Kirpa Ram Sood vs Man Mohan Pasricha and Others

V.P. Gupta, J.—The Plaintiff has filed this suit on 24-6-1978 for recovery of Rs. 2,41,248/- on the basis of a memo of settlement of accounts. It is alleged that Amolak Ram Man Mohan of the then Narang House, Shimla were regular suppliers of timber, hakris etc. to M/s. Rohtas Industries Ltd., Dalmia Nagar for manufacture of paper as their joint Hindu family business. The Defendants supplied timber and hakris to M/s. Rohtas Industries and the railway receipts and hundis thereof were sent through bank for collection of bills which entailed a period of one to three months or more. For carrying on the business conveniently Amolak Ram Man Mohan (Defendants) required finances for their joint Hindu family business. Defendant No. 1, the Managing Partner and Karta of the joint family business approached the Plaintiff for funds to finance the transactions. Defendants were members of joint Hindu family business carried on under different names. The Plaintiff was advancing amounts and some agreements were executed in Plaintiff''s favour in 1967. Smt. Kartar Devi wife of Amolak Ram and mother of the Defendant No. 1 and owner of Narang House, Shimla also by an agreement dated 3-8-1967, agreed to indemnify the Plaintiff for the amount or the amounts that remained unpaid on account of the transaction. Defendant No. 2 (Amolak Ram) is the father of Man Mohan (Defendant No. 1). Smt. Pushpa Devi, (Defendant No. 3) is the wife of Defendant No. 1 while Smt. Kartar Devi (Defendant No. 4) is the mother of the Defendant No. 1. The transactions between the parties continued till 1971 and the Defendants carried on joint Hindu family business under various names and styles such as M/s. Amolak Ram Man Mohan, A.R. Pasrichand and Co., and Himachal Timber Trading Company, the partners of which were the Defendants (members of joint Hindu family). Hundis worth Rs. 1,96,500/- remained unpaid and were returned to Plaintiff''s bankers. Some other amounts were also due from the Defendants to the Plaintiff and finally a total amount of Rs. 2,36,500/- was found due to the Plaintiff. The Plaintiff could not get this amount inspite of repeated requests and notices but finally the accounts were settled by Defendant No. 1 as a Managing Partner of his various firms and as Karta of joint Hindu family and its business through the intervention for one Shri Krishnamurti (the Managing Director of M/s Rohtas Industries) and he agreed to pay Rs. 1,50,000/- immediately and the remaining amount of Rs. 1,30,000/- by annual instalments of about Rs. 33,000/- along with interest at 1 percent per mensem till the amount was finally paid. Now the Plaintiff claims that out of Rs. 1,50,000/-, only an amount of Rs. 1,31,600/- was paid and the remaining amount agreed to be paid by instalments was never paid. It is alleged that the Defendants 2 to 4 did not take active part in the business dealings while they were the partners of the business which was carried on solely and entirely by Defendant No. 1, the active and energetic partner as a Karta of joint Hindu family. The Defendant No. 1 was permitted and recognised by other members of the family as a Karta for managing the business. It is alleged that Defendant No. 1 paid Rs. 100/- as Karta of joint Hindu family and ensured payments himself and on behalf of other Defendants and also extended the limitation. The Plaintiff now claims an amount of Rs. 2,41,248/- with costs of the suit and also claims future interest. He has further prayed that the Defendants be restrained from transferring their properties mentioned in the plaint.

Separate written statements were filed on behalf of Defendants.

Shri Man Mohan (Defendant No. 1) alleges that the agreement dated 23-7-1973 was entered on account of threat and fraudulent conduct of the Plaintiff and that the accounts were never settled or rendered. He also alleges that only a sum of Rs. 66,200/- remains to be paid to the Plaintiff. Objections that the Plaintiff is a money lender and the present suit is not competent are also raised. On merits, the Plaintiff''s claim is denied and it is alleged that only the Defendants 1 and 2 were the partners of M/s. Himachal Timber Trading Co. There was no Hindu Undivided Family or business of H.U.F. Defendant No. 1 was not the manager or Karta of H.U.F. and business was not carried out in the name of joint Hindu family. The surety bond given by the Defendant No. 4 (Smt. Kartar Devi) was cancelled and withdrawn and notice to that effect was duly issued. It is admitted that he had been giving hundis along with railway receipts to the Plaintiff and the Plaintiff used to get the payment after deduction of 3 percent as commission charges per month. It is denied that any partner of the firm had any right to extend the limitation with respect to the dues. It is denied that he was authorised to sign the hundis and other documents or to extend the limitation. He alleges that by the middle of 1971, an amount of Rs. 1,48,500/- was outstanding for the hundis but as the accounts of the Defendant No. 1 were misplaced, therefore, he is not in a position to give the exact amount due. It is alleged that he was compelled to admit a figure of Rs. 2,35,000/- although only an amount of Rs. 1,97,800/- was due on account of all the accounts. He further alleges that no accounts were actually gone through and that he agreed to pay an amount of Rs. 2,80,000/- under mistake and coercion. The other allegations of the plaint are denied and it is alleged that the Plaintiff''s suit should be dismissed with costs. In the alternative, the Defendant No. 1 has prayed that if any amount is found due to the Plaintiff, then the same may be allowed to be paid by easy instalments.

