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Jalal Mohammed Ibrahim (Died) and ors. Vs. Kakka Mohammed Ghouse Sahib and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberAppeal No. 93 of 1964
Judge
Reported inAIR1972Mad86
ActsPartnership Act, 1932 - Sections 69; Indian Limitation Act, 1908 - Schedule - Article 95; Code of Civil Procedure (CPC), 1908 - Sections 80 - Order 6, Rule 6 - Order 7, Rules 1 and 11 - Order 8, Rule 2 - Order 22, Rule 4 - Order 30, Rule 9
AppellantJalal Mohammed Ibrahim (Died) and ors.
RespondentKakka Mohammed Ghouse Sahib and anr.
Cases ReferredSon Punnayil Kuttu v. Raman Nair.
Excerpt:
partnership act (ix of 1932), section 69--under section, registration of firm is condition precedent to its right to institute suit--effect of non-registration--defendant should raise plea of non-registration in suit itself--decree passed in suit by unregistered firm is not nullity--analogy of pleas of jurisdiction and limitation considered--application of order xxx rule 9 of civil procedure code (v of 1908)--suit to set aside decree on ground of fraud--period of limitation under article 95 of indian limitation act--application of article to this case; under section 69 of the partnership act (ix of 1932) the registration of a firm is a condition precedent to its right to institute a suit. if a firm was not registered at the time a suit was filed by it, the subsequent registration of the.....1. the plaintiff is the appellant. the suit was filed by him for a declaration that the decree dated 25-3-1952 in c.s. no. 173 of 1950 on the file of this court was void as far as the plaintiff was concerned on the ground that the said decree had been obtained by fraud and suppression of the unregistered partnership agreement between the defendants and for restraining the first defendants and for restraining the first defendant from executing the said decree. or in the alternative for declaring the transfers of the funds of the second defendant made by the first defendant in his accounts as void and directing the first defendant to adjust the decree amount from the moneys standing to the credit of the second defendant and his wife with the firm of kaka mohammed ghouse and company. the.....
Judgment:
1. The plaintiff is the appellant. The suit was filed by him for a declaration that the decree dated 25-3-1952 in C.S. No. 173 of 1950 on the file of this court was void as far as the plaintiff was concerned on the ground that the said decree had been obtained by fraud and suppression of the unregistered partnership agreement between the defendants and for restraining the first defendants and for restraining the first defendant from executing the said decree. or in the alternative for declaring the transfers of the funds of the second defendant made by the first defendant in his accounts as void and directing the first defendant to adjust the decree amount from the moneys standing to the credit of the second defendant and his wife with the firm of Kaka Mohammed Ghouse and company. The plaintiff also prayed for a decree for enforcement of the indemnity clause in the agreement executed by the second defendant in favour of the plaintiff and for costs.

2. The case of the plaintiff as set out in the plaint is as follows. The plaintiff the 22nd defendant and one Abdul Ahmad were carrying on business in partnership, under the name and style of Roshan N.M.A. Carim Oomer and Co. (hereinafter called Rosham and co.) The first defendant, who is the son-in-law of the second defendant, had been carrying on business in partnership; with the second defendant, since April 1945 under an unregistered agreement dated 27-4-1945 in the name and style of Kaka Mohammed Ghouse Sahib and Co. (here-in after called Ghouse Sahib and Co.) and the second defendant had invested large sums of money in that business in his own name and in the name of his wife Safura Bi. With a view to overreach the plaintiff and obtain an undue advantage to himself the second defendant instigated the first defendant to file a suit. S.C., 173 of 1950 on the file of this court as the sole proprietor of Ghouse and co., against Roshan and Co., represented by its three partners and impleading also the receivers who were in charge of the properties of Roshan and Co. for the recovery of a sum of Rs. 57, 876-11-11. The defendants had colluded together and suppressed the fact of the partnership and wilfully and deliberately made a false and fraudulent Statement that the first defendant was the sole proprietor of the firm Ghouse and Co. As the plaintiff was not aware of the partnership between the first and second defendants. he did not contest and an ex parte decree came to be passed on 25-3-1952 in C.S 173 of 1950. When the suit was pending, certain creditors of the plaintiff filed I.P. No. 79 of 1952 for adjudicating them insolvents. When these insolvency proceedings were pending, and finding that the adjudication of the second defendant might involve Ghouse and Co., the first defendant obtained a fraudulent release from the second defendant of all his rights and claims in the partnership of Ghouse and Co., for a nominal sum of Rs. 10,000. Regarding the amounts standing to the credit of the second defendant and his wife in Ghouse and Co., with a view to screen them from the creditors the defendants got them fraudulently transferred in the name of the second defendant's daughter. who is the wife of the first defendant. This release and the transfer of entries were bogus and were never intended to be acted upon.

