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Kansi Ram Vs. Jai Ram and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtHimachal Pradesh High Court
Decided On
Case NumberFirst Appeal No. 12 of 1950
Judge
Reported inAIR1956HP4
ActsCode of Civil Procedure (CPC) , 1908 - Order 6 Rule 4; ;Evidence Act, 1872 - Sections 114 and 137; ;Partnership Act, 1932 - Section 13
AppellantKansi Ram
RespondentJai Ram and ors.
Appellant Advocate D.N. Awasthy, Adv.
Respondent Advocate Tek Chand, Adv. for Respondents (1 to 5)
DispositionAppeal dismissed
Cases ReferredSanthanakrishna Naidu v. Chellappa Aiyar
Excerpt:
- .....defendants (nos. 3 and 4) in the suit, the real object of the suit being to recover from the other partners (defendants 1, 2 and 5) their shareof the amount alleged to be due by the firm to the plaintiffs. it was held by a division bench of the bombay high court, in the above circumstances, that: 'the suit as framed was not maintainable. the money claimed was only one, item in the partnership account between the plaintiffs and the defendant. without taking a general partnership account, it was impossible to say whether there was anything due by the defendants to the plaintiffs'.(d) 'santhanakrishna naidu v. chellappa aiyar', air 1927 mad 650 (m), wherein a division bench of madras high court indicated that: 'the rule is that as between partners ordinarily no suit will lie except one for.....
Judgment:

Ramabhadran, J.C.

1. This is a plaintiffs appeal, which arises out of a suit to recover a sum of Rs. 8,500/- (Rs. 5,000- principal plus Rs. 3,500/-interest) on the basis of a loan, alleged to have been taken by Jai Ram, defendant 1, from the plaintiff, Kanshi Ram, and his father, Bijai Ram, for the benefit of the defendants' family trade business.

There were five defendants, namely, Jar Ram and his four brothers, Gopi Ham, Ganga Ram, Durga and Govind, as well as one pro forma defendant, with whom, we are not concerned. The plaintiff's case was that in his capacity, as Manager of tile joint Hindu family (consisting of the defendants), Jai Ram took the loan from the plaintiff and his father on 19-3-1993B. It was stated that the loan had been taken for the benefit of the joint Hindu family.

2. The suit was resisted by Jai Ram and Ganga Ram on the following grounds:-- In the first place, it was categorically denied that Jai Ram, defendant 1. had borrowed the money for the benefit of the joint Hindu family. The defendants' case was that Kanshi Ram plaintiff, his father, Bijai Ram, Daya Ram, Jai. Ram and Ganga Ram were partners of a firm styled 'Dhandari Bijai Ram Kanshi Ram and Company'.

The sum of Rs. 5,000/-, mentioned above, was advanced by Bijai Ram to the firm through Jai Ram. The said amount was duly entered in the Bahis of the firm. Under these circumstances, the defendants contended that the suit was incompetent as there had been no settlement of accounts between the partners. As regards the other defendants, it was stated that they had no concern with the partnership.

It was further stated that the partnership was determined on 4th Phagun, 1994 B., and, under the terms of the ''Parkhati' executed on that day, the plaintiff' was debarred from bringing this suit.

3. The learned Subordinate Judge first class, Bilaspur, Mr. G. R. Prashar, came to the conclusion that the loan of Rs. 5,000/- was not a personal advance to Jai Ram, but was an advance through Jai : Ram to the firm Bijai Ram Kanshi Ram and Company to be utilized on the business of sawing wood, which was being carried on, at Kulu in those 'days.

In other words, the trial Court did not accept the plaintiffs case that the money had been borrowed by Jai Ram for the benefit of the joint Hindu family, consisting of Jai Ram and his brothers. Following--'Ghisulal-Ganeshi Lal v. Gumbhirmull', AIR 1938 Cal 377 (A), the learned Subordinate Judge held that the suit for one item of the partnership account was not competent. Accordingly, he non-suited the plaintiff. Hence, the present appeal.