Shri Amolak Ram (Defendant No. 2) in his written statement has denied the Plaintiff''s claim. He alleges that the suit against Defendants 2 to 4 is barred by limitation and the Defendant No. 1 had no authority to bind other Defendants. The settlement, if any, can only bind Defendant No. 1 personally. He admits that he along with the Defendant No. 1 was a partner of the firms M/s. Himachal Timber Trading Co. and M/s. Amolak Ram Man Mohan. Other allegations are the same as that of Defendant No. 1.

Smt. Pushpa Devi (Defendant No. 3) in her written statement has denied the Plaintiff''s claim. She alleges that the Plaintiff''s suit is barred by limitation and that she was not a partner in the firms M/s. Amolak Ram Man Mohan, A.R. Pasiicha and Co. and Himachal Timber Trading Co. She also alleges that no business was being run in the name of joint Hindu family. On merits, she has denied the Plaintiff''s claim.

Smt. Kartar Devi (Defendant No. 4) in her written statement alleges that she has been unnecessarily impleaded as a party with malafide motives. She is not liable for any amount to the Plaintiff. The alleged agreement dated 2-8-1967 was cancelled by her when she came to know about the implications and she issued a notice through her Counsel Shri Kailash Chand, Advocate. She alleges that the agreement is inadmissible in evidence and the suit is barred by limitation. She also alleges that she was never a partner with Defendant No. 1 and Defendant No. 2 and there was no joint Hindu family business.

Replication was filed by the Plaintiff. In the replication the Plaintiff has denied the various allegations of the Defendants and has re-asserted the allegations of the plaint.

On the pleadings of the parties the following issues were framed on 10-10-1980:

Whether the Plaintiff is a money lender within the meaning of Himachal Pradesh Money Lenders Act (No. 73 of 76)? If so, what is its effect? OPD

Whether the Defendants were running a Joint Hindu Family business, as alleged? OPP.

Whether the Memo, of settlement of accounts dated 20th July, 1973 was signed by Defendant No. 1 under threat and fraud and there were mistakes in the accounts? If so, what is its effect? OPD.

Whether Defendants Nos. 2 to 4 are bound by the settlement of accounts dated 20th July, 1973? OPP.

Whether the agreement executed by Defendant No. 4 as a guarantor on 3rd August, 1967, required registration? If so, what is its effect? OPD.

Whether the agreement executed by Defendant No. 4 as a guarantor is not binding and enforceable against the said Defendant for the reasons contained in para 2 of the preliminary objections and para 6 of the written statement, filed on merits, by Defendant No. 4? OPD.

Whether the suit is within limitation in the face of the allegations made by Defendants Nos. 2 to 4 in their written statements? OPP.

To what amount and from which Defendant/Defendants the Plaintiff is entitled to recover the decretal amount, if any? OPP.

Whether Defendant No. 1 is entitled to make the payment of the decretal amount by instalments, in the event of the decree being passed? OPD.

Relief.

During the pedency of the suit, Amolak Ram (Defendant No. 2) died on 1-2-1982 and his legal representatives were impleaded vide orders dated 27-4-1982 passed on OMP No. 13 of 1982. Smt. Kartar Devi (Defendant No. 4) also died on 20-8-1983, and her legal representatives were also impleaded. They were, in fact, legal representatives of Amolak Ram (Defendant No. 2). This application for impleading her legal representatives was allowed vide orders on OMP (M) 26 of 1983 passed on 9-9-1983 and 21-12-1983.

I have heard the learned Counsel for the parties and have also gone through the records of the case. My findings on various issues are as follows:

Issue No. 1:

By a separate order dated 2-8-1982, I have decided this issue against the Defendants.

Issue No. 2:

The learned Counsel for the Plaintiff contends that the Defendants are members of a joint Hindu family. Defendant No. 2 is the father, Defendant No. 4 is the mother and Defendant No. 3 is the wife of the Defendant No. 1. They were running joint Hindu family business in firm names (a) M/s. Amolak Ram Man Mohan, (b) A.R. Pasricha and Co. and (c) Himachal Timber Trading Co. He contends that even a junior member can be a Karta of a joint Hindu family. In the alternative, it is contended that the Defendants were partners in the aforesaid three firms.

