Dewan Chand Vohra and Others vs Raghbir Chander Kapur

D.K. Mahajan, J.—This appeal is directed against the decision of the trial Court decreeing the plaintiff''s suit for recovery of Rs. 10,937/5/- against defendants 1 to 4 on the basis of a pronote executed by defendant 3 as a partner of defendant-firm defendant No. 1.

The parties to this appeal are related to one another. The plaintiff Raghbir Chander is the son of Hari Chand Kapur. Hari Chand Kapur''s real brother is Ram Parkash, who is married to the daughter of Dewan Chand, defendant 2. Defendants 3 and 4, Prithmi Chand and Vishwa Nath, are the sons of defendant 2 Dewan Chand and defendant 5. Smt. Sumitra Devi, is his wife. The plaintiffs father is carrying on the business of commission agents in dry fruits. The defendant Dewan Chand and his sons are carrying on the business of export and import of dry fruits as well as they are wholesale dealers in dry fruits. It is common ground that at one time Ram Parkash was employed with Hari Chand Kapur. He is no longer in his employment and, according to the defendants, the relations between the plaintiff, which term will include Hari Chand Kapur and his sons, and the defendants, which will include Dewan Chand and his sons, became strained because Dewan Chand was instrumental in making Ram Parkash leave the employment of Hari Chand Kapur and take up employment elsewhere. This enraged Hari Chand Kapur who according to the defendants decided to take revenge on them and thus fabricated the suit pronote.

The present suit is based on the basis of a pronote, Exhibit P. 2, executed by Prithmi Chand for and on behalf of Messrs Dewan Chand Prithmi Chand. The pronote is in favour of Raghbir Chand son of Hari Chand Kapur who admittedly was a minor at the time of the execution of the pronote. The factum of minority is amply proved on the record and is no longer in dispute. The suit was filed against the defendants on two alternative bases, which are disclosed by the pleas taken up in paragraphs 3 and 7 of the plaint, which are in these terms:

That the firm defendant 1 through Shri Prithmi Chand a proprietor of the firm borrowed a sum of Rs. 10,000/- only from the plaintiff on 13th August, 1958 and executed a pronote for the said amount on the same date at Delhi agreeing to pay the amount due on the pronote with interest at 12 annas per cent per mensem with monthly rests and acknowledged the receipt of this money in cash in con ideration of the said promissory note and signed the said receipt also a copy of the promissory note and the receipt are attached and the original will be produced in Court at the time of hearing.

That assuming without admitting that the firm, defendant No. 1, is not a joint Hindu family trading firm, the plaintiff claims in the alternative that the firm defendant No. 1 is a partnership firm consisting of defendants 2 to 5 and that all the defendants are liable for the loan in question as stated in paragraph No. 6 above.

Written statements were filed by firm Dewan Chand Prithmi Chand and defendants 4 and 5 Vishwa Nath and Sumitra Devi. No written statement was filed by Prithmi Chand. Defendants 4 and 5 in reply to paragraph 3 pleaded want of knowledge about the loan or the execution of the pronote and took up the plea that they had no concern with the litigation. The execution and the receipt of consideration for the promissory note was also denied. Paragraph 7 of the plaint was totally denied by the defendants 1, 2, 4 and 5. In reply to paragraph 3 defendants 1 and 2 stated as follows: -

Contents of para, 3 of the plaint are wrong and therefore, repudiated. The firm Dewan Chand Prithmi Chand or its sole proprietor, Shri Dewan Chand, defendant No. 2 never borrowed any alleged sum of Rs. 10,000/ (Rupees ten thousand) from the plaintiff nor was any such pronote executed by them. It is denied that Shri Prithmi Chand defendant No. 3 borrowed the sum of Rs. 10,000/- from the plaintiff on the basis of a pronote on behalf of the defendant No. 1 or the defendant No. 3 had any right or authority to do so. The execution of the alleged pronote or receipt of its consideration are also denied. The alleged pronote is without consideration. The plaintiff ought to have filed the promissory note in original, the basis of the suit, along with the plaint as required by law.

The plaintiff in replication reiterated his stand in the suit and on the pleadings of the parties as many as eight issues were framed. It may be stated that proceedings against defendant 3 were ex parte. Defendant 3, however, prayed for being allowed to participate in the proceedings with effect from the 23rd May, 1960, and he was allowed to do so by the trial Court. For our purposes, the only issues that are relevant are issues Nos. 2 to 6 which are in these terms -

Whether the pronote in suit was executed by defendant No. 3 in favour of the plaintiff ?

