The dissolution of a partnership firm and the giving of public notice of such dissolution absolves the partners from liability for acts done by any one of them after the dissolution.

Headnote:
LIMITATION ACT, 1963 - SECTION 1 - PARTNERSHIP ACT, 1932 - SECTION 45 - CIVIL PROCEDURE CODE, 1908 - ORDER VII, RULE 11 - MUTUAL, OPEN AND CURRENT ACCOUNT - DISSOLUTION OF PARTNERSHIP - LIMITATION PERIOD - ACKNOWLEDGMENT OF LIABILITY BY ONE PARTNER AFTER DISSOLUTION - EFFECT.
Fact of the Case:

The plaintiff filed a suit to recover an amount due on the foot of an account for the period from the accounting year 1977-78 to 1981-82. The plaintiff alleged that it maintains accounts of different firms in its account books and that the defendant firm was dissolved with effect from 9-12-1979. The defendants contended that the suit was barred by limitation as the last payment was made on 8-9-1981, more than three years before the filing of the suit.
Finding of the Court:

The court held that the suit was barred by limitation as the defendant firm was dissolved on 9-12-1979 and there was a public notice of dissolution on 13-12-1979. The court further held that the acknowledgment of liability by one of the partners of the dissolved firm after the dissolution did not hold good against the other partners.
Issues: Whether the suit was barred by limitation.
Ratio Decidendi: The court held that the suit was barred by limitation as the defendant firm was dissolved on 9-12-1979 and there was a public notice of dissolution on 13-12-1979. The court further held that the acknowledgment of liability by one of the partners of the dissolved firm after the dissolution did not hold good against the other partners.
Final Decision: The court dismissed the appeal and the cross-objection.

JUDGMENT - A.D. MANE, J.:-A short but important question is involved in this first appeal, as to whether the suit filed by the appellant-firm was within limitation on basis of open, mutual and current account of the respondent-firm after its dissolution.

2.In order to appreciate this question we may refer to the facts of the case. For the sake of convenience, the appellant is referred as 'plaintiff respondent No. 1- firm and respondents 2 to 5, who were 'it's partners as 'defendants'.

3.The plaintiff filed suit on 29-4-1983 to recover certain amount due on the foot of the account for the period from accounting year 1977-78 to 1981-82. The plaintiff alleged that it maintains accounts of different firms in it's account books. Advances made by the plaintiff to the defendants and repayments thereof, are debited and credited respectively in the accounts of the defendants in books of accounts maintained by the plaintiff. The balance, at the end of each accounting year was forwarded in the next year. According to the plaintiff, the account books of the defendants are open and running account and the amount received by the plaintiff from defendants was credited towards the general balance due at the end of the account and not towards any particular advance made to the defendants. The last advance made by the plaintiff to the defendants was on 15-1 -1980 and the last payment received by the plaintiff from the defendant No. 5 towards the general balance due from the defendants was on 8-9-1981.

4.The plaintiffs further case is that the plaintiff demanded the amount of advance by 'ifs Advocate's letter dated 10-2-1981 but the defendants failed to satisfy the said demand.

5.In response to the suit summonses issued, the defendants 1, 3 and 4 appeared

and filed application Exhibit 5 raising a contention that the plaint was liable to be rejected under Order VII, Rule 11 of the Civil Procedure Code. In this context, it was contended that the defendant No. 1 firm was dissolved with effect from 9-12-1979 Defendant No. 5 Lalchand Manakchand Mehta is the common partner of the plaintiff, as well as of the respondent No. 1 firm. Plaint is signed by Vijay Lalchand Mehta, who is son of the defendant No. 5 Lanchand. Other sons of defendant No. 5 are the partners of the plaintiff firm. Defendant No. 5 and his son, form a joint Hindu family and defendant No. 5 is the Manager and Karta of the joint family. Notice of dissolution of partnership firm was given by Lalchand by publishing in the news paper. Taking into account this aspect, it was contended by the plaintiff firm that dissolution of the defendant No. 1 firm took place on 9-12-1979 and as such last payment made by one of the partners viz., defendant No. 5 of the firm will not bind the firm and will not save limitation. Therefore, the plaint was liable to be rejected under Order VII, Rule 11 of the Civil Procedure Code.

6.The learned trial Judge considered the objection and held that the plaintiffs claim was not within limitation. The plaint was, therefore, rejected under Order VII, Rule 11 of Civil Procedure Code.

7.We heard Shri Godsey, learned Counsel for the appellant and Shri Patni, learned Counsel for the respondents.

8.Shri Godsey, learned Counsel urged that the learned trial Judge mis-construed the provisions of Order VII, Rule 11 of the Civil Procedure Code and grossly erred in following the said provisions. It is submitted that the learned trial Judge virtually decided the question of limitation on merits without framing any issue to that effect and without giving the appellant an opportunity to present case and to rely upon document and oral evidence. Therefore, the impugned order is unjust and illegal.

9.In the first place, it may be stated that Order VII, Rule 11 of the Civil Procedure Code enables the defendants to raise a preliminary objection against maintainability of the suit on account of formal defect in the plaint, consequent upon, the Court is under obligation to decide the objection.

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