Thumati Paripurna Govindamma v. Thatha China Venkata Subbaiah
2001-12-03
B.PRAKASH RAO
body2001
DigiLaw.ai
B. PRAKASH RAO, J. ( 1 ) THE defendants 1, 2 and 4 are the appellants-petitioners herein who are aggrieved against the judgment and decrees in O. S. No. 185, 186 and 187 of 1983 dated 10-9-1993 and the orders passed in LA. Nos. 2355, 2356 and 2357 of 1993 dated 14-9-1994 on the file of the Principal subordinate Judge at Ongole. ( 2 ) ALL the three suits were filed for recovery of Rs. 1,19,662-40, Rs. 35,024-64 and rs. 1,90,662-40 on the foot of promissory notes of the even date 23-12-1980 marked as exs. A-11, A-9 and A-12 executed by late thumati Rangaiah Choudhary. ( 3 ) THE first defendant is the wife, the second defendant is the son and defendants 3 and 4 are the daughters of the said late rangaiah Choudhary. ( 4 ) AS per the plaint allegations, Rangaiah choudhary was doing business in Tobacco and he was the kartha of the joint family consisting of the defendants 1 to 4. He died on 1-6-1982. Late Rangaiah Choudhary was running the business under the name and style of M/s. Lavanya Tobacco Private limited, Ongole and Lavanya Re-Drying factory, Ongole. The defendant No. l, the wife, was also one of the Directors in the said firms. That apart, Rangiah Choudhary was a partner in Sri Ramlingeswara Oil mill, Uppugundur and was also having lands at Maddiralapadu (Ongole), chadalawada and other places. ( 5 ) THE plaintiffs are the partners in the firm M/s. Thatha Iron Company, Ongole dealing in Iron, steel, cement and hardware etc. , wherein late Rangaiah Choudhary was having an account for his necessities as to the building materials for the aforesaid two firms. By 23-12-1980, he became indebted in a sum of Rs. 2,00,000. 00 and after transferring an amount of Rs. 7,113-23, there was a settlement of account and late Rangaiah choudhary undertook to pay a sum of rs. 2,00,000/- and in accordance therewith, he executed two promissory notes on 23-12-1980 for Rs. 1,00,000. 00 each. In spite of demands, as no amounts were forthcoming, the two suits in O. S. Nos. 185 and 187 of 1983 were filed for recovery of the amounts under the said two pronotes along with interest thereon as agreed to. In regard the other suit in O. S. No. 186 of 1983, similarly, in regard to the said account, the amount was struck at Rs.
185 and 187 of 1983 were filed for recovery of the amounts under the said two pronotes along with interest thereon as agreed to. In regard the other suit in O. S. No. 186 of 1983, similarly, in regard to the said account, the amount was struck at Rs. 18,374-18 which was ascertained after transfer of certain amounts and on settlement of account, Rangaiah choudhary agreed for payment of the same and duly executed the suit pronote Ex. A-9 for Rs. 18,374-18. Though Rangaiah choudhary issued a cheque dated 19-4-1981 for a sum of Rs. 20,000. 00 as part payment, the same was dishonoured. Hence the suit for recovery of the amount thereunder along with interest. ( 6 ) THE common defence in all the three suits was that the defendant No. l was not aware about any transaction except merely signing on papers. There was already a partition between late Rangaiah Choudhary and the second defendant long ago under a registered partition deed and, therefore, no liability in regard to the suit debts could be fastened on the other defendants. The entire business was that of Rangaiah Choudhary and the other defendants are not in possession of any assets of Rangaiah choudhary. That apart, late Rangaiah choudhary was also indebted heavily and there was a suit in O. S. No. 53 of 1983 filed by the Baroda Bank, Guntur for recovery of amounts on the basis of a mortgage. In view of the heavy debts and taking advantage of the financial breakdown and mental inability and the habit of drinking, late rangaiah Choudhary was made to execute the suit pronotes and, therefore, the same are not valid and without consideration. Further, the plaintiffs firm being unregistered, the claim is barred under section 69 of the Indian Partnership Act. ( 7 ) ON these and other allegations, the court below has framed the following issues:"o. S. No. 185 of 1983: (1) Whether the suit promissory note is true and supported by consideration? (2) Whether the second defendant and his father became divided long prior to the date of the suit promissory note? (3) Whether the debt is not binding on the estate of late Rangaiah choudhary in the hands of the defendants 1 to 4? (4) To what relief ? additional issues: (1) Whether the plaintiff firm is registered under the Indian partnership Act?