4. Arguments in this appeal were heard onthe first and second of last month. The appealcould not be disposed of earlier, since I was busywith the meetings of the Himachal Pradesh Transport Advisory Committee. I now proceed to deliver judgment in this appeal.

5. Learned counsel for the appellant argued, firstly, that the Court below has not properly interpreted the bond, Ex. P 1, executed by Jai Ram on 19-3-1993 B. Mr. Awasthi contended that the wording of this bond indicates that the sum of Rs. 5,000/- had nothing to do with the partnership assets and, consequently, the Court below has erred in thinking that the suit, in its present form, was incompetent. The bond has been reproduced, in extenso, in the judgment of the trial Court.

It was read over to me several times by learned counsel on both sides during the course of arguments. I am unable to accept the argument of the learned counsel for the appellant that the sum in question (Rs. 5,000/-) had nothing to do with the partership assets.

The language of the document is, no doubt, cumbersome, but so much is clear that the money was expressed as advanced by the plaintiff to the firm through Jai Ram for the wood sawing business carried on at Kulu on behalf of the firm. Painshave been taken to show in the document that this sum of Rs. 5.000/- was in addition to the original capital of the firm invested by Bhandari Bijai Ram Kanshi Ram.

The use of the word 'juda' four times was obviously, for the purpose of showing unmistakably that this sum of Rs. 5,000/- was in addition to the capital already invested in the firm.

6. Learned counsel for the respondents rightly pointed out that the plaintiffs case, as disclosed in the pleadings, was that the money had been advanced to Jai Ram, as Manager of the joint Hindu family, for the benefit of that family. There is nothing in the bond, Ex. P. 1, to show that the money had been so advanced. On the other hand, it shows unmistakably that the money was advanced to the firm.

Confronted with this difficulty, learned counsel for the appellant argued that the document, Ex.. P. 1, was intentionally written in an ambiguous manner and that it bears the 'hallmark of fraud'. Mr. Tek Chand for the respondents rightly pointed out that fraud was no where alleged by the plaintiff. Under Order 6, Rule 4, Civil Procedure Code, in all cases in which a party relies on any fraud, the relevant particulars must be stated in the pleadings. Since this has not been done by the plaintiff, this plea must fail.

7. In the second place, learned counsel for the appellant argued that the account-books, relied upon by the Court below, were not produced from proper custody. In this connection, my attention was drawn to an application under Order 11, Rule 2, put in by the defendants, on 10th Har, 2000B., before the trial Court, requesting it to direct the plaintiff to produce the account-books of the firm.

In reply to the above application an affidavit was filed by Kanshi Ram on 20-6-2000 B. to the effect that the account-books were in the possession of the defendants and the former 'Munim', Paras Ram. The 'Roker' and the 'Lekha' were actually produced by Paras Ram, who appeared as a defendants' witness. It was he who produced the extracts, Ex. C. W. 3/1 and C. W. 3/2, which show that the sum of Rs. 5,000/- was credited to the account of Bhandari Bijai Ram Kanshi Ram on 11-6-1936 A. D. in the 'Roker Bahi'.

In his statement, on oath, Paras Ram deposed that he was working as Munim in the firm of Bijai Ram Kanshi Ram and Company of Simla. There were three partners in the firm, namely, (1) Bhandari Bijai Ram Kanshi Ram (2) Bhandari Daya Ram and (3) Jai Ram Ganga Ram. Witness used to maintain the accounts. On 11-6-1936 A. D., a sum of Rs. 5,000/- was credited in favour of partner No. 1. The said sum was spent over the business of the firm.

