1. These are two cross appeals and they arise out of a suit filed by Jai Ram and Ganga Bam against Bijai Ram Kanshi Ram for the recovery of a sum of Rs. 30,534/10/-. The plaintiffs' case was that they were carrying on business at Simla styled as 'Firm Jai Ram Ganga Ram', while the defendants, similarly, carried on business in the name of Firm 'Bijai Ram and Co.'
On 31-3-1936, the latter took over the assetsand liabilities of the former firm for a sum of Rs. 26,054/13/3. They also took over the business of a third firm styled as 'Firm Daya Ram Jai Ram.'
In place of the three firms, a new firm styled 'M/s Bhandari Bijai Ram Kanshi Ram and Co.' came into existence with a capital of Rs. 16,000/-Bijai Ram Kanshi Ram had eight-anna share in the firm, while Jai Ram Ganga Ram and Daya Ram had four-anna share each. The plaintiffs' case was that the sum of Rs. 26,054/13/3, plus interest thereupon, was due to them from the defendants less a sum of Rs. 2,420/8/3, for which they had been given credit by the defendants.
2. The suit was resisted by Kanshi Ram on various grounds. In the first place, he contended that the suit, as filed, was defective, since it purported to have been instituted on behalf of Firm Jai Ram Ganga Ram, which had already been dissolved. He maintained that Ganga Bam was a necessary party to the suit.
In the second place, he pointed out that his father, Bijai Ram, had died long before the institution of the suit and, consequently, he (Bijai Ram) could not be sued. He urged that his brother, Ram Lal, who was joint with him, should have been impleaded as a defendant. Another objection, taken by him, was that all the partners of the former firm Bijai Ram and Co. should have been made parties to the suit.
He further pleaded that since the Firm Bijai Ram Kanshi Ram and Co. had been dissolved, according to the plaintiffs, on 4-12-1994B., the proper course for the plaintiffs would have been to sue for the rendition of accounts. Kanshi Ram further categorically denied that he had purchased the plaintiffs' firm, or agreed to pay them any amount.
According to him, the business of the firm Bijai Ram Kanshi Ram and Co. was being run by the plaintiffs, who had all the account books in their possession. The plaintiffs did not contribute the sum of Rs. 4,000/-, their share of the capital of the new firm, as alleged by them. Consequently, Kanshi Ram contended that the plaintiffs were not entitled to any relief.
3. The learned District Judge, who tried the suit, found that the suit, as framed, was competent, that Ram Lal, Daya Ram and Ved Vrat were not necessary parties and further that Bijai Ram and Kanshi Ram constituted a joint Hindu family. He also found that Bijai Ram Kanshi Ram took over the assets of the three firms, i.e (1) Bijai Ram and Co. (2) Daya Ram Jai Ram and (3) Jai Ram Ganga Ram, for a sum of Rs. 1,04,000/- and invested the same as their personal capital in the new firm, 'Bhandari Bijai Ram Kanshi Ram & Co.'
He also came to the conclusion that Bijai Ram Kanshi Ram undertook to pay the sum of Rs. 26,054/13/3 to Jai Ram Ganga Ram. This figure was arrived at after adjusting a sum of Rs. 9,760/- due to Bijai Ram Kanshi Ram from Jai Ram Ganga Ram. After allowing for the sum of Rs. 2,420/8/3, credit admittedly afforded to the plaintiffs, the learned District Judge granted the plaintiffs a decree for Rs. 23,634/5/-. Interest was disallowed.
4. Aggrieved by this decision, both the parties have come up in appeal. First Appeal No. 34 of 1951 has been filed by Jai Ram Ganga Ram and the relief sought for therein is that the plaintiffs be awarded interest as claimed by them. First Appeal No. 37 of 1951 has been filed by Kanshi Ram and the prayer made therein is that the decision of the trial Court be set aside and the suit be dismissed.
5. These appeals were heard at Bilaspur in the March circuit, but judgment could not be delivered earlier, since there was one other connected appeal (First Appeal No. 12 of 1950), which could be taken up at Simla only last month. Subsequent to that, I have been busy with the meetings of the Himachal Pradesh Transport Advisory Committee. I am now delivering judgment in all the appeals simultaneously.
6. Learned counsel for Kanshi Ram, Mr. D. K. Mahajan, argued, firstly, that the suit was bad, as it was filed in the name of the firm after its dissolution. The plaint was instituted on 13-3-1942 with the following heading:
'Firm (1) Jai Ram (2) Ganga Ram, sons of Tikku Ram ..'