The learned Counsel for the Defendants contends that there was no joint Hindu family business of the Defendants and there was no sufficient or adequate nucleus for the alleged business. He contends that a presumption of jointness of status is possible but there cannot be any presumption of jointness in estate. The alleged business was not a joint Hindu family business as alleged in the plaint. The learned Counsel further contends that there is no evidence of partnership and Defendant No. 1 had no authority to act even if any such partnership is proved. The evidence is insufficient to prove that the Defendants were running a joint Hindu family business or a partnership business. Only Defendant Nos. 1 and 2 were the partners in two firms but the Defendant No. 1 had no express or implied authority to bind the firms or the partners.

Ex. P-77 (letter dated 10-3-1970), Ex. P-75 (letter dated 25-3-1970) and Ex. P-78 (letter dated 2-2-1972) were written by the Defendant No. 1 on behalf of A.R. Pasricha and Co. In Exs. P-75 and P-77, Defendant No. 1 describes himself as a partner of M/s. A.R. Pasricha and Co.

Ex. P-23 (letter dated 15-7-1970) was written by the Defendant No. 1 as partner of Himachal Timber Trading Co. In this letter Defendant No. 1 states that the partners of Himachal Timber Trading Co. and that of Amolak Ram Man Mohan are the same with same ratio of shares. He further states that for all practical purposes Himachal Timber Trading Co. and Amolak Ram Man Mohan are the same and now Himachal Timber Trading Co. is responsible for all assets and liabilities of M/s. Amolak Ram Man Mohan. Contents of Ex. P-23 are admitted to be correct by Man Mohan Pasricha (DW-10).

An agreement (Ex. P-52) was signed by Defendant No. 1 on behalf of Amolak Ram Man Mohan. Ex. P-55, (letter dated 28-8-1971) and Ex. P-56 (letter dated 18-9-1971) were written by Man Mohan (Defendant No. 1) as a partner of Himachal Timber Trading Co. In Ex. P-5, (Indemnity bond) Man Mohan (Defendant No. 1) and Amolak Ram Pasricha (Defendant No. 2) have signed as partners of firm Amolak Ram Man Mohan. In Ex. P-11 (letter dated 29-7-1972) Man Mohan Pasricha (Defendant No. 1) has signed on behalf of M/s. Himachal Timber Trading Co. and for Amolak Ram Man Mohan. In Ex. P-30 (settlement dated 20-7-1973) Man Mohan Pasricha (Defendant No. 1) has admitted the two firms M/s. Himachal Timber Trading Co. and Amolak Ram Man Mohan. Ex. P-54 (cheque dated 15-9-1971) was issued by Man Mohan (Defendant No. 1) as a partner of A.R. Pasricha and Co. In Ex. P-86, (letter dated 1-1-1970) Man Mohan (Defendant No. 1) has again signed as a partner of firms Amolak Ram Man Mohan and A.R. Pasricha and Co.

Thus, from the aforesaid documents it is proved that the three firms known as (a) M/s. Amolak Ram Man Mohan, (b) Himachal Timber Trading Co. and (c) A.R. Pasricha and Co. were being managed and controlled by Man Mohan Pasricha (Defendant No. 1) as a partner. Documents Ex. D-1 to D-15 (receipts of money) issued by the Plaintiff on different dates also prove that these three firms were working and were having dealings with the Plaintiff.

Ram Gopal (PW 2) states that Man Mohan (Defendant No. 1) was purchasing goods and placing orders in the name of M/s. Amolak Ram Man Mohan.

Defendant Nos. 1 to 4 are closely related and are members of one family and they will be presumed to be members of a joint Hindu family.

The next question now to be decided is as to whether the business carried on by the aforesaid three firms was a joint Hindu family business or not. To prove a joint Hindu family business or joint family property it is necessary that the joint family should be in possession of a sufficient and adequate nucleus with which the joint family property can be acquired.

In AIR 1929 Privy Council 1, K.L.S.V.E. Annamalai Chetty v. K.L.S.V.E. Subramanian Chetty and Ors. it is held:

A member of a joint undivided family can make separate acquisition of property for his own benefit, and unless it can be shown that the business grew from joint family property, or that the earnings were blended with joint family estate they remain free and separate.

