Probodh Chandra Chakravarty and others vs Bharat Loan Co., Ltd. and others

G. Mehrotra, C.J.—The plaintiff Bharat Loan Company Limited is a money lending concern. Previously it was known as Cachar Marine Fire Insurance and Banking Co. Subsequently its name was changed into Bharat Banking Co. Ltd. and then into Bharat Loan Co. Ltd. Prafulla Chakravarty, Promode Chandra Chakravarty and Probodh Chandra Chakravarty were three brothers.

Plaintiff''s case giving rise to this appeal is that Prafulla Chakravarty who was the eldest of the three brothers, having married from a Brahma family, lived separately from the other two brothers. The two brothers Probodh Chandra Chakravarty and Promode Chandra Chakravarty remained joint all through and they carried on a joint family business under the name and style of P. Chakravarty and Co. P. Chakravarty and Co. carried on contract works and other business both in Bengal and Assam. Probodh Chakravarty being the elder of the two, was the manager and karta of the family so long as be was alive and after his death Promode Chakravarty managed the same as karta till his death. Promode Chakravarty died after the institution of the suit giving rise to this appeal.

In May 1944 the accounts of P. Chakravarty and Co. with the plaintiff were squared up but another account No. 915 was opened on 31st May, 1944 on the application of Probodh Chakravarty dated 26th May 1944. From time to time P. Chakravarty and Co. borrowed money from the plaintiff for the contract work. There was a contract between the plaintiff and P. Chakravarty and Co. that their bill money would be deposited in, the account. Promissory notes were also executed as collateral security from time to time in favour of the plaintiff.

P. Chakravarty and Co. entered into a contact to purchase a tea estate in Tripura, State and in order to pay up the earnest money of the said contract, loan was taken from the plaintiff which was also entered in the account. Another account was subsequently opened as account No. 915-A and various loans were taken on this account also. Two other accounts were opened with the plaintiff by the defendant P. Chakravarty and Co. in order to finance some other tea gardens. On 23rd February 1948 the debit balance in all these accounts was Rs. 3,30,664-4-8. A mortgage was executed by P. Chakravarty and Co. as a security in favour of the plaintiff. On 31st December 1951 the balance on accounting came to Rs. 2,26,567-10-0.

On these facts the plaintiff brought a suit for recovery of Rs. 2,00,000/- A sum of Rs. 1,80,787-3-4 is principal and Rs. 19,212-12-8 is interest. In the suit Promode Chandra Chakravarty was impleaded as defendant No. 1 and the successors, of Probodh Chandra Chakravarty were impleaded as defendants 2(ka) to 2(jha), Messrs. P. Chakravarty and Co. was impleaded as defendant No. 3. During the pendency of the suit Promode Chandra Chakravarty also died and his heirs were impleaded as defendants Nos.1 (ka), to 1(Cha).

The trial Court decreed the suit against the assets of late Probodh Chandra Chakravarty and late Promode Chandra Chakravarty in possession of the defendants.

The present appeal has, been filed by the heirs of Probodh Chandra Chakravarty. No appeal has been filed by the heirs of Promode Chandra Chakravarty, nor by P. Chakravarty and Co.

The contention of the appellants is that the suit is barred by limitation and secondly that Probodh and Promode were not members of the Hindu joint family, nor was the business carried on by the joint family. Regarding the questions of limitation it is urged that the account was neither a mutual, open and current account nor was there any valid acknowledgment made by Probodh Chandra Chakravarty so as to make the defendants liable to repay the loan advanced by the plaintiff.

Probodh Chandra Chakravarty died in the month of December, 1948. The present suit was brought on the and February, 1954. The first contention raised by the counsel for the appellants is that Probodh and Promode were not members of the joint family and as such the business carried on by these two brothers in the name of P. Chakravarty and Co. was not a joint family business. The contention of the appellants is that admittedly Prafulla Chakravarty the third brother separated from the family and thus the joint family was disrupted. There cannot be any presumption that the two brothers remained joint.

