DALICHAND V PAREKH Vs. MATHURADAS RAVJI

JUDGEMENT

(1.) THE only question arising in this appeal is whether the payment made by the respondent company by way of a set-off to one Sevarani, a partner of Roy and Co. , against a debt due by the respondent firm to the said Roy and Co. , is binding on Roy and Co. The suit out of which this appeal arises was brought by the receiver of the said Hoy and Co. , appointed by the Civil Court of Bantwa, for recovering the sum due from the defendant firm on taking accounts of the dealings between Roy and Co. , and the defendant firm. Roy and Co. , was a partnership firm constituted by a deed of partnership, Ex. 8/1 dated 5-10-48, having four partners Salarnatrai, Baleband, Sevaram and Variyaldas, each partner having an equal share. The said firm purchased chillies and other goods at Veraval through the commission agency of the defendant firm. Shortly after the constitution of Roy and Co. , the partners fell out and on 6-1-49, Sevaram gave a notice to the remaining partners for a dissolution of the firm and for settling the accounts, the notice stating, inter alia, that the said other partners should not do any act on behalf of the partnership without his consent. On receipt of this notice, Salarnatrai sent the manager of Roy and Co. , one Kanaiyalal, to the defendant at Veraval for a settlement of accounts of Roy and Co. , with the defendant firm but the defendant refused to settle the accounts stating that they knew only Sevaram and they would not recognise the other partners. Kaniyalal returned to Bant-wa and then Salamatrai himself went along with Kanaiyalal to Veraval and demanded a settlement of accounts but the defendant still refused to settle the accounts. So Salamatrai returned to Bantwa and sent a telegram to the defendant firm on 9-1-49, Ex. 7/7, asking the defendant not to pay or deal with Sevaram Nebhandas or else the defendant will remain responsible. Sevaram had his own business at Veraval and he had dealings with the defendant firm in that business. Sevaram was indebted to the defendant firm in a sum of Rs. 2013-1-6 and the defendant firm in its turn was indebted to Roy and Co. Sevaram and the managing partner of the defendant firm met at Veraval and as a result of that meeting, the defendant firm debited Roy and Co. , with the abovesaid sum of Rs. 2013-1-6 and credited it to Sevaram, thereby setting off their liability to the extent of the abovesaid sum to Roy and Co. , against their dues from Sevaram personally.

(2.) IN reply to the telegram of Roy and Co. , dated 9-1-49 the defendant company sent a letter dated 27-1-49 stating that they recognised Sevaram as Roy and Co. , and that Roy and Co. , was responsible for the dealings entered into by Sevaram, though curiously enough, they did not state that they had set off Rs. 2013-1-6 debiting the said sum to Roy and Co. The receiver of Roy and Co. , Mr. Dali-chand, a pleader of Bantwa, then gave a notice to the defendant company on' 23-3-50 demanding a sum of Rs. 4065-6-0 remaining due on accounts, but the defendant in reply stated that Rs. 1258-1-0 only were due from them. Thereafter the receiver filed a suit against the defendant company. The learned trial Judge held that the payment of Rs. 2013-1-6 by way of a set off was not binding on Roy and Co. , and the defendant was liable to Roy and Co. , for the same. The trial Court allowed interest to Roy and Co. , on the footing of interest due on the amount of each particular dealing from the date of such dealing and awarded Rs. 4648-9-3, allowing the plaintiff to withdraw Rs. 1238-1-0 deposited by the defendant in Court and giving a decree for the balance which included interest as calculated above. The defendant went in appeal and the learned appellate Judge held that the payment of Rs. 20i3-1-6 was not collusive and fraudulent, that the defendant firm was entitled in its own interest to realise its dues from Sevaram and for that purpose to set it off against the debt owed by them to Roy and Co. , and that the payment was binding on Roy and Co. The learned Judge further held that the awarding of interest on various sums from the dates of those sums was wrong in principle. Accordingly, he held that Roy and Co. were not entitled to the Sum of Rs. 2013-1-6 nor the interest, but that interest should be calculated on the sum due to Roy and Co. from the date of the suit until the date of the preliminary decree at nine per cent, and at six per cent, from the date of the preliminary decree. In accordance with this finding, the learned Judge remanded the case to the trial Court for suitably amending the decree.

(3.) IN this appeal, Mr. Baxi for the appellant has not disputed the lower appellate Courts find-, ing regarding interest and the only point in issue now is whether the payment of Rs. 2013-1-6 by way of set oif is binding on Roy and Co. under Section 19 of the Indian Partnership Act, an act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm, and the authority of a partner to bind the firm conferred by this section is called implied authority. Therefore, a payment made to a partner falls within his implied authority and is valid payment to the firm and it is competent to a partner to give a discharge in respect thereof so as to bind the firm, and this legal position in no longer in dispute. But the question is whether it is within the implied authority of a partner to set off his own separate debt against the debt due to the firm. On this subject Lindtey on Partnership says :