M A NALLASAMY Vs. JAI SREE FINANCE

JUDGEMENT

(1.) The appellant advanced a sum of Rs.85,000/- on the strength of a promissory note Ex.A-1 wherein M.L.Ramasamy, Partner, Jai Sree Finance, had promised to pay the sum borrowed and the promissory note was signed by the said Ramasamy with the seal for Jai Sree Finance as Partner. Since the amount borrowed was not repaid, the appellant filed a suit for recovery of the money due against the firm and the partners including the aforesaid Ramasamy, the 9th respondent. The trial Court was inclined to hold that the amount was borrowed individually by the 9th respondent and not on behalf of the firm and decreed the suit against him and dismissed the suit against the firm and the other partners. Against this dismissal, the appeal has been filed.

(2.) Mr.V.K.Muthuswamy, the learned senior counsel appearing for the appellant, would refer to Section 22 of the Indian Partnership Act and Sections 27 and 28 of the Negotiable Instruments Act. Section 22 of the Indian Partnership Act says that in order to bind a firm, an act or instrument done or executed by a partner or other person on behalf of the firm shall be done or executed in the firm name, or in any other manner expressing or implying an intention to bind the firm. Section 27 of the Negotiable Instruments Act refers to the principle of agency and the liability of agents signing. As per Section 28 of the same Act, a person capable of binding himself as a party to the note, bill or cheque may be equally bound by a duly authorized agent acting in him name and an agent who signs his name to a note, bill or cheque without indicating that he signs as such as agent or he does not intend to incur personal responsibility, is personally liable except to those who induced him to sign upon the belief that the principal only would be held liable.

(3.) The promissory note Ext.A-1 was read out. It was submitted that the fact that it has been signed for the firm as a partner would clearly show that he was acting on behalf of the firm. It was further submitted that it was not as if the 9th respondent did not have the authority to bind the firm. Clause 8 of the partnership deed Ex.B-5 states that the 9th respondent is the Managing Partner entitled to a monthly remuneration and that as a partner he has the power and authority to individually operate bank accounts and to borrow money. In Clause 9 of the other partnership deed Ex.B-1, the 9th respondent has been given power and authority to individually operate bank account and to borrow money from the bank and others. The evidence of P.W.1 shows that before signing the promissory note, the 9th respondent had produced two partnership deeds of the firm and after satisfying himself that he had the authority to sign on behalf of the firm, the money was lent. P.W.2 is the scribe of Ex.A-1 who speaks of the execution of the promissory note was executed on behalf of the firm and for the benefit of the firm. Therefore, it was submitted that the firm must be made liable.