In AIR 1947 PC 189, Appalaswami v. Suryonarayanmurti and Ors. it is held:

Proof of the existence of a joint family does, not lead to the presumption that property held by any member of the family is joint, and the burden rests upon any one asserting that any item of property is joint to establish the fact. But where it is established that the family possessed some joint property which from its nature and relative value may have formed the nucleus from which the property in question may have been acquired, the burden shifts to the party alleging self-acquisition to establish affirmatively that the property was acquired without the aid of the joint family property.

In Chattanatha Karayalar Vs. Ramachandra Iyer and Another, , it is held:

Under the Hindu Law, there is no presumption that a business standing in the name of any member is a joint family one even when that member is the manager of the family and it makes, no difference in this respect that the manager is the father of the coparceners.

In Mudi Gowda Gowdappa Sankh Vs. Ram Chandra Ravagowda Sankh, it is held:

There is no presumption that a Hindu family merely because it is joint, possesses any joint property. The burden of proving that any particular property is joint family property is, therefore, in the first instance upon the person who claims it as coparcenary property. But if the possession of nucleus of the joint family property is either admitted or proved, any acquisition made by a member of the joint family is presumed to be joint family property. This is, however, subject to the limitation that the joint family property must be such as with its aid the property in question could have been acquired. It is only after the possession of an adequate nucleus is shown, that the onus shifts on to the person who claims the property as self-acquisition to affirmatively make out that the property was acquired without any aid from the family estate.

The learned Counsel for the Plaintiff relied upon the observations made in Ratan Kumar Poddar and Others Vs. The Howrah Motor Co. Pvt. Ltd. and Others, wherein it was proved that the members of the joint Hindu family carried on business with the joint family assets and there was a capital of the joint Hindu family with which the business could be carried on. In these circumstances, it was held that an inference could be drawn that the business was started with a nucleus of joint family fund. In this judgment 1947 Privy Council 189 (supra), was relied upon.

For a joint family business the Plaintiff, therefore, has to prove that there was a nucleus of a joint family which was adequate and sufficient for the running of the aforesaid three firms.

Kirpa Ram, Plaintiff (PW 1) states that the Defendant Nos. 1 to 4 are members of the joint Hindu family. This joint Hindu family has got ancestral property in Baramula in Kashmir. The joint Hindu family depended upon joint Hindu family''s firm business and this was practically the only source of livelihood of the joint Hindu family of which Man Mohan Pasricha was the Karta. In cross-examination he states that he does not know in whose name the property in Jammu and Kashmir stands and the property had been acquired by the Military Authorities.

There is no other oral or documentary evidence from the Plaintiff''s side.

Man Mohan Pasricha, Defendant No. 1 (DW 10) states that his father did not inherit any ancestral property. He owned property in Baramula but that was acquired by Military Authorities. In cross-examination he states that his grand-father was a resident of Baramula and his father also lived there. His father received compensation for the acquisition of property of Baramula but he did not know the year in which such compensation was received. He did not know if the compensation was received by his father on 7-4-1980. He did not acquire any property in his name and the property in his name was inherited by him from his maternal grand-father.

Thus, there is no evidence to prove that the joint Hindu family of the Defendants had any ancestral property which was sufficient or adequate to run the business of the three firms mentioned above. In other words, the sufficiency or adequacy of the nucleus of the joint Hindu family is not proved. If there was any property which could form sufficient or adequate nucleus then the Plaintiff could give evidence of that fact to prove that the business of the three firms was carried on from the nucleus of this joint Hindu family property.

The learned Counsel for the Plaintiff also contends that in the written statement of efendant Nos. 1 and 2, the allegations of para No. 1 of the plaint are admitted. In para No. 1 of the plaint the Plaintiff has specifically alleged that the Defendants Amolak Ram Man Mohan were running joint Hindu family business and in the written statement this para is not denied. By an amendment in the plaint the Plaintiff pleaded the case of a joint Hindu family business and the following words were added "as their joint Hindu family business". Such words were added in several paras of the plaint. The Defendant Nos. 1 and 2 filed written statement to the amended plaint and in this written statement they repeated para No. 1 verbatim of the old written statement. It appears to be due to inadvertance or oversight because in all other paras of the written statement the Defendants have specifically stated that there was no joint Hindu family business of the Defendants. Thus, it appears that due to oversight or inadvertance the word ''not'' was typed before the word ''denied'' in para 1 of the written statement. As the Defendants have specifically denied the fact of joint family business in other paras of the written statement and a specific issue was framed on 10-10-1980, therefore, it cannot be said that the Defendants have admitted the joint family business. The learned Counsel for the Plaintiff next contends that the tax was not deducted at source by the Defendants as it was a joint Hindu family business. Man Mohan Pasricha (DW 10) states that he did not deduct the Income Tax at the source due to ignorance regarding Income Tax law. He denied the suggestion that deduction at the source was not done because it was a joint Hindu family business. In these circumstances, the fact that the tax was not deducted are the source is not sufficient to prove that it was a joint Hindu family business.

