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1999 Supreme(P&H) 1145
PUNJAB & HARYANA HIGH COURT
R.L.Anand, J.
Subhash Chander
Versus
Ram Chander And Ors.
Second Appeal Order No. 11 of 1987,
Decided On : OCTOBER 1, 1999
Payment to one partner after the dissolution of the firm is not valid and does not bind the other partners.
Headnote:
PARTNERSHIP ACT - DISSOLUTION OF FIRM - SECTION 18, 19 - ADJUSTMENT OF SUIT CLAIM - ORDER 23 RULE 3 CPC - PAYMENT TO ONE PARTNER - VALIDITY - HELD, PAYMENT TO ONE PARTNER AFTER DISSOLUTION OF FIRM NOT BINDING ON OTHER PARTNERS.
Fact of the Case:
Five partners filed a suit for recovery of money due to their dissolved firm. During the pendency of the suit, one of the partners received a payment from the defendants and claimed that the suit claim had been adjusted. The other partners contested this claim, arguing that the payment to one partner could not bind them.
Finding of the Court:
The court held that the payment to one partner after the dissolution of the firm was not valid and did not bind the other partners. The court relied on Sections 18 and 19 of the Indian Partnership Act, 1932, which provide that a partner's implied authority does not empower him to compromise or relinquish any claim by the firm unless there is a usage or custom of trade to the contrary.
Issues: Whether the payment to one partner after the dissolution of the firm was valid and binding on the other partners.
Ratio Decidendi: The court held that the payment to one partner after the dissolution of the firm was not valid and did not bind the other partners because: * The firm had already been dissolved at the time of the payment. * The partner who received the payment did not have the implied authority to compromise or relinquish the claim on behalf of the firm. * There was no usage or custom of trade to the contrary.
Final Decision: The court dismissed the appeal and directed the trial court to proceed with the suit on merits.
R.L.Anand, J.
1. This is a second appeal and has been directed against the judgment dated 6.9.1986 passed by Additional District Judge, Kurukshetra, who set aside the judgment and decree dated 19.10.1983 passed by the Sub Judge, 1st Class, Kaithal, who dismissed the suit of the plaintiffs on the ground that during the pendency of the suit the claim of the plaintiff had been adjusted.
2. Some facts can be noticed in the following manner:-
Five plaintiffs, namely Rangi Ram, Ram Chander, Narsi Dass, Richha Ram and Madan Pal filed a money suit for a sum of Rs. 43,000/- against Subhash Chand, Ramesh Chand, Kailash Chand, Smt. Kailash Devi and M/s Lakshmi Rice and General Mills on the allegation that they have to receive this money in the following manner-Rs. 24,950.77 as principal amount and Rs.18,049.23 by way of interest.
The suit was contested by the defendants. Issues were framed by the trial Court on 16.2.1982. When the suit was pending before the trial Court, on 24.8.1992 the defendants made an application that the suit of the plaintiffs may be dismissed inasmuch as the claim of the plaintiffs stood satisfied as per entry made by one of the plaintiffs, namely Rangi Ram on the bahi of defendants regarding payment of Rs.24,950.77 and 28.4.1982. This application was contested by the plaintiffs. According to them, the application moved by the defendants was not maintainable and their claim has not been fully satisfied. According to the plaintiffs, they received a sum of Rs.24,950/- by way of cheque but the said amount was only towards principal and so far their claim regarding interest is concerned, it is still unsatisfied. The following issue was framed by the trial Court in order to dispose of the application moved by the defendants:-
1. Whether the claim of the plaintiffs has been fully adjusted? OPD The learned trial Court held that the entire claim of the suit has been adjusted. Resultantly, the suit was dismissed vide judgment and decree dated 19.10.1983.
2. Aggrieved by the judgment and decree of the trial Court, the plaintiffs filed the appeal in the first Appellate Court and gave a challenge to die compromise allegedly effected between the defendants and Rangi Ram one of the plaintiffs, who received the amount of Rs.24,950.77. The learned Additional District Judge, for the reasons given in paras No. 12 and 13 of the judgment dated 6.9.1986, allowed the appeal and remanded the case of the trial Court with the direction to proceed with the trial on merits.
3. This time defendant Subhash Chand was aggrieved by the judgment of the first Appellate Court and he filed the present appeal.
4. I have heard Mr. C.B. Goel, Advocate, on behalf of the respondents. No assistance has been given from the side of the appellant. I have also given notice to the appellant to appear in this case, but in spite of the intimation nobody has appeared.
5. Have gone through the grounds of appeal and after going through the same, I am of the opinion that this appeal is totally devoid of any merit. As I have stated above that the Civil Suit was field by five persons, namely Rangi Ram, Ram Chander, Narsi Dass, Richha Ram and Madan Pal and in para No. 1 of the plaint it was specifically alleged by the plaintiffs that earlier they were carrying on the business of commission agency in partnership formed under the provisions of the Indian Partnership Act under the name and style of M/s Rangi Ram, Richha Ram situated at Kaithal Mandhi, but the said firm has been dissolved in the year 1978 and as such they have locus standi to file the suit for the recovery of the property of the dissolved firm. It is settled principle of law that once the firm stood dissolved, the partners of such dissolved firm could only file the suit in their individual capacity and this has been done. The reading of para No. 1 of the plaint would show that it was in the knowledge of the defendants that the suit was instituted not on behalf of the existing firm but On behalf of
