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Manapali Krishnayya Vs. Kaza Seetharamayya and anr. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in174Ind.Cas.22
AppellantManapali Krishnayya
RespondentKaza Seetharamayya and anr.
Cases ReferredBombay High Court. In Brayant Powis and Bryant Ltd. v. La Banque
Excerpt:
receiver - powers of--acknowledgment by--suit for dissolution of partnership--defendant partner appointed receiver with consent of plaintiff to realize assets, to pay debts and to do other acts--such receiver, if has power to make acknowledgment of partnership debt--such acknowledgments, if save time against other partner. - .....as meaning all acts necessary and incidental for the realization of the assets and for the payment of debts due by the firm. this was on october 5, 1923. defendant no. 1 was discharged from the office of the receiver on february 19, 1929. it was during this interval that ex. f came into existence. the recitals in ex. f are to the effect that the plaintiff pressed for payment of the debt on the ground that it would be barred by limitation but as defendant no. 1 had not the account books before him, he could not, verify the amount due and as soon as the account books were received from court, he would pay the principal and interest which may be found due in accordance with the account without having any regard to limitation. there can be no doubt that this letter operates as an.....
Judgment:

Venkataramana Rao, J.

1. The main question argued in this second appeal is one of limitation. The suit is to recover a sum of Rs. 709-7-0 due in respect of dealings had with defendants Nos. 1 and 2 who carried on business under the name of Seetharamanjaneya Rice Mill. The claim would be admittedly barred by limitation but for an acknowledgment of liability contained in the letter, Ex. F, executed by defendant No. 1 on October 28, 1926. Defendant No. 2, who is the appellant in this second appeal, resists the claim on the ground that Ex. F is not binding on him on two grounds: (1) The letter was intended to be executed by both the defendants but it is only signed by defendant No. 1 and, therefore, inoperative as against him (defendant No. 2); (2) On the date of Ex. F there was a decree for dissolution of partnership made in O.S. No. 244 of 1923 and defendant No. 1 could no longer act for him.

2. The first contention can be easily disposed of. Though the document was intended to be executed by two persons, at the time of the execution, it was agreed that it would be enough if defendant No. 1 executed it as he was the Receiver appointed in the said suit and the letter was signed by him as Receiver. The view taken by the lower Court in this behalf is correct and I see no reason to differ from it.

3. To appreciate the second contention a few facts may be necessary. Original Suit No. 244 of 1923 was a suit for dissolution of partnership of the said Seetharamanjaneya Rice Mill and in that suit an application was made on September 5, 1923, for the appointment of a Receiver by defendant No. 2 who was the plaintiff in the said action. The petition ran thus:

For the reasons set forth in the affidavit filed herewith, the plaintiff prays for the appointment of a Receiver for collecting the assets due to the suit rice mill from others and for payment of the debts due to others and do other acts.

4. Defendant No. 1 in Paragraph 3 of his counter-affidavit filed therein stated that in the matter of recovery of the assets due to the firm and in the matter of the payment of the debts due by the firm, he would carefully attend to them without allowing them to be barred by time and he would recover the debt by filing suits, etc. On the strength of the undertaking given by defendant No. 1 the plaintiff agreed to the appointment of defendant No. 1 as Receiver. The order of the Court was: 'defendant No. 1 appointed Receiver accordingly,' i.e. in accordance with the terms of the petition. Therefore, the effect of this appointment was that defendant No. 1 was appointed Receiver for collecting the assets due to the suit rice mill from others and for payment of the debts due to others and to do other acts, which 1 interpret as meaning all acts necessary and incidental for the realization of the assets and for the payment of debts due by the firm. This was on October 5, 1923. Defendant No. 1 was discharged from the office of the Receiver on February 19, 1929. It was during this interval that Ex. F came into existence. The recitals in Ex. F are to the effect that the plaintiff pressed for payment of the debt on the ground that it would be barred by limitation but as defendant No. 1 had not the account books before him, he could not, verify the amount due and as soon as the account books were received from Court, he would pay the principal and interest which may be found due in accordance with the account without having any regard to limitation. There can be no doubt that this letter operates as an acknowledgment of liability. The question is whether defendant No. 1 as Receiver is entitled to acknowledge this debt, and if so, would it save the suit from being barred by limitation even as against defendant No. 2?. The order appointing Receiver distinctly authorises the Receiver to make payments of the debts due to others by the firm. If the Receiver had made a part payment, it would certainly be within the scope of his authority though the effect of it might be to stop the statute of limitation from running. In In re Hale; Lilley v. Foad (1899) 2 Ch. 107 : 68 L.J. Ch. 517 : 80 L.T. 827 : 47 W.R. 579 : 15 T.L.R. 389, a question arose whether a part payment made by a receiver who was authorized to make payments under a statute towards the debt due in respect of the estate of a mortgagor would save an action to recover the debt from the bar of limitation. The Court of Appeal held in that case that it would and Sir F.H. Jeune, one of the learned Judges who took part in the appeal, remarked thus:

