CHANAHALU SIVA REDDI Vs. OFFICIAL RECEIVER OF BELLARY

JUDGEMENT

(1.) The appellants are two out of three brothers who have been adjudicated insolvents in I.P. No. 43 of 1931, on the file of the District Judge, Bellary. The learned District Judge has found that all the three brothers were in partnership and that the firm of which they were members was liable to be adjudicated insolvent. The eldest brother who has not appealed put up a case that the business in which the debts due to the petitioning creditors were contracted belonged to him alone and that his two younger brothers (the present appellants) had nothing to do with it. The appellants also supported that case. They pleaded that they had effected a partition from their elder brother 4 or5 years before the insolvency petition was filed. The eldest brother Ayyanha Gowd was adjudicated on his own admission and the appellants were adjudicated subsequently by the District Judge.

(2.) It is contended on behalf of the appellants that there was no sufficient evidence to prove any partnership between these three brothers and further that even if the partnership were found to have been proved, the acts of the insolvency alleged were committed only by the eldest brother Ayyanna Gowd and that they could not suffice to support the adjudication in insolvency of the other two brothers. With regard to the question of partnership, we have no hesitation in upholding the finding of the learned District Judge. The documents (Exs. D and D-1) and the account books (Exs. G and H-O) are quite sufficient by themselves to show that the three brothers were jointly engaged in the trade. They are members of a joint family and they state in Exs. D and D-1 that the trade which was being carried on under the name of the eldest brother Ayyanna Gowd was a trade which was being conducted for the benefit of the joint family (vide Ex. D). In Ex. D-1 they said: We are trading in partnership under the name of Ayyanna Gowd.

(3.) The only difficulty is whether the act or acts of insolvency committed by the first counter- petitioner only (the eldest brother) can support the adjudication of the other two brothers. We have been referred to a number of cases. The learned District Judge has held that the eldest brother Ayyanna Gowd secluded himself and evaded his creditors and also gave notice to his creditors that he had suspended payment. He has also held that these acts of Ayyanna Gowd must be considered as the acts of the other members of the firm, viz., the two present appellants. In other words the first counter-petitioner according to the learned Judge acted as the agent of the other two brothers who are in partnership with him. Under the explanation to Section 6 of the Provincial Insolvency Act which defines an act of insolvency, it is laid down that for the purposes of this section the act of an agent may be the act of the principal. The law is summarised in paragraph 136, page 103 of Muila's Treatise on Insolvency in the following words: It will be seen from what is stated above that there is a distinction between an ordinary agent and an agent who has exclusive control of the business and occupies such a position that the principal must stand or fall by his acts. In the former case the act of insolvency committed by the agent is not the act of the principal. In the latter case the act of insolvency committed by the agent will be the act of principal.