In those days, the firm carried on wood business at Kulu and there is a reference to this in the extract, Ex. C. W. 3/1. Raghunand and Kaura Mull, defendants' witnesses, have corroborated Paras Ram on these points, i.e. the formation of the new partnership in April 1936, and the credit of Rs. 5,000/- by Jai Ram in the partnership accounts in favour of Bijai Ram Kanshi Ram.

Intimation of the credit of Rs. 5,000/- was sent to Bijai Ram Kanshi Ram. Paras Ram was not cross-examined by the plaintiff and since there is no inherent improbability in his statement, it must be accepted as correct. If any authority is necessary for this proposition, reference may be made to--'Karnidan Sarda v. Sailaja Kanta Mitra,' AIR 1940 Pat 683 (B), where a Division Bench of that High Court observed that:

'It cannot be too strongly emphasized that the system of administration of justice allows of cross-examination of opposite party's witnesses forthe purpose of testing their evidence, and it must be assumed that when the witnesses were not tested in that way, their evidence is to be accepted unless of course there are any inherent improbabilities'.

A similar view was taken by the High Court of Travancore-Coehin,--'Velu Pillai v. Paramanandam', AIR 1954 Trav.-Co. .152 (C), where it was held that:

'The trial of a cause is aimed at arriving at the truth of the conflicting cases that are presented before the Court. Every witness entering the box does so as a witness of truth. Cross-examination is a powerful and valuable weapon for the purpose of testing the veracity of a witness and the accuracy and completeness of his story.

The extent of its effectiveness, no doubt, depends upon the dexterity of the wielder of the weapon, but, every cross-examiner should and can if he is careful, indicate in cross-examination, which ever part of the evidence given in examination-in-chief is challenged and an omission to do so would Lad to the inference that the evidence is accepted, subject, of course, to its being assailed as inherently improbable'.

Consequently, this argument also fails.

8.In the third place, it was argued that it was incumbent on the part of the defendants to produce Jai Rain. Since they did not do so, 1 was requested to draw a presumption adverse to the defendants. Reliance was placed, in this connection, 'inter alia', on the following rulings:--'Gurbakkhsh Singh v. Gurdial Singh', AIR 1927 PC 230 (D), wherein their Lordships observed:

'The practice of not calling the party as witness with a view to force the other party to call him, and so suffer the discomfiture of having him treated as his (the other party's) own witness is a bad and degrading practice.

' 'Lal Kunwar v. Chiranji Lal', 32 All 104 (E) Ref. The true object to be achieved in Court of justice can only the furthered with propriety by the testimony of the party who personally knowing the whole circumstances of the case, can dispel the suspicions attaching to it. The story can then be subjected in all its particulars to cross-examination.'

(b) 'Bishan Das v. Gurbaksh Singh', AIR. 1934 Lah 63 (2) (F), where a Division Bench of that High Court indicated that:

'Failure of party, coming forward with a case, to give evidence on matters within his knowledge, ought to be a weighty factor, when the value of the case put forward on his behalf is appraised'.

(c) Haroo v. Man Dass', AIR 1949 Him. ,P. 4 (G)', where my learned predecessor, Dr. Bannerji, pointed out that:

'When a party is ordered by a Court to appear and submit to examination and cross-examination but he never cares to enter into the witess-box and deliberately keeps away, the Court is justified in drawing an inference unfavourable to his case. A party runs a great risk if he does not enter into a witness-box and himself gives evidence in his case which is directly in his knowledge and which relates to the matters in controversy.

Thus, where the plaintiff refrains from givingevidence in his own behalf and adopts instead thetactics of calling the defendant as a witness forthe plaintiff with the result that important featureof the plaintiff's case is denied by the defendant,the procedure has to be condemned.'

9. Mr. Tek Chand for the defendants-respondents conceded that it would have been better, if Jai Ram had been produced as a witness by the defendants. He admitted that the defendants wereill-advised in withholding Jai Ram. At the same time, he argued that Jai Ram's statement was not indispensable. Since the transaction has been recorded in the bond, Ex. P-1, it could not be altered.