The plaint was signed by Jai Ram alone. It was as late as 13-3-1947 that Ganga Ram applied to the Court for permission to sign the plaint.
Permission was granted and he then signed the plaint. Mr. Mahajan contended that this was tantamount to addition of a new party and, consequently, as far as Ganga Ram was concerned, the suit must be deemed to have been instituted on that date. He pointed out that limitation had already expired on 31-3-1942. He relied on the provisions of Section 22, Limitation Act. Reference was also made by him to--'South India Industrials Ltd. v. Narasimha Rao', AIR 1927 Mad 468 (A), where a Division Bench of that High Court indicated that:
'When a party is added on application, theaddition must be deemed to have effect from thedate of the application.'
My attention was also drawn, to--'Firm MohanLal v. Udai Ram Sewa Ram', AIR 1936 Pat 140(B), where a Division Bench of that High Courtobserved that:
'What is contemplated by Order 30, Rule 1 is that two or more persons under a firm may sue, without mentioning the names of the individuals.'
'That is not the case, where the plaint describes the plaintiff himself as the 'firm X, situatein Y, etc., through B, proprietor of the said firm'and the plaint is signed by B, as the plaintiff cannot be deemed to be suing in the firm's namebut in his own name, and the mere fact of thefirm's name being mentioned, in no way affectsthe matter.' . '
Mr. Tek Chand for Jai Ram Ganga Ram, on theother hand, argued--and, in my opinion, notwithout justification--that this was not a case of addition of a new plaintiff and, therefore Section 22, Limitation Act has no application here.He drew my attention to the heading of theplaint, which, as already shown, runs as 'Firm(1) Jai Ram (2) Ganga Ram ....' It was contended by Mr. Tek Chand that, at the worst, thiswas a case of misdescription, which could be condoned.
He referred me, in this connection, to--'Bhagirath Singh v. Munga Lal', AIR 1939 Pat 40 (C), where the facts were that plaintiffs who were a joint family of a Hindu father and a son and who alone did the business in their joint name, described themselves in the plaint by their two names with the addition of the word 'firm'. Upon objection as to registration of the firm being taken, plaintiffs amended the plaint by deleting the word 'firm'. But this amendment was made after limitation had expired. James J. held, in the circumstances, that:
'The suit was not barred under Section 22 as the deletion of the word 'firm' was no addition of parties within the meaning of Section 22, the original description of the plaintiffs as partners being mere misdescription.'
My attention was also invited to--'Municipal Commissioners, Dacca v. Gangamani Chaudhurani', AIR 1940 Cal 153 (D), where a Division Bench of that High Court observed that:
'The name is not always the true criterion for determining the party really sued. The nature of the allegations in the plaint and the nature of the relief sought should be considered.' Mr. Tek Chand further invited my attention to the statement of Jai Ram under Order 10, Civil P. C. Therein, Jai Ram deposed that the suit was instituted by him both on behalf of Ganga Ram and on his own behalf. Ganga Ram did not sign the plaint as be (Jai Ram) was responsible for him from the Beginning. In his application dated 25-12-2003B, to the District Judge, Ganga Ram stated that the suit had been filed by Jai Ram with his consent and approval and he could not sign the plaint, as he was away in connection with forest contract, business.
The application was allowed by the Revenue Minister in the absence of the District Judge and Ganga Ram then signed the plaint. In--'Ganga Ram v. Secretary of State', AIR 1937 Pesh 17 (E), referred to by the learned District Judge, Mir Ahmad A. J. C. held that:
'There is no rule that a person named as a co-plaintiff is not to be treated as a plaintiff unless he signs and verifies the plaint. The defect is not such as to justify the rejection of the plaint, but the co-plaintiff should be allowed to sign it.'
In--'Wali Mohammad Khan v. Ishak Ali Khan', AIR 1931 All 507 (SB) (P) also referred to by the District Judge, a Special Bench of that High Court was of the view that:
'The absence of signature or verification or, for the matter of that, the absence of presentation on the part of some of the plaintiffs, out of several, does not affect the jurisdiction of the Court, and the suit must be deemed to have been duly instituted on their behalf, if it was filed with their knowledge and authority.'
Under these circumstances, I agree with the Court below that the omission, on the part of Ganga Ram to sign the plaint before it was presented to the Court, was not fatal to it, and did not affect limitation.
