Judgment

DWIVEDI, J. :- The factual framework of this appeal is set spatially in the undivided geography of India during the British period and temporarily during 1944 to June 1947. There are three appellants: (1) Messrs Hari Chand Madan Gopal and Co., (2) Hari Chand and (3) Sri Ram. The first appellant is a partnership firm, of which the other two appellants are partners. Some time in 1944 there was concluded an agreement between the first appellant and the Government of the Province of Punjab (hereinafter called the Undivided Punjab). By that agreement, the first appellant agreed to act as a clearing Agent (Foodgrains) for the sale and purchase of foodgrains on behalf of the Undivided Punjab on payment of a commission. The first appellant obtained stock of rice from the Rationing Controllers of the districts which were after the partition of India in August 1947 included in the State of East Punjab and are now included in the State of Punjab. According to the State of Punjab (the plaintiff-respondent) the price of the stock supplied by the Rationing Controllers was Rupees 12,15,178/4/11. The stock was supplied in May and June, 1947. The first appellant sold the said stock to persons in Delhi and the United Provinces (now called Uttar Pradesh). The plaint admits the receipt of three amounts : (1) a sum of Rupees 2,91,817/13/111/2, (2) a sum of Rupees 2,67,963/10/1, collected from various purchasers in Delhi and Uttar Pradesh to whom the first appellant had sold the stock, and (3) a sum of Rupees 20,000/- paid by the first appellant. The aggregate of receipts thus comes to Rupees 5,79,841/81/2. Deducting the aggregate amount from the total sum due, there still remains an outstanding of Rupees 6,03,897/-/9. It is alleged in paragraph 9 of the plaint that on July 29, 1953, the appellants admitted their liability to pay the said amount.

2. The third appellant did not enter appearance. The case proceeded ex parte against him in the trial Court.

3. The appellants Nos. 1 and 2 filed their first joint written statement on June 15, 1957. They pleaded that all rights and liabilities under the agreement of 1944 have accrued in favour of the Government of West Punjab which forms part of Pakistan and the respondent has no right to sue. They also pleaded that in the meeting held on July 28 and 29, 1953 between the representatives of the respondent and the first appellant, it was admitted on behalf of the respondent that the first appellant was liable to pay only 40 of the total amount. It is alleged that according to the respondent the 40 of the total liability was Rs. 5,00,085/12/- but according to the first appellant it was only Rupees 47,327/6/9. As the plaintiff has admitted in the plaint to have received Rupees 5,79,841/8/1/2 from and on behalf of them, there was in credit in favour of the first appellant a sum of Rupees 59,695/12/1/2. The written statement adds that according to the first appellant the credit amount would be Rupees 86,510/1/3. It is asserted in the written statement that nothing was due by the appellants. The written statement denies that the appellants Nos. 1 and 2 admitted their liability to pay any amount in the meeting held on July 29, 1953 between the representatives of the Government and the appellants. The bar of limitation was also pleaded.

4. The appellants Nos. 1 and 2 filed another written statement on June 2, 1959. In this written statement they 383 reiterated their pleas in the first written statement. They also added that the Award of the Chairman of the Arbitration Tribunal, dated March 17, 1948 determined the ratio of financial adjustment between East Punjab and West Punjab in respect of assets and liabilities of the Undivided Punjab as 40:60 and that accordingly the respondent was entitled only to 40 of the amount due by the appellants.

5. The trial Court decreed the suit of the respondent for a sum of Rupees 5,53,897/-/9. On appeal the High Court of Punjab reduced the decretal amount to Rupees 3,23,89