It is further urged that even if they were living jointly and the business was carried. on by them jointly, it is not proved that the business was a joint family business and that there was any ancestral nucleus for the constitution of the joint family and acquisition of the joint family property. This being so, it is urged that Promode Chandra Chakravarty had no right to acknowledge the debt of the firm P. Chakravarty and Co. so as to bind the heirs of Probodh Chandra Chakravarty. The general principle of the Hindu law is that a family is presumed to be joint unless the contrary is proved. Where, however, one of the coparceners separates himself from the other. members of the joint family and his share in the joint property partitioned off for him, there will be no presumption that the rest of the coparcener continued to be joint. In each case it will be question of fact to be determined from the evidence on the record and the circumstances as to whether the remaining coparceners continued to remain joint. When one of the coparceners separates, the other coparceners may decide to remain joint and that is a question of fact to be established by the evidence on the record. Even if there is a separation among the other remaining coparceners, there may be a case where they have, chosen to reunite and that will again be a question of fact to be decided on the materials on the record. It on of the members has separated, there cannot be a presumption also that the remaining coparceners also were separated. Each case will depend upon the materials on the record. Reliance is placed by the counsel for the appellants on the case of Bhagwati Prasad Sah and Others Vs. Dulhin Rameshwari Kuer and Another, . Particular reference was made to the following observation at p. 74 of the report:

The general principle undoubtedly is that a Hindu family is presumed to be joint unless the contrary is proved, but, as it is admitted here, that Imrit one of the coparceners, did separate himself from the other members of the joint family and had his share in the joint property partitioned off for him, there is no presumption that the rest of the coparceners continued to be joint. There is no presumption on the plaintiff''s side too that because one member of the family separated himself, there has been separation with regard to all. It would be a question of fact to be determined in each case upon the evidence relating to the intention of the parties whether there was a separation amongst the other coparceners or that they remained united. The burden would undoubtedly lie on the party who asserts the existence of a particular state of things on the basis of which he claims relief.

In this case there was a definite evidence on the record to prove that Imrit had separated himself from the other members of the family and had his share in the joint property partitioned off.

In the present case plaintiff did not refer in his plaint to the existence of the third brother. In the written statement filed on behalf of the heirs of Probodh Chandra Chakrayarty it is stated that the three brothers Probodh Chandra Chakravarty, Promode Chandra Chakravarty and Prafulla Chakravarty were all living and carrying on I their business separately after the death of their father and that Probodh. Chandra Chakravarty and Promode Chandra Chakravarty carried on partnership business. There is thus no. assertion in the written statement that Prafulla Chakravarty separated and got his property partitioned resulting in the severance of the two brothers Probodh Chandra Chakravarty and Promode Chandra Chakravarty. It cannot be doubted that both the brothers Probodh Chandra Chakravarty and Promode Chandra Chakravarty were jointly running the business under the name and style of P. Chakravarty and Co. The loan was taken at the time by Probodh Chandra Chakrayarty signing for P. Chakravarty and Company.

The plaintiff has examined a number of witnesses to prove the fact that the two brothers were living jointly. P.W. 1, Sukhesh R. Dutta was an employee of the plaintiff from 1940 to October 1956. This witness belonged to the village Kalirkachha in the district of Tipperah. The two brothers Probodh Chakravarty and Promode Chakravarty also were residents of the same village Kalirkachha. He states that in 1940 when he came in touch with this family, Prafulla Chakravarty was separate from the other two brothers. But Promode and Probodh remained joint all through. The two brothers conducted their family business under the name and style of P. Chakravarty and Co''. In cross-examination he states that ho had been in Kalikacha personally in 1949 and at that time he found Promode Chakravarty''s family and Probodh Chakravarty''s family living jointly. He has denied that P. Chakravarty and Co. was ever a partnership business.

P.W. 2 Sudhindra Mohan Deb is also an employee of the plaintiff. He states that he knew the two brothers Probodh Chakravarty and Promode Chakravarty. They were men of Kalikacha. He states that he had visited Kalikacha several times in connection with the realisation of dues of the plaintiff company from P. Chakravarty and Co. and he found the two brothers living jointly.

P.W. 3 Gopesh Chandra Nag is also an employee of the plaintiff. He went to Kalikacha in 1952. At that time no doubt Probodh Chakravarty was dead. He saw the family of Probodh Chakravarty and the family of Promode Chakravarty living together. It will also appear from the evidence on the record that the properties were acquired by the two brothers by the money borrowed from the plaintiff, although the purchase was made in the name of Probodh Chandra Chakravarty alone. From the recital in the mortgage deed Ext. 19 it is clear that some properties were acquired by the mortgagors in the name of their mother deceased Monomohini Debi. The acquisition of the property in the name of the mother benami and the purchase in the name of one of the brothers though the money was supplied by the plaintiff to both the brothers, go to show that the two brothers Probodh Chakravarty and Promode Chakravarty continued to be the members of the joint family.