7. As regards the plea that a suit in the name of a dissolved firm was not maintainable, Mr. Tek Chand cited--'Agarwal Jorawarmal v. Kasam', AIR 1937 Nag 314 (G), where Vivian Bose J. observed that:
'The mere fact of dissolution does not prevent suits being instituted in the name of the firm with respect to transactions, which were entered into before the date of dissolution. The effect of dissolution is not to render the firm non-existent. It continues to exist for all purposes necessary for its winding up, one of these being the recovery of moneys due to it, by suit or otherwise. Two or more of the partners, therefore, can institute, the suit under Order 30, Rule 1, Civil P, C.' The District Judge has referred to the above authority as well as to--'Muthu K. M. Mayappa Chettyar v. Periah', AIR 1931 Rang 74(1) (H), where Carr J. held that:
'Where, after dissolution of a certain firm, the assets are divided between the partners, one of the partners can make use of the old firm's name in suits and execution proceedings for the recovery of the debts which fell to his share at the division.' Mr. Mahajan argued that the above ruling was not applicable, since there were no partnership assets of the old firm Jai Ram Ganga Ram left and, consequently, there was nothing to be wound up. In this connection, he cited--'Siluvaimuthu v. Muhomad Sahul', AIR 1927 Mad 84 (I) where Reilly J. observed that: 'If a suit is brought to recover a debt due to joint promisees all of them must be impleaded and the suit must be for the entire debt. They are not entitled to split up their claim and each sue separately for his own share.'
8. It is not correct, however, to say that there are no partnership assets left. The plaintiffs' case, as already stated, was that when the firm Jai Ram Ganga Ram was taken over by the new firm Bijai Ram Kanshi Ram & Co., the previous accounts were gone into and settled and a sum of Rs. 26,054/13/3 was found due to the former. This sum, according to the plaintiffs, was still due to them. Therefore, it is open to the plaintiffs to say that the firm must still be deemed alive for the purpose of recovering this amount.
9. In view of what has been said above, the suit, in my opinion, cannot fail on these grounds.
10. Another point, taken in appeal, is that the proper course for the plaintiffs was to sue, for rendition of accounts and not for the specific amount mentioned in the, plaint. It was further contended that Ram Lal, Daya Ram and Ved Vrat were necessary parties to the suit.
At the risk of repetition, I must point out that the plaintiffs' case was that on 31-3-1936, when the three old firms were dissolved and in their place, a new firm 'Bhandari Bijai Ram Kanshi Ram & Co.', came into existence, the accounts of the old firm Jai Ram Ganga Ram were worked out and it was found that the sum of Rs. 26,054/13/3, was due to the latter as it represented the value of the assets of Jai Ram Ganga Ram, which were taken over by Kanshi Ram Bijai Ram.
As Mr. Tek Chand rightly pointed out, the new firm had nothing to do with the transaction completed on 31-3-1936. The sum claimed by the plaintiffs obviously is not an item in the partnership accounts of the new firm Bijai Ram Kanshi Ram & Co. As was pointed out by a Division Bench of the Calcutta High Court in--'Ghisulal Ganeshi Lal v. Gumbhirmull', AIR 1938 Cal 377 (J) :
'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.'
11. I shall presently discuss whether the plaintiffs succeeded in establishing that the defendants took upon themselves the liability to pay them i.e. the plaintiffs the sum of Rs. 26,054/13/3. The plaintiffs' allegation was that this sum represented the balance of a settled account and had nothing to do with the business transactions of the new firm Bhandari Bijai Ram Kanshi Ram & Co.
Therefore, there was no question of rendition of accounts as between the plaintiffs and the new firm; nor was it necessary to implead Ram Lal, Daya Ram and Ved Vrat. The suit was against the joint Hindu family of Bijai Ram Kanshi Ram, through Kanshi Ram, Manager. Bijai Ram, no doubt, had died, but the joint Hindu family assets were adequately represented by Kanshi Ram.
12. So much for the arguments that were advanced against the frame of the suit. I now come to the main issue in the suit, namely, whether Bijai Ram Kanshi Ram took over the assets of Jai Ram Ganga Ram and undertook to pay Rs. 26,054/13/3 to the plaintiffs. The burden of proof lay on the plaintiffs.
They produced oral and documentary evidence in support of their case, while the defendants produced oral evidence. Let us go through this evidence and see how far the plaintiffs have been able to substantiate their case. (After discussing evidence of three witnesses examined by plaintiffs his Lordship observed :)
13. The statements of the above three witnesses were recorded on commission. The defendant, despite notice, did not appear before theCommissioner in person, or through pleaderConsequently, these witnesses were not cross-examined. The result would be that the evidence of these witnesses must be accepted, unless there are some inherent improbabilities.
If any authority is necessary for this proposition, reference may be made to--'Karnidan Sarda v. Sailaja Kanta Mitra', AIR 1940 Pat 683 (K), 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 for the 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.'
