CHUNDURI PANAKALA RAO Vs. ATMURI VENKATA SARVESAM

JUDGEMENT

(1.) The facts necessary for the disposal of this second appeal may be briefly stated. Defendants 1 and 2 are brothers and were members of an undivided Hindu family till January 1926. In or about 1913 it appears that some paddy trade was being carried on by defendant 2 in partnership with D. W. 3. At that time defendants 1 and 2 with a view to get loans from the Imperial Bank of India for the trade entered into an agreement with the bank, Ex. A, dated 18 January 1913, in and by which they intimated to the bank that they were trading for their joint family benefit and interest and that they will hold themselves jointly and severally liable in respect of moneys advanced to any of them. Ex. A runs as follows: We, the undersigned : (1) Atmoori Venkatasarvesam, A.L.N. (2) Atmoori Lakshmi Nara-simham, do hereby request you to take notice that we are trading for our joint family benefit and interest, and we further request you to note that all transactions entered into by any of us, whether jointly or individually, and all documents signed by any of us jointly or severally or in the name of our firm as per specimens of signature at foot, may be regarded by you as entered into for and on behalf of our joint family account and interest, and that we hereby jointly and severally bind ourselves, our heirs, executors or administrators and trustees liable in respect of all or any of such transactions and documents.

(2.) The effect of this agreement is that any transaction entered into by either defendant 1 or defendant 2 will be a joint transaction in the sense that both of them will be primarily liable to the bank and the bank has a right to sue both and realise the amount advanced personally and out of their joint family properties or their separate properties. On 31 March 1922 both defendants 1 and 2 also gave a further undertaking not to alienate their properties so long as they were indebted to the Bank. In or about November 1924, defendant 2 wanted a loan from the bank and the bank apparently seemed to have demanded a surety and the plaintiff accommodated defendant 2 by executing a promissory note (Ex. 0) dated 28 November 1924 for a sum of Rs. 3,000 in favour of defendant 2 which was neegotiated in favour of the bank. Defendant 2 having failed to pay the said sum of money due under the promissory note, the plaintiff was called upon by the bank to pay the amount, and on 18 August 1925 the plaintiff paid to the bank the sum of Rs. 3,180 in full discharge of the principal and interest due under the said promissory note. The bank granted a receipt to him on 21 August 1925 and sent the pronote to the plaintiff with the payment duly endorsed. On the very same day, i.e., 18 August 1925, when the plaintiff paid the amount the plaintiff got a promissory note from defendant 2 for a sum of Rs. 3,732 made up of the said sum of Rs. 3,180 and another sum of Rs. 552 being the principal and interest due in respect of a pair of earrings purchased by defendant 2.

(3.) The plaintiff has instituted this action to recover the amount due under the said promissory note from defendants 1 and 2 or in the alternative to recover the sum of Rs. 3,180, the amount paid by the plaintiff to the bank, from both the defendants with interest from the date of payment. This claim is resisted by defendant 1. Defendant 1 denied that the suit promissory note was executed for any family necessity and also that the promissory note in favour of the bank was the sole transaction of defendant 2, the amount borrowed thereunder having been utilised by him solely for his own purposes and that he could not be made liable therefor. The principal Subordinate Judge of Narasapur who tried the suit gave a decree to the plaintiff for the amount paid by the plaintiff to the bank with interest. The learned District Judge reversed the decision of the Subordinate Judge holding that the transaction with the bank was the sole concern of defendant 2 and defendant 1 could not be made liable therefor. It is clear from the evidence that the amount borrowed from the bank was borrowed for the individual purposes of defendant 2 and the accommodation of the plaintiff was at the request of defendant 2. It has been concurrently found by both the lower Courts that the plaintiff was a surety for defendant 2 in regard to the transaction with the bank.