1976 Supreme(SC) 32

SUPREME COURT OF INDIA
R.S. SARKARIA AND S. MURTAZA FAZL ALI, JJ.
Nanchand Gangaram Shetji, Appellant
Versus
Mallappa Mahalingappa Sadalge and others, Respondents.
Civil Appeal No. 1896 of 1968
Decided on 30-1-1976.
Advocates appeared
Mr. H. B. Datar, Sr. Advocate, (Mr. P. C. Bhartari, Advocate for M/s. J. B. Dadachanji and Co., Advocate with him), for Appellant; Mr. S. T. Desai, Sr. Advocate, (Mr. Naunit Lal, Advocate with him), for Respondents Nos. 3 and 4.

Headnote:

Partnership Act, 1932 – Sections 4,5,45 - Limitation Act, 1908 – Sections 19,21,21(3) - Hindus governed by School of Hindu Law propositus of the joint family died in 1922 survived by three sons namely Defendant 1 Defendant 2, Neelkanth. (The sons are hereafter referred to as M , A and N .) and his sons constituted a joint Hindu family - Family was trading in tobacco as Karta was managing joint family business - After his death his eldest son Neelkanth father of Defendant 3, began to look after management of family business - N also started Factory in name of his son in 1942 or thereabout - N died on July 8, 1946. Thereafter A (Defendant 2) continued and managed joint family business and the family concerns with the consent of the other members. After 1951, the family business was managed by M (Defendant 1) - Appellant had business dealings in tobacco and money dealings with the Defendants joint family. There used to be periodical verification of accounts and acknowledgments were made from time to time by the manager of the family. The plaintiffs accounts were burnt in fire on October 1949 and he had to reconstruct the accounts from available information and documents - On April 15, 1953, accounts were taken, and the amount due from the defendants family to the plaintiff was worked out and verified. The accounts thus stated were acknowledged and signed by 837 Defendant 1 and by Defendant 4, as guardian of her minor son, Defendant 3. A balance of was found due to the plaintiff from the defendants – Whether on November 4 1945, on account of an unequivocal declaration of an intention to separate made by the three sons of there was a disruption of the joint family status. - Held, Unless intimation of the severance of joint status between the members of the joint family is given tooutside creditors who had dealings with the joint family through its karta, either by public notice or individual notice in that behalf, karta would be deemed to continue to represent the family and to have power to incur debts for family necessity and to make acknowledgements or part-payments in respect of the same so as to extend the period of limitation. With great respect to the learned Judge, we do not think that this is a correct enunciation of the law on the point. Firstly, the legislature has, in its wisdom , excluded joint Hindu trading families from the operation of the Partnership Act. Section 4 of that Act defines partnership as "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". Section 5 further makes it clear that this Act governs only that relation of partnership which arises from contract and not from status such as the one obtaining among the members of a joint Hindu family trading partnership. Secondly, the question whether an acknowledgement made by the karta of an erstwhile joint Hindu family after its severance, would extend limitation against all the former members of that family, turn primarily on an interpretation of Clause (b) of sub-s. (3) of Section 21 read with Section 19 of the Limitation Act, 1908. Clause (b) of Section 21 (3) provides - Where a liability has been incurred by or on behalf of a Hindu undivided family as such, an acknowledgement 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 - It is therefore the duty of the creditor to ascertain after due enquiry whether the person making the acknowledgement still holds his representative capacity as karta of the family. The law does not cast any duty upon the members of the family who do not figure in the endorsement or writing admitting the debt to inform the creditor by a general notice about the disruption of the family. If the creditor fails to make an enquiry and satisfy himself about the capacity of the executant to represent the family at the time of making the acknowledgement, he does so at his own peril. Disruption of the joint family status as already noticed, puts an end to the representative capacity of the karta and any acknowledgement of a debt made by him after such disruption cannot save the creditors claim from becoming time-barred against the other members - Appeal dismissed