Decided on September 17,1974

Kampallil Chandrasekharan Appellant
Kerala Varma Raja Respondents


K.K.NARENDRAN,J. - (1.) IN this appeal against the judgment and decree of the Subordinate Judge of Kozhikode in O.S.No.142 of 1967 the plaintiff is the appellant.The defendants in the court below are the respondents.The above suit was one for the realisation of amounts alleged to live been given to a partnership firm by name The National Engineering Industries run by the defendants.The plaintiff 's case is that the National Engineering Indu­stries,a partnership firm run by the defendants,took loans for the purpose of its business on seven occasions spread over a period from 11th November 1965 to 23rd November 1966 and the total amount came to Rs.8,900.Inspite of repeated demands and registered notice,the amount was not repaid and hence the suit was filed.The 1st defendant in his written statement admitted that the amount due to the plaintiff was borrowed for the purpose of the firm,the National Engineering Industries,of which he was also a partner.It is further stated that the firm was dissolved on 5th November 1966 and as per the agreement of dissolution the 2nd defendant was to pay off all the debts owed by the firm.It is also stated that neither the 1st defendant nor the 3rd defendant has any interest over the concern and it was being run by the 2nd defendant.The 2nd defendant in his written statement admitted that the National Engineering Industries has become a concern belonging to him alone and the other defendants have ceased to have any right in the business.It is also stated in his written statement that the business was originally conducted as a partnership by all the defendants together.The stand taken by this defendant in his written statement is that none of the partners of the firm was authorised to borrow amounts on behalf of the firm and I the transactions entered into individually by one partner was not valid and binding on the other partners or the firm.The 2nd defendant denies the loan transactions and contends that no amount was received on behalf of the firm or by all the partners.The 2nd defendant admits that he agreed to pay Rs.700 to the plaintiff at the time of dissolution of the firm and that it was an amount which the 3rd defendant owed to the plaintiff.The stand taken by the 2nd defendant in the written statement is that defendants 1 and 3 and the plaintiff might have colluded together and concocted the documents and those documents are not valid and binding as far as he is concerned.The 3rd defendant remains ex parte.
(2.) IN the court below Exts.A -1 to A -8 were marked on the side of the plaintiff and also the plaintiff was examined as P.W.1 while on the defence side Exts.B -1 to B -8 were marked and D.Ws.1 and 2 examined.D.W.1 is the 2nd defendant himself.The court below after considering the evidence oral and documentary in the case came to the con­clusion that the loans in question were not taken by the firm and the 2nd defendant is liable only to the extent of Rs.700.It has also been found that the assets of the National Engineering Industries are not liable to be attached and sold for the debts claimed in the plaint except to the extent of Rs.700.The court below also came to the conclusion that the suit was collusive.In the result,the suit was decreed for Rs.700 with interest at the rate of 9 per cent from 13th October 1967 against the 2nd defendant.Against the 3rd defendant the court below gave a decree for the plaint claim except to the extent of Rs.700 decreed against the 2nd defendant. It is against the above judgment and decree of the court below that the plaintiff has come up in appeal.Before us the counsel for the appellant contends that the court below went wrong in not decreeing the suit as prayed for.According to the counsel for the appellant the court below ought to have found that the 3rd defendant was com­petent to incur the debts in question on behalf of the partnership firm and hence the debts are debts incurred for the partnership.
(3.) EXT .B -8 is the partnership deed dated 15th March 1965.From Ext.B -8 the following facts are clear.Defendants 1 to 3 agreed to run an engineering workshop by name The National Engineering Industries.Rs.12,000 is the capital of the partnership.There is to be a manager for running the business of the partnership and the Manager can be a partner or one who is not a partner. Clause 11 of the partnership deed provides that debts can be incurred only with the consent of all the partners.The partnership was dissolved by Ext.B -1 agreement dated 5th November I966 and all the defendants are parties to Ext.B -1.As per Ext.B -1 the business run by the partnership will thereafter belong to the 2nd defendant.By clause 3 of Ext.B -1 the 2nd defendant has undertaken to indemnify the other two partners from all liabilities to third parties for the acts of the firm due before the date of dissolution of the firm.Further in clause 8 of Ext.B -1 the 2nd defendant has undertaken to discharge all debts and liabilities of the partnership includ­ing 'the credit standing in the name of Kambolly Chandrasekharan 'the plaintiff.For reasons not known what exactly was the amount due to the plaintiff is not stated in Ext.B -1.At the same time it is clear that as per the partnership accounts some amount must be due to the plaintiff on the date of the dissolution.;

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