It seems to me that this Receiver, in making this payment, was acting properly, that is within the scope of his authority. Then the difficulty in the case vanishes. It is impossible to draw a distinction between a payment as a payment, and a payment as an act from which an inference of a promise is to be drawn--that is a legal inference. Payment of part of a debt is an acknowledgment that it is part of a debt which has to be paid. It is impossible to draw a distinction between a payment as a payment, and a payment with regard to which there arises the legal inference of a promise to pay the whole debt.

5. If the Receiver can make a part payment and take the case out of the statute. I do not see any reason why he should not have power to acknowledge the debt. As observed by their Lordships of the Judicial Committee in Raja Braja Sunder Deb v. Bhola Nath 12 L.W. 288 : 55 Ind. Cas. 543 : A.I.R. 1919 P.C. 120 : 24 C.W.N. 153 : 2 U.P.L.R 1 , where an agent was authorized to pay the amount of the claim, 'he could plainly also arrange to prevent time from becoming a bar to it'. In that case the agent executed a renewed promissory note which was held sufficient to save the suit from being barred by limitation. In this case, the Receiver must, therefore, be deemed to have made the acknowledgment for and on behalf of the partners of the firm. In Lakshumanan Chetty v. Sadayappa Chetty 35 M.L.J. 571 : 48 Ind. Cas. 179 : A.I.R. 1919 Mad. 816 : 8 L.W. 594 : (1918) M.W.N. 877 : 25 M.L.T. 371, it was held that where a receiver in an action for dissolution of partnership had authority to do all things necessary for the preservation of the assets of the firm, an acknowledgment of liability made by him in respect of a claim against the, partnership was held a sufficient acknowledgment within the meaning of Section 19, Limitation Act, to prevent the claim being barred against the partners. Their Lordships observe that in many cases an acknowledgment of a debt may be necessary to save the estate from loss and thus necessary for the preservation of the estate. The learned Subordinate Judge in this case find that the acknowledgment was made to prevent the creditor from filing a suit and to avoid unnecessary expense to the partnership. Therefore, I am of opinion that. Ex. F would avail as an acknowledgment of liability even as against defendant No. 2.

6. I shall now deal with some of the cases relied on by Mr. Somasundaram Kilgour v. Finlyson (1789) 1 H.B.L. 155 : 126 E.R. 92, was one of the cases relied on by him. In that case on the dissolution of a partnership one of the partners was authorized to receive all debts owing to and pay those owing from the partnership. He indorsed a bill for exchange in the name of the partnership. It was held that he had not authority to do so and it was conceded in argument that the action on the bill could not be supported against the other partners. Abel v. Sutton 3 Esp. 108 : 170 E.R. 556 : 6 R.R. 818, was a case where on the dissolution of a partnership, one of the partners was authorized to settle the affairs of the partnership but this power was held insufficient to negotiate a bill of exchange and the reason assigned was that no one might make another his debtor against his will. The distinction between these cases and the present is this: the partner in the said cases was incurring a fresh liability, whereas in the present case, the Receiver was acknowledging a liability already existing. This distinction was noticed in the case in Abdulalli Badruddin v. Ranchodlal Trikamlal, 38 Ind. Cas. 873 decided by the Bombay High Court. In Brayant Powis and Bryant Ltd. v. La Banque de Peuple (1893) A.C. 170 : 62 L.J.P.C. 68 : 1 R. 336 :68 L.T. 546 : 41 W.R. 600, an agent of a company who was authorized to make a contract of sale and purchase under the express terms of a power of attorney was held not to have the power to borrow money or bind the company by a contract of loan. This case only illustrates the general principle that a power to bind a principal by a particular act of an agent who was authorized to transact the affairs of the principal under a power of attorney must be derived from the instrument and where the power is not expressly conferred or would not arise by necessary implication, the principal would not be bound. In the present case under the order of appointment, the Receiver, by necessary implication, had the power to acknowledge the debt. The view of the lower Court that the claim against defendant No. 2 is not barred by limitation is correct. In the result, the second appeal fails and is dismissed with costs of respondent No.1. Leave refused.


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