If issue No. 2 is proved, whether the pronote is without consideration ?

Whether defendants Nos. 2 to 5 are members of joint Hindu family trading firm, or members of a partnership? If not, to what effect ?

Whether the promissory note in suit was executed by defendant No. 3 on behalf of firm defendant No. 1 and whether defendants other than defendant No. 3 are also liable for the pronote amount ?

If issue No. 4 is proved, whether defendant No. 3 had no authority to execute the suit pronote on behalf of defendant No. 1 ?

The trial Court found on the aforesaid issues as follows that the pronote in suit was executed by defendant No. 3 in" favour of the plaintiff, that the pronote was for consideration, that defendants 2 to 4 were partners in defendant No. 1 partnership firm; that the pronote was executed by defendant 3 on behalf of the firm and therefore, defendants 2 to 4 are liable on its basis; and that defendant 3 had authority to execute the pronote on behalf of the firm. As a result of these findings, the plaintiff''s suit was decreed for Rs. 10,937/5/- with future interest at the rate of 12 annas per cent per mensem from the date of the institution of the suit to the date of the decree and also to the date of the realisation of the amount. The suit was dismissed against defendant 5 as she was not proved to be a partner of the firm. Against this decision, all the defendants including defendant 5 have come up in appeal to this Court.

Learned counsel for the appellants has raised the following contentions before us :

That the pronote is a forgery and it was never executed by Prithmi Chand. The amount in question was never borrowed by him nor was there any necessity to borrow the amount;

that the pronote is without consideration; and

that even if it be held that Prithmi Chand executed the pronote and raised the money he had no authority to bind the other partners and that no decree could be passed against him because no relief against him alone has been claimed by the plaintiff.

The learned counsel has conceded that for the purposes of this case it may be assumed that defendants 2 to 4 are partners in the firm defendant 1. Thus the finding of the trial Court that defendants 2 to 4 are partners in firm defendant 1 has not been contested.

The first question that requires determination is whether the pronote was executed by Prithmi Chand. On this part of the case there is the direct evidence of Hari Chand Kapur, attorney of the plaintiff, as P.W. 6, He has stated that the pronote, Exhibit P. 2, was executed by Prithmi Chand defendant on behalf of defendant 1 firm Dewan Chand Prithmi Chand and at places marked H/1 and G/1 Prithmi Chand had signed it in his presence. The witness also stated that he could identify the signatures of Prithmi Chand. In rebuttal Mohan Lal, a broker of Khari Baoli, Delhi, was examined by the plaintiff, who has stated on oath that a sum of Rs. 10,000 was paid by the plaintiff''s father to Prithmi Chand in his presence and a pronote was executed. Neither of the parties put it to him whether the pronote in question was that pronote. This evidence has been believed by the trial Court and we see no reason to take a different view of the same; though it may be observed that the evidence of both these witnesses is not of a very high order on which implicit faith could have been placed, but the surrounding circumstances are such that they do lend support to the testimony of these witnesses and that is why their testimony as to the execution of the pronote is being accepted. The surrounding circumstances have been dealt with in detail by the trial Court and we will only refer to them briefly.

The pronote was executed on the I3th August, 1953, The suit on its basis was filed on the 12th August, 1959. Thus it is clear that it is not a case where the plaintiff waited till the last day of limitation to file the suit. Defendant 3 who is the executant of the alleged pronote did not file any written statement. As a matter of fact, the proceedings were taken ex-parte against him. Defendants 1 and 2 and defendants 4 and 5 filed separate written statements on the 12th November, 1959. It is no doubt true that in their written statements they have denied the execution of the pronote by defendant 3. It is not disclosed how they were aware of the fact that no pronote was executed by defendant 3. They nowhere deposed that on the 13th August, 1958, defendant 3 was not in the town or was all the time with them and thus could not have executed the pronote in dispute. The only defendants who have appeared in the witness-box are Dewan Chand and Prithmi Chand.

