JUDGMENT

1. This is an appeal on behalf of the first three defendants in a suit commenced against them by the plaintiffs-respondents for recovery of money due under a promissory-note executed on the 7th July 1904. The plaintiffs and the fourth defendant were partners of a firm, styled Ram Chandra Guru Churn Pal Chowdhry. The promissory note was executed in favour of the first plaintiff who was the managing member; but it is common ground that in this matter he acted on behalf of the firm and that the sum advanced was part of the assets of the partnership business. The debtors defendants admitted the transaction. Their defence to the claim in substance was that on the 10th March 1907, they paid Rs. 1,800 to the fourth defendant, and that the debt was satisfied to that extent. The Subordinate Judge held that the debtors in collusion with the fourth defendant had got up this unfounded plea, and that consequently there was, no valid defence to the claim. Upon appeal, the learned District Judge held that it was improbable that any payment had been made; but his judgment is meagre and unsatisfactory. The first three defendants have appealed to this Court, and on their behalf it has been argued that the decree in favour of the plaintiffs cannot be supported inasmuch as the fourth defendant upon his own admission has received Rs. 1,800 on account of the transaction in question. It has been contended in substance that the payment made to one of the partners was a good payment against all; and that, consequently, the plaintiffs are hound to allow credit for this sum. In answer to this contention, it has been argued on behalf of the plaintiffs-respondents that the alleged payment cannot be treated as a good payment against them because, admittedly, no money was paid by the first three defendants to the fourth defendant, and all that happened was, that the fourth defendant set off the amount due from him to the debtors defendants against the amount due by the latter to the firm. After careful consideration of the arguments which have been addressed to us on both sides, we have arrived at the conclusion that this contention of the plaintiffs respondents must prevail.

2. It is clear from the correspondence between the parties, which has been placed before us, that the case for the debtors defendants is not that they made any actual payment to the fourth defendant in discharge of the debt but that the latter has withheld; payment of a sum of Rs. 1,800 due from him personally to them, in other words, the essence of the alleged transaction is, that the first-three defendants have allowed the fourth defendant to set off, against the debt due by them to the firm, the sum realisable from him. If we assume for a moment that the alleged set-off represents a genuine transaction, a matter upon which the parties are at controversy; the question arises, whether a release of a partnership debt by one partner is operative against the firm if it was taken in discharge of the separate debt of the partner releasing it, by his creditor knowing all the circumstances. In Lindley on Partnership (7th Edition page 161), it is slated that although each partner has power to receive payment of a partnership debt and to give a discharge for it on payment, it does not follow that he has power to compromise or settle the debt in any way he likes without payment. A partner has no implied authority to discharge a separate debt of his own by agreeing that it shall be set-off against a debt due to his firm; this proposition is supported by the decision in Pieray v. Fynney L.R. 12 Bq. 69 : 40 L.J. Ch. 404 : 19 W.R. 710. In the same work, it is stated in another passage (page 306) that according to the strict rulers of the Common Law, although a partner has no right to pay his own separate debt by setting it off against a debt-due from his creditor to the firm, yet if he actually agreed that such, set off should be made and it was made accordingly, he and his partners could no