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Madhya Pradesh High Court · body

2006 DIGILAW 467 (MP)

Omprakash v. Gordhan

2006-03-29

S.K.GANGELE

body2006
JUDGMENT 1. Appellant-defendant No.2 has filed this appeal against the judgment and decree dated 30.10.1991 passed by the 7th Additional District Judge, Indore, in Civil Appeal No. 21/89 affirming the judgment and decree dated, 28.6.1991 passed by the Fifth Civil Judge Class II, Indore, in Civil Suit No. 18-A/1981. 2. This appeal has been admitted for final hearing vide order dated 12.7.1996 on the following substantial questions of law: (a) "Whether the appellant is liable to pay the suit amount of the partnership firm when he retired long before the transaction took place ? " (b) "Whether the appellant is liable to pay the suit amount because no public notice was issued after his retirement especially when the respondent No.l/plaintiff did not know at the time of entering into transaction who were the partners of the said firm? " 3. The plaintiff/respondent No.1 filed a suit for recovery of an amount of Rs. 11,000/- with interest at the rate of 18% per annum. He pleaded that he delivered sugarcane to a Mill named as Shri Kisan Mill between 1.3.1978 to 1.4.1978. The Mill was being run by a firm to which the appellant-defendant No.2 was the partner. The total amount of sugarcane which was delivered by the plaintiff was of Rs.9,281.27 Paisa and the defendant No.1 firm paid only Rs.1,830/- and an amount of Rs.7,491.27 Paisa was unpaid. He served a notice but the defendant No.2 and the other defendants did not scnd reply to the aforesaid notice. The mill was closed. On the basis of the aforesaid pleadings the plaintiff prayed a decree of Rs.11,000/- with interest at the rate of 18% per annum. 4. The defendants No.2, 3 and 7 filed joint written statement. They denied that they were the partners of the firm. Similarly, the delivery of sugarcane was also denied. During the pendency of the suit the defendants No.3 and 7 have died. 5. The trial Court decreed the suit by holding that the plaintiff supplied sugarcane as pleaded by him and the defendant No. 1 did not pay an amount of Rs.7,451.27 Paisa. The trial Court also held that the defendant No.2 could not be exempted from his liability on account of the fact that he was relieved from the partnership with effect from 30.6.1976, because no public notice was issued to this effect by the defendant No.2. The trial Court also held that the defendant No.2 could not be exempted from his liability on account of the fact that he was relieved from the partnership with effect from 30.6.1976, because no public notice was issued to this effect by the defendant No.2. The appellate Court also affirmed the aforesaid findings of the trial Court. 6. Learned counsel for the appellant has submitted that the appellant has been retired from the defendant firm by a deed of dissolution with effect from 30.6.1976. Copy of the deed has been filed as Ex. D-2, hence he could not be held responsible for non-payment of the amount. Learned counsel for the appellant in support of her contention relied on the judgments reported in AIR 1960 Calcutta 463 and AIR 1986 Gujarat Page 162. 7. In my opinion, for answering the substantial questions of law and to meet out the arguments of learned counsel for the appellant the factual and legal position has to be looked into. 8. Both the Courts have recorded findings of fact that the, plaintiff supplied the sugarcane to the defendant No.1 a sugar mill which was being run by the partnership firm between 1.3.1978 to 1.4.1978 of an amount of Rs.9,281.27 Paisa. The defendant No.1 paid only Rs.1,830/and did not pay the amount of Rs.7,491.37 Paisa, hence the plaintiff is entitled to receive the balance amount along with interest which was due on the date of filing of the suit. The defendant No.2 resisted the claim of the plaintiff on the ground that he has been retired in the year of 1976 from the partnership of the firm hence he cannot be held liable to pay the amount. He had no knowledge about the transaction between the plaintiff and the firm, defendant No.1. The deed of dissolution, Ex. D-2, has been filed. It is mentioned in the aforesaid deed that earlier deed of partnership dated 2.10.1974 shall be deemed to have been dissolved with mutual consent with effect from 30.6.1976 and the business of the firm shall be carried on by the parties 3rd, 4th and 5th partners and some other persons, who have been inducted subsequently. It is clear from the letter written to the Sales-tax Commissioner, copy of which has been filed by the defendant himself as Ex. D-4. 9. It is clear from the letter written to the Sales-tax Commissioner, copy of which has been filed by the defendant himself as Ex. D-4. 9. It is mentioned in the letter that the appellant has been retired from the firm with effect from 30.7.1976. Subsequently the firm continued his business by the other persons. Same fact has been mentioned by the appellant in Annexure D-5 that he has been separated from the firm due to some loss and thereafter his son and other family members are running, the firm. Annexure D-5 is the copy of the letter sent to the Sales-Tax Officer in which he himself has mentioned that he has been separated from the firm due to loss in the business and thereafter his son and other family members have been running the firm. 10. The plaintiff, who was examined as PW 1, stated in his deposition that he contacted the defendant No.2, after supply of the sugarcane and he had no information that on the date of supplying the sugarcane, who were the partners of the firm. 11. The defendant-appellant in his statement as DW 1 has stated that he was retired from the firm from 30.6.1976 and the firm continued its business by the defendants No.4, 6 and 7. He admitted the fact that no public notice was issued to this effect. 