K R V FIRM Vs. SATHYAVADA SITHARAMA SWAMI

JUDGEMENT

(1.) This is a suit by the plaintiff, a firm of merchants carrying on business in Madras, against the three defendants, who are brothers alleged to be carrying on business in partnership in the mofussil for the price of goods sold and delivered with interest according to agreement; and the plaint alleges that accounts were settled on the 7th January 1909 when Rs. 3976-0-6 were found due to the plaintiffs and the 1st defendant signed for that amount in the books of the plaintiffs. The 1st and 3rd defendants do not contest the suit. The 2nd defendant has filed a written statement in which he denies carrying on business in partnership with the 1st and 3rd defendants and says that the business belonged exclusively to the 1st defendant. He also denies that the business was a family trade and says there was no meaning in calling the defendants members of an undivided Hindu family as there is no family property. He also pleads that the suit is barred by limitation.

(2.) The transactions with the 1st defendant are proved and are not barred owing to the acknowledgment by the 3rd defendant. There must therefore be judgment against him in any event. As regards the 2nd defendant, I find it proved against him that he was a partner with the 1st defendant. His denial that he had anything to do with the business is contradicted by the letters exhibited in his own writing. It is clear that the defendants were undivided and were working together for profit in the business and this it seems to me renders them partners within the definition in Section 239 of the Indian Contract Act. The business was no doubt carried on in the name of the 1st defendant as appears from the plaintiff s Ledger, but there is nothing unusual in that. In the box the 2nd defendant said something about being divided in status but not by metes and bounds. In the written statement however he did not deny he was undivided, but only that there was any joint family property, and before he went into the box his vakil had expressly admitted that he was undivided and that judgment must in any event be given on that basis.

(3.) As regards limitation, it is contended that the written acknowledgment by the 1st defendant of January 1909 does not affect the other defendants and that the suit is barred as against them under two recent decisions of this court in Valasubramania Pillai v. S.V.R.B. M. Ramanathan Chettiar (1908) I.L.R. 32 M. 421 and Sheik Moideen Saib v. The Official Assignee of Madras (1911) I.L.R. 35 M. 142. This is a question of very great importance, because written acknowledgments such as this are a very ordinary, not to say, necessary incident of business at any rate in this part of India, and any decision affecting their validity must have a far reaching operation. As is well known the object of this legislation was to restrict the rule laid down by Lord Mansfield and the Court of King s Bench in Whitcomb v. Whiting (1781) 1 Sm. L.C. (Tenth Edition) 501, that any acknowledgment or payment by one co-debtor was sufficient to take the case out of the statute of Limitation as regards the others. This was effected as to acknowledgments by Lord Tenderten s Act 9 Geo. 4 c. 14, and as to payments by the Mercantile Law Amendment Act 1856, 19 and 20 Vic. c. 97 Section 14. The Indian Act of 1859 dealing only with acknowledgments provided generally (Section 4) that "if more than one person be liable none of them shall be chargeable by reason only of a written acknowledgment signed by another of them". The Act of 1871 Section 20 contained the following explanation 2. " Nothing in this section renders one of several partners or executors chargeable by reason of a written promise an acknowledgment signed by another of them." Section 20 of Act XV of 1877 provided that " Nothing in Sections 18 and 19 renders one of several joint contractors, executors or mortgagees chargeable by reason only of a written acknowledgment &c." This is very near the language of Lord Tenderten s Act. " No such joint contractor, executor or administrator shall lose the benefit of the said enactments so as to be chargeable in respect or by reasononly of any written acknowledgment or promise made and signed by any other or others of them." The main alteration for the present purpose is that, in the Indian Act partners are mentioned separately and not included under joint contractors. It has never been held so far as I know that the specific mention of the word partners makes any difference. Construing the language of the English sections Starling J. in In re Macdonald (1897) 2 Ch. 181 at 188 said that the word " only" is emphatic and in In re Tinker (1894) 3 Cb. 429 at 437 Lindley L. J. observed that " the object of the enactment was not to facilitate frauds by debtors upon creditors, but to protect debtors against state claims," and Lord Herschell observed that " it was not intended to have any application where the payment was made by him for and on behalf of another co-debtor at his request." It had previously been held by the Court of Queen s Bench in Goodwin v. Parton (1879) 41 L. T. 91 that one of two partners must be presumed in the absence of proof to the contrary to have authority to make a payment on account of a debt due to the firm so as to take the debt out of the Statutes of Limitation against the other. This case was affirmed by the Court of Appeal in Goodwin v. Parton (1880) 42 L. T. 568, and the same presumption is treated as applicable to acknowledgments in Lindley on Partnership and other text books though I have not found any express decision on the point. In Khudu Ram Dutt v. Kishen Chand (1876) 25 W.B. 145 a case under the Act of 1871 where a question arose as how far an acknowledgment by one partner was binding on another, the Court seems to have been of opinion that if by the ordinary rules of partnership such an acknowledgment would be binding on the other co-partners that would be sufficient, but the language is not very clear. In Prengi Moha v. Dorsa, Doongersey(1886) I.L.R. 10 13, 358. Scott J. ruled "It must be shewn that the partners signing the acknowledgment had the authority express or implied to do so. In a going mercantile concern such agency is I think to be presumed as a rule. See Lindley on Partnership. Goodwin v. Parton3;" but he held following Watson v. Woodman (1875) 20 Eq. 721, that as the partnership had ceased to be a going concern when the acknowledgment was made it was not binding, as the presumption no longer applied. In Gadu Bihi v. Pursotatn (l888) I.L.R. 10 A. 418 the Allahabad High Court referred to this decision with approval and held that where an acknowledgment was effected in the ordinary course of business of the firm and was such a transaction as was contemplated in Section 251 of the Indian Contract Act, it was sufficient to save limitation. In Dulsukram v. Kalidas (1902) I.L.R. 26 B.42, Candy J. referred to Scott J. s ruling with approval, and stated that it had been approved by Sargeant C. J. in an unreported case, but the Court eventually sent down an issue whether assuming the partnership to have been existing when the acknowledgment was made, such acknowledgment was or was not an act necessary for as usually done in carrying on the business of the partnership (Section 291 of the Indian Contract Act) in which case they held it must be taken to have been done under the authority of the other partners. Here it may be observed that Section 251 of the Indian Contract Act of 1872 which was subsequent to Limitation Act IX of 1871 Section 20 in which partners are expressly mentioned, is quite general in its terms and mikes no exception as to. payments and acknowledgments made in the necessary or ordinary course of the partnership business. Now if as here held, it be enough to shew that the acknowledgment was an act necessary for or usually done in carrying on the business of the partnership, that would seem to conclude the question so far as relates to trading partnerships in this part of India. It is the almost invariable practice of trade creditors here to insist on a written acknowledgment in their books being made by the debtors as a condition of giving credit and engaging in further transactions no doubt as a safeguard against idle and dishonest defences being set up if they should ultimately be obliged to sue. Such acknowledgments are made as a matter of course by the trade-debtors, whether carrying on business singly or in partnership and are forthcoming in almost every suit for the price of goods sold and delivered. This is a matter within the daily experience of Courts of first instance and I think they are entitled to take judicial notice of it if relevant and need not require it to be proved by evidence in each case.