In fact the case set up by the defendant was that they were carrying on the business in partnership. There is no evidence at all that they carried on business in partnership. That being so it is evident that the two brothers were members of the joint family and that the business was carried on by them as members of the joint family. P. Chakravarty and Co. was a joint family business. There was no reason why if the brothers were carrying on business as partners, none of the properties purchased from the money borrowed from the plaintiff should have been purchased in the name of Promode Chandra Chakravarty who was the junior member of the family during the life-time of Probodh Chandra Chakravarty and all transactions should have been done only in the name of Probodh Chandra Chakravarty. The question of burden of proof becomes immaterial when both the parties have led evidence. In our opinion thus the two brothers Probodh Chandra Chakrayarty and Promode Chandra Chakravarty were members of the joint family and they as such carried on the business under the name and style of P. Chakravarty and Co.

The next contention is that there is no evidence to prove that there was any ancestral nucleus and as such the business Cannot be presumed to be a joint family business. A business can be a joint family business without being ancestral. If the business is being carried on jointly by the members of the joint family as the members of the joint family such a business will be a joint family business in spite of being a new business. As in our opinion it is established that the two brothers constituted a joint family, any business carried on by them jointly must in the circumstances be presumed to be a joint family business. The appellants asserted .that the two brothers were carrying on business in partnership. In the absence of any evidence to prove that the two brothers were trading as partners, on the finding that the joint family existed, the business must be presumed to be carried on by them as members of the joint family. It cannot be disputed that Probodh Chandra Chakrayarty being the eldest, was the karta of the joint family during his life-time and after his death Promode Chandra Chakravarty being the eldest member of the joint family consisting of Promode, his heirs and the heirs of Probodh Chandra Chakravarty, was the karta of the family.

The next question is as regards the limitation. The plaintiff''s contention is two-fold in this regard. Firstly it was urged that the account was an open, mutual and current account and thus Article 85 of the limitation Act was attracted. Secondly it was contended that the acknowledgment made by Promode Chandra Chakravarty as the karta of the joint family kept alive the debt and the suit is not barred by limitation. The debt was kept alive by Probodh Chandra Chakravarty till April 1947. After the death of Probodh Chandra Chakravarty, Promode Chandra Chakrayarty wrote a letter dated 7th January 1950 to the plaintiff company in which it was stated that the plaintiff company was authorised to give full effectual discharge on his behalf of their dues from Krishnapur Tea Co. Ltd. under the Mortgage Loan and Hypothecations accounts by adjusting the sum of Rs. 91,000 only by credit to their overdraft accounts. There was another letter sent by Promode Chandra Chakravarty on the 2nd February 1951 by which he acknowledged the correctness of the statement of account sent by the Manager, Bharat Banking Co., Limited to him. The present suit was brought within three'' years of this acknowledgment; If, therefore, the letter is a valid acknowledgment as against the heirs of Probodh Chandra Chakravarty also, it cannot be said that the suit was barred by limitation. Section, 21(3) (b) of the Limitation Act provides as follows :

For the purposes of the said section (sections 19 and 20):

Where a liability has been incurred by, or on behalf of a Hindu undivided family as such, an acknowledgment or payment made by, or by the duly authorised agent of, the manager of the family for the time being shall be deemed to, have been made on behalf of the whole family.

As we have already found that the business was carried on by the two brothers as the members of the joint family, the liability was incurred by the family as such and thus the acknowledgment made by Promode Chandra Chakravarty who was the manager of the family at the time, will be deemed to have been made on behalf of the whole family consisting of himself and the heirs of the deceased Probodh Chandra Chakrayarty. This was thus a valid acknowledgment made by Promode Chandra Chakravarty which will save limitation as against the whole family.

In view of the decision that the acknowledgment of the liability made by Promode Chandra Chakravarty will be valid as against the heirs of Probodh Chandra Chakravarty, it is not necessary to deal with the question whether the account between the parties can be regarded as a mutual open and current account. However as the question has been argued, I would like to express my opinion in the matter. What is a mutual open and current account has been fully laid down by their Lordships of the Supreme Court in the case of The Hindustan Forest Company Vs. Lal Chand and Others, . In this case it was held that the requirement of reciprocal demands involves transactions on each side creating independent obligations on the other and not merely transactions which create obligations on one side, those on the other being merely complete or partial discharges of such obligations. The following observation of Rankin, C.J., in the case of The Tea Financing Syndicate Ltd. Vs. Chandra Kamal Bez Barua, has been quoted with approval:-

There can, I think, be no doubt that the requirement of reciprocal demands involves, as all the Indian cases have decided following Halloway, A.C.J., transactions on each side creating independent obligations on the other and not merely transactions which create obligations on one side, those on the other being merely complete or partial discharges of such obligations. It is further clear that goods as well as money may be sent by way of payment. We have therefore to see whether under the deed the tea, sent by the defendant to the plaintiff for sale, was sent merely by way of discharge of the defendant''s debt or whether it was sent in the course of dealings designed to create a credit to the defendant as the owner of the tea sold, which credit when brought into the account would operate by way of set off to reduce the defendant''s liability.