(Then after discussing other evidence produced on behalf of the plaintiffs and defendants his Lordship concluded:)
14. In this state of evidence, I consider that the Court below was justified in finding in favour of the plaintiffs. One of the grounds taken, in appeal, by Kanshi Ram is that the lower Court has erred in not deducting from the plaintiffs' claim the sum of Rs. 4,000/- which, according to the terms of the partnership deed, were to be invested by the plaintiffs in the new firm.
Obviously, this sum has nothing to do with the subject-matter of the suit. As already pointed out, the suit is in respect of the sum found due to Jai Ram Ganga Ram on taking accounts on 31-3-1936. The accounts of the new firm are a different matter and must be gone into in a separate suit. Consequently, no deduction, as claimed by Kanshi Ram, can be made from the plaintiffs' claim.
15. There is an application under Order 41, Rule 27, Civil P. C., by Kanshi Ram, wherein I am requested to admit into evidence an agreement dated 1-4-1935, alleged to have been executed by Daya Ram, Bijai Rarn and Jai Ram, Ganga Ram. It is said that this agreement was not available to Kanshi Ram during the pendency of the suit. It is stated that this document would show that Bijai Ram, father of Kanshi Ram, was a partner in the firm Jai Ram Ganga Rani and, consequently, this would be of material help to this Court in pronouncing judgment.
This application is opposed by the other side (Jai Ram Ganga Ram), who contended, firstly, that the document was deliberately withheld by Kanshi Ram during the trial and, secondly, that the agreement is not material for the disposal of the appeal. Earlier, I have discussed the evidence produced by both the parties and given my reasons for upholding the view of the trial Court that, on 31-3-1936, the assets and the liabilities of the old firm Jai Ram Ganga Ram were worked out and after adjusting all amounts due to Bijai Ram Kanshi Ram, a sum of Rs. 26,054/13/3 was found due to Jai Ram Ganga Ram and Kanshi Ram took upon himself the liability to pay this amount.
This sum of Rs. 26,054/13/3 was carried over by Bijai Ram Kanshi Ram as part of their personal investment of Rs. 1,04,000/- in the new firm. Therefore, it is immaterial if Bijai Ram was, or was not, a partner in the firm Jai Ram Ganga Ram for the purpose of disposing of this appeal. Consequently, the application under Order 41, Rule 27, is rejected.
16. The learned District Judge, while passing a decree in favour of the plaintiffs has deducted a sum of Rs. 2,420/8/3, representing credit afforded to plaintiffs by the defendants. For reasons stated earlier in the course of this judgment, I agree with the finding of the trial Court to the effect that Bijai Ram Kanshi Ram took over the assets of Jai Ram Ganga Ram amounting to Rs. 26,054/13/3 (after setting off the sum of Rs 9,760/- due to them from Jai Ram Ganga Ram) and undertook to pay that amount to Jai Ram Ganga Ram. Under the circumstances, the appeal of Kanshi Ram, First Appeal No. 37 of 1951, cannot succeed. It is, accordingly, rejected with costs.
FIRST APPEAL NO. 34 OF 1951
17. In this appeal by the plaintiffs, Jai Ram Ganga Ram, it was strenuously urged that the trial Court has deprived the plaintiffs of interest Without any justification. The relief, sought in the appeal, is thai this Court award to the plaintiffs the amount of Rs. 6,900/-, as interest, over and above the sum decreed by the District Judge.
In support of his arguments, learned counsel for the appellants (Mr. Tek Chand) pointed out that the parties were traders and the sum in suit was advanced in the course of commercial dealings. Consequently, the appellants were entitled to interest, not only on the basis of the covenant to pay interest, but also on that Of mercantile usage.
The learned District Judge framed a specific issue regarding interest, but disposed of the same in three short sentences. His finding was that the record did not disclose that the interest was stipulated. Further, he remarked that no custom had been alleged by which interest was due to the plaintiffs.
Consequently, he expressed his opinion that no interest was due to the plaintiffs. Mr. Tek Chand rightly pointed out that having relied upon the testimony of Raghunand (P. W. 4), Kura Mal (P. W. 6) and Jai Ram, plaintiff, on the main issue in the case, it was not proper that the District Judge should have ignored their evidence to the effect that interest was stipulated, for instance, Raghunand (P. W. 4) stated that Bijai Ram Kanshi Ram had promised to pay interest at the rate of 10 per cent per annum if the sum in suit was not repaid within a month.
