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2013 Supreme(AP) 585

High Court of Andhra Pradesh
L. NARASIMHA REDDY & S.V. BHATT, JJ.
G. Chandra Sekhar Rao
Versus
The State Bank of Hyderabad & Others
C.C.C.A. No. 265 of 2001
Decided on : 29-07-2013

Advocates appeared:
For the Appellant:P. Bhaskara Mohan, Advocate.
For the Respondents:Y.V. Kishore, Advocate.

Headnote:Partnership Act 1932 - Sections 31 and 32 – Old liability---New partner cannot be saddled with liability which was existing from before date on which he became partner - Erstwhile partners are liable to clear liability despite their retirement and reconstitution of Finn -- As long as third party did not accede to such request, such contingent liability cannot evaporate.

Judgment :

LNR, J.

Defendant No.6 in O.S.No.1617 of 1985 on the file of the learned V Additional Judge, City Civil Court, Hyderabd is the appellant.

For the sake of convenience, the parties are referred to as arrayed in the suit.

The plaintiff filed the suit against the defendants for recovery of a sum of Rs.4,73,185/-together with interest. It was pleaded that the 1st defendant, a firm, in which defendants 2 to 4 were partners obtained loan/cash credit facility and have executed a document, dated 13.11.1979. According to the plaintiff, in the year 1983, a proposal was mooted for reconstitution of the 1st defendant and on that, they made it clear that the liability of the erstwhile partners i.e., defendants 2 to 4 does not get altered. It was also pleaded that without any intimation to them, the 1st respondent had permitted not only the erstwhile partners, but also those who joined later, including the 6th defendant, to retire from partnership. With these and other allegations, the plaintiff prayed for a decree for recovery of amount.

The suit was opposed by defendant No.2 by filing a written statement and respondents defendants 3 and 4 adopted the same. They did not dispute the factum of borrowing of the amount. However, their plea was that they retired from the firm and therefore, they cannot be saddled with any liability. The 7th respondent herein also filed an independent written statement. He too denied the liability. Defendants 1,5 and 6 remained ex parte.

The 7th defendant died during the pendency of the suit.

Through its judgment, dated 17.04.1997, the trial Court decreed the suit as prayed for and held defendants 1 to 6 as jointly and severally liable to pay the decretal amount. Hence, this appeal.

Learned counsel for the 6th defendant submits that his client joined the 1st defendant-firm as a partner only on 02.03.1983 and he cannot be held liable to pay the decretal amount in relation to a transaction, which was entered into in the year 1979.

Learned counsel for the plaintiff, on the other hand, submits that being a partner of the 1st defendant-firm, the 6th defendant is also liable to pay the decretal amount either in its entirety or in part depending upon the adjustment between the partners.

The suit was filed for recovery of the amount that was lent by the plaintiff to the 1st defendant. Of the several defendants, few of them filed written statements. The trial Court took note of the pleadings before it and framed the following issues for its consideration:

1. Whether the plaintiff bank is entitled to the suit sum with future interest as prayed for?

2. Whether the suit is barred by time?

3. Whether the interest claimed is usurious?

4. Whether the suit is liable for dismissal for mis-joinder of parties?

On behalf of the plaintiff, P.W.1 was examined and Exs.A.1 to A.27 were filed. On behalf of the defendants, D.Ws.1 and 2 were examined and Exs.B.1 to B.20 were filed. The suit was decreed as prayed for and defendants 1 to 6 were held jointly and severally liable to pay the decretal amount.

In view of the extensive submissions made by the learned counsel for the parties before us, we find that the following points arise for consideration:

1. Whether the plaintiff proved the case for recovery of amount? And

2. Whether the 6th defendant can be held jointly and severally liable to pay the decretal amount?

The plaintiff pleaded that it has advanced amounts or created the credit facility in favour of the 1st defendant-firm. The various documents such as Ex.A.3-letter, dated 13.11.1979, Ex.A.4-sanction letter, dated 13.09.1982, Ex.A.5-promisory note, dated 10.12.1982, Ex.A.6-D.P.Note deliver letter, dated 10.12.1982 vouch for the same. In addition to that, the agreement of overdraft facility was created through Ex.A.8 dated 10.12.1982. In relation thereto, indemnity agreement and bond marked as Ex.A.9 and Ex.10 were executed on the same day. These and other documents clearly establish that the plaintiff has exte



















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