The contention of the appellants is that the accounts do not show that there could be any reciprocal demands. The firm P. Chakravarty and Co., borrowed certain money from the plaintiff and from time to time the payments were made. The money paid by P. Chakravarty and Co., was towards the discharge of the debt and that cannot create a separate and independent credit in favour of P. Chakravarty and Co., and thus the account cannot be regarded as a mutual, open and current account.

On the other hand the contention of the respondent is that Ext. 3 the letter of the 26th May, 1944, sent by Sri Probodh Chandra Chakravarty on behalf of P. Chakravarty and Co., to the plaintiff shows that the plaintiff undertook a distinct and separate liability to realise the bills of P. Chakravarty and Co., with the Central Public Works Department and appropriate the amount so realised towards the payment of the debt. It was further agreed according to the respondent, between the parties that the tea lying with the brokers at the garden awaiting despatch, was to be sold by the respondent and the sale proceeds to be appropriated towards the discharge of the loan. The relevant portion of the letter Ext 3 reads as follows :-

All our works are being paid by the Central Public Works Department, please note I would request you to grant us a ''short term'' loan for Rs. 30,000/ -. As securities for payment, you might consider any one or more of the following :--(1) Amount of the aforesaid security deposit (2) Bills lying with Central Public Works Department about two lacs, (3) Chaklapunji Tea Estate--we have advanced about a lac and quarter on hypothecation of 1943 and 1944 crops etc., 1943 tea lying with brokers through you and lying at the Garden awaiting despatch will be about one thousand maunds, (4) Krishnapur Tea Estate--we have advanced similar amount on hypothecation and mortgage. I am out of debt and if I am to be a debtor again, my inevitable choice is Bharat Banking. I send you herewith a pronote for thirty thousand. The letter of lien will be sent on receipt of your instruction. The amount may kindly be paid by a Calcutta cheque.

The contention is that in the account certain amounts are shown to have been realised by dividend a/c transfer and further by realisation of the bills. It may be that in realising the bills of P. Chakravarty and Co., by the plaintiff as their agents, the plaintiff may have realised an amount which was in excess of the overdraft dues and thus by authorising the plaintiff to realise the bills an independent transaction has been created between the two parties. Thus the account was a mutual, open and current account.

Strong reliance is placed on the case reported in The Tea Financing Syndicate Ltd. Vs. Chandra Kamal Bez Barua, . The observations made by Rankin, C.J., in this case were approved, as I have already pointed out, by their Lordships of the Supreme Court in The Hindustan Forest Company Vs. Lal Chand and Others, .

In the present case, however, besides the letter sent by Probodh Chandra Chakravarty in the year 1944, it does not appear from the material on the record that there was any letter of authority given by P. Chakravarty and Co., to the plaintiff under which the plaintiff was appointed agent to realise the amounts of the outstanding bills of P. Chakravarty and Co., with the Central Public Works Department and thus the mere entries in the account books that the payment was made by the realisation of the amounts of the bills, do not show that there was any independent agreement between the parties and the dealing between the parties can be said to have been designed to create a credit to P. Chakravarty and Co. We do not think that the account'' was mutual, open and current.

Mr. Lahiri who appears for the respondent, has further contended that even if it is found that the business was carried on by the two brothers as partners, the surviving partner Promode Chandra Chakravarty was competent to acknowledge the liability of the partnership firm. Reliance is placed on the following passage in ''Lindley on Partnership'', eleventh edition at page 292 where the law is said to have been set out :-

Notwithstanding a dissolution each partner can pay, or receive payment of, a partnership debt for it is clearly settled that payment by one of several joint debtors, or to one of several joint creditors, extinguishes the debt irrespectively of any question of partnership. So, again, it has been held that a continuing or surviving partner may issue a bankruptcy notice in. the firm name in respect of a judgment obtained before the dissolution, and that notice to him of the dishonour of a bill of exchange is sufficient, and that he can withdraw a deposit or sell the partnership assets, or pledge them for the purpose of completing a transaction already commenced, or of securing a debt already incurred, or the overdraft on the partnership current account at the bank.

