K KOTAIAH Vs. KOGANTI SIVA PRASAD

JUDGEMENT

(1.) Defendants in O.S. No. 7 of 1991 on the file of the Court of the Principal Subordinate Judge, Tenali, are the appellants herein. The suit was filed for recovery of a sum of Rs. 2,64,789.14 ps.

(2.) The allegations in the plaint go to show that the 1st defendant is a firm situated with its Head Office at Pedanandipadu doing business in contract works. Defendants 2 to 7 are its partners and the 2nd defendant is the Managing Partner. The 2nd defendant is residing at Malladivari Street, Nazerpet, Tenali since more than 10 years. Defendants 2 to 7 are related to each other. The plaintiff, defendants 2 and 3, M.V. Swamy and Davvuluri Venkata Narayana formed into a partnership on 10.02.1972 to conduct and carry on contract works under the name and style of M/s. K. Kotaiah & Company and a partnership deed dated 01.03.1973 was executed between the partners. The said partnership was dissolved on 12.01.1979. As per the deed of dissolution executed between the said partners on 12.01.1979, accounts between partners were looked into and an amount of Rs. 76,553/- became due to the plaintiff from the dissolved partnership by the date or dissolution. An amount of Rs. 26,553/- was adjusted to the plaintiff on that day either by payment in cash or by adjustment of deposits. For the balance of Rs. 50,000/- it was agreed that said amount has to be paid to the plaintiff on or before 30.06.1979 without interest and if it is not paid before 30.06.1979 the amount Rs. 50,000/- has to carry interest at 18% from 01.07.1979. The amount was not paid before 30.06.1979 and so the plaintiff became entitled to claim interest at 18% from 01.07.1979.

(3.) After dissolution of the said firm on 12.01.1979 the defendants 2 to 7 herein formed into partnership firm under the name and style of the 1st defendant on 12.01.1979 and a partnership deed dated 24.12.1979 was executed between them constituting 2nd defendant as its Managing Partner. As per the terms and conditions of the said partnership deed, the 1st defendant firm and its partners have taken over the assets and liabilities of the erstwhile M/s. K. Kotaiah & Company of which the plaintiff, defendants 2 and 3, M.V. Swamy and Dawuluri Venkata Narayana were partners. Thus the 1st defendant firm and its partners, who are defendants 2 to 7, have become liable to discharge the above mentioned amount of Rs. 50,000/- with 18% interest to the plaintiff. So the 2nd defendant as Managing Partner of 1st defendant firm executed a promissory note dated 12.01.1982 for an amount of Rs. 72,500/- being the amount due to plaintiff from the 1st defendant firm by that date towards the above mentioned account, agreeing to repay the same with 18% interest on demand either to the plaintiff or his order. As the amount has not been repaid the 2nd defendant representing the 1st defendant firm executed a fresh promissory note in renewal of the prior promissory note dated 12.01.1982 for Rs. 1,11,650/- agreeing to repay the same with 18% interest either to the plaintiff or his order. Even the said amount was not repaid to the plaintiff either in part or in full and the 2nd defendant representing the 1st defendant and its partners executed a fresh promissory note on 14.01.1988 for Rs. 1,71,941/- being the amount due under the promissory note dated 13.01.1985 agreeing to repay the same either to plaintiff or his order with 18% interest on demand. The defendants have not repaid the amount due under the said promissory note to the plaintiff in spite of repeated demands both oral and in writing. The 1st defendant's assets and defendants 2 to 7 personally are liable to discharge the suit debt. The plaintiff learns that the suit debt is shown periodically by 1st defendant firm in its accounts books and also in Income Tax returns submitted to the income tax authorities.