(3) Whether the debt is not binding on the estate of late Rangaiah choudhary in the hands of the defendants 1 to 4? (4) To what relief ? additional issues: (1) Whether the plaintiff firm is registered under the Indian partnership Act? (2) Whether the suit is not maintainable by virtue of Section 69 of the Indian Partnership Act? o. S. No. 186 of 1983: (1) Whether D-2 became separated long ago under a registered partition deed as alleged in para 4 of the written statement? (2) Whether D-1 was never one of the directors of the company and if the debt is binding on her? (3) Whether the interest claimed is usurious? (4) To what relief? additional issues: (1) Whether the plaintiff is entitled to claim personal liability against the second defendant for the suit amount? (2) Whether in spite of registered partition deed between late rangaiah Choudhary and D-2, there is a joint family consisting of late Rangaiah Choudhary and D-2 on the date of suit pronote? (3) Whether the suit khata and the pronote are true? (4) Whether the plaintiff firm was registered under the Indian partnership Act? (5) Whether the suit is not maintainable by virtue of Section 69 of the Indian Partnership Act? o. S. No. 187 of 1983: (1) Whether the second defendant and his father became divided long prior to the suit debt? (2) Whether the defendants 1 to 3 have no interest in the business firms of late Rangaiah? (3) Whether the first defendant is not a partner of Lavanya Tobacco company and Lavanya Redrying factory, Ongole? (4) Whether the suit debt is binding on defendants 1 to 4? (5) To what relief? (6) Whether the plaintiff firm is registered under the Indian partnership Act? (7) Whether the suit is not maintainable by virtue of Section 69 of the -Indian Partnership Act?" ( 8 ) DURING the course of the trial, the plaintiffs examined P. Ws. l to 4 and marked exs. A-1 to A-23 and on behalf of the defendants, the second defendant was examined as D. W. I and marked Exs. B-1 to b-7.
l to 4 and marked exs. A-1 to A-23 and on behalf of the defendants, the second defendant was examined as D. W. I and marked Exs. B-1 to b-7. ( 9 ) THE court below on a consideration of the evidence on record, decreed the suits holding that since the suits are filed by the plaintiffs in their individual capacity, the provisions of Section 69 of the Indian partnership Act have no application; the execution of the suit pronotes has not been denied and the defendants have failed to prove any coercion in execution thereof. Further, the alleged partition was not proved and not acted upon apart from the same being unequal in division, is not valid. ( 10 ) SUBSEQUENT to the disposal of the suits, the plaintiffs have filed interlocutory applications in LA. Nos. 2355, 2356 and 2357 of 1993 seeking amendment of the decrees to add personal liability as against the defendants and the same were ordered after contest. ( 11 ) SRI K. Subrahmanya Reddy, the learned senior counsel appearing on behalf of the appellants-petitioners, mainly submitted that the suits in their format and as filed are in respect of a debt belonging to a firm, which having not been registered, the claims made thereunder are clearly barred under Section 69 of the Indian partnership Act. Further, in view of the partition already effected under Ex. B-1 dated 22-3-1970, which is a registered one, and the subsequent filing of the income tax returns as evident from Exs. B-2 to B-7 which are admittedly subsequent to the said partition, the debts are not binding on the defendant No. 2 and the doctrine of pious obligation cannot be extended to such debts. ( 12 ) REPELLING the said contentions, Sri ashok Anand Kumar, learned counsel appearing for the respondents-plaintiffs, submitted that in view of the pronotes executed by late Rangaiah Choudhary though in regard to the debt which he owed to the firm, the suits are perfectly maintainable at the instance of the plaintiffs in their individual capacity and Section 69 of the Indian Partnership Act cannot be pressed into service. And further, as rightly held by the Court below, Ex. B-1 has not been proved and not acted upon and, therefore, the defendant No. 2 cannot escape his liability under the principle of pious obligation .