Another contention of the learned Counsel for the Plaintiff is that a junior member of a joint Hindu family can also act as a Karta/manager of the joint Hindu family. The learned Counsel for the Defendants also frankly conceded that even a junior member of a joint Hindu family can act as a Karta of the joint Hindu family.

In these circumstances, although there is a presumption of joint ness of status of Defendant Nos. 1 to 4 to prove that they form a joint Hindu family but the fact that the Defendants were running the joint Hindu family business is not proved. In view of the above discussion issue No. 2 is decided against the Plaintiff.

Issue No. 3:

Ex. P-30 (memo of settlement dated 20-7-1973) is signed by the Plaintiff and Defendant No. 1. The learned Counsel for the Defendants admits that there is no evidence of threat and fraud. He, however, contends that it was signed by Defendant No. 1 under mistake and the accounts were not available at that time. He referred to the statement of Man Mohan Pasricha (DW 10) who states that he was not having accounts with him at the time of the signing of Ex. P-30. He also referred to Ex. P-38 order dated 14-5-1980, of the Wealth Tax Officer, A-Ward, Shimla for the assessment year 1971-72 pertaining to Plaintiff''s assessment and copy of the letter dated 29-12-1975 (Ex. D-57), the wealth tax return of the Plaintiff for the assessment year 1981-82 (Ex. D-59) wealth tax return of the Plaintiff for the assessment year 1980-81 (Ex. D-60) and the account for the year ending 31-3-1979 for assessment year 1979-80 (Ex. D-61) the account ending year 31-3-1978 for the assessment year 1978-79 (Ex. D-62). The learned Counsel contends that in Ex. D-57 and Exs. D-59 to D-62 the amount against the name of the Defendant No. 1 is shown as 62,500/- and in Ex. P-38, the amount recoverable from the Defendant No. 1 is shown as 1,30,000/- and, therefore, Ex. P-30 was signed under a mistake.

Now it is correct that in Ex. D-57, Ex. D-59 to Ex. D-62, the Plaintiff has shown an amount of Rs. 62,500/- against the name of Defendant No. 1, but this statement of return by the Plaintiff to the Income Tax or the wealth tax authorities does not prove conclusively that this was the only amount due from the Defendant No. 1. The order Ex. P-38, is only an adjudication by the Wealth Tax Officer for the purpose of wealth tax assessment. The learned Counsel also refers to Ex. D-63, Ex. D-64 and Ex. P.24, but in my opinion the documents do not help the Defendants. Ex. D-63 does not pertain to the three firms and relates to another firm Pasricha and Co. Ex. D-64 bears no date and as such is not relevant. Ex. P-24 is a notice dated 29-6-1973. No reply to this notice was ever sent by the Defendants claiming any mistake in accounts.

In Ex. P-30, the Defendant No. 1 has in unambiguous terms admitted that an amount of Rs. 2,80,000/- is to be paid to the Plaintiff. Out of this amount, Rs. 1,50,000/- was to be paid immediately. Another amount of Rs. 1,00,000/- was to be paid in three equal annual instalments and in the fourth year, the balance amount of Rs. 30,000/- was to be paid. This settlement was arrived at between the Plaintiff and Defendant No. 1 after long discussions. There is no evidence to prove that the parties had not understood the accounts. The Defendant No. 1 was doing business while the Plaintiff was advancing money as a financer. In these circumstances, it is presumed that both the parties knew the true facts and arrived at a settlement after complete and full understanding.

Man Mohan, Defendant No. 1 (DW 10) states that one Charan Dass was an accountant of the firm and the accounts were with him. Charan Dass left the job in 1972 without their consent and had taken the accounts with him. For this reason the accounts were not available when Ex. P-30 was signed. The statement of Defendant No. 1 (DW 10) does not appear to be true. No notice was ever issued to Charan Dass and no complaint was made against him for taking away the account books. The Defendant produced a register of accounts (Ex. D-66) and a statement of accounts (Ex. D-65) extracted from the register Ex. D-66. Both Ex. D-65 and Ex. D-66 were produced on 11-4-1983 when the statement of the Defendant was being recorded. The Defendant states that he contacted Charan Dass in Kathua town of Jammu in the year 1977, because he came to know the whereabouts of Charan Dass in the year 1977 and took the registers from him. If the Defendant after making enquiries could find out the whereabouts of Charan Dass in 1977 then he could procure the registers and produce the same at the time when the written statement was filed. The present suit was filed in 1978 and the account books were never produced till 11-4-1983. In these circumstances, no reliance can be placed on this register.

