LAWS(PVC)-1924-8-40

HIRACHAND AMERSEY Vs. JAYAGOPAL GANGABISHAN

Decided On August 02, 1924
HIRACHAND AMERSEY Appellant
V/S
JAYAGOPAL GANGABISHAN Respondents

JUDGEMENT

(1.) [His lordship after dealing with the facts of the case proceeded.] Now the arguments before us have been interesting and able, and have covered a wide field. In the first place I think it clear that the two mortgages, though taken in the names of the two firms, operated as if they had been taken in the names of the individual partners of those firms. A partnership firm is not a legal entity like a limited liability company. Consequently a conveyance to the firm operates as a conveyance to the individual partners. Authority for this will be found in Ragoonathdas Gopaldas V/s. Morarji Jutha,(1892) I.L.R. 16 Bom. 568 in our High Court, and in Wray V/s. Wray,[1905] 2 Ch. 349. and In re Smith: Johnson V/s. Bright- Smith,[1914] 1 Ch. 937 in England. In the present case this construction is quite consistent with the actual definitions used in the various documents Exs. E to H, viz., "the creditors," and "the mortgagees" and "the releasors" as there defined.

(2.) That being so, four questions at least arise, viz. (1) as to whether the vendor had properly shown who the individual partners of the two firms actually were; (2) if so, whether the alleged partners Harilal and Venilal were expressly authorised by their respective firms to execute the releases in question;(3) if not, were they competent to execute such releases; and (4) what is the effect if any in India of a bare outstanding interest being left, in a paid-off mortgagee. In considering these points, one has also to consider whether the purchaser was reasonably protected against any possible fraud by Harilal or Venilal either in collusion with the mortgagor or by deceiving him. For instance if the other partners had brought a suit and proved that Harilal or Venilal was only a munim and had no power to sign on behalf of the firm and had wrongfully abstracted the deeds and received payment, would the purchaser have had a good defence, and if so on what grounds?

(3.) Now as regards the first point, the vendor in effect asked the purchaser to accept the bare statements of Venilal and Harilal as to the several individuals constituting the two firms, and that they themselves were partners in the two firms respectively, and were duly authorised by their copartners to receive the mortgage moneys, No independent evidence, either from bankers or merchants or by production of the partnership books on the partnership deed, was forthcoming. There was not even any statement from the other alleged partners, nor from the mortgagor. It may be that the mortgagor honestly thought he was paying the right person. But his means of knowledge are not before us. He is described in the registration endorsements as a merchant and Bania. Accordingly he may have been content to rely on his knowledge as a Bania derived it may be from his past transactions and supported by his books as to who this partnership firm consisted of, and who generally acted for them and signed on the firm's behalf. If so, a statutory declaration or its Indian equivalent might have been most useful. But in fact none such was shown to or put in evidence, although I notice from the defendant's affidavit of documents that the mortgagor appears to have made a declaration on the same day as Exs. I and J.