The main legal point established in the judgment is the application of Sections 28 and 69 of the Indian Partnership Act to establish the liability of partners in an unregistered firm, and the reliance on evidence to determine the genuineness of a promissory note and the partnership status of a defendant.

JUDGMENT :

T. MALLIKARJUNA RAO, J.

1. The Appeal, under Section 96 of the Code of the Civil Procedure, is filed by the Appellant/3rd Defendant challenging the decree and Judgment dated 27.08.2012 in O.S. No. 799 of 2002 passed by the learned III Additional Senior Civil Judge, Vijayawada (for short ‘the trial court’). Respondent No. 1 is the Plaintiff, who filed the suit in O.S. No. 799 of 2002 seeking recovery of Rs.9,11,817/- with subsequent interest on the principal amount of Rs.7,26,000/- from the date of the suit till the date of realisation and for costs. Respondents 2 and 3 are Defendants 1 and 2 in the said suit.

2. It is expedient to refer to the parties as they are initially arrayed in the suit to mitigate any potential confusion and better comprehend the case.

3. The factual matrix, necessary and germane for adjudicating the contentious issues between the parties inter se, may be delineated as follows:

1st Defendant is the firm, and Defendants 2 and 3 are the working partners of the 1st Defendant firm. While so, 2nd Defendant, on behalf of 1st Defendant firm, borrowed Rs.6,00,000/- from the Plaintiff on 01.09.2000 for their business purpose, agreeing to repay the same with interest at 21% p.a., with yearly rests and executed pronote. Subsequently, on 01.09.2001, the 2nd Defendant, on behalf of the 1st Defendant firm, re-written and executed a suit promissory note for Rs.7,26,000/- towards consideration of the earlier promissory note. Despite several demands made by Plaintiff, the Defendants did not choose to repay the amount. Finally, Plaintiff issued a legal notice to the Defendants, calling them to discharge the debt. But Defendants 1 and 2 received the notice, whereas the 3rd Defendant got it returned.

4. The 1st Defendant submitted a written statement conceding to nearly all the assertions presented in the Plaintiff’s case. The contention put forth was that Defendants 2 and 3 transformed their business into a partnership firm. The 3rd Defendant, who verified the transactions during his presence in India, also indicated granting a General Power of Attorney (G.P.A.) to his father, K.V. Apparao, for managing the business transactions. Subsequently, the 3rd Defendant revoked the G.P.A. issued to his father and issued a new one in favour of the current G.P.A. characterized as a chronic litigant. It is alleged that the 3rd Defendant deliberately evades responsibility for the incurred liability.

5. In the written statement, the 2nd Defendant admitted the Plaintiff’s case but contended that with the consent of the 3rd Defendant and his G.P.A. holder only, he executed a promissory note; the Plaintiff, in collusion with the 3rd Defendant, filed this false suit.

6. The 3rd Defendant refuted the plaint averments in the written statement and contended that the suit is collusive between the Plaintiff and 2nd Defendant; 1st Defendant is a fictitious partnership form; he is not at all partner of 1st Defendant firm; 2nd Defendant created the documents; the Plaintiff cannot lend such huge amounts; he has not executed any G.P.A. in favour of his father; the Plaintiff is no other than the 2nd Defendant’s daughter-in-law; he has been in the U.S.A., since 1992 and therefore, the question of 3rd Defendant being partner of 1st Defendant firm does not arise; 2nd Defendant created pronote with the help of attestors who are his close relatives; 2nd Defendant misused the faith reposed by him and his father and got filed this false and vexatious suit to cause wrongful loss to him; the suit is not instituted correctly.

7. The 2nd Defendant filed a rejoinder denying the material allegations in the 3rd Defendant’s written statement.

8. Based on the above pleadings, the trial Court framed the following issues:

(1) Whether the 1st Defendant partnership firm is a fictitious firm?

(2) Whether the 3rd Defendant is not a partner of 1st Defendant?

(3) Whether the suit pronote is true, valid and binding on 3rd Defendant?

(4) Whether the letter dt.01.09.2001 is fabri