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Ghisu Lal Vs. Hazi Mohammed and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil Second Appeal No. 801 of 1968
Judge
Reported in1980WLN96
AppellantGhisu Lal
RespondentHazi Mohammed and ors.
DispositionAppeal allowed
Cases ReferredIn Jankidas v. Sir Kishan Pershad
Excerpt:
.....are not liable for payment.;i am clearly of the view that the description such as mahendra boot house bali ka proprietor somaram vald motaji given by somaram executant in the promissory note ex. 1 was a mere description of his position & 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.;it therefore, follows that soma ram alone was liable on this pronote 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 signatures on the pronote is nothing but a description of his position or address. the execution of promissory note in such form does not find the other partners of the..........as follows: h mohd. plaintiff-respondent instituted a suit against the partners of mahendra boot house, namely, sonaram, bagaram & gisulal in the court of munsif bali for recovery of a sum of rs. 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. soma ram defendant no. 1 further agreed to pay interest on the principal amount at the rate of rs. 12/- per cent per annum.....
Judgment:

K.D. 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 Bali 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 Rs. 6/- percent per annum was confirmed.

2. The relevant facts giving rise to this second appeal may be briefly described as follows: H Mohd. plaintiff-respondent instituted a suit against the partners of Mahendra Boot House, namely, Sonaram, Bagaram & Gisulal in the court of Munsif Bali for recovery of a sum of Rs. 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. Soma Ram 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 Rs. 760/- against them.

3. The defendants appeared in the Court Munsif in response to the summons issued in the suit. The defendants Nos. 1 and 2 admitted the claim of the plaintiff for Rs. 700/- 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 Ghisulal 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 and if they have executed any pronote or receipt for that amount they alone are responsible for making payment thereof Ghisulal raised an addition plea in his written statement that defendants Nos. 1 and 2 secured a loan of Rs. 1500/- from him on 1-5-1964 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 bad to worse and the business of the firm received a set back so they conspired together to shift the entire liability on Ghisu Lal 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 the plaintiff?

(2) If so whether defendants No. 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 & all its as seats 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 CPC.

(5) Relief

The learned Munsif recorded the evidence of the parties on the aforesaid issues and decided issues No. 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 plaintiffs 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 out set 1 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 Somarm 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 not which is negotiable instrument must be disclosed in such a way in the pronote as to indicate that the pronote was executed by its agent or partner or for on behalf of that firm. In support of his above contention Mr. H.M. Lodha relied upon the following authorities:

(1) Jankidas v. Sir Kishan Parsed AIR 1918 PC 146 (2) PRMT Rule Perchippa v. Muniyandi AIR 1932 Rangoon 97. (3) Punjab United Bank Ltd. v. Mohammed Hussain AIR 1934 Lahore 358. (4) Srinivasayya v. Nagappa AIR 1936 Mad 984. (5) Sitaram v. Chimandas AIR 1928 Bom 516, (6) Birulal v. Ratanlal 1969 RLW 383. (7) Madangopal v. Narsingdas and Sons (8) Hamanujulu v. Harasimhulu AIR 1962 AP 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 Sonaram 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 pronote. 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 promote on behalf of or for the firm, namely, Mahendra a 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 pronote. Unless the firm's name is not disclosed in some such manner, the other partners in the firm cannot be held liable on the pronote, In Jankidas v. Sir Kishan Pershad 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 be charged upon a negotiable, document 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. 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 Lordship of the Privy Council the drawer of the Hundi signed it describing himself beneath signatures as Acting Superintendent of the Private Treasury of His Excellency Sir Maharaja, the Prime Minister of H.H. Nijam.' In their Lordships' opinion such a description was a description of drawar'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 a number of referred to above cases.

9. Applying this principle to the present promissory note Ex. 1 I am clearly of the view that the description such a 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 foiled to sign the promissory note in such manner as to indicate that he was not thereby incurring personal liability on the pronote. 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 there of does not appear to have been executed by him for on behalf of the firm The name of the firm beneath his signatures on the pronote 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 pronote 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 the courts below are set aside and the plaintiff's suit is dismissed in to. As the appeal has been disposed of on a point of law, no order as to costs.


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