1. This is a suit for recovery of Rs. 10718-4-0 alleged to be due to the pltf. from the defts. 1 to 4 as drawers & acceptors of a hundi dated 13-11-1938, from deft. 5 as indorser of the hundi & from deft. 6 on the footing that he agreed to discharge the liabilities of the deft. 5.
2. The pltf. & Din Mahommad used to carry on business in partnership in the name of East India Export Co. & Asiatic Produce Co. In 1933 they decided to terminate the partnership. The defts. 1 to 4 had drawn & accepted a hundi for Rs. 10,000 payable to the said firm or order 56 days after date. In accord & satisfaction of the pltf.'s share in the partnership, the said Hundi was indorsed by the said firm through Din Mohommed in favour of the pltf. on 14-11-1933. The partnership was dissolved by mutual consent as on & from 31-12-1933 & on 14-2-1934 a deed of dissolution was executed by the pltf. & Din Mohommed. The deed provided, inter alia, that Din Mahommad would be entitled to realise all the outstandings of the partnership businesses & would pay all debts & liabilities of the said businesses & indemnify the pltf. in respect of any claim or action in respect of any of the debts of the said businesses & Din Mohommed would be entitled to use the firm names & to the benefit of all contracts entered into by the two firms. In a schedule to the deed of dissolution, the outstandings, stock-in-trade & the liabilities of the businesses were set out, which did not contain any reference to the pltf. as a creditor on account of the indorsement of the hundi by the deft. firm.
3. On 31-12-1933, the pltf. made & signed the following endorsement in the books of account of the partnership:
'After understanding the account, partnership is dissolved amongst us & the account book is closed., I have received my full dues, & have no further claim. Henceforth I shall have no interest or concern with the firms of East Indian Export Co. & Asiatic Pro-duce Co.'
4. The said hundi dated 13-11-1943 was dishonoured by non-payment by the drawers & it is alleged that the deft, firm had notice of dishonour. This suit was filed on 21-3-1935.
5. The plaint alleged that on 9-6-1934 the defts. 1 to 4 with the verbal assent of the deft, firm pledged 15 barrels of Lizard Skin as security for the debt due on the hundi, with the pltf. on certain terms & conditions contained in a writing bearing the said date. Leave was reserved under Order 2, Rule 2 to sue for enforcement of the rights in respect of the pledge.
6. The defts. 1 to 3 filed a joint written statement. Defendant 4 filed a separate written statement as also the deft, firm of East India Export Co.
7. On 10-3-1937 the suit came up for hearing before Lort-Williams J. & was part-heard.
8. Thereafter an appln. was made for amendment of the plaint. The appln. was heard on 27-7-1937 when Lort-Williams J. made an order that the plaint & the register of the suit be amended by adding to the cause title thereof the name & description of Din Mohommed, a member of the firm of East Indian Export Co. as a party deft. & that the body of the plaint be amended in the manner indicated in red ink in the schedule to the order. The order for amendment was made without prejudice to the contentions of the deft, that the claim against Din Mohommed was barred by limitation & that the amendment introduced a new claim. Pursuant to the order the plaint was amended & the amendment in the plaint was signed by the Registrar on 15-9-1937.
9. The plaint was amended by adding Din Mohammed as a party to the suit & by alleging that the deft, firm was a continuation of be firm of East India Export Co. & Din Mohammed had taken over the liabilities of the business of the said firm. It was also alleged that Din Mahommed acknowledged his liability to pay the pltf.'s claim by a letter dated 24-3-1934.
10. Din Mahommad filed a written statement. He urged that the pltf. had no claim against him because by the deed of dissolution as well as by the endorsement in the account books, to which I have referred the pltf. acknowledged that he had no claim against Din Mahommed. He denied presentation of hundi & notice of dishonour. He further denied that the East India Export Co. which he carried on after dissolution was the same as the firm which had been dissolved. He denied shaving taken over the liabilities of the old firm so far as the pltf. was concerned. He also denied that he had acknowledged his liability in writing or that he assented to the pledge by the defts 1 to 4 on 9-6-1934. He contended that the agreement dated 9-6-1934 was a novation of the original contract & wiped out the liability, if any, on the hundi.
11. The defts. 1 to 4 not having filed their affidavit of documents in time, their defence has been struck out by an order of this Ct.
12. Defendant firm & Din Mahommed have appeared to contest the suit.
13. The following issues were framed:
1. (a) Is the suit maintainable against defts. 5 & 6?
(b) Has the pltf. any cause of action against debts. 5 & 6?
(a) Does the plaint disclose any cause of action?2. Did the pltf. accept or appropriate the sum covered by the hundi as alleged in para. 2 of the written statement of deft. 5?
