The main legal point established in the judgment is that the suit for recovery of amounts due was maintainable based on the agency relationship of defendant 2 and the absence of partnership between the plaintiffs' firm and the defendants' firm.

Ramesam, J.

1. This second appeal arises out of the suit by five plaintiffs members of a certain firm called N. A. P. S. R. M. Venkatarama Aiyar & Co., to recover certain amounts due from the defendants who are the partners of another firm known as T. M. R. S. Muthiah Bagavathar & Co. The District Munsif gave a decree. On appeal the Subordinate Judge reversed the decree and dismissed the plaintiffs suit. Plaintiffs 2 and 3 are the appellants before me. The other plaintiffs had been made respondents.

2. The facts of the case will now be stated. One Perumal Aiyar, whose widow is the 4th plaintiff and daughter-in-law is plaintiff 5, and defendant 2 Ranga Aiyar are the members of the firm N. A. P. S. R. M. While that firm was going on, defendant 2 wanted to start another firm. But as the new firm would require some capital he arranged that the N. A. P. S. R. M. firm should lend up to the limit of Rs. 1,000, to the new firm to enable it to carry on its business. It was agreed that at the end of three years accounts should be taken of the new firm and that the N. A. P. S. R. N. firm should get one-third of the. profits of the new firm. To evidence this arrangement Ex. 1 was executed on 10th October 1917. It is conceded before me that the new firm took shape on 1st Arpisi 1917, that is 17th October. A week before the formation of the new firm the plaintiffs firm advanced Rs. 100, to defendant 2 for being used as capital of the new firm. Again on 29th October 1917, the plaintiffs firm advanced cloths to the value of Rs. 653, to be used for similar purpose. Two days later, on 31st October, a sum of Rs. 400, was similarly advanced. All these items, the moneys and the cloths were handed over to defendant 2 who handed them to the new firm. The present suit is virtually a suit to recover the value of three sums minus Rs. 180, which was the value of some cloths which were returned out of the cloths advanced by the plaintiffs firm. The defendants plea in the written statement was that there was no dealings between the plaintiffs firm and the defendants firm and that the plaintiffs lent money or sold goods to Rangaier, defendant 2, and that defendant 2 sold these goods or advanced these moneys to the defendants firm, or in other words there were two distinct contracts, one between the plaintiffs firm and defendant 2 and the other between defendant 2 and the defendants firm and that there was no privity between the plaintiffs firm and the defendants firm and therefore the suit was not maintainable. It is true that there was a further plea in para. 7 of the written statement with reference to the notice sent by the plaintiffs prior to suit on 25th October 1920, and where they say that the suit is not also maintainable on the ground that a suit for the capital alone is not sustainable in law. That plea no doubt implies that the plaintiffs firm was a partner in the defendants firm. But they have not actually pleaded that the plaintiffs firm was such a partner. That plea merely amounted to saying that on the facts alleged in the plaintiffs notice, whatever they may legally amount to, the suit is not maintainable.

3. Five issues were framed. We are not concerned with the first and the fourth issues as there is no dispute about them,

4. The issue 2 is "if so, is the present suit, as framed not maintainable?"

5. The issue 3 is

Were the amounts referred to in paras. 5 and 6 of the written statement advanced by the defendant 2 only and not by the plaintiffs as alleged by them.

6. This was really intended to raise the plea already stated by me. Issue 5 is merely a general issue.

7. On issue 2 the District Munsif found that the suit is maintainable and on issue 3, he found that there were not two contracts, but that the goods were supplied by the plaintiffs firm to the defendants firm through defendant 2, and defendant 2 in handing over the money and the goods to the defendants firm acted as their agent and not as an independent contracting party. He, th