Point of law : A claim against a firm based on a written contract by one partner in the course of business with authority to act will be held to be binding on the firm. But when such a claim is made on the strength of a promissory note or a bill of exchange, court will have to be satisfied that the negotiable instrument discloses the liability of the firm clearly
There can be no doubt that if a partner owes any money, the creditor will be entitled to proceed against the profits that may be earned by the debtor, in his capacity as a partner of a firm or against the debtors' interest in the partnership firm

JUDGMENT :

Pious obligation, a doctrine/principle of pristine Hindu law, which obliged a son to settle the debts incurred by his father, appears to be still haunting the Irrigation Department, in understanding the rights of the parties to a written contract. The petitioner, who is the Managing Partner of a partnership firm, which has executed certain works on the basis of agreements entered into with the respondents, are faced with a situation where the amounts due to them are being withheld for the reason that certain amounts are due from the mother of the Managing partner of the firm to the department, for having abandoned a work which was undertaken by her. One wonders whether the basic principles of the laws relating to partnerships and contracts will not apply when one of the contracting parties is the State.

2. Heard Sri S.Sreekumar, Senior Advocate, instructed by Sri P.Martin Jose, on behalf of the petitioner and Smt.Deepa Narayanan, Senior Government Pleader, on behalf of the respondents.

3. One Sri Sathyapalan had been undertaking civil works entrusted by the State, both in his individual capacity as well as through a partnership firm, which had been reconstituted on several instances from 1979. He had undertaken a work on 16.6.2000, which was designated as "IIP – Constructing Lower-level canal from CH.9000m to 9455m, including Construction of pressure siphon, flume and aqueduct". The work was entrusted to him in his personal capacity as can be seen from Ext.P8 letter dated 13.4.2000. Soon after the execution of the agreement relating to the work, he died on 7.7.2001, leaving behind his wife and two sons. In the agreement executed, Sri Sathyapalan had named his wife Smt.P.Syamala as his nominee, and it can be seen Ext.P8, which contains the nomination, that the nomination is for the purpose of receiving all or any sums due to her husband, under the terms of the agreement dated 16.6.2000. After the death of Sri Sathyapalan, his legal heirs wrote Ext.R4(a) letter to the Superintending Engineer on 10.7.2001, stating that they are the only legal heirs and they are willing to continue the work through a partnership firm, that they acknowledge the nomination of Smt.P.Syamala and further requesting that the nominee may be permitted to complete the balance work. The respondents thereafter executed Exhibit P6 supplementary agreement with the nominee on 03.08.2001, whereby it was agreed that the nominee shall execute the work as per the original schedule of the work, at the rate specified in that schedule and that the nominee shall not claim any enhanced rate of compensation, whatsoever. It can be seen from Exhibit P6 that the respondents in their wisdom thought it fit to entrust the work to the nominee in her personal capacity, without any reference to the partnership firm constituted by the legal heirs, even though at that point of time, Smt.P.Syamala was also a partner of the said firm.

4. It is contended that the nominee did not complete the work in the prescribed time owing to the failure of the respondents to supply materials for the work as agreed in the agreement. The respondents extended the time for completion of the work on several occasions but did not supply materials. The validity of the original agreement expired on 13.07.2002. The nominee requested the 2nd respondent to foreclose the contract and relieve her from the obligation of continuing the work and she refused to grant revised rates for completing the work. The request has been produced as Exhibit P1. The dispute regarding the said work went up to the Hon'ble Supreme Court in Civil Appeal Nos.1961–1962 of 2013, which was disposed of by Exhibit P2 judgment dated 26.2.2013, with an observation that the nominee shall be free to file a civil action for damages/compensation. It is stated that the nominee has filed O.S.No.48 of 2014 thereafter, which is pending before the Sub Court, Muvattupuzha. In short, whether Smt.P.Shyamala is liable to pay any amount to the re