And further, as rightly held by the Court below, Ex. B-1 has not been proved and not acted upon and, therefore, the defendant No. 2 cannot escape his liability under the principle of pious obligation . ( 13 ) ON these and other detailed submissions made from both sides, the main questions which fall for consideration in these appeals and the revisions are as to whether the suits as framed and filed for recovery of amounts under the suit pronotes are hit by Section 69 of the Indian partnership Act and secondly as to whether the defendant No. 2 can be made liable in view of the partition effected under Ex. B-1 on 22-3-1970? ( 14 ) THERE is no dispute about the relationship amongst the defendants 1 to 4. Defendant No. 1 is the wife of late Rangaiah choudhary and defendant No. 2 is his son and defendants 3 and 4 are the daughters. Rangaiah Choudhary died on 1-6-1982. During his life time, he was doing business in tobacco under two firms viz. , Lavanya tobacco Pvt. Ltd. and Lavanya Redrying factory, Ongole wherein the defendant no. 1 was a partner. That apart, Rangaiah choudhary was also a partner in sri Ramalingeswara Oil Mill and having several lands in different places as mentioned supra. The case of the plaintiffs is that late Rangaiah Choudhary was having an account with the firm of the plaintiffs viz. , Thatha Iron Company, Ongole, which was doing business in iron and steel, cement and hardware. Late Rangaiah choudhary was supplied with construction materials thereby on 23-12-1980, he became indebted to a tune of Rs. 2,00,000. 00 in one instance and another sum of Rs. 18,374-18 and after transferring certain amounts, he executed three promissory notes i. e. , exs. A-11 and A-12 for Rs. 1,00,000. 00 each and Ex. A-9 for Rs. 18,374-18. Though in the latter case, a cheque was issued on 19-4-1981 for Rs. 20,000. 00, the same was dishonoured. The plaintiff in O. S. No. 185 of 1983 and the plaintiff in O. S. No. 187 of 1983 were examined as P. Ws. l and 3 and both of them reiterated the allegations as contained in the plaints. P. W. 2 is the attestor of Ex. A-11 and p. W. 4 is the scribe, and incidentally, he is also the clerk of the plaintiffs firm.
l and 3 and both of them reiterated the allegations as contained in the plaints. P. W. 2 is the attestor of Ex. A-11 and p. W. 4 is the scribe, and incidentally, he is also the clerk of the plaintiffs firm. In the written statement, there is no serious denial about the execution of these pronotes by late rangaiah Choudhary. In support of the pleas taken, the defendant No. 2 examined himself as D. W. I. The defendant No. l, who is the wife of Rangaiah Choudhary, was not examined. D. W. I reiterates the ground that the pronotes were got executed by the plaintiffs when Rangaiah Choudhary was in troubles due to debts and in a drunken state. However, except examining himself as d. W. I, no other witness was produced and in fact there is no material to support the alleged plea of use of any coercion in the execution of the suit pronotes. In view of the consistent evidence coming from P. Ws. l to 4 in regard to the execution of the suit pronotes and in the absence of any denial thereto by D. W. I or in the written statement of the defendants it has to be taken that late rangaiah Choudhary had executed the suit pronotes. The ultimate questions, which mainly centered around in the court below and as sought to be urged in the appeals, are two-fold: viz. , the suits as filed by the plaintiffs are barred under Section 69 of the indian Partnership Act and further in view of the partition already effected under ex. B-1 and the debts under the suit pronotes being post-partition ones, the liability cannot be extended to defendant No. 2. In fact, it was also expressed that if any assets are left out, the plaintiffs be given liberty to proceed against any of the assets of late rangaiah Choudhary. ( 15 ) COMING to the first aspect as to the bar under Section 69 of the Indian partnership Act, it is submitted that in the plaints in O. S. Nos. 185 and 187 of 1983, the plaintiffs described themselves as "partners" in Thatha Iron and Steel Co. , ongole. Further, in paragraph D of the plaint, the allegations run to the effect that late Rangaiah Choudhary opened an account with M/s. Thatha Iron and Steel co.