3. Has the pltf. any claim against deft. 6 in view of the dissolution of the partnership firm of East India Export Co ?
4. Has liability under the hundi been discharged by reason of the agreement dated 9-1-1934? Was there any consent by clefts. 5 & 6 to the said agreement?
5. Is the suit barred by limitation against deft. 6?
6. To what relief, if any, is the pltf. entitled?
14. Issue 1 (a,). -- Is the suit maintainable against defts. 5 & 6? It is contended that the indorsement of the hundi dated 13 11-1934 by She deft, firm in favour of the pltf. did not create any debt or liability as between the pltf. & the firm, because a patnr. cannot be a creditor of the firm of which he is a member.
15. Reference was made to the case of Ellis v. Kerr, (1919) 1 ch. 529 : (79 L. J. Ch. 291). By A marriage settlement, W. W. Kerr assigned a policy of assurance on his own life in favour of the trustees, to be held upon the trusts of the settlement. The settlement contained a covenant toy W.W. Kerr & T.D. Butler & C.J. Kerr (two of the trustees) whereby they covenanted with the trustees. W.W. Kerr would not by any act or omission cause or allow the policy assigned by the settlement or any policy substituted therefor to become void or voidable & that they would duly pay all money payable for keeping in force the said policy & that if such policy should become void would effect on the life of the said W.W. Kerr a new substituted policy with such office & in such names as the trustees would direct & would deliver A assign every such policy to the trustees. The policy lapsed & in substitution for it, W.W. Kerr effected a Policy on his own life in the names of Butler, C. J. Kerr & W.H. Chetwynd as trustees of the settlement. W.W. Kerr made default in the payment of premium & was adjudicated a bankrupt. Thereafter, Butler & C.J. Kerr paid premiums for same time but they refused to make any further payments. The action was brought by E. H. Ellis against W.W. Kerr, T.D. Butler & C. J. Kerr inter alia, for an order on them to pay the premiums which had fallen due. The defence of Butler & C.J. Kerr was not that the failure to pay premiums created no cause of action against them by reason of their being named therein both as covenantors & covenantees. Warring ton J., held that the covenant was void. He observed as follows :
'The substance of the objection is that a man cannot make a contract with himself. One would bare though, it only required to be stated to be self-evident that it makes no difference that he joins in that contract with himself some other person either as covenantor or as covenantee, if the obligation on the one side, or as the case may be, the right to enforce the obligation on the other side, is joint. In the present case the right to enforce the obligation is a joint right. It is vested in the three persons with unquestionably whom it is made as joint tenants & the action is brought in supposed enforcement of that right against two of the persons in whose favour it is created.' (p. 534),
16. Again he observed as follows : (p. 536) 'Now the result of that ease I think is plainly to determine that as a matter of substance an obligation by a man to pay himself or to pay himself & another is one which is in fact not an obligation in the eye of the law.'
17. In Teague v. Hubbard, (1828) Section B. & C. 345 : (108 E. R. 1071), a member of a Joint Stock Co. was employed by the company as their agent to sell goods for them. Having sold goods on account of the company he drew a bill of Exchange on the purchaser payable to the drawer's order. The purchaser accepted the bill & the drawer indorsed it to the actuary of the company who again indorsed it to another member who was the Managing Director & who purchased goods for the company. The company was then indebted to the managing director for a larger amount than the sum mentioned in the bill. The acceptor became inslvt. before the bill became due. The drawer received from the acceptor 10 shillings in the pound upon the amount of the bill by way of composition. The indorsee sued the drawer on the bill. It was held that the indorsee being a member of the company could not sue the drawer on the bill inasmuch as it was drawn by the latter on account of the company. Lord Tenterden C. J. observed :
'It further appears that both the pltf. & the deft. were members of the Mining Co. If therefore the pltf. recovered on these bills it would be recovered by one joint Director against another & the then deft, could have a right to call upon the pltf. for contribution. It is dear therefore that no action can be maintained upon the bills.'
18. In Neale v. Turton, (1827) 4 Bing 149: (5 L. J. P. C. 133) the pltf. who was a holder of shares in a company, drew bills on the directors of the company for goods supplied by him. The bills were accepted by the secretary of the company for the directors. The secretary had authority to accept bills drawn by the pltf's brother. It was held that the pltf. could not recover on these bills against the company. Best C. J., at p. 151 observed as follows :
'It may be admitted that if a patnr. were to draw on other patnrs. by name & they were individually to accept, he might recover against them because by such acceptance a separate right is acknowledged to exist. But that is not the case here, for the bills are drawn on the directors of the company & accepted for the directors. They are the agents of the company & accept as agents of the company. The case, therefore, is that of one partner drawing on the whole firm including himself. There is no principle by which a man can be at the same time pltf. & deft. We are clearly of the opinion that these bills being drawn on the directions are in fact drawn on the company of which the pltf. is himself a member. He cannot be at the same time drawer & acceptor, & the rule therefore which has been obtained for entering a non-suit must be made absolute.'
