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2017 Supreme(Ori) 953
IN THE HIGH COURT OF ORISSA AT CUTTACK
A.K. RATH, J.
Andhra Bank, Cuttack - Appellant
Versus
Raghunath Tripathy and others - Respondents
S.A.No.24 of 1996
Decided On : 10-11-2017
For the Appellant :Mr.C.A.Rao, Sr. Advocate
For the Respondent:Mr.Sudeep Kumar Sarangi, Advocate
Partners in a firm are jointly and severally liable for the firm's acts, as per Section 25 of the Indian Partnership Act, 1932.
Headnote:
Loan Recovery - Partnership Liability - Indian Partnership Act, 1932 - Section 25
Fact of the Case:
The plaintiff, a nationalized bank, filed a suit for loan recovery against defendants who had failed to repay the loan taken for a book-binding business under a self-employment scheme. The defendants denied receiving machinery from the supplier and claimed dissolution of the partnership.
Finding of the Court:
The court found that the defendants had not supplied the materials to the borrower and held them liable for the outstanding dues. The appellate court's judgment was set aside, and the suit was decreed in favor of the plaintiff.
Issues: The issues revolved around the non-supply of machinery, dissolution of the partnership, and the liability of the defendants to repay the loan.
Ratio Decidendi: The court applied Section 25 of the Indian Partnership Act, 1932, which holds every partner liable for acts of the firm. It held defendants jointly and severally liable for the loan repayment.
Final Decision: The impugned judgments were set aside, and the suit was decreed in favor of the plaintiff. The appeal was allowed with no order as to costs.
JUDGMENT :
DR. A.K.RATH, J.
1. This is a plaintiff’s appeal against confirming judgment. The suit was for realization of Rs.14,422/-with pendilite interest and future interest at the rate of 18.5% per annum.
2. The case of the plaintiff is that the plaintiff is a nationalized bank. Defendant no.1 through the District Industries Centre, Orissa, Cuttack applied for a loan of Rs.20,800/-to start a book-binding business under Self Employment Scheme for Educated Unemployed Youth. Defendant no.1 executed the necessary documents in favour of the bank on 27.3.1985. He agreed to repay the loan amount with interest at the rate of 12% per annum in 48 installments. As per the scheme, the money was not payable directly to defendant no.1, but through the supplier of the machinery/material etc, who in turn would supply the same to defendant no.1. Pursuant to the instructions of defendant no.1, the bank paid an amount of Rs.19,100/-to defendant no.2 to supply the machinery/material to defendant no.1. The defendant no.1 denied to have received any machinery from defendant no.2. The defendants became defaulters. The bank issued a demand notice to the defendants to pay the amount with interest. While the matter stood thus, defendant no.2 paid an amount of Rs.10,500/-. The same was credited to the loan account on 4.11.1986. A sum of Rs.14,422.25 was outstanding. With this factual scenario, the suit was filed.
3. Defendant no.1 filed written statement denying the assertions made in the plaint. He advanced the blank paper theory and contended that the plaintiff took signature from him in a blank document. He had not received any machinery from defendant no.2. The defendant no.2 was a partnership firm. The same was dissolved. Defendant no.5 paid half of the amount to the plaintiff.
4. Defendant no.5 filed a separate written statement stating, inter alia, that pay order was received by defendant no.2 for supply of machineries to defendant no.1. When the defendants failed to supply the machineries to defendant no.1, the bank demanded money. He had 50% share in the partnership. He refunded 50% of Rs.19,100/-that is Rs.8,550/-along with interest upto 5.3.1986. A total sum of Rs.10,500/-was paid by him to the bank towards his share in the partnership. The amount was deposited in the account of defendant no.1 on 5.3.1986. The firm was dissolved. He is not liable to pay any amount.
5. Stemming on the pleadings of the parties, the learned trial court framed six issues. The parties led evidence, both oral and documentary, to substantiate the case. The suit was dismissed. The unsuccessful plaintiff filed Money Appeal No.6 of 1992 before the learned 1st Additional District Judge, Cuttack, which was eventually dismissed.
6. The appeal was admitted on 5.5.1997 on the substantial questions of law enumerated in ground nos.III, IV and V of the appeal memo. The same are:
“III. The learned lower appellate court had made out a third case in dismissing the plaintiff’s suit, inasmuch as it was not the case of any of the parties that full payment had been made to the plaintiff-bank.
IV. The learned lower appellate court had confused between the credit voucher dated 5.3.1986 for Rs.10,500/-and the ledger entry dated 4.11.1986 for the self-same amount. The entry dated 4.11.1986 in the ledger account shows that there was a transfer of a sum of Rs.10,500/-from the sundry creditors account. The amount received from D.w.5 under the credit voucher dated 5.3.1986 was initially credited to the sundry creditors account and subsequently the same was given a credit in the ledger account of defendant no.1 on 4.11.1986. There was no duplication at all nor was there payment of Rs.10,500/-on two occasions. The self same amount of Rs.10,500/-was shown under the credit voucher dated 5.3.1986 and the same was shown as transferred from sundry creditors account to the ledger account of defendant no.1. Unfortunately, the learned lower appellate court got confused between the sundry creditors account a
