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Ghisulal Vs. Hazi Mohammed and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberSecond Appeal No. 302 of 1969
Judge
Reported inAIR1981Raj58
ActsNegotiable Instruments Act, 1881 - Sections 27 and 28
AppellantGhisulal
RespondentHazi Mohammed and ors.
Advocates: H.M. Lodha, Adv.
DispositionAppeal dismissed
Cases ReferredIn Jankidas v. Sri Kishen Per
Excerpt:
.....to the plaintiff--for the suit, amount. a mere description of somaram's position such as 'mahendra boot house bali ke proprietor somaram vald motaji' does not clearly indicate that the promissory note was really executed by a partner of the firm for or on behalf the said firm. --it is of the utmost importance that the name of a person or firm to he charged upon a negotiable document should be clearly stated on the fare 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. 1 i am clearly of the view that the description such as mahendra boot house bali ke proprietor somaram vald motaji given by somaram executant in the promissory note ex. i may further observe that somaram failed to sign the..........as follows:--haji mohammed plaintiff-respondent instituted a suit against the partners of mahendra boot house, namely, somaram, bagaram and ghisulal in the court of munsif bali for recovery of a sum of rupees 760/-. the averments in the plaint were that the defendants were partners in a firm under the name and style mahendra boot house situated at bali. the firm used to deal in leather, shoes and hardware. on 23-1-1964 somaram partner of the firm secured a loan of rs. 658/- from the plaintiff for business of the firm i.e. payment of the price of pieces of leather and executed a promissory note for this amount in favour of the plaintiff along with a receipt of money. somaram defendant no. 1 further agreed to pay interest on the principal amount at the rate of rs. 12/- per cent per annum......
Judgment:

Kalyan Dutta Sharma, J.

1. This is a civil second appeal under Section 100 CPC against the judgment and decree of the Additional District Judge, Sirohi, dated 19-4-1969, by which the decree and judgment of the Munsif Ball dated 12-10-1968, decreeing the suit of the plaintiff for Rs. 760/- with costs and pendente lite and future interest at the rate of Rupees 6/- per cent per annum was confirmed.

2. The relevant facts giving rise to this second appeal may be briefly described as follows:--

Haji Mohammed plaintiff-respondent instituted a suit against the partners of Mahendra Boot House, namely, Somaram, Bagaram and Ghisulal in the court of Munsif Bali for recovery of a sum of Rupees 760/-. The averments in the plaint were that the defendants were partners in a firm under the name and style Mahendra Boot House situated at Bali. The firm used to deal in leather, shoes and hardware. On 23-1-1964 Somaram partner of the firm secured a loan of Rs. 658/- from the plaintiff for business of the firm i.e. payment of the price of pieces of leather and executed a promissory note for this amount in favour of the plaintiff along with a receipt of money. Somaram defendant No. 1 further agreed to pay interest on the principal amount at the rate of Rs. 12/- per cent per annum. According to the plaintiff, the loan was secured by Somaram for the partnership business and so all the partners were liable for payment thereof to the plaintiff. Later on the firm was dissolved with effect from 18-11-1964 and the loan secured by Somaram remained unpaid. Hence the plaintiff served a notice on the partners of the firm on 22-3-1965, asking them to pay off the loan along with interest at the stipulated rate. The defendants failed to make any payment in response to the demand notice given to them by the plaintiff. Hence the plaintiff brought a suit for recovery of Rupees 760/- against them.