3. As the affairs of Roshan and Co. were getting worse and more involved, to compose the differences between the partners, the plaintiff and the second defendant entered into an agreement a dated 28-2-1953, whereby the plaintiff was to release all his rights to the assets of Roshan and Co., in favour of the second defendant and the second defendant had to discharge all the debts of Roshan and Co., and release the plaintiff from his liability and keep him indemnified against any claim by the creditors of the firm. The second defendant in pursuance of the agreement paid several creditors and adjusted with some others but could not come to an arrangement with regard to certain others. A list of creditors, whose claims were so disputed and could not be settled by the second defendant, was set out in Schedule C to the affidavit filed by the second defendant on 1-3-1954 in I.P. 79 of 1952. Item 4 of Schedule C to this affidavit is the decree amount in this decree the second defendant had stated in his affidavit that he was a partner with the first defendant in Ghouse and Co., that he had contributed a sum of Rs. 44,000 towards the capital that C.S. No. 173 of 1950 was filed at the instance of the second defendant, that the second defendant had subsequently passed a letter to the first defendant authorising and directing him to appropriate towards the decree amount the sum of Rs. 47,446-1-1 and Rs. 47000 standing to the credit of himself and his wife respectively and that if accounts were taken of the said partnership the first defendant would have to pay him substantial sums.

4. Contrary to the agreement between the plaintiff and the second defendant, the second defendant allowed the decree in C.S. 173 of 1950 to be executed against the plaintiff. The execution petition, though defended by the plaintiff, was ordered by the court on the ground that it was not open for the plaintiff in the execution proceedings to attack the validity of the decree and that he night take such appropriate proceedings by way of filing a suit to obtain his redress. Accordingly the plaintiff had filed the present suit. The plaintiff further contended that the decree obtained by the first defendant as the sole proprietor of Ghouse and Co. was fraudulent and had been done at the instance of the second defendent and by suppression of the unregistered agreement of partnership between the first defendant and second defendant, and that the plaintiff became aware of the existence of this agreement only on 16-1-1958. when he came to know of the production of the said agreement in C.S. 1656 of 1955 on the file of the City Civil Court, Madras. The further contention of the plaintiff was that his remedy to set aside the decree fraudulently obtained could be said to have arisen only from the date when he definitely ascertained and came to know of the existence of the agreement and therefore the suit was within time. The plaintiff also claimed that he was entitled to enforce the indemnity clause in the agreement between the plaintiff and the second defendant and that he was also entitled to have all the amounts that stood to the credit of the second defendant in Ghouse and Co. adjusted towards the decree in C.S. 173 of 1950.