He further pointed out that u/s. 114, Evidence Act, Illus. (g), the words used are 'the Court may presume that the evidence, which could be and is not produced, would, if produced, be unfavourable to the person who withholds it.' Mr. Tek Chand urged that the expression 'may' leaves it to the discretion of the Court to draw the presumption or not.

Reliance was placed by him, in this connection, on 'Emperor v. Sibnath Banerjee', AIR 1943 FC 75 (H)', wherein their Lordships of the Federal Court observed that:

'The words 'may presume' in Section 114 leave itto the Court to make or not to make the presumption, according to the circumstances of the case; and the presumption, when made, is rebuttable.'

Had the defendants case rested, mainly, on the testimony of Jai Ram, then such a presumption could validly have been drawn. In the present case, however, we have, not only the bond, Ex. P. 1, but also the extracts Ex. C. W. 3/1 and C. W. 3/2. In addition, we have the oral evidence of the parties, to which I shall refer in the following paragraphs. Consequently, no adverse presumption can be drawn.

10. That brings me to the oral evidence on the record. (After briefly alluding to the evidence given by P. Ws. 1 to 5 & taking note of the statement of Kanshi Ram, the plaintiff, 'remarkable in many respects' the judgment dismissed it as being 'most unsatisfactory'.) This being the state of oral evidence, the Court below was justified in holding that the oral evidence did not help the plaintiff. On the other hand, it went in favour of the defendants.

Mr. Tek Chand, for the respondents,, further pointed out that issue No. 1, as framed by the trial Court, wrongly placed the onus on the defendants. He argued, and in my opinion, not without justification, that in the face of the contents of the bond, Ex. P. 1, the onus should have been placed upon the plaintiff to prove that the loan had been taken by Jai Ram for the benefit of the joint family, consisting of the defendants.

11. Another point argued by Mr. Awasthi was that this sum of Rs. 5,000/- did not fall into the pool of partnership assets and, consequently, a suit to recover ft would not be incompetent. Reliance was placed by him on the following two rulings: (a)--'V. Subbiah v. M. Venkataramiah', 31 Mad 343 (I). There, the facts were that one member of a firm sued the remaining two members on the basis of a promissory note given to him by the latter in respect of an advance made by him to the firm.

The District Judge had found that the accounts between the partners had been settled and :a balance was found due to the plaintiffs. The partnership was thereupon, dissolved and the promissory note, referred to above, given to the plaintiff in respect of the balance. In the circumstances of that case, it was held by the Madras High Court that a suit on the basis of the promissory note was competent.

The facts of the case before me are, however, different. Here, the accounts between the parties had not yet been settled. Therefore, the above ruling would not help the appellant.

12. (b) 'Ramnath Gagoi v. Pitambar Deb', AIR 1916 Cal 788 (J). There, the facts were that the defendant, Adhikar Gossain, took a lease from Government of a certain area in the district of Sibsagar for the purpose of catching wild elephants. Gossain subsequently took the plaintiff, Ramnath, as a partner in the venture to the extent of half a share. Sales of wild elephants were to take place, in the presence of both the partners.

In pursuance of this partnership, wild elephants were caught in several stockades. The accounts of the captures in the various stockades were kept separate. Their Lordships of the Calcutta High Court held that when the accounts of a particular stockade had been finally settled, it could not be maintained that the rights of the parties in the elephants captured there remained undetermined, because the accounts of some other stockade had not been taken.

Under those circumstances, their Lordships held that the plaintiff was entitled to the value of four elephants. The Calcutta ruling, cited above, will not help the appellant, because it was never the plaintiff's case that the Kulu business was a separate accounting unit. Nor was evidence produced by him to establish that such was the case.

I notice that even in the grounds of appeal to this Court, such a ground was not taken. This appears to be an after-thought.