12. Except these two witnesses no other witness was examined by the plaintiff or the defendant. It is an admitted position that no public notice was issued with regard to retirement of the appellant from the Firm. Section 45 of the Indian Partnership Act, 1932 reads as under with regard to liability of partners: 45. Liability for acts of partner done after dissolution. -- (1) Notwithstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution, until public notice is given of the dissolution. It is clear from the aforesaid section that the partners continued to be liable to the act of the firm after dissolution of a firm to third parties if, no public notice is published for dissolution. It is clear from the aforesaid section that the partners continued to be liable to the act of the firm after dissolution of a firm to third parties if, no public notice is published for dissolution. The Division Bench of Kerala High Court in the case of C. Assiamma v. State Bank of Mysore and others reported in [AIR 1990 Kerala 157] has held as under : "Section 45 (1) provides that notwithstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution until public notice is given of the dissolution. The mode of giving notice has been laid down in section 72 of the Partnership Act which says that a public notice has to be given by intimation to the Registrar of Finns under section 63 and by publication in the Official Gazette and in at least one vernacular news-paper circulating in the district where the firm to which it relates has its place of principal place of business. It is not contended that notice was given to the Registrar of Firms of the dissolution of retirement or a publication was effected in the Official Gazette. What is relied on to prove the public notice is the publication in 'Sathanadam', which is a Sunday Edition of Malayalam Daily, 'Kerala Times", as evidenced by Ext. B. 12. That alone would not satisfy the requirement of public notice is clear from section 72 of the Partnership Act. Further DW 1 admitted that he is not a reader of "Kerala Times" of 'Sathyanadam'. It is difficult to attribute knowledge of dissolution to the Bank from publication Sathyanadam. In any event, as there is no publication in the Official Gazette, or proof of notice to the Registrar, there is no public notice contemplated in section 45 (1) and 72 of the Partnership Act. In the circumstances the retirement of the second defendant, even if it be true, cannot affect the rights of the plaintiff Bank who is a third party in view of section 32 (3) of the Partnership Act." 13. In the circumstances the retirement of the second defendant, even if it be true, cannot affect the rights of the plaintiff Bank who is a third party in view of section 32 (3) of the Partnership Act." 13. The Division Bench of Gujarat High Court in Jani Nautamlal Venishanker v. Shri Vivekanand Co-operative Housing Society, reported in [AIR 1986 Gujarat 162] has discussed the matter in detail and held as under: "(1) Need to issue public notice would remain germane only for those third parties who might be dealing with the firm without having any knowledge that one of its partners had retired. In such an eventuality, if a public notice is issued and even though individual notices are not issued to such third parties about retirement of the concerned partner, the retiring partner can escape from his liability. (2) But if individual notice is not given to the concerned third party about retirement of such partner and even public notice is not given, then the retiring partner cannot escape from his liability as a partner for the acts of commission or omission done by the remaining partners after his retirement provided they would have been acts of the firm if done before retirement." The Division Bench further held as under after analyzing the provisions of sections 32 (3) and 45 of the Partnership Act and the earlier provision of the Indian Contract Act: "Section 32 (3) therefore enacts a liability on the well known principle of holding out. This principle is also recognized in the case of dissolution under section 45 of the Partnership Act. The Partnership Act is an amending enactment and is by no means a complete one. It repealed Ch. XI of the Indian Contract Act which contained provisions relating to the law of partnership. It is a well recognized rule of construction that for a due appraisement of the content of a statutory provision and to gather the intent of the legislature while enacting it, the previous law on the subject and the mischief which the statute intended to cure should be looked into. Under the law as it stood prior to the Indian Partnership Act, an active partner who had retired from a firm could continue to remain liable for the debts contracted subsequently by the continuing firm unless those who had previous dealings with the firm had actual notice of the retirement. Under the law as it stood prior to the Indian Partnership Act, an active partner who had retired from a firm could continue to remain liable for the debts contracted subsequently by the continuing firm unless those who had previous dealings with the firm had actual notice of the retirement. In order that the retiring partner can escape liability in regard to the future acts of the continuing partners, individual notice of retirement to the old constituent was necessary. Public notice was necessary to avoid the claim of those who only deal with the continuing firm after the retirement". 14. On the basis of above facts of the case and principle of law, in my opinion, both the Courts have not committed any illegality and error of law in holding that the appellant is liable to pay the amount even though he was retired from the firm earlier on the basis of the fact that no public notice was issued with regard to retirement of the appellant. I answer the substantial questions of law (a) and (b) accordingly, against the appellant and in favour of the plaintiff-respondent No.1. Consequently, I do not find any merit in this appeal. It is hereby dismissed with no order as to cost.