3. The defendants appeared in the Court of Munsif in response to the summonses issued in the suit. The defendants Nos. 1 and 2 admitted the claim of the plaintiff for Rs. 760/- and further pleaded that the firm Mahendra Boot House was dissolved on 18-11-1964 on account of sickness of its partner defendant No. 1 and the assets and liabilities of the firm were transferred to Gheesulal partner-defendant No. 3 who alone is, therefore, liable to pay off the suit money to the plaintiff. Ghisulal resisted the suit of the plaintiff on the ground that he was not a partner of the firm Mahendra Boot House which was a joint Hindu family firm consisting of defendants Nos. 1 and 2 and that he did not secure any loan of Rs. 658/- from the plaintiff on 23-1-1964. If the amount of Rs. 658/- has been secured on credit by defendants Nos. 1 and 2 from the plaintiff and if they have executed any pro note or receipt for that amount they alone are responsible for making payment thereof. Ghisulal raised an additional plea in his written statement that defendants Nos. 1 and 2 secured a loan of Rs. 1500/- from him on 1-5-1963 and executed a promissory note for that amount in his favour but later on the defendants Nos. 1 and 2 could not pay off this debt. Hence they assured him (Ghisulal) that the latter would have one and a half share in the business of the firm. Thereafter the monetary condition of the defendants Nos. 1 and 2 went (from) bad to worse and the business of the firm received a setback so they conspired together to shift the entire liability on Ghisulal for loans of the firm and in pursuance of the said conspiracy colluded with the plaintiff and caused this suit to be brought against him i.e. Ghisulal also.

4. Upon pleadings of the parties the learned Munsif framed as many as five issues in the suit which when translated into English read as follows :--

(1) Whether Somaram defendant No. 1 executed a promissory note on 23-1-1964 in favour of plaintiff?

(2) If so whether defendants Numbers 2 and 3 also are liable for the debt on the basis of the promissory note.

(3) Whether the firm Mahendra Boot House was a partnership firm of the defendants and whether it has been dissolved and all its assets and liabilities have been taken upon himself by the defendant No. 3.

(4) Whether the defendant No. 3 is entitled to get compensatory costs of Rs. 100/- from the plaintiff under Section 35A C. P. C.

(5) Relief?

The learned Munsif recorded the evidence of the parties on the aforesaid issues and decided issues Nos. 1 and 2 in favour of the plaintiff. As regards issue No. 3 the finding of the learned Munsif was that the plaintiff could proceed against the defendants as well as against the firm but as the firm has been dissolved the partners thereof are still personally liable to the plaintiff-- for the suit, amount. Issue No. 4 was decided against defendant No. 3 Consequently, the learned Munsif decreed the suit of the plaintiff for Rs. 760/- with costs and pendente lite and future interest at the rate of Rs. 6/- per cent per annum from 20-5-1965 up to the date of realisation.

5. Aggrieved by this decree and judgment Ghisulal defendant No. 3 preferred an appeal in the Court of Additional District Judge, Sirohi who by his judgment dated 19-4-1969 dismissed the appeal and confirmed the decree and judgment of the trial court. As against this judgment Ghisulal has come up in second appeal.

6. Neither the respondents nor their learned counsel has appeared in this Court although notices of the appeal were duly served on the respondents. The appeal was, therefore, heard ex parte.

7. I have carefully perused the record and heard Mr. H.M. Lodha learned counsel for the appellant.

8. At the outset I may observe that Mr. H.M. Lodha has not challenged the finding of both the courts below regarding the appellant being a partner of the firm Mahendra Boot House. He has confined his arguments in this appeal to one point only, namely, that the appellant was not liable for the amount secured on credit by Somaram defendant No. 1 from the plaintiff-respondent No. 1 because there is no indication in the promissory note executed by Somaram that he was making the firm liable and thereby excluding his personal liability for payment of the loan. According to the submission of Mr. H.M. Lodha learned counsel for the appellant, the name of the firm to be charged upon a promissory note which is a negotiable instrument must be disclosed in such a way in the pro note as to indicate that the pro note was executed by its agent or partner for or on behalf of that firm. In support of his above contention Mr. H.M. Lodha relied upon the following authorities:--

(1) Jankidas v. Kishen Pershad, (AIR 1918 PC 146),

(2) Perchippa v. Muniyandi (AIR 1932 Rang 97).

(3) Punjab United Bank Ltd. v. Mohammed Hussain (AIR 1934 Lah 358).