185 and 187 of 1983, the plaintiffs described themselves as "partners" in Thatha Iron and Steel Co. , ongole. Further, in paragraph D of the plaint, the allegations run to the effect that late Rangaiah Choudhary opened an account with M/s. Thatha Iron and Steel co. , of which the above plaintiffs are the partners, for his family necessities and family business viz. , construction of buildings for Lavanya Tobacco Pvt. Ltd. , and Lavanya Redrying Co. , etc. By 23-12-1980, he became indebted in a sum of rs. 2,00,000/- after transferring an amount of Rs. 7,113-20 to Thatha Chinna Venkata subba Rao from Ongole. After the settlement of the account on 23-12-1980, late rangaiah Choudhary undertook to pay an amount of Rs. 2,00,000. 00 which was ascertained to be due to the company by executing two promissory notes - one in favour of the plaintiffs and other in favour of Thatha Venkateswarlu, the other partner of the company as per the entry made in the account books and signed by him on the even date. In pursuance of the said undertaking, late Rangaiah Choudhary executed two promissory notes on 23-12-1980 for Rs. one lakh each agreeing to pay the amount with 24% compound interest with yearly rests. It is on these very basic allegations, the suits were filed for recovery of amounts due thereunder on the ground that in spite of demands, the amounts were not paid. The plaintiff in O. S. Nos. 185 and 187 of 1983, as stated above, are the partners in the said M/s. Thatha iron and Steel Co. While examining himself as P. W. I, one of the plaintiffs, reiterated that he was one of the partners in Thata Iron and steel Co. , which was dealing in iron, hardware etc. , and further reiterated all the other allegations. Thus both Exs. A-11 and a-12 came to be executed in favour of the respective plaintiffs in O. S. Nos. 185 and 187 of 1983 at Madras in Woodlands Hotel. Later, Rangaiah Choudhary died on 1-6-1982.
, which was dealing in iron, hardware etc. , and further reiterated all the other allegations. Thus both Exs. A-11 and a-12 came to be executed in favour of the respective plaintiffs in O. S. Nos. 185 and 187 of 1983 at Madras in Woodlands Hotel. Later, Rangaiah Choudhary died on 1-6-1982. ( 16 ) A reading of the case as set up in the plaints and as reiterated in the evidence and also as admitted by the defendants, clearly shows that the suit pronotes are only in regard to the amounts due to the said firm and not an independent transaction as such for any money lent unconnected with the said business transaction or otherwise. The said fact is also reiterated once again by p. Ws. 2 and 4, who are the attestor and the scribe. It is not anybody s case that any consideration was paid then and there. On this premise the objection is as to the maintainability of the suits under Section 69 of the Indian Partnership Act since the suit amounts pertain to a debt owed to a firm, which is unregistered. ( 17 ) IN a recent decision of the apex Court in Haldiram Bhujiawala v. Anand Kumar deepak Kumar, the scope of Section 69 (2) of the Indian Partnership Act and the bar created therein has been considered with reference to the very objects and also the historical account and especially by taking into consideration the expression enforcing a right arising under the contract" used in the said provision. It was held:"the above Report and provisions of the English Acts, in our view, make it clear that the purpose behind Sec. 69 (2) was to impose a disability on the unregistered firm or its partners to enforce rights arising out of contracts entered into by the plaintiff firm with the third party defendants in the course of the firm s business transactions. The further and additional but equally important aspect which has to be made clear is that the contract by the unregistered firm referred to in sec. 69 (2) must not only be one entered into by the firm with the third party defendant but must also be one entered into by the plaintiff firm in the course of the business dealings of the plaintiff firm with such third party defendant.
69 (2) must not only be one entered into by the firm with the third party defendant but must also be one entered into by the plaintiff firm in the course of the business dealings of the plaintiff firm with such third party defendant. " ( 18 ) IN Loonkaran Sethia v. Ivan E. John, the apex court held that the provision under section 69 of the Indian Partnership Act is mandatory in character and its effect is to render a suit by a plaintiff in respect of a right vested in him or acquired by him under a contract which he entered into as a partner of an unregistered firm, whether existing or dissolved, void. In other words, a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Section 69. ( 19 ) KEEPING in view the aforesaid principles as laid down and also the express words used in the said provision, there cannot be any doubt that the claims made in the suits do arise out of transactions which are in pursuance of a contract subsisting between the parties and ultimate settlement of accounts thereunder and later culminating into the suit promissory notes in favour of the partners of the very same firm who are before the court as plaintiffs. These liabilities are by the defaulter in relation to and in the course of the firm s business transactions. Though an attempt was made on behalf of the respondents- plaintiffs to show that the suit pronotes are independent contracts or transactions as such de hors the existing liabilities in the course of the said business and therefore the provisions of Section 69 of the Indian partnership Act cannot be brought into force, I am not prepared to accept such a submission more so when admittedly, the entire plaint allegations and the case of the plaintiffs proceed on the basis that the amounts under the pronotes are nothing but only the amounts which late Rangaiah choudhary owed to the said firm. ( 20 ) IN view of the same, it has to be held that admittedly, the said firm being unregistered, the provisions of Section 69 of the Indian Partnership Act step in and the claim made under the suits in O. S. Nos. 185 and 187 of 1983 gets barred.
