Scope of the provisions of the Section.

This application raises a question of the application of section 49 (4) of the Presidency Towns Insolvency Act, III of 1909. The facts giving rise to the application are these. One Anjali Devi was adjudicated insolvent on a creditor’s petition in I. P. No. 12 of 1965. A partnership by name, Messrs. Anjali Pictures consisting of Anjali Devi and her husband P. Audinarayana Rao as partners, was adjudicated insolvent in I. P. No. 25 of 1965. Her personal estate was sold and after paying the secured and the preferential creditors, a sum of Rs. 2,24,624-45 is available. (Vide the report dated 29th September, 1968, of the Deputy Official Assignee).

The assets of the partnership were sold and only a balance of Rs. 95,308-90 is available from which a dividend of 6½ paise in the rupee can be paid besides the dividend 5 paise already paid.

Certain persons have proved in the insolvency of P. Anjali Devi, as her personal creditors and the amount necessary for paying them in full is Rs. 79,013-68 (amount due to the creditors Rs. 75,063 plus commission). The amount due to the creditors who have proved in the insolvency of the firm is in the region of Rs. 13,64,311. What the Deputy Official Assignee has proposed in terms of section 49 of the Presidency Towns Insolvency Act is to pay the personal creditors (debts to whom amount to Rs. 75,063) in full and make the balance of the personal estate namely Rs. 1,45,610.71, available for distribution to the creditors of the firm. If that is done, a further dividend of 16½ paise in, he rupee can be paid in addition to the five paise already paid.

The applicant, herein, Adaikappa Chettiar, is one of the firm’s creditors. He objects to the payment in full to the creditors in the insolvency of Anjali Devi. He contends that those creditors are really creditors of the firm and hence cannot get a more favoured treatment than the creditors of the firm in the application of section 49 of the Act. Section 49 (4) of the Act reads:

“Section 49 (4).- In the case of partners, the partnership property shall be applicable in the first instance in payment of the partnership debts, and the separate property of each partner shall be applicable in the first instance in payment of his. separate debts. Where there is a surplus of the separate property of the partners, it shall be dealt with as part of the partnership property ; and where there is a surplus of the partnership property, it shall be dealt with as part of the respective separate property in proportion to the rights and interests of each partner in the partnership property.”

The scheme of section 49 (4) is clear and there is no controversy about it. The only question in dispute is whether the sum of Rs. 75,063 can be said to be the separate debt of Anjali Devi or should be held to be partnership debts as contended by Adaikappa Chettiar to use the phraseology of section 49 (4). It is stated before me that the debt amounting to Rs. 75,063 were contracted by Anjali Devi on promissory notes and the following promissory note dated 14th February, 1964 may be taken as typical.

“Rs. 10,000

2, Pughs Road,

Madras-28.

Due date 15th May, 1964 dated 14th February, 1964.

At 90 days (ninety days) after date without grace, I. P. Anjali Devi, residing at No. 2, Pughs Road, Madras-28 promise to pay to Mr. E. A. Swami, No. 4, Maharaja Surya Rao Road, Alwarpet, Madras-18 the sum of Rs. 10,000 (Rupees ten thousand only) for value received in cash this day.

Sd. P. Anjali Devi.”

On the face of this promissory note, the debtor was only Anjali Devi and not the firm. Under section 27 of the Negotiable Instruments Act, it is no doubt open to a person to bind himself or to be bound by a duly authorised agent acting in his name. But if the parties meant that the firm should be bound, that should clearly appear on the face of the document. That however is not the case here. In Rangaraju v. Salt Devichand Bhootaji firm1, under even stronger circumstances, Patanjali Sastri, J., held that a promiss