An OMP No. 218/80, was filed on 12-12-1980 seeking extension of time for production of documents. The Defendants never made a mention of the account books in this application nor mentioned the fact that these were taken away by Charan Dass in the year 1972. The Defendants prayed for extension of time as the documents upon which they were relying were lying in a locker, keys of which had been taken away by the wife of Defendant No. 1 to England. Thus, these circumstances also prove the Defendant''s version about the account books having been taken by Charan Dass in the year 1972 is not correct. The Defendants never cared to produce Charan Dass as a witness to substantiate the allegations.

In these circumstances, it cannot be said that the settlement dated 20-7-1973 was signed by Defendant No. 1 under a mistake. The issue No. 3 is decided against the Defendants.

Issue Nos. 4 and 7:

Both these issues are being decided together. While discussing issue No. 3 I have held that the memo of settlement of accounts dated 20-7-1973 was signed by Defendant No. 1. Similarly, under issue No. 2, I have held that the Defendant Nos. 1 to 4 are the members of joint Hindu family but the business of the various firms (which was being controlled and managed by the Defendant No. 1) was not joint Hindu family business. In these circumstances, the Defendant Nos. 2 to 4 are not bound by the admissions of the Defendant No. 1 made in Ex. P-30, i.e., the settlement of accounts dated 20-7-1973.

The learned Counsel for the Plaintiff contends that Defendants 1 to 4 were partners in the firms and for this reason Defendants 2 to 4 are bound by the admissions of the Defendant No. 1. Plaintiff was advancing money to the firms through Defendant No. 1. The Defendants 1 and 2 in their written statements have admitted that they were partners in firms (a) Amolak Ram Man Mohan and (b) Himachal Timber Trading Co. Man Mohan (DW 10) admits that in the firm A.R. Pasricha and Co., he along with his father (Amolak Ram) and Sarbanand Manie were the partners. He also states that his mother and wife were partners in A.R. Pasricha and Co. and this firm was dissolved in February, 1970. This firm was not registered. The learned Counsel for the Plaintiff contends that Defendant No. 1 was an active or the managing partner, and Defendant Nos. 2 to 4 were the sleeping partners in these firms. Defendant Nos. 2 to 4 did not appear in the witness box to rebut the Plaintiff''s case and no document was produced to prove that they were not partners in these firms.

The learned Counsel for the Defendants contends that firstly partnership was not proved and secondly even in a partnership the Defendant No. 1 had no authority to bind any other partner by his admissions.

Now Defendant Nos. 1 and 2 were admittedly the partners in two firms, namely, Amolak Ram Man Mohan and Himachal Timber Trading Co., as is admitted in their written statements. However, there s no evidence that Defendant Nos. 3 and 4 were also the partners in these firms. From the statement of Defendant No. 1 (DW 10) it is proved that the Defendant Nos. 1 to 4 w,ere partners in firm A.R. Pasricha and Co. till February, 1970 but thereafter this firm stood dissolved. This firm was not a registered firm. In such circumstances, it is not proved that in the year 1973 or thereafter the firm A.R. Pasricha and Co. (of which the Defendants 1 to 4 were the partners) was in existence. Therefore, Defendant No. 1 had no authority to bind Defendant Nos. 3 and 4 on 20-7-73.

The next question which arises for consideration is as to whether Defendant No. 1 had any authority to bind Defendant No. 2 (Amolak Ram) by his admissions or acknowledgements. A partner can bind another partner in a partnership business if the act is performed by the managing partner in the usual course of the partnership business.

In Indian Law Reports (Madras Series) 1909 ( 32) 421, Valasubramania Pillai v. S.V.R.R.M. Ramanathan Chettiar and Ors. it is held that a part payment by one partner of a going mercantile firm of a debt due by the firm will not save the operation of limitation u/s 20 of the Limitation Act against the other partners, in the absence of evidence to show that, in the course of business, the partner who made the payment had authority to do so on behalf of the firm.

In AIR 1916 Mad 508, (Veerappa Chetty and Anr. v. Chidambaran Chetty and Ors.), it is held that the mere fact of a partner being incharge of a branch of the partnership business does not authorise him to bind the firm by a payment or acknowledgment. He must be specially authorised to do so in order to bring the payment within Section 20.

In Madras Law Journal 1968 ( 2) 101, (S. Vellaya Gounder v. R. Venkatasa Chettiar and Anr.), it is held that the acknowledging partner should have authority to acknowledge on behalf of the silent partners.