He further relies upon Section 47 of the Partnership Act, which provides as follows :-

After the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise:

Provided that the firm is in no case bound by the acts of a partner who has been adjudicated insolvent; but this proviso does not affect the liability of any person who has after the adjudication represented himself or knowingly permitted himself to be represented as a partner of the insolvent.

Section 45 provides as follows :-

(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;

Provided that the estate of a partner who dies, or who is adjudicated an insolvent, or of a partner who, not haying been known to the person dealing with the firm to be a partner, retires from the firm, is not liable under this section for acts done after the date on which he ceases to be a partner.

(2) Notices under sub-section (1) may be given. by any partner.

Section 45 clearly lays down that any acknowledgment made by the surviving partner after one of the partners dies is not binding on the heirs of the deceased partner and the estate of the deceased partner in their hands would not be liable. In view of Section 45 the authority of the surviving partner does not extend to making acknowledgment so as to bind the estate of a deceased partner in the hands of his heirs. Mr. Lahiri, however has relied upon Section 47 which I have already quoted. Under this section the rights and obligations of the partner continue even after dissolution, in so far as it is necessary to wind up the affairs of the firm. It cannot be said that the acknowledgment made by Promode Chandra Chakravarty was an act necessary to wind up the affairs of the firm. Probodh Chandra Chakravarty died sometime in 1948. The acknowledgment was made by Promode Chandra Chakravarty in 1951. Under these circumstances it cannot be said that this act was a necessary act to wind up the affairs of the firm. There is, therefore, no substance in the contention of the respondent that even if the two brothers carried on business in partnership, Promode Chandra Chakravarty could bind the estate of the deceased partner in the hands of his heirs by making an acknowledgment.

As I have said the defendants appellant case was that the two brothers were tarrying on business as partners. Section 4 of the Partnership Act defines partnership as follows :-

�Partnership'' is the relation between persons Who have agreed to share the profits of a business carried on by all or any of them acting for all.

Persons who have entered into partnership with one another are called individually ''partners'' and collectively ''a firm, and the name under which their business is carried on is called the firm name.

Unless there is an agreement between persons to share the profits of a business it cannot be said to be a partnership business. In the present case there is no evidence to prove any such agreement. That being so, on the finding that the two brothers were members of a joint family, the joint conduct of the business can only be consistent with the fact that the business was run by them as members of the joint family and not as partners.

The appellants have relied upon the recital in the mortgage bond executed by Indian Commonwealth Bank Ltd., on the 26th September 1945, in favour of P. Chakravarty and Co., at Comilla. The recital runs as follows :

This Indenture made this twenty-sixth day of September one thousand nine hundred and forty-five, Between Indian Commonwealth Bank Ltd., (formerly known as the Chittagong Loan Co., Ltd.,) a company incorporated under the Indian Companies Act and having its registered office in the town of Chittagong (hereinafter called the ''Mortgagor'' which expression shall unless excluded by or repugnant to the context included its assigns) of the one part and Probodh Chandra Chakravarty and Promode. Chandra Chakravarty (sons of Kumar Chandra Chakravarty deceased) of Kalikachha, P.S. Sarail in the District of Tipperah carrying on business under the name and style of P. Chakravarty and Co., at Comilla in the district of Tipperah (hereinafter called the ''Mortgagees'' which expression shall unless excluded by or repugnant to the context include the said Probodh Chandra Chakravarty and Promode Chandra Chakravarty and the partners for the time being of the said P. Chakravarty and Co., their respective heirs executors, administrators and assigns) of the other part

This document is marked Ext. A and reliance is placed on the use of the expression ''partners'' in regard to the two brothers. This is a document of mortgage executed by the Indian Commonwealth Bank Ltd. and any such recital in this deed cannot be treated as an admission of Probodh Chandra Chakravarty and Promode Chandra Chakravarty, nor can this be binding on the plaintiff. Besides, this may be a loose description of the mortgagees. This recital can be no, evidence of any partnership between the two brothers.

It was lastly contended that the decree is not in the proper form. Under the decree it may be open to the plaintiff to realise the amount from the assets of Probodh Chandra Chakravarty in the hands of his heirs, even though those assets may not have, been joint family property but were the self-acquired property of Probodh Chandra Chakravarty and Promode Ghandra Chakravarty. On the finding that the money was borrowed for the joint family business, the decree could be passed against the heirs of Probodh Chandra Chakravarty and whatever property in the hands of the heirs of Probodh Chandra Chakravarty can be treated to be the assets of late Probodh Chandra Chakravarty will be liable for the debt of Probodh Chandra Chakravarty. No serious objection, thus can be made to the form of the decree. In the result I would dismiss, the appeal. Parties to bear their own costs of the appeal.