5. The first defendant in his written statement denied the claim of the plaintiff in the suit and contended that the entries in the accounts were made only in pursuance of an agreement, which had already come to between the first and second defendants, that the first defendant was fully authorised, empowered and entitled to file the suit C.S. No. 173 of 1950 and that the plaintiff was always aware of all the circumstances. The first defendant denied that the second defendant instigated him to file the suit C.S. 173 of 1950 and the allegation of collusion between the defendants. The first defendant further stated that the plaintiff was served with the summons in the suit and that the plaintiff did not contest and allowed the ex parte decree to have passed in the suit and therefore the plaintiff was barred by res judicata and could not question the decree at this stage., The further contention of the first defendant was that the plaintiff was aware of the partnership between the first defendant and the second defendant from the very beginning and that in any case he was aware of it on 1-3-1954 when the affidavit was filed by the second defendant in the insolvency proceedings fully setting out the facts, that it was not correct to state that the plaintiff came to know of it only on 16-1-1958 and that the suit was therefore clearly barred by limitation. The first defendant also denied that there were any moneys of the second defendant which were liable to be appropriated or credited towards the decree, or that there was any direction given or that there was any direction given by the second defendant as alleged by the plaintiff or that the first defendant was aware of any such directions. the first defendant contended further that the agreement between the plaintiff and the second defendant dated 28-2-1953 was not binding on the first defendant and that he was neither a party nor privy to any such arrangement. The first defendant also contended that, since the first defendant was allowed to execute the decree, the plaintiff was barred by res judicata and by orders passed against him from questioning the validity of the decree or raising the same contentions in this suit. The first defendant further stated that the decree was not void on any ground. that there was no fraud, that the allegations in the plaint would not constitute such fraud as in law would entitle the plaintiff to set aside the decree, that even assuming to be true the allegations were only such as could be pleaded as defences to the suit and that the same not having been raised must be deemed to have been decided against the plaintiff and that in any event the plaintiff was precluded in law from raising the said contentions in a separate suit to set aside the previous decree. The first defendant also contended that the suit was bad for misjoinder of parties and causes of action.

6. The second defendant did not file any written statement. Pending the suit he also died. His legal representatives were not brought on record under the provisions of Order 22. Rule 4 subclause (4) Civil; P.C. So the suit had proceeded for trial without impleading the legal representatives of the second defendant.

7. The Sixth Assistant Judge, City Civil Court Madras, who tried the case, came to the conclusion that the first and second defendants were partners of Ghouse and Co., under the agreement dated 27-4-1945, that the plaintiff and his counsel must have been aware of the partnership agreement between the defendants on 1-3-1954, that the alleged knowledge of the partnership agreement by the plaintiff in 1958 only could not be believed, that the plaintiff must have been aware of the fact that the second defendant was also a partner of Ghouse and Co. on the date of suit and did not choose to raise the plea of bar of suit under Section 69 of the Partnership Act and that therefore the plaintiff was not entitled to set aside t`he decree passed against him and that the present suit was clearly barred by limitation. In regard to the agreement between the plaintiff and the second defendant under Ex. A.3 the lower court held that it was not binding on the first defendant, who was not a party to it and that the adjustments made in the accounts of the first defendant in respect of the amounts belonging to the second defendant and his wife were genuine and true and not fraudulent and therefore could not be reopened. In that view he dismissed the suit filed by the plaintiff. The unsuccessful plaintiff has filed the present appeal.

8. The first contention of Mr. Parasaran, learned counsel for the appellant in this appeal, was that the decree obtained by the first respondent first defendant as the sole proprietor of Ghouse and Co. in C.S. 173 of 1950 was void and liable to be set aside on the ground that it was obtained by committing a fraud upon the court and Roshan and Co., of which the plaintiff was a partner. The fraud alleged to have been committed by the first defendant in collusion with the second defendant is stated to have two fold aspects. Firstly though Ghouse and Co. was an unregistered partnership firm, of which the first and second defendants were partners, the suit C.S. 173 of 1950 was filed by the first defendant as its sole proprietor, and therefore, the decree obtained was liable to be set aside as a decree obtained by suppressing the fact of its being an unregistered firm which could not maintain a suit under Section 69 of the Partnership Act. This conduct of the first defendant amounted to a fraud vitiating the decree. Secondly, the suit was filed by the first defendant as the sole proprietor at the instance of the second defendant with a view to get over the legal obstacles in filing the suit by reason of the second defendant being a common partner and in order to defraud the firm of Roshan and Co., of its right to work out its equitable remedies in the suit.

