Subhash Chander vs Ram Chander

R.L. Anand, J. (Oral)

This is a second appeal and has been directed against the judgment dated 6.9.1986 passed by Addl. District Judge, Kurukshetra, who set aside the judgment and decree dated 19.10.1983 passed by the Sub Judge 1st Class, Kaithal, who dismissed the suit of the plaintiffs on the ground that during the pendency of the suit the claim of the plaintiff had been adjusted.

Some facts can be noticed in the following manner :

Five plaintiffs namely Rangi Ram, Ram Chander, Narsi Dass, Richha Ram and Madan Pal filed a money suit for a sum of Rs. 43,000/ against Subhash Chand, Ramesh Chand, Kailash Chand, Smt. Kailash Devi and M/s Lakshmi Rice and General Mills on the allegation that they have to receive this money in the following manner Rs. 24,950.77 as principal amount and Rs. 18,049.23 by way of interest.

The suit was contested by the defendants. Issues were framed by the trial Court on 16.2.1982. When the suit was pending before the trial Court, on 24.8.1992 the defendants made an application that the suit of the plaintiffs may be dismissed inasmuch as the claim of the plaintiffs stood satisfied as per entry made by one of the plaintiffs namely Rangi Ram on the bahi of defendants regarding payment of Rs. 24,950.77 and 28.4.1982. This application was contested by the plaintiffs. According to them, the application moved by the defendants was not maintainable and their claim has not been fully satisfied. According to the plaintiffs, they received a sum of Rs. 24,950/ by way of cheque but the said amount was only towards principal and so far their claim regarding interest is concerned, it is still unsatisfied. The following issue was framed by the trial Court in order to dispose of the application moved by the defendants :

Whether the claim of the plaintiffs has been fully adjusted ? OPD

The learned trial Court held that the entire claim of the suit has been adjusted. Resultantly, the suit was dismissed vide judgment and decree dated 19.10.1983.

Aggrieved by the judgment and decree of the trial Court, the plaintiffs filed the appeal in the first Appellate Court and gave a challenge to the compromise allegedly effected between the defendants and Rangi Ram one of the plaintiffs, who received the amount of Rs. 24,950.77. The learned Addl. District Judge, for the reasons given in paras No. 12 and 13 of the judgment dated 6.9.1986, allowed the appeal and remanded the case of the trial Court with the direction to proceed with the trial on merits.

This time defendant Subhash Chand was aggrieved by the judgment of the first Appellate Court and he filed the present appeal.

I have heard Mr. C.B. Goel, Advocate, on behalf of the respondents. No assistance has been given from the side of the appellant. I have also given notice to the appellant to appear in this case, but in spite of the intimation nobody has appeared.

I have gone through the grounds of appeal and after going through the same, I am of the opinion that this appeal is totally devoid of any merit. As I have stated above that the Civil suit was filed by five persons namely Rangi Ram, Ram Chander, Narsi Dass, Richha Ram and Madan Pal and in para No. 1 of the plaint it was specifically alleged by the plaintiffs that earlier they were carrying on the business of commission agency in partnership formed under the provisions of the Indian Partnership Act under the name and style of M/s Rangi Ram Richha Ram situated at Kaithal Mandi, but the said firm has been dissolved in the year 1978 and as such they have locus standi to file the suit for the recovery of the property of the dissolved firm. It is settled principle of law that once the firm stood dissolved, the partners of such dissolved firm could only file the suit in their individual capacity and this has been done. The reading of para No. 1 of the plaint would show that it was in the knowledge of the defendants that the suit was instituted not on behalf of the existing firm but on behalf of the dissolved firm. The principal amount claimed by the plaintiff was Rs. 24,950.77 and in these circumstances if the defendants wanted to make the payment, that payment ought to have been made to the entire body of the plaintiffs and not to the individual one.

Order 23 Rule 3 of the Code of Civil Procedure lays down that where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subjectmatter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the suit, whether or not the subjectmatter of the agreement, compromise or satisfaction is the same as the subjectmatter of the suit. The other provisions as contained under Order 23 Rule 3 of the Code of Civil Procedure need not be quoted in the present order. The point which survives for determination is whether any discharge given by Rangi Ram can bind the other four plaintiffs or not and the answer of this Court would be in the negative, because the defendants had entered into an agreement with the plaintiffs and such compromise firstly should be signed by all the parties and it should be in writing. The argument which was developed in the trial Court as well as in the present appeal by the appellant was that Rangi Ram had the implied authority to give a valid discharge of the outstanding amount to the firm in the capacity of a partner. In this regard we can examine the provisions of Sections 18 and 19 of the Indian Partnership Act, 1932. Section 18 of the said Act lays down that subject to the provisions of this Act, a partner is the agent of the firm for the purpose of the business of the firm. In the present case when the suit was instituted no firm was in existence as the firm had already been dissolved in the year 1978. There is no suggestion that Rangi Ram was representing himself as a partner of the firm irrespective of the dissolution. As per Section 19 of the abovesaid Act, the implied authority of a partner does not empower him to compromise or relinquish any claim or portion of a claim by the firm unless there is usage or custom of trade to the contrary. In this view of the matter, if any payment has been made to Rangi Ram in individual capacity, that would not bind the other four plaintiffs namely Ram Chander, Narsi Dass, Richa Ram and Madan Pal.

Resultantly, I do not find any illegality in the impugned judgment passed by the first Appellate Court. I do not see any merit in this appeal and dismiss the same with no order as to costs.

Registry is directed to send back the record of the trial Court, who is directed to proceed with the matter on merits after issuing notice to the appellantdefendants. Registry is also directed to send a copy of this order to the trial Court.

The counsel for the respondents is directed to appear before the trial Court on 27.10.1999.