Again, Kura Mal (P. W. 6) made a similar statement. Jai Ram, plaintiff, also deposed that Bijai Ram Kanshi Ram promised to pay interest at -/10/- per cent per mensem. Lachman Singh (D. W. 4) stated in a guarded manner that Bijai Ram Kanshi Ram 'might have stipulated for interest on the sum of Rs. 1,04,000/- invested by them in the new firm.'
The new partnership deed, Ex. C, W. 1/1, provides for six per cent interest on the sum of Rs. 1,04,000/-, invested by Bijai Ram Kanshi Ram. Under these circumstances, learned counsel urges that the plaintiffs were entitled to interest.
18. Reliance was placed by him on the following rulings: (a)--'Mahomed Abdul Gaffur v. Hamida Bivi Animal', AIR 1919 Mad 164 (L), where a Division Bench of that High Court observed that:
'The Interest Act (32 of 1839) is not exhaustive of all cases where interest is allowable. The Act while specifically allowing interest in all cases of 'debts or sums certain' payable at a certain time or otherwise' saves by its proviso other cases in which it is legally allowable.
Where the suit was for a sum of money which would be payable to the plaintiff (a Muhammadan lady) as for her share on taking accounts of the business which was carried on by her father while he was alive and which was continued by her brothers, the defendants, after his death, wherein the amount due to the plaintiff was utilized by her brothers.
Held, (1) that the proviso in the Interest Act applied to the case and (2) that 6 per cent interest was payable as damages on the amount due to the plaintiff.'
(b)--'Aijaz Hussain v. Maqbul Hussain', AIR 1935 Lah 307 (M), wherein Tek Chand and Skemp JJ. held that:
'Where a just claim has been resisted onwholly unsubstantial grounds and the defendantshave been responsible for the prolongation ofJitigation it is just and equitable to award interest.'
(c)--Jagat Kishore Pd. Narain Singh v. Parmesh war Singh', AIR 1951 Pat 348 (N), whereina Division Bench of that High Court observedthat:
'The act of the decree-holder deprived the plaintiff not only of the money, but the interest which he could earn and that should be taken into account in fixing the measure of damages and, therefore, the plaintiff should be allowed something by way of interest, though, strictly speaking, it should be described as damages and not interest.'
(d)--'Sewak Ram v. Municipal Board, Meerut', AIR 1937 All 328 (O). There, a Division Bench of that High Court remarked that:
'Where the plaintiff has been kept out of his money for a considerable time by the conduct of the defendant, it is only fair and proper that the defendants should pay a reasonable rate of interest upon the sum awarded by the Court.'
19. Mr. D. K. Mahajan for Kanshi Ram, respondent, on the other hand, cited--'B.N. Rly. Co. Ltd. v. Ruttanji Ramji', AIR 1938 PC 67 (P), where their Lordships of the Privy Council were of the view that:
'Interest for the period prior to the date of the suit may be awarded, if there is an agreement for the payment of interest at a fixed rate, or it is payable by the usage of trade having the force of law, or under the provision of any substantive law entitling the plaintiff to recover interest as for instance the Court may award interest at the rate of six per cent per annum, when no rate of interest is specified in a promissory note or bill of exchange under Section 80, Negotiable Instruments Act.
The proviso to Section 1 applies to a case in which the Court of equity exercises jurisdiction to allow interest. But in order to invoke a rule of equity, it is necessary, in the first instance, to establish the existence of a state of circumstances which attracts the equitable jurisdiction.' Mr. Mahajan suggested that grant of interest is discretionary with the Court and in this case, discretion should not be exercised in favour of the plaintiffs.
20. On facts, I have held that Bijai Ram Kanshi Ram took over the assets of Jai Ram Ganga Ram--found to be Rs. 25,054/13/3--and agreed to pay interest thereupon. The plaintiffs claimed interest at -/8/- per cent per mensem. I.e. 6 per cent per annum. The debt was created on 31-3-1936. The suit was instituted on 13-3-1942.
Interest at six per cent on the principal amount upto the date of the institution of the suit comes to about Rs. 9,379/-. The plaintiffs have claimed only a sum of Rs. 6,900/- and that is the valuation of the appeal. I may point out that the suit remained pending for about nine years.
21. In my view, for reasons given above, the learned District Judge was not justified in denying the plaintiffs the interest claimed by them.
22. Consequently, I allow the appeal of the plaintiffs (First Appeal No. 34 of 1951), i.e. the plaintiffs will get a sum of Rs. 6,900/- as interest, from the defendants i.e. over and above the sum decreed by the District Judge. The appellants will get their costs of this appeal from the respondents.
23. This judgment will be read in both theappeals, i.e. 37 and 34 of 1951.