The circumstances in which Prithmi Chand appeared in the witness-box will now be stated. Plaintiff''s evidence started on the 24th March, 1960. Plaintiff had summoned Prithmi Chand as his own witness, Prithmi Chand was absent on the 24th March, 1960, and bailable warrants were issued against him. On the 23rd May, 1960, Prithmi Chand appeared and prayed that he may be permitted to participate in the proceedings. This prayer was allowed. On the 25th May, 1960, when Prithmi Chand was to be examined as plaintiff''s witness, he stated that he would appear as his own witness. In these circumstances, the plaintiff gave him up as his witness. When the examination of P.W. 5, A.S. Kapur, handwriting expert, started, on the 19th July, 1960, which statement was concluded on the 3rd August, 1960, he was subjected to cross-examination by defendant 3. It is, therefore, for the first time in July, 1960, that defendant 3 actively participated in the proceedings. Defendant 3 appeared on the 2nd February, 1961, as his own witness and for the first time he stated that the pronote was not executed by him. There is no explanation why defendant 3 did not, at the very outset, raise this plea and the plea of want of execution on his part was left to be raised by defendants 1, 2, 4 and 5. Prithmi Chand, defendant No. 3, wants us to believe that the pronote in dispute was not executed by him which stand is wholly inconsistent with the attitude he adopted in this case before he decided to participate in the proceedings. If it were true that he had not executed the pronote and the pronote was a forged document, as is alleged on behalf of the appellants he would have, at the very outset, challenged it and not kept himself in the background to watch how the plaintiff was going to prove execution of the pronote. This attitude of defendant 3 goes a long way to show that the testimony of Hari Chand attorney of the plaintiff and that of the broker Mohan Lal has been rightly believed by the trial Court Moreover, it is highly inconceivable that the plaintiff will set up a forged pronote and waste court-fee on it and not only that persist in examining the executant of the pronote, particularly when the executant had not appeared on the scene to contest the execution of the pronote and had. left the contest to persons who were not in a position to state categorically that the executant had not executed the pronote. None of the other defendants was in a positron to say a anything one way or the other about the want of execution of the pronote by defendant 3. It is also highly inconceivable that the plaintiff would lay himself open to the risk of prosecution for forgery. Moreover there is no motive why the plaintiff would have resorted to forgery. The appellant''s counsel suggested that there was strong motive for the alleged forgery, namely, that Hari Chand''s brother Ram Parkash who was working with him was made to leave Hari Chand''s service by Dewan Chand, but we find from the record that this is not so. Ram Parkash left Hari Chand''s service on the 3rd March, 1959 of his own accord. This is apparent from the employees-register maintained by Hari Chand, Exhibit P.W. 7/9. The pronote in question was executed on the 13th August, 1958. At that time, admittedly, there was no bad blood between Hari Chand and Dewan Chand. The motive on which very strong reliance was placed is, therefore, not proved to exist in this case.

We have examined the original pronote and also the signatures thereon with reference to the admitted signatures of defendant 3, and we are of the view that the signatures on the pronote are undoubtedly those of defendant 3. The various matters that have been elicited from the Handwriting Expert in cross-examination go to show that the signatures on the pronote in dispute are those of defendant 3. We are further fortified in this conclusion by the fact that defendant 3 has signed the papers, which he his filed in Court in this controversy in Urdu and it was only at the bidding of the Court that he signed his name in English for purposes of comparison with the pronote, Exhibit P. 2. In the circumstances of this case, we are, therefore firmly of the view that the plaintiff has been able to prove satisfactorily that the pronote in dispute was executed by defendant 3, and we endorse the finding of the trial Court on this part of the case.