9. The certified copy of the agreement of partnership between the defendants has been marked as Ex. A.1 in this suit. This is dated 27-4-1945. Under this agreement, the defendants have agreed to carry on a partnership business under the name and style of Kaka Mohammed Ghouse and Co., with its place of business at Periamet, Madras. The first defendant in his evidence admits that Ghouse and Co., was started in 1945, that Ex. A.1 was executed by both the defendants, that what was recited in the document was correct, that the business was run by the defendants as partners. In fact the learned counsel for the first defendant-first respondent did not seek to content that there was no partnership between the defendants. Therefore, there could be no doubt that Ghouse and Co., was an unregistered partnership firm, of which the first and second defendants were partners.

10. Under Section 69 of the Partnership Act. 1932, no suit to enforce a right arising from a contract shall be instituted in any court by or on behalf of any person suing as a partner, in a firm against any person alleged to have been partner in the firm and no suit to enforce a right arising from a contract shall be instituted in any person alleged to have been partner in the firm and no suit to enforce a right arising from a contract shall be instituted in any court by or on behalf of a firm against any third party unless the firm is registered and the person suing is or has been shown in the Register of firms as a partner. The registration of a firm is a condition precedent to its right to institute a suit. If a firm was not registered at the time a suit was filed by it, the subsequent registration of the firm would not entitle the court to proceed with the suit and the only course open to the court is to dismiss the suit. This principle is well settled and we may refer in this connection to the decision in Ponnuchami Goundar v. Muthusami Goundar, 1941-2 Mad LJ 968 = (AIR 1942 Mad 252) and the latest decision of the Supreme Court in Commr, of Income-tax, Andhra Pradesh, Hyderabad v. Jayalakshmi Rice Mill,. C.A. No. 545 of 1967 SC 1015). Therefore, it is clear that the suit C.S. 173 of 1950 filed by the first defendant as "Kaka Mohammed Ghouse Sahib and Co." Madras Represented by its sole proprietor. Kaka Mohammed Ghouse Sahib was contrary to the provisions contained in Section 69 of the Indian Partnership Act. The first defendant knowing fully well that he was only a partner of Ghouse and Co., had filed the suit as its sole proprietor, Thus it may be conceded that the first defendant had suppressed a material fact that the plaintiff in C.S. 173 of 1950 was an unregistered partnership firm, and obtained a decree against the defendants therein. The question arises whether this will amount to fraud, which will entitle the plaintiff-appellant to get an order setting aside the decree in C.S. 173 of 1950.

11. Under Order 7 Rule 1 Civil P.C. the plaint shall contain the name, description and place of residence of the plaintiff and the facts showing that the court has jurisdiction. Under Order 6, Rule 6 Civil P.C. any condition precedent, the performance or occurrence of which is intended to be contested, shall be distinctly specified in his pleading by the plaintiff or the defendant, as the case may be. Under Order 8. Rule 2 of the Civil P.C. the defendant must by his pleading raise all matters which show the suit not to be maintainable and all such grounds of defences, if not raised, would be likely to take the opposite party by surprise, or would raise issues of fact not arising out of the plaint, as for instance fraud, limitation etc. It is not disputed that the summons in the suit C.S. 173 of 1950 was duly served on all the defendants including the plaintiff herein. The three partners of Roshan and Co. who were impleaded individually did not file any written satement in that suit. The joint receivers who were in possession of the properties of the firm were also impleaded as defendants and though they took time for filing a written statement, ultimately they did not file and the suit was decreed ex parte. The maintainability of the suit is one of the grounds that will have to be specifically pleaded under will have to be specifically pleaded under Order 8, Rule 2, Civil P.C. The defendants in that suit and not raised that plea. The learned author Mulla in his book on Civil P.C. 13th Edn. p. 769 states that a question of fact, which had not been put forward in the written statement, cannot be allowed to be raised later, for example a plea that a partnership was not registered. In Chaimanram v. Ganga Saha, it was held that the plea could not be allowed to be raised in second appeal when it was not pleaded in the written statement. In Mohamed Ali v. Kondho Rayaguru, AIR 1945 Pat 286 a Division Bench of the Patna High Court took the same view and further observed that, since it was the defendant who intended to contest the performance of the condition precedent. viz the registration of the firm within the meaning of Order 6, Rule 6. Civil P.C. and if that point was not raised in the pleadings. the question was not at all before the court. A similar view was taken by the Rajasthan High Court in Kalyan Sahai v. Firm Lachminarian, . These

authorities clearly establish that the defence of non-registration of the firm is as plea that will have to be raised in the suit itself, and if it had not been raised, it could not be permitted to be raised for the first time in the second appeal. Such a plea could not be permitted to be raised in a separate suit is in our opinion, a fortiori case. In this connection we may also refer to the decision of this court inGoverdhandoss v. Abdul Rahiman, AIR 1942 Mad 634 = ILR (1942) Mad 775 wherein it was held:--

