B S MAHADEVA IYER Vs. RAMAKRISHNA REDDIAR

JUDGEMENT

(1.) In this case the plaintiffs are the sons of one 8. V. Manavala Reddiar who died about 1915 and they sue the defendants who are, as to defendants Nos. 2 to 4, the undivided sons of defendant No. 1 and as to defendants Nos. 6 and 7, the undivided sons of defendant No. 5. Defendant No. 1 and defendant No. 5 carried on business in partnership in cotton and money-lending under the style of "P.K.N." Firm Defendant No. 1 borrowed from Manavala Reddy Rs. 10,000 from his family funds, is his (defendant No. 1 s) capacity as managing partner, on 26 August 1914. The suit is brought on the promissory note executed thereupon (Ex. A).) Defendant No. 1 is also alleged to have made and endorsed a payment of Rs. 1,000 for interest on 16 August 1917 thus saving limitation. The defence is that the partnership between defendant No. 1 and defendant No. 5 had ceased to the knowledge of. plaintiffs long before 16 August 1917 and had been dissolved by a decree in a suit for dissolution (O.S. No. 7 of 1918) brought by defendant No. 5, the capitalist partner, against defendant No. 1. The decree decided that the partnership was dissolved as from 11 March 1915. Consequently defendant No. 1 had no authority to bind his former partner in 1917 by an endorsement of part payment in order to save limitation. It is, no doubt, clear law that after dissolution no ex-partner has power to do any act to bind another ex-partner, cf., Watson V/s. Woodman (1875) 20 Eq. 721 : 45 L.J. Ch. 57 : 24 W.R. 47, where the Vice- Chancellor held that it was not there proved that the two parties concerned had so intended that they should for the purposes of that suit be deemed to have continued partners. In Rajagopala Pillai V/s. Krishnasami Chetti 8 M.L.J. 261 it was held that the fact that a partnership is being wound up is by itself insufficient to authorise a surviving partner to bind the representatives of a deceased partner. But in the present case it is clear that as regards third parties (in the position of the plaintiffs) there was no notice, express or constructive, given of dissolution and Section 264 of the Contract Act is clear that in the absence of such notice, persons dealing with a firm are entitled to assume that the partnership still continues Chundee Churn Dutt V/s. Eduljee Cowasjee Bijnee 8 C. 678 : 11 C.L.R. 225 : 4 Ind. Dec. (N.S.). 437; Giovani Gorio and Co. V/s. Vallabh Das Kalianji 30 Ind. Cas. 864 : 17 Bom. L.R. 762. Therefore plaintiffs were still entitled even after 1915 to regard the partnership between defendant No. 1 and defendant No. 5 with whom they have dealt for 15 years as subsisting. The question then arises, had defendant No. 1 authority to bind his firm by making this payment. My own opinion is that as, in the case of a mercantile firm as here, each partner is entrusted by his co-partners with a general authority to do any act necessary for or usually done in carrying on the business of such partnership, a partner's authority extends to making an acknowledgment by part-payment so as to bind his partners. I am fortified in this opinion by that of Kumaraswami Sastri, J., in his referring judgment in Pandiri Veeranna V/s. Grandhi Veerabhadraswami 45 Ind. Cas. 18 : 41 M. 427 at p. 431 : 34 M.L.J. 373 : 23 M.L.T. 261 : (1918) M.W.N. 285 : 7 L.W. 552. However a question has been raised on limitation with regard to the provisions of Section 21(2) of the Limitation Act which runs as follows: Nothing in the said sections renders one of several joint contractors, partners, executors or mortgagees chargeable by reason only of a written acknowledgment signed or of a payment made by, or by the agent of, any other or others of them.

(2.) These words have been construed in Pandiri Veeranna V/s. Grandhi Veerabhadraswami 45 Ind. Cas. 18 : 41 M. 427 at p. 431 : 34 M.L.J. 373 : 23 M.L.T. 261 : (1918) M.W.N. 285 : 7 L.W. 552 by the Full Bench of this Court. There the learned Judges say "It is important to notice the exact wording of Section 21 (2) of the Limitation Act. The section does not say that a person shall not be liable on an acknowledgment signed by the partner by, reason only of his being a partner but by reason only of a written acknowledgment signed by his partner; and it amounts to saying that if you have no more than written acknowledgment signed by one defendant the fact that the other defendant is his partner cannot affect the latter liability. You would obviously have a case where one partner signed an acknowledgment in respect of a gambling debt of his own; but for the sub-section, proof of the acknowledgment would be sufficient to fix the other partner with liability, a conclusion manifestly repugnant both to sense and justice." (Page 434). Here there is no question that the part-payment was in respect of a partnership debt-(Ex. A). There is also ample evidence from the surrounding circumstances which we are entitled to look at Pandiri Veeranna v. Grandhi Veerabhadraswami 45 Ind. Cas. 18 : 41 M. 427 at p. 431 : 34 M.L.J. 373 : 23 M.L.T. 261 : (1918) M.W.N. 285 : 7 L.W. 552 for the conclusion that there was express authority" for defendant No. 1 to make the acknowledgment to rebut the possible validity of the contention that from the wording of Section 21 (2), Limitation Act, there is no presumption in India, that a. partner has power to acknowledge, though the validity of this contention is at least doubtful after the exposition of the sub-section by the Full Bench. Plaintiff witness No. 3 a clerk of appellants (defendants ) firm swears that the entry in Ex. E (1) showing the payment of Rs. 1,000 on 16 August 1917 was made under the orders of defendants Nos. 1 and 5; He also states that the partnership has not been wound up or the account settled. Defendant No. 5 himself applied for a loan to the South Indian Bank in 1915 (Ex. G) in which he sets out the present loan. Exhibit H is the defendant No. 5's plaint in the dissolution suit against respondent No. 1. He says that since his (defendant No. 5 s) father's death in 1907, defendant No. 1 and another assistant partner, conducted the entire business. Defendant No. 5 was obliged to rely on defendant No. 1 for the conduct by him of all matters connected with the partnership and all such things as the collection of outstandings, etc. In Ex. F dated 6 February 1918 the present appellant admits" that defendant No. 1 has to pay a share of the debt due to Manavala Reddi. There is also a correspondence between the Receiver in the dissolution suit and the Vakil of Manavala Reddi's sons which shows that at first at any rate the appellants were willing to discharge their half of the suit debt and did not question their liability to do so. There is no doubt on the evidence, which there is no reason to discredit, that never until this suit was brought did appellants dispute their liability nor suggest that defendant No. 1 was not authorised to make the acknowledgment. The proviso of Section 21(2) of the Limitation Act as construed by the Full Bench can, therefore, have no application to the present case. I am, therefore, of opinion, that the Subordinate Judge was correct in the conclusion he came to and I would dismiss this appeal with costs of plaintiffs (respondents Nos. 1 to 3). Costa not to come out of partnership assets. Spencer, J.

(3.) I agree that the appeal must be dismissed with costs and I will give my reasons in my own language. Defendants Nos. 6 and 7 sons of 5 defendant, who died during the suit, appeal and 10 defendant is the Receiver in O.S. No. 7 of 1918.