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Madras High Court · body

2009 DIGILAW 1998 (MAD)

Bramaramba v. T. Madhawarao & Co.

2009-06-30

S.TAMILVANAN

body2009
J U D G M E N T:-The suit has been filed by the plaintiff, seeking a preliminary decree against the defendants for a total sum of Rs.14,90,331/- with subsequent interest at 18% p.a., directing the defendants to pay the amount within the time limit fixed by this court and in default to bring the mortgaged property for sale, as per the procedure to realise the amount, and in case the amount is insufficient to pass a personal decree against the defendants and also for costs. 2. As per the plaint averments, the first defendant is a partnership firm carrying on business in the name and style of T.Madhavarao & Co., engaged in the business of purchasing and selling of food grains, pulses, chilly, turmeric, coriander etc., and also functioning as commission agent. The first defendant represented by its partners, defendants 2 to 4 approached the plaintiff and borrowed a sum of Rs. 2,00,000/- on 12.06.1990, for which, the aforesaid defendants jointly executed a promissory note in favour of the plaintiff, whereby promised to repay the same with 18% interest p.a., Subsequently on 03.09.1990, the defendants borrowed a sum of Rs.30,000/- from the plaintiff and jointly executed a promissory note in favour of the plaintiff, whereby agreed to repay the same with 18% interest p.a., 3. The first defendant has created an equitable mortgage in favour of the plaintiff on 30.11.1990 by depositing the title deeds of its property set out in the schedule of the plaint, as collateral security for the loan amounts availed by the defendants. 4. According to the plaintiff, after availing the loan, the defendants committed default in payment of interest. On 21.03.2000 the defendants admitted that a sum of Rs.10,72,605/- was due and payable by them to the plaintiff. However, the defendants failed to repay the loan, in spite of repeated oral and written demands made by the plaintiff, hence, the plaintiff caused legal notice, dated 20.03.2002 through her counsel. Though the notice was received by the defendants 1 to 4, they failed to settle the amount due and payable to the plaintiff, hence, the plaintiff has come forward with this suit, seeking preliminary decree against the property, that was given as collateral security, by way of creating equitable mortgage, in order to realise the amount with 18% interest p.a., and costs. 5. 5. The third defendant has filed written statement, wherein he has admitted that the defendants 2 to 4 were partners in the first defendant firm, which borrowed a sum of Rs.2,30,000/- from the plaintiff as stated in the plaint. The third defendant has also admitted that the property described in the schedule of property of the plaint at No.12, Chinnathambi Mudali Street, Pudunaickenpet, George Town, Chennai – 1 was given as collateral security for the loan obtained from the plaintiff, by way of creating equitable mortgage. The third defendant has admitted that there was a default in payment of interest and has further stated that the same was neither wilful nor wanton. According to the third defendant, due to lack of business, the defendants were not in a position to pay the interest and discharge the loan. According to the third defendant, the defendants are willing to settle the entire amount due and payable to the plaintiff with interest, however, he prayed that the suit be dismissed, based on the undertaking given by the third defendant. 6. When the suit was pending, the second defendant was reported dead and his legal representatives, defendants 5 to 9 were brought on record. 7. Based on the pleadings of the plaintiff and the defendant, the following issues were framed by this Court to decide the suit : 1. Whether the admission made by the third defendant with regard to the amount due and payable is binding on the defendants 5 to 9 ? 2. Whether the defendants are liable to pay interest at the contractual rate ? 3. Whether the defendants 5 to 9 are in possession and enjoyment of the property left by the second defendant and liable to pay the amount from and out of the estate of the deceased second defendant and whether the suit can be decreed in entirety ? 4 What other reliefs the plaintiff is entitled to ? 8. Mr.S.Venkateswaran, learned counsel appearing for the plaintiff submitted that the plaintiff has established that the defendants 2 to 4 were partners in the first defendant firm and that they had borrowed a sum of Rs.2,00,000/- from the plaintiff on 12.06.1990 and executed the promissory note, Ex.P.2, while they were partners in the firm. 9. In support of the claim of the plaintiff, P.W.1 was examined and documents Exs.P.1 to P.12 were marked. 