The learned Counsel for the Plaintiff relied upon AIR 1919 Mad 1140, (Pandiri Veeranna v. Grandhi Veerabhadraswami) AIR 1926 Mad 114 ,(B.S. Mahadeva Iyer and Ors. v. Ramakrishna Reddiar and Ors.) Debi Dayal Vs. Baldeo Prasad and Another, and AIR 1935 Lah 559, (H.M. Dayal and Co. v. Radha Krishan and Ors.) In all these judgments the authority of the partner who acknowledged the debt on behalf of other partners of the firm was presumed or the aforesaid partner in the usual course of partnership business had acknowledged the liability.

In the present case there is no proof that Defendant Nos. 3 and 4 were partners with Defendant No. 1. Only Defendant Nos. 1 and 2 are admitted to be the partners in two firms. There is, however, no evidence to prove that the Defendant No. 1 signed the document (Ex. P-30) or the acknowledgment of part payment (Ex. P-34) on behalf of the partnership business.

Ex. P-30 proves that before the final settlement, the Defendant No. 1 was trying to settle the accounts of the firms Himachal Timber Trading Co. and Amolak Ram Man Mohan of which the Defendant No. 2 was also a partner. When the settlement was finally arrived at only Defendant No. 1 settled the matter with the Plaintiff. At the time of signing the document Defendant No. 1 did not sign the same as a partner of the aforesaid two firms. 1 may mention that in various documents Defendant No. 1 was signing and describing himself as a partner of the firms but Ex. P-30 is neither written on a letter pad of the partnership firm nor is signed by Defendant No. 1 as partner. In these circumstances, the only inference which can be drawn is that without the knowledge of Defendant No. 2, the Defendant No. 1 settled the accounts with the Plaintiff and accepted to pay the amount to the Plaintiff in the matter stated in Ex. P-30.

By making a part payment of Rs. 100/- to extend limitation Defendant No. 1 has signed Ex. P-34 (dated 19-7-1976) in his personal capacity and has not signed as a partner of the firm. No express or implied authority is proved to have been given by the Defendants 2 to 4 to the Defendant No. 1 to settle the accounts or to give acknowledgment, therefore, the Plaintiff has failed to prove issue Nos. 4 and 7. The suit is within limitation against Defendant No. 1 as he has given an acknowledgment by making a part payment on 19-7-1976 but the same is not within time against defen- dant Nos. 2 to 4. In view of the above discussion, issue Nos. 4 and 7 are decided against the Plaintiff.

Issue No. 5:

An indemnity bond (Ex. P-5) was executed by Smt. Kartar Devi (Defendant No. 4) in favour of the Plaintiff on 3-8-1967. It is contended by the learned Counsel for the defendants that this document requires registration because it creates a charge upon immovable property. If any charge has been created then the document might have become inadmissible for want of registration. Ex. P-5 only states that the Plaintiff wanted an indemnity bond for the payment of his outstanding dues, which were advanced by him to M/s Amolak Ram Man Mohan Pasricha for timber consigned to M/s. Rohtas Industries and for carrying goods of M/s. Amolak Ram Man Mohan Pasricha. The Defendant No. 4 agreed to indemnify the Plaintiff against the price of unretired railway receipts, hundis and other allied expenses incurred by him for collecting the payment and for unpaid freight charges of goods to M/s. Amolak Ram Man Mohan Pasricha carried on the trucks. The Defendant No. 4 agreed not t" create any charge or encumbrance upon her property known as Narang House, Shimla. The document Ex. P-5 read as a whole clearly suggests that no charge was created upon the property owned by Defendant No. 4 and that it was only in the shape of an agreement by which the Defendant No. 4 agreed not to alienate some of her property. As such it is held that the agreement Ex. P-5 does not required any registration. This issue is held against the Defendants.

Issue No. 6:

The agreement dated 3-8-1967 (Ex. P-5) is proved to have been signed by the Defendant No. 4. In the written statement, Defendant No. 4 alleges that her signatures were procured on this agreement without explaining to her the implications thereof and she cancelled the same by issuing a notice through Shri Kailash Chand Advocate.

Defendant No. 4 has not come in the witness box and Shri Kailash Chand, Advocate has also not been produced. There is no evidence regarding the cancellation of the agreement (Ex. P-5) or that it was executed by Defendant No. 4 due to some misunderstanding. In these circumstances, the cancellation of the agreement Ex. P-5 or that the signature on the same were obtained from Defendant No. 4 without explaining the contents to her is not proved. Thus, it is held that Defendant No. 4 (Smt. Kartar Devi) agreed to become a surety for the payment of the amounts which were due to the Plaintiff from M/s. Amolak Ram Man Mohan Pasricha. The learned Counsel for the Defendants contends that the liability of the Defendant No. 4 is not existing because the surety is discharged as soon as the terms are varied.

