Extent of liability to persons who give credit to the firm.

Thangamani, J.

The appellants in A.S.No.192 of 1983 are defendants 2 to 5,11 and l in O.S.Nos.981 of 1978,1055 of 1978 and 109 of 1982 respectively on the file of learned Subordinate Judge of Salem. In another two appeals the 1st defendant does not figure as an appellant. Three different plaintiffs have laid those suits against the present appellants and 5 others. In the first suit there is one more defendant by name Goodluck Textiles. The plaintiffs are registered partnership firms dealing in textiles on wholesale business.

Hereafter parties arc referred to as arrayed in the suits.

2. The first defendant is the father of defendants 2 to 5. Defendants 6 to 9 are their cIose relations and associates. They were doing textile business under the name and style of Dhanalakshmi Textile Traders who is the 10th defendant in the suits at Door No.3-4-395 Tobacco Bazaar in Secunderabad, Andhra Pradesh. The first suit has been instituted for the recovery of Rs.60,000 for the value of textile goods supplied on credit for the business requirements of the defendants from 1974 to 24. 1978. The sum includes Rs.27,500 payable by way of interest as per the agreement at 12% per annum on the outstandings. While the claim in O.S.No.1055 of 1978 is for the recovery of Rs.12,300 that in C.S.No.l09 of 1982 is for recovery of Rs.4,685 on similar allegations.

3. In all the three suits defendants 2 to 5 are sought to be made liable on the ground that the first defendant represented that he was the main partner of the business run under the name and style of the 14th defendant. Only on believing the representation of the first defendant and his sons, the plaintiffs supplied goods to the 10th defendant firm on credit. By conduct and representation they held out that they were the actual partners of the firm. The defendants 1 to 5 were frequently visiting and looking after the business of Dhanalakshmi Textile Traders conducted at Door No.3-4-395, Tobacco Bazaar, Secunderabad. As such they are personally liable to pay the amounts under Sec.28 of the Partnership Act. Plaintiffs further alleged that the name of the 10th defendant has now been changed as M/s.Mayilone Textile Corporation which is the 11th defendant in the suits. The said concern is also run by the same defendants 1 to 9 with the same stock-in-trade. This arrangement has been done by the first defendant evidently with a view to defraud the lawful creditors. The 12th defendant has been impleaded for the reason that some of the defendants have also started a textile business under the name and style of Goodluck Textiles in Hyderabad.

4. The trial court found that the defendants have purchased textiles on credit from the plaintiffs for the sake of the 10th defendant firm and as per the custom and usage of the trade, they have to pay interest at 12% per annum, that defendants 6 and 7 have filed written statement supporting the case of the plaintiffs, that though defendants 1 to 5 are not partners of the 10th defendant firm, they have held out as partners and as such defendants 1 to 5 and 11 are also liable to pay the debts due to the plaintiffs in all the suits along with the defendants 6 to 9. Accordingly, all the suits were decreed as prayed for with costs against defendants 1 to 11 and the suit against the 12th defendant was dismissed without costs. And those appeals are directed against the said judgment and decree.

5.. Originally, the first defendant was carrying on business in Secunderabad under the name and style of Dhanalakshmi Textiles. The business was run in the premises bearing Door No.3-4-395 belonging to the father of P.W.1 Rajeswara Rao. The latter states in his evidence that he had leased out the shop to the first defendant. In 1968 the first defendant approached him and represented that he was going to change the name of the shop from Dhanalakshmi Textiles to Dhanalakshmi Textile Traders-10th defendant. Ex.B-24 is the copy of rental agreement dated 15. 1968 entered into