9. In support of the claim of the plaintiff, P.W.1 was examined and documents Exs.P.1 to P.12 were marked. The plaintiff has also filed proof affidavit to support the case of the plaintiff. 10. Issue No.1 : It is seen that Ex.P.1 is the authorisation letter given by the plaintiff to P.W.1 to depose evidence on behalf of the plaintiff. P.W.1 has submitted that he is the son-in-law of the plaintiff. According to him, he is conversant with the facts of the case. Ex.P.2 is the promissory note, dated 12.06.1990 signed by the defendants 2 to 4 on behalf of the first defendant partnership firm. As per this document, the defendants 1 to 4 had borrowed a sum of Rs.2,00,000/- from the plaintiff on 12.06.1990 and agreed to repay the same with 18% interest p.a. Ex.P.3 is the promissory note, dated 03.09.1990 executed by the first defendant. The second defendant signed the promissory note as a partner of the first defendant firm. The defendants have not disputed the genuineness of the promissory notes, Exs.P.2 and P.3, in fact the third defendant, one of the partners of the first defendant firm has admitted that the defendants 1 to 4 had borrowed the aforesaid loan amounts from the plaintiff and executed the suit promissory notes, Exs.P.2 and P.3. 11. The defendants have not disputed the fact that the defendants 2 to 4 were partners of the first defendant firm. It is not in dispute that Ex.P.4 is the document signed by defendants 2 to 4 for the deposit of title deeds, Ex.P.5 is the certificate issued by Inspector of Police for the complaint given for missing of document and Ex.P.6 is the copy of paper publication (Tamil), Ex.P.7 is the copy of paper publication in Trinity Mirror (English). Ex.P.8 is the certified copy of sale deed, Ex.P.9 and Ex.P.10 are letters acknowledging the liability and the account copy respectively. The plaintiff issued legal notice to the defendants 1 to 4, the copy of the same has been marked as Ex.P.11. The defendants have not disputed that there was no reply notice sent by them and the loan amount availed from the plaintiff and also the execution of the promissory notes. Ex.P.12 is the Encumbrance Certificate of the property mortgaged. 12. The defendants have not disputed that there was no reply notice sent by them and the loan amount availed from the plaintiff and also the execution of the promissory notes. Ex.P.12 is the Encumbrance Certificate of the property mortgaged. 12. In such circumstances, as contended by the learned counsel appearing for the plaintiff, it has been established that the plaintiff is entitled to a decree as prayed for against the mortgaged property as well as personal decree against defendants 3 and 4. Being the partners of the firm, defendants 3 and 4 are liable to pay the plaintiff discharge the loan amount due and payable with interest. As the second defendant was reported dead, his legal representatives were brought on record as defendants 5 to 9, they are not personally liable to discharge the suit debts, however, if there is any estate of the deceased second defendant left with the legal heirs, such estate is liable to discharge the suit claim. It is contended that the property entrusted as per the equitable mortgage is not sufficient to realise the amount. 13. Mr.R.Venkataraman, learned counsel appearing for the defendants 5 to 9 submitted that the said defendants are only legal heirs of the second defendant, who have no personal knowledge about the alleged loan transaction and that they are not in possession and enjoyment any estate left by the second defendant. Learned counsel further contended that the mortgaged property is a house site, an extent of 1698 sq.ft. at Chinnathambi street, George Town, Chennai – 1, which is more than sufficient to realise the suit debt and being the legal heirs of the deceased second defendant, they are entitled to their share in the balance of sale proceeds. 14. As per Section 18 of the Indian Partnership Act, 1932, a partner is the agent of the firm for the purpose of the business of the firm. Similarly, as contemplated under Section 19 of the Act, the act of the partner, which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm, subject to the provisions of Section 22 of the Act. 15. Similarly, as contemplated under Section 19 of the Act, the act of the partner, which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm, subject to the provisions of Section 22 of the Act. 15. In order to bind a firm, an act of instrument done or executed by a partner or other person on behalf of the firm shall be done or executed in the firm name, or in any other manner expressing or implying an intention to bind the firm, as per Section 22 of the Act. 16. The suit promissory notes, Ex.P.2 and Ex.P.3 were signed by the defendants 2 to 4 as partners