(4) Srinivasayya v. Nagappa, (AIR 1936 Mad 984)

(5) Sitaram v. Chimandas, (AIR 1928 Bom 516).

(6) Hiralal v. Ratanlal, (1967 Raj LW 383).

(7) Madangopal v. Narsingdas & Sons, (AIR 1951 Raj 64).

(8) Ramanujulu v. Narasimhulu, (AIR 1962 Andh Pra 92) :

I have carefully gone through the authorities cited above and considered the submission of Mr. H.M. Lodha. The only point for consideration in this appeal is whether both the courts below were justified to hold the appellant liable for the amount secured on credit by Somaram from the plaintiff by way of execution of the promissory note Ex. 1. As stated earlier the appellant was a partner in the firm Mahendra Boot House along with Somaram and Bagaram. From a bare perusal of the promissory note Ex. 1 and the receipt Ex. 2 it is obvious that they were not executed by the appellant in favour of the plaintiff. Both the courts below arrived at a conclusion that the promissory note was executed by one of the partners of the firm i.e. Somaram for and on behalf of the firm and so the other partners also were liable on the pro note. In my opinion, the courts below committed an error in coming to the above conclusion. The reason is that Somaram one of the partners of firm Mahendra Boot House executed promissory note Ex. 1 describing himself as proprietor Mahendra Boot House Bali. It is nowhere written in the promissory note Ex. 1 that Somaram executed or signed the pro note on behalf of or for the firm, namely, Mahendra Boot House Bali. A mere description of Somaram's position such as 'Mahendra Boot House Bali ke proprietor Somaram vald Motaji' does not clearly indicate that the promissory note was really executed by a partner of the firm for or on behalf the said firm. The firm's name must be disclosed in some such manner that upon fair interpretation of the promissory note it must appear that the firm was the real person liable upon the pro-note. Unless the firm's name is disclosed in some such manner, the other partners in the firm cannot be held liable on the pro note. In Jankidas v. Sri Kishen Per-shad (AIR 1918 PC 146) their Lordships of the Privy Council have observed as follows:--

'It is of the utmost importance that the name of a person or firm to he charged upon a negotiable document should be clearly stated on the fare 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. 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 the case before their Lordships of the Privy Council the drawer of the Hundi signed it describing himself beneath his signature as Acting Superintendent of the Private Treasury of His Excellency Sir Maharaja, the Prime Minister of H. H. Nizam. In their Lordships' opinion such a description was a description of drawer's position and was not sufficient to bind the Maharaja because the Hundi was not signed in such a form as was necessary for an agent signing on behalf of a principal. The aforesaid authority of the Privy Council was later on followed in number of cases referred to above.

9. Applying this principle to the present promissory note Ex. 1 I am clearly of the view that the description such as Mahendra Boot House Bali ke proprietor Somaram vald Motaji given by Somaram executant in the promissory note Ex. 1 was a mere description of his position and was not indicative of the fact that the promissory note was executed by him for or on behalf of the firm Mahendra Boot House of which he was a partner. I may further observe that Somaram failed to sign the promissory note in such manner as to indicate that he was not thereby incurring personal liability of the pro note. He merely put his signatures to the promissory note as Somaram Motaji Bali, Mahendra Boot House Bali. It, therefore, follows that Somaram alone was liable on this pro note which upon fair interpretation thereof does not appear to have been executed by him for or on behalf of the firm. The name of the firm beneath his signature on the pro note is nothing but a description of his position or address. The execution of promissory note in such form does not bind the other partners of the firm. This aspect of the case was not considered by both the courts below. Hence I have no hesitation in holding that the appellant was not liable for payment of the sum secured by Somaram from the plaintiff after executing a pro note Ex. 1 and the receipt Ex. 2 in favour of the latter. The second appeal filed by Gheesulal is, therefore, accepted and the decrees and judgments of both the courts below are set aside and the plaintiff's suit is dismissed in toto. As the appeal has been disposed of on a point of law, no order as to costs.


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