"There is distinct provision in the Limitation Act that a court is bound to dismiss a suit on the ground of limitation, if it finds the suit to be barred, whether a plea of this kind had been raised on behalf of the defendants or not. No such provision however exists in the Partnership Act and therefore the court is not bound to dismiss the suit on the ground of non-registration of the firm suo motu, if no plea had been raised by any of the defendants to the suit"

Learned counsel for the appellant drew our attention to Order 7, Rule 11 (d) Civil P.C. which states that the plaint shall be rejected where the suit appears from the statement in the plaint to be barred by any law and contended that Section 69 of the Partnership Act being a provision barring a suit by an unregistered firm, the court could dismiss a suit suo motu and that therefore the decision in AIR 1942 Mad 634 requires reconsideration. But we consider that it is not necessary to go into that aspect, because we are of the view that the maintainability of a suit is a plea that will have to be taken by a defendant in the suit, and if such a plea had not been taken, it will not be open to him to raise that plea on any ground in a separate suit.

12. Further, the decree passed in a suit instituted by an unregistered firm is not a nullity. The disability created by Section 69 of the Partnership Act is with regard to the right to institute a suit and not with regard to the power of the court to pass a decree. The object of this section appears to be to protect public against a firm carrying on business under a name which does not disclose to the public the names of the actual partners. But still the objection as regards the maintainability of the suit on the ground that it is an unregistered firm is one that it is primarily available to the defendants in the suit,. Therefore, the defendants could waive that objection. In construing an analogous provision contained in Section 80. Civil P.C. the Privy Council in Vellayan Chettiar v. Govt. of the Province of Madras, ILR (1948) Mad 214 = (AIR 1947 PC 197) said that though the provisions of Section 80. Civil P.C. were mandatory and must be enforced by the court it could be waived by the authority for whose benefit it was provided. The plea of bar of jurisdiction being a matter, which might and ought to have been made a ground of defence directly or attack in the former suit, shall be deemed to have been a matter directly and substantially in issue in such a suit. It has been repeatedly held that in order that fraud may be ground for vacating a judgment, it must be a fraud that is extrinsic or collateral to everything that has been adjudicated upon but not one that has been or must be deemed to have been or must be deemed to have been dealt with by the court (vide Chinnayya v. Ramanna. ILR 38 Mad 203 = (AIR 1916 Mad 364); Kadirvelu Nainar v. Kuppuswami Naicker. ILR 41 Mad 743 = (AIR 1919 Mad 1044)(FB); Jagannath v. Perumal Naidu.(1969) 82 Mad LW 167; Weavers Mills Ltd. v. Balkis Ammal. . In our opinion, therefore, the mere fact of filing of the suit by the first defendant as the sole proprietor of Ghouse and Co., contrary to Section 69 of the Partnership Act cannot be considered to be extrinsic or collateral to everything that has been adjudicated upon.

13. But the question arises as to whether the suit filed by the first defendant as the sole proprietor at the instance of the second defendant with a view to get over the legal obstacles in filing the suit by reason of the second defendant being a common partner and by reason of the fact is not allowing Roshan and co., to exercise its right to work out its equitable remedies will make a fraud extrinsic or collateral to everything that has been adjudicated upon. Under O 30, R.

