DHULIPALLA KANAKAM ALIAS SITARAMAYYA, MINOR, BY MOTHER AND GUARDIAN RAMAMMA; DHULIPALLA SITARAMASWAMY, MINOR, BY MOTHER AND GUARDIAN RAMANNA Vs. NADIPALLI VENKATARAJU; SANKACHINA VENKATAPPAYYA

JUDGEMENT

(1.) The plaintiff sues on a promissory note executed by defendants Nos. 1 and 3. The 2nd defendant is joined as being the undivided brother of the float defendant. The father of the first two defendants carried on a trade in timber with one Naganna. On his death, the 1st defendant, as the manager of the joint family, carried the stock in trade left by his father into a similar partnership with the 3rd defendant. The debt evidenced by the promissory note was contracted in the course of this trade and it has been proved to have been incurred for the benefit of the family. The 2nd defendant pleaded that the joint family property should not be held liable for the debt. The Courts below have rejected this contention and have given a decree against the family property.

(2.) Mr. Narayanamurthi in an elaborate argument contended that the objections of the 2nd defendant are governed by Section 247 of the Indian Contract Act and that the liability, if any, should be restricted to the assets of the partnership; on the other hand Mr. Somasundaram, for the 1st respondent, argued that the liability of the 2nd defendant is under the Hindu Law and the fact that the debt was incurred in the course of a partnership concern should not make any difference in his liability.

(3.) If the position of the 2nd defendant were to be looked at from the point of view of a person who was admitted to the benefits of the partnership, a great deal can be said in favour of the contention raised by the learned Vakil for the appellant. Prima facie, his case would be governed by Section 247 of the Act. The asset of the father in which he had a share was brought into the new partnership and consequently he must be regarded as a person admitted to the benefits of the partnership in which his elder brother and the 3rd defendant were the active partners. If this position is established, we are not prepared to say that the ancestral family property can be regarded as partnership assets. The definition given in Lindley on Partnership, page 384, is against the view that the family property was a part of the assets. One essential consideration for such a position is that all the partners, during the continuance of the business, must have the right to deal with that property. We do not think that the family property was an asset of the partnership. The definition given in Section 20 of the English Partnership Act is against holding properties not directly associated with the business as assets of the firm. Therefore, the 2nd defendant, regarded as one to whom Section 217 is solely applicable, could not be made liable in respect of the ancestral property.