The main legal point established is that the admission of a co-partner of a registered firm is binding on the other partners as well as on the firm, and the suit was within limitation and maintainable under Section 34 of the Evidence Act.

Rakesh Kumar Garg, J.

1. This is defendants appeal challenging the judgment and decree of the lower Appellate Court whereby the suit of the plaintiff/appellant has been decreed by accepting his appeal against the judgment and decree of the trial Court.

2. The plaintiff-respondent filed a suit for recovery against the defendant-appellant and others stating that the defendant-firm was having a mutual running and open account with the plaintiff. After settling the account with the plaintiff on 31.3.1994, a sum of Rs. 2,02,556/- was outstanding against the defendant No. 1 entry of which has been made in the account books of the plaintiff-firm. This debit balance during assessment year 1993-94 was also shown by the defendant-firm in its balance sheet. The plaintiff-firm issued a notice on 23.4.1994 demanding payment of Rs. 2,02,556/- along with interest up to 31.3.1994. After receiving the notice and admitting the accounts to be correct, defendant No. 5 gave a cheque bearing No. 452370 for Rs. 57.500/- on 7.6.1994 which was got encashed through the Punjab National bank, Barnala by the plaintiffs. Another cheque for Rs. 57,500/- had been given by the defendant Guriqbal Singh (defendant No. 3) on 9.6.1994, which was also got encashed and in this way, a sum of Rs. 86,556/- were outstanding against the defendants on 9.6.1994. The defendants have neither paid towards principal amount nor any interest. The customary rate of interest of the market at Barnala is 18% per annum. Thus the present suit for recovery of Rs. 2,45,000/- was filed for which defendants are liable to pay.

3. Upon service, defendant No. 1 filed no written statement. The defendants Nos. 3 and 5 have admitted the claim of the plaintiff. Defendant Nos. 2 and 4 in their joint written statement have contested the suit. It was pleaded that M/s Punjab Cotton Ginning and Oil Mills (defendant No. 1-firm) stand dissolved and does not exist. It was denied that defendant No. 1 firm was having a mutual running and opening account with the plaintiff. It was also stated that no account was settled on 31.3.1994 by the defendants. It was denied that a sum of Rs. 2,02,556/- was outstanding against the firm. It was also pleaded that the suit is barred by limitation and the plaintiff has made false entries and has filed false suit.

4. On the pleadings of the parties, following issues were framed:

1. Whether the plaintiff is entitled to recover suit amount along with interest? OPP

2. Whether the plaintiff has got no cause of action and locus standi to file the suit? OPP

3. Whether this suit is not maintainable in the preset form? OPD.

4. Whether this suit is not within limitation? OPD

5. Whether this suit is hit by principle of Damdupt? OPD

6. Relief.

Issue No. 1 was decided against the plaintiff. Issue No. 2, 3 and 5 were decided against the defendants. Under issue No. 4, it was held that the suit was time barred. Hence the trial Court dismissed the suit filed by the plaintiff.

5. Feeling aggrieved, the plaintiffs filed an appeal, which was accepted by the Additional District Judge, Barnala vide impugned judgment and decree dated 14.2.2006. On the issue of limitation, the lower Appellate Court observed as under:

I have considered the arguments advanced by the learned Counsel for the parties and carefully gone through the authority of the Honble Apex Court cited on the point of admission by the counsel for the plaintiff. Defendant Nos. 3 and 5 never turned up in the witness box to depose that they have issued cheques on 7.6.1994 and 9.6.1994 from their personal accounts to discharge their personal liabilities. No dissolution deed, no statement of account was prepared to prove that defendant No. 1 firm was dissolved and it was not existing and defendant No. 2 and 4 are not its partners. For the purpose of termination or dissolving of a partnership firm, there must be balance sheet prepared at the time of dissolution of the firm and dissolution deed must be prepared and signed by al