as the 7th defendant has not given the public notice of his election not to become a partner on or before 7-12-1949. the 7th defendant also must be considered to be a partner and held liable for the claim.

32. In our opinion the contention of Mr. Nambiar on this point has to be accepted. The documents Exts. A32, A33, A34 and A4 have been taken by the plaintiff Bank from the 7th defendant also treating him as a major. The plaint also proceeds on the basis that the 7th defendant was a major. P. W. 2, the agent of the plaintiff Bank, states in his evidence that they were never told by the other defendants about the minority of the 7th defendant. The rulings referred to above clearly show that there must Be positive proof about the admission of the 7th defendant to the benefits of the partnership. As the plaintiff proceeded on the basis that the 7th defendant was a major, no evidence on this point was adduced by them.

The defendants also have not placed before us any evidence to show when the 7th defendant was admitted to the benefits of the partnership of the firm severally known as 'P. Hyder Hajee Son,' 'p. Hyder Hajee and Son', or 'P. Hyder Hajee Sons.' There are no accounts filed before us to show that the 7th defendant was paid any share of the profits of the firm, if any. The first time that the 7th defendant comes into the scene is only in Ext. A32 on 23-9-1947. He being a minor, the agreement entered into under Ext. A-33 will not bind him. Though the document Ext. A-4 clearly shows that the plaintiff Bank knew about the business carried on under the name of 'P. Hyder Hajee Sons,' they have not cared to call upon the defendants to produce their accounts regarding the admission of the 7th defendant to the benefits of the partnership.

The statements in Exts. A-32, A-33, A-34, andA 4 will not bind the 7th defendant as such, merelyby having joined in the execution of those documents.Apart from these documents, no other independentevidence has been placed before us to show that themajor members of the partnership agreed to admitthe 7th defendant to the benefits of the partnership.The case of the 3rd defendant being of a businessrun by him independently will not help the plaintiffand he has also not spoken about the 7th defendant.Equally the only other evidence of the 5th defendantas D.W. 2 also does not help the plaintiff's case because the 5th defendant's case was that there wasno partnership at all along with the 3rd defendant.It is also argued by Mr. Nambiar that the 7th defendant could not give the public notice as required under Section 30 Clause 5 of the Partnership Act. His explanation is that the 7th defendant became a majoron 7-6-1949 and before the expiry of six months fromthat date the present suit has already been instituted on 5-10-1949 and the liability was being disputedin this suit. We accept the explanation offered byMr. Nambiar on this point.

33. The learned Subordinate Judge, in our opinion, has rather summarily disposed of this aspect of the ease. He has not considered as to whether there was really any evidence about the admission of the 7th defendant to the benefits of the partnership. For the reasons given above, we differ from the judgment of the learned Subordinate Judge on this point and we hold that it has not been proved that the 7th defendant was admitted to the benefits of the partnership. On this finding it follows that the plaintiffs are not entitled to have a decree against the 7th defendant. In this view, the judgment anddecree of the learned Subordinate Judge so far as the 7th defendant is concerned, has to be set aside.

34. Mr. M. K. Nambiar has not also challenged the finding of the learned Subordinate Judge regarding the contention of the defendants on the question of the applicability of Act IV of 1938. Therefore, that finding of the learned Subordinate Judge is confirmed by us.

35. In the end, the decree and judgment of the learned Subordinate Judge so far as defendants 1 to 6 are concerned, are confirmed & the appeal filed by appellants 1 to 4 (defendants 2 and 4 to 6) in so far as it relates to them, is dismissed with costs of the plaintiff, 1st respondent throughout. But the decree and judgment of the trial court regarding the 7th defendant are set aside and the appeal of the 5th appellant (7th defendant) so far as he is concerned, is allowed with 1/6th costs throughout payable by the plaintiff, 1st respondent.


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