The main legal point established in the judgment is the binding nature of a promissory note executed by a partnership firm on all the partners, as per Section 22 of the Indian Partnership Act.

( 1 ) THE appellants herein, who are defendants 2, 4, 5, 8 to 12 in O. S. No. 75 of 1981, preferred this appeal against the judgment and decree dated 26-4-1989 passed in O. S. No. 75 of 1981 by the learned Principal Subordinate judge, Ongole, for recovery of a sum of rs. 65,200/- with subsequent interest @ 6% per annum on the principal amount of rs. 40,000/- from the date of the suit till the date of realization.

( 2 ) THE 1st respondent/plaintiff initially instituted the above suit against the 1st defendant-registered partnership firm alleging that the firm represented by 6th defendant- a. Satyanarayana borrowed an amount of rs. 40,000/- from him on 7-4-1978 by executing a demand promissory note in his favour agreeing to repay the same together with interest at the rate of Rs. 1. 75 ps. per hundred per mensum. Subsequently, when the plaintiff demanded the 1st defendant to pay the due amount, the 1st defendant promised to pay the same but failed to repay. As the suit promissory note was getting barred by time, the plaintiff was constrained to file the suit on the last date of limitation i. e. , 7-4-1981. Subsequently, defendants 2 to 12 were added as parties to the suit as per the orders in LA. No. 2503 of 1981, dated 26-11-1981.

( 3 ) THE 2nd defendant filed written statement denying the allegations made in the plaint and stated that the 1st defendant firm was not in existence on the date when the suit pronote is executed. Defendants 2 to 12 have formed into a partnership firm and took Sri Seetaramanjaneya Rice Mill for the purpose of doing rice-milling business. The said business of the firm was stopped even prior to 1977 cyclone. Subsequent thereto, the firm never did the rice milling business with defendants 2 to 12 as partners. In December, 1977, 6th defendant took the said Rice Mill on lease for his separate business, to which the 2nd defendant was not a partner. Therefore, the 6th defendant borrowing the amount and executing the promissory note on behalf of the firm does not arise and he was not authorized or entitled to contract debt, so as to bind the other defendants. Even if executing the suit pronote and borrowing the amount by the 6th defendant were true, it must be contracted by him for the purpose of his individual business but not for the firm. It was further stated that the plaintiff has no capacity to lend such huge amount of rs. 40,000/- as alleged in the plaint. The plaintiff and 6th defendant have colluded with each other and brought into existence the suit pronote in order to cause loss to him and therefore, prayed for dismissal of the suit.

( 4 ) THE 6th defendant in his written statement denied the borrowing of amount and execution of pronote in favour of the plaintiff. He stated that he did not know the plaintiff. On the date of execution of the pronote, he has actually attended the death ceremony of his brother at Ganapavaram. Therefore, his execution of pronote does not arise. He also took the plea that the plaintiff has no capacity to lend Rs. 40,000/- to him and one Mr. M. Satyanarayana also filed a suit in O. S. No. 77 of 1981 on the allegation that he executed another promissory note for Rs. 47,000/- on 7-4-1978. He does not know the said M. Satyanarayana also. Therefore, prayed for dismissal of the suit.

( 5 ) DEFENDANTS 3 to 5 and 8 to 12 adopted the written statement of 2nd defendant and 7th defendant adopted the written statement of 6th defendant.

( 6 ) BASING on the above pleadings the lower Court framed as many as three issues for trial, which read as under: (1) Whether the suit promissory note is true, valid and binding on these defendants? (2) If so, whether the other defendants are not liable to pay the suit debt? (3) To what relief?

( 7 ) IN order to prove the case of the plaintiff, he himself was examined as P. W. 1 and got marked Ex. A. 1-pronote and also examined the attestor of the pronote as p. W. 2. On behalf of the defendants, 2nd defendant was examined as D. W.