13.In view of all that has been said above, I must uphold the findings of the trial Court to the effect that this sum of Rs. 5,000/- was a part of the partnership assets and was not independent of it. That being so, the present suit was not competent. If authority is necessary for this proposition, reference may be made to the following rulings:--(a)--'AIR 1938 Cal 377 (A). This has been referred to by the trial Court. Therein, a Division Bench of the Calcutta High Court pointed out that:

'Partners are not, as regards partnership dealings, considered as debtor and creditor inter se until the concern is wound up or until there is a binding settlement of the accounts. It follows that one partner has no right of action against another for the balance owing to him until after final settlement of the account; but a partner may have a right of action against another for a debt which is independent of the partnership accounts.

It is obvious, therefore, that the only remedy possible between the partners is one for partnership accounts'.

(b) 'Rustomji v. Purshotamdas', 25 Bom 606 (K), where a Division Bench of that High Court observed that:

'Where an individual is a common partner in two houses of trade, no action can be brought by one house against the other house upon any transaction between them while such individual is a common partner. This doctrine is founded on the rule that the same individual, even in two capacities, cannot be both a pla'intiff and defendant to one and the same action.

One partner cannot sue for money lent by him to a firm of which he is a member. The advance is but an item in the partnership account'.

(c) 'Kashinath Kedari v. Ganesh Hari', 26 Bom 739 (L). There, the facts were that the two plaintiffs were the owners and sole partners of the firm of Apaji Kashinath. They were also partners in the defendant firm of Ganesh Hari Narkar in which there were three, other partners besides themselves.

Between 1891 and 1896, the firm of Apaji Kashinath advanced money to the firm of Ganesh Hari Narkar, which latter firm ceased to do any business in 1897, although the partnership was not formally dissolved. In 1899 the plaintiffs brought this suit against the firm of Ganesh Hari Narkar to recover their advance.

Being partners in the firm, the plaintiffs appeared also as defendants (Nos. 3 and 4) in the suit, the real object of the suit being to recover from the other partners (defendants 1, 2 and 5) their shareof the amount alleged to be due by the firm to the plaintiffs. It was held by a Division Bench of the Bombay High Court, in the above circumstances, that:

'The suit as framed was not maintainable. The money claimed was only one, item in the partnership account between the plaintiffs and the defendant. Without taking a general partnership account, it was impossible to say whether there was anything due by the defendants to the plaintiffs'.

(d) 'Santhanakrishna Naidu v. Chellappa Aiyar', AIR 1927 Mad 650 (M), wherein a Division Bench of Madras High Court indicated that:

'The rule is that as between partners ordinarily no suit will lie except one for general account. No suit lies by one partner against another for damages for breach of certain covenants in the partnership deed. In such cases the proper course is to bring a suit for general accounts and debiting the defaulting partner with any loss that might have been incurred by his action in the general account'.

14. To sum up, therefore, the sum sought to be recovered, was one item in the partnership account and, therefore, unless and until the accounts between the partners are settled, it could not be recovered by a suit like the present one. I would, therefore, uphold the dismissal of the suit by the trial Court.

15. There is an application under Order 41,Rule 27, Civil P. C., by the appellant, wherein Iam requested to admit a list of cases in which theperiod of limitation had been extended by the Rulerof Bilaspur State. This is opposed by the respondents. There was an issue on the point of limitation.

The trial Court held that the suit was within time, since the period of limitation had been extended by the Ruler. The lower Court has, however, found that the suit, in its present form, was not maintainable, I have earlier given my reasons for upholding that finding. Consequently, it is not necessary to go into the question of limitation. The documents, referred to in the petition under Order 41 Rule 27 are not essential for the disposal of, this appeal. Consequently, that petition is rejected.

16. One other point argued before me was the matter of interest. It is, however, not necessary to discuss this point, in view of my finding that the suit did not lie in its present form.

17. In the result, the appeal fails and is dismissed with costs to the contesting respondents 1to 5.


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