CENTRAL UNITED BANK Vs. B A VENKATARAMA NAIDU

JUDGEMENT

(1.) THIS appeal raises a question about the liability of a retired partner who failed to give public notice of his retirement with respect to dealings of the continuing partners of the firm with a third party.

(2.) THREE persons Ramakrishna Chettiar, Ramaswami Nadar and Venkatarama naidu, the defendants to the suit out of which this appeal arises, carried on business in partnership as grocers in Rajapalayam. The first among them, ramakrishna Chettiar, was the managing partner. He also happened to be the president of the Central United Bank, which is now represented by the appellant, a limited liability banking concern of the place. The partnership firm had overdraft facilities with the bank. On 8th February 1946, Venkatarama Naidu (the third defendant) retired from the partnership. His retirement is evidenced by a document, Ex. B. 4, executed between the partners. Under the arrangement referred to therein the remaining two partners were alleged to run the business as before in the name of the firm. Although intimation of the retirement was given to the Registrar of Firms and to the Commercial Tax officer of the place, no public notice of it in the manner specified in Section 72 of the Partnership Act was given. Subsequent to the retirement of Venkatarama naidu, on 4th January 1947, Ramakrishna Chettiar, acting on behalf of the firm of which he and Ramaswami alone were partners, obtained a loan of Rs. 6000 from the bank by executing a promissory note. The loan was renewed later, such renewal being evidenced by a fresh promissory note bearing 3rd January 1950 as its date. The suit, out of which this appeal arises, is based on that note. It is not disputed that it is very clear on the evidence in the case, that the suit loan is independent of the transactions which the old firm had with the bank. The only ground on which the retired partner is sought to be made liable is that he, having not given public notice of his retirement would be bound by the obligations of the reconstituted firm, under Section 32 of the Partnership Act. There is little doubt that the bank was, as a matter of fact, aware of the retirement of Venkatarama from the firm. The managing partner of the firm Ramakrishnna was himself the President of the Board of Directors of the Bank. The bank significantly enough did not consider that Venkatarama was liable for the suit loan when it issued a notice of demand in respect of it, as it called upon only the continuing partners to pay it off. The bank subsequently went into liquidation. It was only in the suit that was filed to recover the loan advanced, Venkatarama was also sought to be made liable and impleaded as a party. The main contest in the suit related only to his liability. 2a. Of the other defendants, the first defendant claimed benefit under Madras Act iv of 1938. He had admittedly an interest in agricultural lands. But his claim to relief was objected to on behalf of the bank on the ground that he bad been assessed to income-tax during the relevant years which disentitled him to come within the definition of the term "agriculturist. " No evidence, however, was adduced on this question. The bank was entitled, under the circumstances to obtain a decree against the first defendant only in accordance with the agriculturists Relief Act.

(3.) THE learned Subordinate Judge who passed such decree, however, added a rider thereto namely that if the bank was able to produce within a period of two months a certificate from the Collector that the debtor was paying income-tax during the relevant years and thus not entitled to the benefits of that enactment, he would be liable for the entire amount. The passing of such a conditional decree is hardly consistent with sound procedure. If a party failed to produce evidence before the Court in support of his case, it will be the duty of the court to decide the case on the materials placed before it and not pass a conditional or second decree if evidence to support it were to be produced in future. It is, however, unnecessary to pursue that matter as the contingency contemplating production of the collector's certificate, never happened. There is no challenge by the defendants 1 to 2 to the decree against them.