S. Vellaya Gounder vs R. Venkatesa Chettiar and Another

A. Alagiriswami, J.—The first defendant in the suit and the third defendant were partner in a venture, and they had dealings with the plaintiff.

The accounts were periodically settled, and signed by the third defendant alone. The suit was filed within three years of the last of such settlements

signed by the third defendant, but beyond a period of three years in respect of anything which could show that the first defendant had

acknowledged liability. The trial Court held that in the circumstances the acknowledgment by the third defendant could not save limitation as

against the first defendant. But the appellate Court took a different view, allowed the appeal in part and decreed the suit as against the first

defendant also. The first defendant is the appellant before this Court.

The lower appellate Court took into consideration the wording of the acknowledgment signed by the third defendant in Exhibit A-4 and thought

he purported to sign the acknowledgment on behalf of both himself and the first defendant. I do not think that this circumstance alone is enough to

enable the acknowledgment by the third defendant to save limitation in respect of the claim as against the first defendant. Section 21 (2) of the

Indian Limitation Act says:

Nothing in Sections 19 and 20 renders one of several joint contractors, partners, executors of mortgagee chargeable by reason ''only of a written

acknowledgment signed or of a payment made by, or by the agent of, any other or others of them.

The earlier view of this Court in Balasubramania Pillai v. S.V.R.R.M. Ramanathan Chettiar ILR (1909) Mad. 421 and Shaik Mohideen Sahib v.

Official Assignee of Madras ILR (1912) Mad. 142 seems to have been that where one partner signs an acknowledgment it was necessary in order

to bind the other partner, to have direct evidence that the partner acknowledging had been authorised by the other partner to acknowledge it on his

behalf. These two decisions of this Court were considered by the Bench which came to consider the case reported in Pandiri Veeranna Vs.

Grandhi Veerabhadraswami alias Veerabhadrudu, as not being in consonance with the view taken by other Courts in India as also the views taken

by Courts in England where the provisions are substantially the same as in India. The matter was therefore referred to a Full Bench and the Full

Bench has held that direct evidence of a specific authority to give acknowledgments is quite unnecessary and such authority may be inferred from

the surrounding circumstances, though it is of course quite beyond our province (the province of this Court) to indicate what circumstances could

be deemed sufficient to warrant the inference. The Full Bench made it clear that Section 21 (2) amounts to saying that if you have no more than a

written acknowledgment signed by one defendant the fact that the other defendant is his partner cannot affect the latter''s liability. They also

referred to the general principle of law embodied in Section 251 of the Contract Act that partners are the agents of one another and that their acts

done in the ordinary course of the partnership business bind the partnership. All the same, they had not based their decision on the fact that an

acknowledgment by one partner would bind another partner because such acknowledgment is done in the ordinary course of the partnership

business. In fact, the circumstances of that case were that the partner who was sought to be made liable as a result of the acknowledgement made

by the other partner had, on an earlier occasion, accepted his personal liability for the whole of the amount. This, apparently, was the circumstance

which the Bench was content to consider as a circumstance which shows that the partner acknowledging on the subsequent occasion had the

authority to acknowledge on behalf of the other partner.

In the present case, it is the third defendant who has been signing Exhibit A-3 the account book all through and nowhere has the first defendant

signed. Wallis, C.J., in his referring judgment in Pandiri Veeranna Vs. Grandhi Veerabhadraswami alias Veerabhadrudu, had pointed out that in the

decision in Shaik Mohideen Sahib v. Official Assignee of Madras ILR (1912) Mad. 142 it was expressly decided that the fact of a partner being

left in management of a business did not give rise to a presumption that he was authorised to sign acknowledgments and to the fact that he had

pointed out in K.R.V. Firm v. Seetharamiswami (1914) 25 M.L.J. 501 : ILR 37 Mad. 146 that a different view has been taken by other Courts in

India and also apparently in England. However, the Full Bench did not proceed on the footing that the fact that a partner being left in management

gave rise to a presumption that he was authorised to sign acknowledgments. The decision in the above Full Bench case cannot therefore, help the

respondent in this case. There are no circumstances available in this case as were available in the case reported in Pandiri Veeranna Vs. Grandhi

Veerabhadraswami alias Veerabhadrudu, to show that the acknowledging partner had the authority to acknowledge on behalf of the silent partner.

The result is that the conclusion of the lower appellate Court that the mere fact that the third defendant purported to sign on behalf of the first

defendant also was enough to show that the suit as against the first defendant also is in time is not correct in law. The Second Appeal is, therefore,

allowed and the decree of the trial Court will be restored. There will however be no order as to costs the appeal in this suit. Leave granted.