9. Civil P.C. it is provided that the provisions in that order will apply to suits as between a firm and one or more of the partners therein and to suits between firms having one or more partners in common, but that no execution shall be issued in such suits except by leave of the court, and on an application for leave to issue such execution, all such accounts and enquiries may be directed to be taken and made and directions given as may be just. The rule is an equitable exception to what has been described as the elementary rule of procedure that the same individual even in different capacities cannot be both a plaintiff and a defendant. The provision that execution will not be taken without leave of the court and that the court may order the accounts to be taken and give such directions, as it considers just, is intended to safeguard the interests of the other partners. This is an equitable principle, which has been applied in the decisions in Lakshmanan Chetty v. Nagappa Chetty, 34 Mad LJ 408 = (AIR 1918 Mad 167); Nagendra Aiyar v. Muthiah Bhagavathar, 52 Mad Lj 303 = (AIR 1927 Mad 1096) and Rustomko v. Purshothamdas, (1901) 25 Bom 606. The suit having been filed by the first defendant as the sole proprietor suppressing the fact of the second defendant being a common partner had deprived the plaintiff of the equitable remedy available under Order 30,. Rule 9, Civil P.C. It is contended on behalf of the first respondent-first defendant that the second defendant being a partner of Ghouse and Co., the knowledge of the second defendant is to be imputed as knowledge of the other partners of Roshan and Co., as well, every partner being an agent in the eye of law of the other partners. For this proposition the learned counsel for the first respondent first defendant relied on Rampal Singh v. Balbaddhar Singh, (1903) ILR 23 All 1 (PC). He further contended the suit, and if he had not taken proper steps to defent the suit, still the plaintiff is bound by the decree and the only course open to the plaintiff is to proceed against the second defendant for the damage caused to him by reason of his failure to take proper steps in the suit as an agent of the plaintiff. The proposition may be acceptable in cases where the fraud committed by the second defendant was in connivance with a third party. But this is a case where the second defendant was a partner with the first defendant himself. therefore, he was an agent both for the plaintiff and the first defendant. In our opinion, therefore, knowledge of the second defendant of the non-maintainability of the suit on the facts and circumstances of this case cannot be imputed as knowledge of the other partners of Roshan and Co. We therefore hold that, though filing of a suit by an unregistered firm by suppressing the fact of non-registration and as a sole proprietary concern will not by itself be a fraud that will vitiate the decree, the said fact taken in conjunction with the fact that the first defendant herein as the plaintiff in the prior suit suppressed the fact that the second defendant herein was a partner in both the firms with the obvious intention of avoiding equitable adjustments will clearly amount to fraud vitiating the decree in the prior suit. The decree in C.S. 173 of 1950 is liable to be set aside on the ground of fraud committed by the defendants.

14. At this stage we may also consider another argument of the learned counsel for the first defendant-first respondent. It was contended by him that the first defendant filed an execution petition E.P. No. 201 of 1955 to execute the decree in C.S. 173 of 1950 and that a portion of the amount due under the decree was also recovered. Even after the filing of the present suit also the first defendant had realised a portion of the decree amount. On this it was contended that the plaintiff had elected to be bound by the decree and that therefore it was not open to him to challenge it in this suit. We are unable to accept this contention. The plaintiff contested the execution and this was refused. He also filed an appeal against that order, though unsuccessfully. Thereafter he had filed the present suit. Therefore, it could not be said that the plaintiff elected to be bound by the decree in C.S. No. 173 of 1950.