This brings us to the consideration of the second contention, namely that the pronote is without consideration. The rule is firmly settled that if the execution of the pronote is proved, the onus to prove that the pronote is without cons deration is on the executant. Admittedly, there is no entry of the amount of the pronote either in the books of the plaintiff or in the books of the defendant-firm. The case of the defendants is that if the money had been borrowed for the defendant-firm. Normally, this would be true, but one cannot lose sight of the fact that businessmen act in a variety of ways and for variety of reasons. It is hard to believe that defendant 3, who is a businessman and is educated, would be going about executing documents without consideration. The plaintiff''s case is that the amount, which was advanced to defendant 3. belonged to his wile. She had sold certain ornaments in the year 1956 (1st May, 1956) and that money was lying in deposit with the plaintiff and was paid over to the wife sometime in the year 1957 (20th March, 1957). This is borne out from the bahi entries existing in the bahi of Hari Chand, Exhibit P.W. 7/7. These bahi entries are sought to be corroborated by the copy of the receipt. Exhibit P.W. 7/1, We have, however, thought it fit not to place much reliance on it in view of the fact that it is not the original receipt and no one. From Messrs Uttam Singh-Kala Singh, who are the authors of the receipt, has appeared to prove it. However, in our view the evidence furnished by the bahi of Hari Chand, Exhibt P.W. 7/7, is sufficient to corroborate the statement of Hari Chand that the money which, was loaned out to defendant 3 and in lieu of which the disputed pronote was executed belonged to his wife and for that reason the pronote was got executed in favour of his son at the behest of his wife The other considerations that firm defendant 1 was not in need of money because it had more than Rs. 10,000/- to its credit on the relevant date and that the amount was not entered in the bahis of the firm, have no significance in view of the conduct of defendant 3. There is no explanation why defendant 3 should have executed the pronote. The defendant No. 3 struck to the stand that the pronote was not executed by him. The moment this stand is not accepted, we are left with no other alternative but the one that the pronote was executed for consideration. The other contention which has been pertinently stressed is that the original pronote was kept back and was produced at a very late stage of the trial. This is true, but this has no relevancy in determining the question of consideration. Moreover, at no stage the defendants made an attempt for the production of the original pronote. In any case, late production of the pronote goes to support its genuineness and is not consistent with forgery. If the pronote had been forged, it would have been produced at the very outset of the trial to eliminate all suspicion. The pronote whether it was genuine or forged had to be produced at some stage and its late production would have been a factor which would have gone against its genuineness. Keeping in view the surrounding circumstances of the case and the evidence brought on the record are clearly of the view that the defendants have failed to prove that the pronote in question was without consideration.

The only other question that remains to be determined is whether defendant 3 is not liable. It has been conceded that for the purposes of this case, we may accept the finding of the trial Court that defendants 2 to 4 are partners of defendant 1; and if the suit is to be decreed against defendant 3, the decision of the trial Court may be allowed to stand. We see no reason why defendant 3 who is the executant of the pronote is not liable to pay back the debt. However, the contention is that defendant 3 borrowed money for the firm in his capacity as an agent of the firm and, therefore, is not personally liable for the debt. In support of this contention, section 230 of the Indian Contract Act has been relied upon. Section 230 is in these terms:

In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them * *

and its bare reading will disclose that it can have no application to the case of a partner. A partner enjoys a dual capacity. He is a principal as well as an agent. As a proprietor of the firm, his position is that of a principal, while acting for the firm, his position vis-a-vis the firm is that of an agent. Moreover, with regard to the mutual rights and liabilities of the partners, the provisions of the Indian Partnership Act have to be looked at. According to section 13 of the Act, the firm shall indemnify a partner in respect of payments made and liabilities incurred by him in the ordinary and proper conduct of the partnership business. Section 18 of this Act nukes the partners an agent of the firm for the purposes of the business of the firm. Section 19 of the same Act deals with the implied authority of a partner as an agent of the firm. It provides that the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm. Sub-section (2) of section 19 deals with the prohibition placed on the implied authority. The act of a partner in borrowing money for the business of the firm is not placed in any one of the prohibitions. On the other hand, there is a settled course of decisions that in a trading firm, a partner has authority to borrow money for the purposes of the firm and that the execution of bills or promissory notes by a partner binds the firm. See in this connection, Okell v. Eaton (1874) 31 L.T. 330, Sarma v. Kapur Chand ILR (1924) 48 Bom. 176, Lal Chand v. Gobi Chand (1949) (sic)W(sic)7, Wiseman v. Easton (1869) 8 L.T. 687, Bunarsee Das v. Ghulam Hussein (1870) 13 Moo. I.A. 353 and Moti Lal v. Unao Bank 1930 All. L.J. 1358 : AIR 1930 P.C. 236. In view of this state of law and in view of the finding of the trial Court, which is not disputed, namely that defendant 3 is a partner of the firm, defendant 1, the pronote executed by defendant 3 is as much binding on defendant 1 as on the other defendants. Thus all the defendants excepting defendant 5 are liable on the pronote in dispute.

For the reasons given above, we see no reason to interfere with the decision of the trial Court. The decision is based on evidence and it cannot be said that the view adopted by the trial Court on the evidence is in any manner perverse or impossible. The decision of the trial Court is, therefore, upheld. The appeal accordingly fails and is dismissed, but we will leave the parties to bear their own costs in this Court.

Dua, J.

I agree.