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Laban Sardar Vs. Choyen Mallick and ors. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in29Ind.Cas.811
AppellantLaban Sardar
RespondentChoyen Mallick and ors.
Cases ReferredSedgwick v. Daniell
Excerpt:
partnership - contribution, suit for--co-partners, liability of, for debts--contract act (ix of 1872), section 43--second appeal--new defence, if can be set up. - .....188 : (1912) m.w.n. 384. in the first of these cases, mr. justice banerjee pointed out that a suit for contribution by a partner against some of, his co-partners, on account of money paid by him for the satisfaction of a debt contracted by him jointly with the said co-partners, is maintainable in cases where the liability satisfied by the plaintiffs is not a joint liability of the entire partnership or where the said partners were some only of several persons comprising the partnership and the bond was executed not in the usual course of business of the partnership. a suit for contribution is also maintainable in cases where the partners expressly promised to contribute their share of the debt after a decree had been passed upon the bond. the rule is similarly stated by mr. justice.....
Judgment:

1. This is an appeal by the plaintiff in a suit for contribution. His case is that he and the defendants borrowed money from one Fazil Mandal with a view to carry on a business for the sale and purchase of goods. The money borrowed was applied for the purposes of the partnership and in fact constituted the nucleus of the capital. Fazil Mandal subsequently sued the plaintiff and defendants and obtained a decree on the 2nd February 1907. He took out execution, however, against the plaintiff alone who was thus constrained to satisfy the decree, under compulsion of legal process, by payments made from time to time during the years 1908 and 1909. The plaintiff now seeks to recover from each of the defendants the sum payable by him in respect of the debt due to Fazil Mandal. The first defendant resisted the suit substantially on the ground that the partnership had been closed, that the accounts had been adjusted and that the plaintiff had been paid the sum which was due to him. The allegation in substance was that the plaintiff alone was bound to furnish the entire capital and had been repaid. The second defendant also resisted the claim on similar grounds. The Courts below have dismissed the suit, on the ground that it is not maintainable in the form in which it has been brought and that the remedy of the plaintiff is by way of a suit for dissolution of partnership and for adjustment of accounts. The Courts below have found in effect that the money was borrowed by the plaintiff and the defendants jointly and that it was applied for the purposes of the partnership business. The Courts below have further found that the plaintiff alone was liable to furnish the entire capital, that there has been no adjustment of accounts as alleged by the defendants and that the plaintiff has not been paid the sum due to him.

2. The question in controversy between the parties is, whether in this state of facts the suit as framed is maintainable. On behalf of the respondents, it has been argued that no contribution suit lies, because the parties stood in the position of partners and that the only remedy of the plaintiff is to institute a suit for adjustment of accounts after realization of the assets. In our opinion the contention of the defendants cannot be sustained.