15. Even so, the suit is liable to be dismissed on the ground that it was filed beyond the period of limitation prescribed under Art. 95 of the Indian Limitation Act, 1908. Under this Article a suit to set aside a decree obtained by fraud has to be filed within three years when the fraud became known to the party wronged. In this case the following facts disclose that the plaintiff must have had knowledge of the fraud in obtaining the decree in C.S. 173 of 1950 long prior to the date of the suit. The plaintiff and the defendants live in Ambur in the same street. They are businessmen meeting almost every day.. The second defendant was a partner both of Ghouse and Co. and Roshan and Co. It is the evidence of the first defendant that even at the starting of the business the plaintiff and the second defendant came to him and that the plaintiff knew that the second defendant came to him and that the plaintiff knew that the second defendant was a partner. Further, the suit claim in C.S. 173 of 1950 was for goods supplied to Roshan and Co. Roshan and Co. must have been aware that Ghouse and Co. with whom they were dealing was a partnership firm. In any case we have no doubt that the first and second defendants were partners of Ghouse and Co. when the second defendant filed his affidavit. Ex. A.4 on 1-3-1954 in I.P. 75 of 1951 and I.P. 79 of 1952. In this affidavit the second defendant had clearly stated that he was a partner with the first defendant in Ghouse and Co. and had also given all other details. While dismissing the insolvency petitions by order dated 1-3-1954 (Ex. A.6) on basis of the affidavit filed by the second defendant the learned Judge has also noted these facts relating to Ghouse and Co. The plaintiff in his evidence as P.W. 1 in this case admits that he was present when the petitions were dismissed. Therefore, the plaintiff and his counsel had sufficient knowledge of the second defendant being a partner of Ghouse and Co. and the fact of non-registration of Ghouse and Co. Learned counsel for the appellant contended that mere knowledge about fraud will not be sufficient, unless the first defendant was able to show that the plaintiff had clear and definite knowledge of the fraud for more than the period of limitation. In support of this contention the learned counsel for the appellant relied on two decisions, viz., Rahimbhoy Habibhoy v. Charler Agnew Turner. (1893) ILR 17 Bom 341 (PC) & Moidiyan's Son Punnayil Kuttu v. Raman Nair. (1908) ILR 31 Mad 230. In these decisions it could be seen that every effort was taken by the person wronged to find out the details of the fraud and, when he came to Know of the fraud definitely, he had filed the suit within time. But in this case as already stated in the affidavit filed by the second defendant as early as 1-3-1954, and in 79 of 1952, it had been clearly stated that the second defendant was partner with the first defendant and in spite of that the plaintiff had not taken any steps to get fuller facts, if necessary. It is not open to the plaintiff to keep quiet indefinitely after having come to know that the defendants were partners and come forward with the case that he came to know of the full facts only within the period of three years prior to the date of the suit. The evidence of the plaintiff that he came to know of the fraud only when Rukuddin told him that the second defendant was a partner of Ghouse and Co. and that he gave him the partnership deed, Ex. A.1 is not reliable,. We have no doubt that the plaintiff was aware of the partnership of Ghouse and Co., and the fact of nonregistration even in 1954, and the suit filed in 1958 was clearly barred by limitation.

16. The next contention of the learned counsel for the appellant was on the alternative relief prayed in the suit,. It was contended that under the agreement executed between the plaintiff and the second defendant on 28-2-1955 the second defendant was liable to discharge the decree debt in C.S. 173 of 1950 and that as an indemnity holder the plaintiff was entitled to require the moneys due to the second defendant being appropriated towards the decree in C.S. 173 of 1950. He also contended that the transfers of moneys by the first defendant on the instructions of the second defendant to the credit of the second defendant's daughter were fraudulent and in order in defeat the claims of the plaintiff. It is further contended that the entries in the account books, as though the amounts had been adjusted to the credit of the daughter, were fraudulent and intended to defeat the claims of the plaintiff. We find absolutely no basis for this argument. The account books of Ghouse and Co., were submitted to the income-tax authorities and we find the seals of the income-tax department on the account books of the years 1948 and 1950. The accounts were closed as early as 31-7-1952. The agreement between the plaintiff and the second defendant was only on 28-2-1953. Therefore, there is no basis for the argument that the entries of transfers of the amounts to the credit of the daughter in the account books were made fraudulently and in order to defeat the claims of the plaintiff. As could be seen from the account books right from 1946, the first defendant had been transferring the profits to the credit of the second defendant's daughter. There were no amounts due to the second defendant from Ghouse and Co. The account books clearly show that the adjustment entries made therein were genuine and true and not fraudulent. Therefore, the prayer in the plaint that the second defendant should bring the moneys standing to his credit to discharge the decree in C.S. 173 of 1950 cannot be granted. Since no money is due by the first defendant to plaintiff cannot ask the first defendant to set off the amount in discharge of the decree in C.S. 173 of 1950,. In the result we dismiss the appeal with costs.

17. Appeal dismissed.


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