In A.I.R.1915 L B 62, (Maung Po Lu v. J.A. Begbie and Co., it is held:

Where in respect of a debt which bore no interest, the creditor gave three months time for its payment in consideration of the principal debtor promising to pay him interest at 12 per cent per annum in case of her failure to pay up at the end of three months. The surety was discharged from his liability on account of the agreement to give further time.

In AIR 1944 Lah 428, (Pirthi Singh v. Ram Charan Aggarwal), it is held:

a contract between the creditor and the debtor by which the former had promised to give time to the debtor and instalments were fixed without the surety''s assent or even knowledge which prevented him to require the creditor from calling upon the principal debtor to pay off the entire debt or to pay the entire debt himself and then to recover it from the principal debtor...the surety is discharged from his liability.

The principale is that if without the consent of the surety some variation is done in the contract between the creditor and the debtor, then in that case the liability of the surety is discharged because there is a variation in the contract to which the surety was a party. In the present case, the indemnity bond was executed on 3-8-1967 and the firm M/s. Amolak Ram Man Mohan Pasricha was working till 1971 or 1972. On 20-7-1973, Man Mohan, Defendant No. 1, on behalf of the firms Amolak Ram Man Mohan and Himachal Timber Trading Co. entered into a fresh agreement with the Plaintiff by executing the settlement deed (Ex. P-30). There is no evidence to prove that the Defendant No. 4 (Smt. Kartar Devi) was a party to this settlement. This suit has been filed on the basis of this settlement deed. The indemnity bond (Ex. P-5) was executed much earlier. As the Plaintiff and Defendant No. 1 have entered into a fresh contract, therefore, the indemnity bond (Ex. P-5) is not binding on the Defendant No. 4 for discharging the debt due on Ex. P-30. The liability of the Defendant No. 4 as a surety/guarantor for the payment of the amount due on Ex. P-30 thus stands discharged. Issue No. 6 is decided accordingly.

Issue No. 8:

I have already held that the Defendant Nos. 2 to 4 are not liable for the payment of the amount and suit against these Defendants is not within limitation. Defendant No. 1 was dealing with the Plaintiff and he has also acknowledged the liability by making a part payment of Rs. 100/- on 19-7-1976. In Ex. P-30 (dated 20-7-1973) Defendant No. 1 admitted his liability to the extent of Rs. 2,80,000/- out of which Rs. 1,50,000/- were to be paid immediately. Defendant No. 1 also argeed to pay interest at the rate of 12 percent per annum for the remaining amount. Thus, on 20-7-1973, the amount due to the Plaintiff was Rs. 2,80,000/-. Out of this amount the Plaintiff has paid an amount of Rs. 1,12,000/- on 1-10-1973 although he was required to pay Rs. 1,50,000/-. Another amount of Rs. 19,600/- was received by the Plaintiff from the Defendant No. 1 on 18-10-1974. The Plaintiff is entitled to interest at the rate of 12 percent per annum on the outstanding amount after deducting a payment of Rs. 1,12,000/-. Thus, on an amount of Rs. 1,68,000/- the Plaintiff is entitled to interest from 1-10-1973 to 18-10-1974 at the rate of 12 per cent per annum. The next payment of Rs. 19,600/- was made on 18-10-1974, and, therefore, the Plaintiff is entitled to interest at 12 per cent per annum on Rs. 1,48,000/- from 19-10-1974 to 24-6-1978 (the date of institution of the suit). The total amount of interest comes to Rs. 1,04,141/-. In these circumstances, I find that the amount due to the Plaintiff from the Defendant No. 1 is Rs. 2,52,541 /-. The Plaintiff has only filed a suit for recovery of Rs. 2,41,248/-. Out of this amount Rs. 51,720/- was paid by Defendant No. 1 during the pendency of the suit. Thus, the Plaintiff is now entitled to Rs. 1,89,528/- from Defendant No. 1. This issue is decided accordingly.

The Plaintiff claims future interest. The transaction in dispute was a commercial transaction and I am of the view that the Plaintiff should be allowed future interest at 12 percent per annum which was also the agreed rate of interest.

Issue No. 9:

No evidence has been led as to why the Defendant No. 1 should be allowed to pay the amount by instalments. This issue is decided against the Defendants.

Issue No. 10:

As a result of the above discussion, the Plaintiff''s suit for recovery of Rs. 1,89,528/- with proportionate cost is decreed against Defendant No. 1. The Plaintiff is also allowed future interest at 12 percent per annum from 24-6-1978 (date of institution of the suit) till the date of the recovery of the uit against Defendant Nos. 2 to 4 is dismissed.