of the firm, which has been admitted by D3 in his written statement. As per Section 18 of the Indian Partnership Act, every partner of the firm is an agent of the firm and as such all the partners of the firm are liable for such an act done on behalf of the firm and further, there is no contra evidence on the part of the fourth defendant, though the second defendant is no more. Therefore, the written statement filed by the third defendant admitting the borrowing and the execution of the suit promissory notes is binding on the other partners of the firm and the defendants 3 and 4, hence, the estate of the deceased second defendant is also answerable to the suit debt. However, the defendants 5 to 9, who were only the legal heirs of the second defendant are not personally liable to discharge the debt and if there is any balance amount after brining the property for sale in public auction, the said defendants are entitled to get their share as legal heirs of the deceased second defendant. 17. Considering the aforesaid facts and circumstances, I am of the view that the first defendant partnership firm came to an end on account of the death of the second defendant, who was one of the partners of the firm. Hence, apart from the mortgaged property, the defendants 3 and 4 are personally liable to discharge the suit debt. In case there is any amount due and payable after realising the decree amount, by way of bringing the mortgaged property for sale, the defendants 3 and 4 are personally liable to discharge the same. Hence, apart from the mortgaged property, the defendants 3 and 4 are personally liable to discharge the suit debt. In case there is any amount due and payable after realising the decree amount, by way of bringing the mortgaged property for sale, the defendants 3 and 4 are personally liable to discharge the same. However, the defendants 5 to 9 are not personally liable for the suit debt, since they are only the legal heirs of the deceased partner of the firm. Accordingly, the first issue is answered in favour of the plaintiff and against the defendants 1, 3 and 4. 18. Issue No.2 : As per the averments of suit promissory notes, the defendants 2 to 4 had agreed on behalf of the first defendant to pay 18% interest per annum, being the contractual rate of interest for the commercial transaction, I hold that the plaintiff is entitled to claim interest at 18% p.a., accordingly, the issue number 2 is answered. 19. Issue Nos.3 and 4 : The defendants 5 to 9, who are the legal heirs of the deceased second defendant have not admitted any estate inherited from the aforesaid deceased and there is no positive evidence on the side of the plaintiff to show that the said defendants have inherited any property from the deceased, the second defendant. It was contended by both the learned counsel that the mortgaged property is sufficient to satisfy the decree, since the value of the property is more than the amount due and payable to the plaintiff. On the aforesaid circumstances, I hold that the plaintiff has not established that the defendants 5 to 9, who are the legal heirs of the second defendant had inherited any property from the second defendant, in other words, the plaintiff has not established that the deceased, second defendant had left any estate, which is being enjoyed by his legal heirs, the defendants 5 to 9. However, it is established that the plaintiff company is entitled to a decree against the mortgaged property and to bring the property for sale, in order to satisfy the decree amount and also to get a personal decree against D3 and D4, in case the amount is insufficient to satisfy the decree. The plaintiff is not entitled to get any personal decree against the defendants 5 to 9, since they are only the legal heirs of a deceased defendant. The plaintiff is not entitled to get any personal decree against the defendants 5 to 9, since they are only the legal heirs of a deceased defendant. It is made clear that if there is any balance available in the sale proceeds, after satisfying the decree, being the legal heirs of the second defendant, defendants 5 to 9 are entitled to get their proportionate share. Issue Nos.3 and 4 are answered accordingly. 20. In the result, preliminary decree is passed for a sum of Rs.14,90,331/- to bring the mortgaged property for sale and to realise the amount with 18% subsequent interest and costs. Personal decree is passed against the defendants D3 and D4, if the sale proceeds is not sufficient to satisfy the decree. No personal decree being passed against the defendants 5 to 9, as they are only the legal heirs of the deceased second defendant. Time for discharging the suit debt granted is three months from the date of decree. 19. With the above observation, preliminary decree is passed.