( 20 ) IN view of the same, it has to be held that admittedly, the said firm being unregistered, the provisions of Section 69 of the Indian Partnership Act step in and the claim made under the suits in O. S. Nos. 185 and 187 of 1983 gets barred. ( 21 ) HOWEVER, coming to the third suit in o. S. No. 186 of 1983, as pointed out in the court below, the plaintiff has filed Ex. A-18, the firm s registration certificate, and therefore, it was held in the court below itself that the suit is not hit by Section 69 of the Indian Partnership Act. Even though the allegations do run on the self same lines as in the other two suits, however, in view of the registration as proved under Ex. A-18, which remained unchallenged, it has to be held that the suit in O. S. No. 186 of 1983 does not suffer from the mischief of Section 69 of the Indian Partnership Act and the same is maintainable. ( 22 ) COMING to the plea on the partition, the case of the defendants is that there was already a partition, being a registered one, in Ex. B-1 dated 22-3-1970, long before the execution of the three promissory notes in exs. A-9, A-11 and A-12 on 23-12-1980. D. W. I, the defendant No. 2, reiterated about the said partition in Ex. B-1. However, according to the respondents-plaintiffs, the said partition is only a sham and nominal one and made only for the purpose of income-tax. Further, even otherwise on the terms contained therein, they are uneven as a negligible share was given to late rangaiah Choudhary whereas substantial portion is allotted to the defendant No. 2. Therefore, it cannot be said to be a valid one apart from the fact that the said partition is not acted upon. Admittedly, the said partition is a registered document between the parties. The defendants have also filed exs. B-2 to B-7, the income-tax returns showing the individual returns in terms of the partition effected under Ex. B-1. That apart, the plaintiffs are the third parties and creditors. It is not their case that Ex. B-1 was executed with a view to defrauding any creditor or a bogus one or to cheat any such creditors.
B-2 to B-7, the income-tax returns showing the individual returns in terms of the partition effected under Ex. B-1. That apart, the plaintiffs are the third parties and creditors. It is not their case that Ex. B-1 was executed with a view to defrauding any creditor or a bogus one or to cheat any such creditors. Except stating that the said document is not acted upon, there is no serious challenge against the said registered deed. There is also no dispute nor any challenge in regard to the returns filed under Exs. B-2 to B-7. The said document is long prior to the execution of the suit pronotes. Once a partition is effected in pursuance of a registered document, the same cannot be challenged except on the available grounds as to fraud etc. Even on the ground of unequal partition, it is difficult to accept any argument to disbelieve the partition under Ex. B-1, though it all depends on the facts and circumstances of each case to say as to really such unequal partition has any effect on its validity. However, on the facts and circumstances of this case, the document was long prior to the suit pronotes and the parties were filing their respective income tax returns. Thus, the fact remains that the partition was very much acted upon. Even though in the court below the circumstances like non-examination of the mother, the defendant No. 1, and there being no partition by metes and bounds were sought to be taken as the basis to reject Ex. B-1, however, it has to be seen that these circumstances themselves would not have any such effect on the validity of Ex. B-1. There is a division between the father and son under Ex. B-1 and the same was being reiterated in the income tax returns and therefore, there is nothing to cast any doubt on the said partition. ( 23 ) IN the circumstances, it has to be held that Ex. B-1 is a valid one and the defendant no. 2 cannot be made liable under the suit pronotes. However, it shall be open for the plaintiffs to proceed against the assets left behind by late Rangaiah Choudhary.
( 23 ) IN the circumstances, it has to be held that Ex. B-1 is a valid one and the defendant no. 2 cannot be made liable under the suit pronotes. However, it shall be open for the plaintiffs to proceed against the assets left behind by late Rangaiah Choudhary. ( 24 ) COMING to the orders in the interlocutory applications passed by the court below, it has to be held that in view of the findings arrived at in the preceding paragraphs, the said orders are liable to be set aside. ( 25 ) ACCORDINGLY, the appeals in A. S. Nos. 64 and 1512 of 1994 are allowed and a. S. No. 1534 of 1994 is partly allowed to the effect that there shall be a decree only against the assets left by late Rangaiah choudhary and not against any other defendants personally or against their properties. The revisions are also allowed. There shall be no order as to costs in all the appeals and the revisions.