3. The rule applicable to cases of this description is thus formulated in the Laws of England edited by Lord Halsbury, Volume XXII, paragraph 66: 'Though partners are jointly liable to third persons, a partner who pays more than his share of a partnership debt, whether voluntarily or not, is entitled to contribution from his partners.' In support of this statement reference may be made to the cases of Boulter v. Peplow 9 C.B. 493 : 137 E.R. 984 : 19 L.J.C.P. 190 : 14 Jur. 248 : 82 R.R. 401; Sedgwick v. Daniell (1857) 2 H. and N. 319 : 115 R.R. 561 : 27 L.J. Ex. 116; Betard v. Hawes (1853) 2 El. and Bl. 287 : 3 Car. and K. 278 : 22 L.J.Q.B. 443 : 17 Jur. 1154 : 1 W.R. 387 : 118 E.R. 775 : 95 R.R. 550 and Fitzgerald v. Mccowan (1898) 2 I.R. 1 at p. 9 : 4 Irish Law. Rep. 1. In the case of Sedgwick v. Daniell (1857) 2 H. and N. 319 : 115 R.R. 561 : 27 L.J. Ex. 116 the plaintiff and the defendants were share-holders in a Joint Stock Mining Company. Money was required to work the mine. T, who was also a share-holder, applied to a Bank for an advance of 500, which had consented to make an advance on the security of the joint promissory note of the plaintiff, the defendants and T. The note was given and the money advanced was applied to the purposes of the mine. The plaintiff was subsequently compelled by the creditors to pay more than his share of the note. He, therefore, sued the defendants for contribution. It was ruled that this was not a part of the partnership transaction and that the action was maintainable. In the case of Betard v. Hawes (1853) 2 El. and Bl. 287 : 3 Car. and K. 278 : 22 L.J.Q.B. 443 : 17 Jur. 1154 : 1 W.R. 387 : 118 E.R. 775 : 95 R.R. 550 the plaintiff along with eleven others including the defendant became liable for a debt contracted in respect of a scheme. The creditor sued the plaintiff who ultimately paid the whole debt. Two of the original contractors died before payment. The plaintiff sued the defendant for contribution. It was ruled that although there might be many cross-liabilities amongst the provisional committee men in respect of the scheme, an action lay at law for contribution against such of them as were liable to pay this debt. Similarly in the case of Boulter v. Peplow 9 C.B. 493 : 137 E.R. 984 : 19 L.J.C.P. 190 : 14 Jur. 248 : 82 R.R. 401 A, B and C, by an agreement in writing, hired the premises of D. The premises so hired were intended to be and were used for the purposes of the Joint Stock Company of which A, B and C were at the time of the contract committee men. The rent was for some time paid by the Company, but ultimately fell into arrears. Thereupon J. sued A, B and 0 upon the agreement, B and C suffered judgment by default. D recovered the amount of rent and costs from A. It was ruled that A was entitled to sue B and C for contribution and that the remedy against B was not affected by the circumstance that B had ceased to be a member of the Committee before accrual of the rent in respect of which the action had been brought. Mr. Justice, Maule observed as follows: Prima facie, where one of three joint contractors who are jointly sued, pays the whole debt, he is entitled to receive contribution from the other two. That state of circumstances exists here: and the only question is, whether there existed any other facts which afford an answer to the plaintiff's right to such contribution. It does not appear to me 'that any such answer has been given.' Mr. Justice Williams stated that whatever remedy the persons who had made themselves liable for the rent might have against the other members of the Company, when these persons placed themselves under this liability to the landlord of the premises, they likewise came under an implied liability, inter se, that if one should be called upon to pay and should actually pay the whole rent, the other two would reimburse him in respect of their respective shares. This implied contract was not in any degree affected by the rule of law that one partner cannot sue his co-partner in respect of a partnership debt. Mr. Justice Talfourd added that the contract out of which the cause of action arose was entirely for that partnership and that the defendants were liable to contribution irrespectively of the accounts amongst the partners. This view of the law has been adopted by the Courts of this country, as is clear from an examination of the decisions in Guda Kulita v. Joyram Das 26 C. 262 note, Durga Prosonno Ghose v.Raghu Nath Das 26 C. 254 : 3 C.W.N. 299, Subbarayudu v. Adinarayudu 18 M. 134; Sadhu Narayana Aiyangar v. Ramaswami Aiyangar 3 Ind. Cas. 486 : 4 M.L.T. 475 : 32 M. 203 and Gudlavellaruv. Vellithanibi 15 Ind. Cas. 2 8 : 11 M.L.T. 188 : (1912) M.W.N. 384. In the first of these cases, Mr. Justice Banerjee pointed out that a suit for contribution by a partner against some of, his co-partners, on account of money paid by him for the satisfaction of a debt contracted by him jointly with the said co-partners, is maintainable in cases where the liability satisfied by the plaintiffs is not a joint liability of the entire partnership or where the said partners were some only of several persons comprising the partnership and the bond was executed not in the usual course of business of the partnership. A suit for contribution is also maintainable in cases where the partners expressly promised to contribute their share of the debt after a decree had been passed upon the bond. The rule is similarly stated by Mr. Justice Muttusami Ayyar in the case of Sabbarayudu v. Adinarayudu 18 M. 134. The learned Judge pointed out that it is no doubt a settled rule of law that advances made by one partner to the partnership concern can only result in matters of accounts and cannot be made the subject of a separate suit. But to this general rule there are exceptions where the ad ances are made by one partner not to the partnership concern, but to the other partners in respect of what he has to contribute to the joint capital, as in French v. Styring 2 c. B. (N.S.) 357 at p. 365 : 26 L.J.C.P. 181 : 3 jur (N.S.) 670 : 5 W.R. 561 : 140 E.R. 455 : 29 L.T. (O.S.) 127 : 109 R.R. 716; or where two partners borrow from a Bank on their joint promissory note and apply the money borrowed to the partnership concern and one of the partners is compelled to pay more than his share of the debt, the transactions have been considered to be separate and altogether dehors the partnership and as such capable of sustaining an action for contribution: Sedgwick v. Daniell (1857) 2 H. and N. 319 : 115 R.R. 561 : 27 L.J. Ex. 116. In the case before us, as already explained, the plaintiffs and the defendants borrowed money in their individual capacity. They were sued as such by their creditor and the decree obtained by the latter was executed, not against the partnership proparty, but against the private property of the plaintiff alone the payment by the plaintiff to the decree holder really signifies that he has in substance been called upon to supply the entire capital, although the initial arrangement between the parties was that the capital should bo furnished by all the share-holders in equal proportion. In circumstances like these, a suit for contribution is obviously maintainable.

4. On behalf of the respondents, reference has been made to Section 43 of the Indian Contract Act. That section lays down that when two or more persons make a joint promise, the promisee may, in the absence of express agreement to the contrary, compel any one of such joint promisors to perform the whole of the promise. Each of the two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract. In the case before us, consequently, the plaintiff is prima facie entitled to call upon each of the defendants to contribute equally with himself to the performance of the promise jointly made by them in favour of their creditor. The only question is, whether a contrary intention appears from the contract. The circumstances as already explained do not indicate that there was any contrary intention on the part of the partners. On the other hand, the intention to be gathered is that each of them agreed to contribute a rateable share of the partnership capital. If the plaintiff is refused relief in this suit, that agreement between the parties would practically be ignored.

5. It has finally been contended on behalf of the respondents that they may be permitted to establish in the present litigation that if the partnership accounts are adjusted, it would bo found that the plaintiff was not entitled to recover the whole of the sum claimed from each of the defendants. In our opinion, although a defence of this character might well have been available to the defendants in the Court of first instance, it is too late for them to urge the point in this Court. The defence was to the effect that the accounts had been adjusted and that upon settlement of accounts the plaintiff had been paid the sum legally due to him. This defence has failed and the defendants cannot be permitted at this stage to make a new case which involves the investigation of facts and must, if entertained, necessitate a remand to the Court of first instance.

6. The result is that this appeal is allowed, the decrees of the Courts below set aside and a decree made in favour of the plaintiff for Rs. 148-3 against the first defendant, Rs. 152-3 against the second defendant and Rs. 152-3 against the third defendant. Each of these sums will carry interest at the rate of 12 per cent, per annum from Nthe 14th April 1909 to the date of the institution of the suit. The decretal amount will carry interest at the rate of 6 per cent, per annum from the commencement of the suit to the date of realization. The plaintiff is entitled to his costs in all the Courts.


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