19. In the Lindley on Partnerships 10th Edn. at p. 747 it is stated as follows :
'In point of law a patnr. may be a debtor or a creditor to his co-partner but he cannot be either a debtor or creditor to the firm of which he himself is a member nor can be employed by his firm for a man cannot be his own employer' & again at p. 161:
'(1) A firm can neither sue nor be sued otherwise than in the names of the persons composing it.
(2) Consequently no action can be brought by the firm against one of its patnrs. nor by one of its patnrs. against it; for in any such action one person, at least, would appear both as pltf. & it was considered absurd for any person to sue himself even in form.'
20. The legal position it seems to me, is the same in India. The principle seems to be as Lort. Tenterden C. J.. observed, that if the pltf. on recovering the amount of the bill can be called upon by the deft, to contribute, no action can be maintained on the bill. Section 43, Contract Act provides that any joint promisor may compel other joint promisor to contribute to the performance of the promise.
21. I do not think, therefore, that the indorsement of the hundi by the deft, firm created any liability as between the pltf. & the deft. firm & that the pltf. is not entitled to enforce that liability in a suit against the firm.
22. The pltf. cannot also sue the firm because a person cannot be a creditor & debtor at the same time & cannot be pltf & deft, in the same action at the same time. The only way in which the liability can be enforced is by filing a suit against the other patnrs. for taking partnership accounts. It was held by Lort-Williams J. in Ghisulal v. Gumbhirmull, 39 C.W.N. 606 : (A.I.R. (25) 1938 Cal. 377) that a patnr. cannot sue the partnership firm on a debt which, is not independent of the partnership account, alleged to be due to him before final settlement of accounts, the only remedy in such a case is a suit for accounts of the partnership.
23. There is also another objection to the maintainability of the suit against the deft, firm. It will be remembered that the hundi was indorsed on 14-11-1934 before the firm had been dissolved. The hundi was payable 56 days after date. The cause of action of the pltf. did not arise on the hundi till 8-1-1934. The firm. was dissolved with effect from 31-12-1933. Under Order 30, Rule 1, C. P. C. a suit can be filed against two or more persons carrying on business as patnrs. in the firm name, only if the cause of action for the suit arose during the continuance of the firm. If the cause of action arises after dissolution of the firm the patnrs cannot be sued in the firm name. In this particular case the cause of action arose after the dissolution of the firm & this suit against the firm in the firm name is incompetent.
24. Issue 1 (b). Has the pltf. any cause of action against the defts. 5 & 6 I have already stated that the pltf. had no cause of action to file a suit against the deft. 5 because the indorsement of the hundi did not create any liability as between the pltf. & the deft. firm. It is clear that the pltf. has no cause of action against deft. 6 on the hundi. The deft. 6 was not the indorser. Deft. 6 is sought to be made liable on the agreement contained in the deed of dissolution by which the deft. 6 agreed to discharge the debts of the partnership. If the indorsement did not create any debt, as between the pltf & the deft. firm, it is obvious that the, deft. 6 cannot be liable to the pltf. Further it is extremely doubtful whether it was ever contemplated by the deed of dissolution that the pltf. would be treated as a creditor whose debt deft. 6 would have to discharge. It is to be observed that the deed provided that if the outstandings which were thereby assigned to the deft. 6 were not recovered the pltf. would not be liable to the deft. 5. Further the pltf. by his indorsement in the books of accounts clearly admitted that there was no liability by deft. 6 on the partnership accounts, & released deft. 6 from all liabilities in respect of partnership accounts. The pltf. has, therefore, no cause of action against the deft. 5 or against deft. 6.
25. Issue 1 (a) Does the plaint disclose any cause of action: It is contended that the plaint does not disclose any cause of action against defts. 5 & 6. The hundi was payable 56 days after date in Calcutta. It had therefore to be presented for payment & without such presentation for payment the cause of action of the pltf. would not be complete (Sections 66 & 69, Negotiable Instruments Act). No presentation for payment has however, been pleaded although the pltf. has pleaded that the defts. 5 & 6 had notice of dishonour. It was held by McNair J. in Sankarlal v. Narayan, 47 C. W. N. 658 that a hundi where the maker is the acceptor must be presented for payment in order to render the maker liable. It is contended that presentment for payment must be pleaded & proved. In the written statement the presentment has been denied. No issue was raised as to whether the hundi was presented or not, though evidence was sought to be adduced. Having regard to the absence of allegation of presentment in the plaint & having regard to the fact that no issue was raised, I think there is a good deal of force in the submission of learned Counsel for defts. that the plaint does not disclose any cause of action. [The rest of the judgment is not material for purposes of reporting--Editor.]