PATNA HIGH COURT
Kanhaiya Singh and Ramratna Singh JJ.
Firm Ram Sahay Mall Rameshwar Dayal
Versus
Bishwanath Prasad
Appeal from Original Decree No. 212 of 1958 ;
Decided On : NOVEMBER 30, 1962
PARTNERSHIP - LOAN - AGREEMENT - PROPERTY CONTRIBUTION - REGISTRATION - JURISDICTION - MONEY-LENDERS ACT - MAXIMUM LOAN AMOUNT - SUIT FOR RENDITION OF ACCOUNTS.
Fact of the Case:
Plaintiff advanced Rs. 41,500/- to defendants through hundis and bank drafts, claiming it was a loan. Defendants asserted it was for partnership in their Ice Factory and grain business. The trial court found for the plaintiff, holding all defendants liable.
Finding of the Court:
The High Court found that the amount advanced was not a loan but was for the plaintiff to become a partner in the Ice Factory and grain business. The court held that no registered document was necessary to transfer the land and machinery of the Ice Factory to the partnership, as it was a contribution by the defendants against their share of the capital. The court also held that the Patna Court had jurisdiction to entertain the suit, as the defendants did not raise the plea of jurisdiction at the earliest possible opportunity. The court further held that all the defendants were liable for the claim of the plaintiff, as they were all proprietors of the firm Ram Sahay Mall Rameshwar Dayal. Finally, the court held that the claim of the plaintiff for loan was not hit by Section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act, 1939, as the amount advanced was not a loan.
Issues: 1. Whether the amount advanced by the plaintiff was a loan or for partnership. 2. Whether a registered document was necessary to transfer the land and machinery of the Ice Factory to the partnership. 3. Whether the Patna Court had jurisdiction to entertain the suit. 4. Whether all the defendants were liable for the claim of the plaintiff. 5. Whether the claim of the plaintiff for loan was hit by Section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act, 1939.
Ratio Decidendi: 1. The court held that the amount advanced was not a loan but was for the plaintiff to become a partner in the Ice Factory and grain business, based on the evidence and the recitals in the plaint. 2. The court held that no registered document was necessary to transfer the land and machinery of the Ice Factory to the partnership, as it was a contribution by the defendants against their share of the capital, relying on Sections 14 and 46 of the Indian Partnership Act and certain provisions of the Indian Contract Act. 3. The court held that the Patna Court had jurisdiction to entertain the suit, as the defendants did not raise the plea of jurisdiction at the earliest possible opportunity, relying on Section 21 of the Code of Civil Procedure. 4. The court held that all the defendants were liable for the claim of the plaintiff, as they were all proprietors of the firm Ram Sahay Mall Rameshwar Dayal, based on the evidence and the improbability of the defendants' case. 5. The court held that the claim of the plaintiff for loan was not hit by Section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act, 1939, as the amount advanced was not a loan.
Final Decision: The appeal was allowed, the judgment and decree of the Court below were set aside, and the suit was dismissed with costs throughout, without prejudice to the plaintiff's right to sue for rendition of accounts.
Ramratna Singh, J.
1. This appeal by the defendants arises out of a suit for recovery of Rs. 41,500/-, said to have been advanced through hundis and bank drafts to a firm known as Ram Sahay Mall Rameshwar Dayal (Defendant No. 1), besides compensation at 1 per cent per month from the different dates, respectively, of the hundis and the bank drafts. The case of the plaintiff, as made out at the time of hearing, was that the said amount was advanced as loan. It was further alleged that defendants 2 to 7 were members of a joint Hindu family governed by the Mitakshra School of Hindu Law, and the said firm Ram Sahay Mall Rameshwar Dayal, which is located at Konch in Uttar Pradesh, belonged to them. Defendants 8 and 9, who are alleged to belong to another joint Hindu family, are said to be partners, along with the aforesaid defendants 2 to 7, of an Ice Factory for which the loan in question is alleged to have been advanced.
2. Defendants 1, 5 and 8 filed one written statement, and denied all the allegations made by the plaintiff. They said that the plaintiff negotiated with these defendants to be a partner in their Ice Factory and also to start a grain business in partnership. It was agreed that the plaintiff would have four annas share in the Ice Factory, which was the sole concern of these defendants, and eight annas share in the grain business to be started in the name and style of Saligram Mohanlal, which was first started in the commission agency of defendant No. I, as the parties thought it proper to start independently the business of Saligram Mohanlal on an auspicious date, which fell on the 15th April, 1951. In pursuance of the agreement regarding partnership, the plaintiff began to send moneys from time to time through hundis and bank drafts towards his shares to Konch, where the Ice Factory and the grain business were situated. The total amount of advance, namely, Rs. 41,500/-, is admitted; but it is said that, out of the same, Rs. 25,000.00 only was credited to the accounts of the Ice Factory against the four annas share of the plaintiff and the balance was credited towards the grain business against his eight annas share. As the lead of the Ice Factory cracked arid the Jai Engine failed, the factory was closed. Similarly, on account of restrictions imposed by the U. P. Government on the transport of gram and fear of seizure of stock, the grain business was also stopped by the plaintiffs agents who were in charge thereof. The jurisdiction of the Patna Court was also challenged. The other defendants filed separate written statements but they substantially supported the case of defendants 1, 5 and 8. All the defendants asserted that defendants 2 to 4, 6, 7 and 9 had nothing to do with either the said firm Ram Sahay Mall Rameshwar Dayal or with the Ice Factory and the grain business.
3. Only the material issue was raised in the suit, namely, whether the plaintiff had advanced any loan to the defendants, and, if so, what amount and from which of the defendants he was entitled to recover. The learned Subordinate Judge accepted the case of the plaintiff that the amount of Rs. 41,500.00 had been advanced as loan and that all the defendants were liable to pay the same, besides interest at the rate of 9 per centum per annum simple.
4. Mr. R.S. Chatterji, learned Counsel for the defendant-appellants, challenged both the above findings; and he also pressed the plea of jurisdiction, regarding which no issue was framed in the Court below and which was not touched at all by the learned Subordinate Judge.
5. The first question for consideration is whether the amount of Rs. 41,500.00 was advanced as loan or otherwise. This amount was admittedly made up of advances in seven instalments of Rs. 5,000.00 and one instalment of Rs. 6,500/-made through two hundis and six bank drafts. All the bank drafts were for payment to Ram Sahay Mall Rameshwar Dayal; the first hundi, dated the 27th February, 1951, was drawn by defendant Kedarnath on
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