1908 (4) TMI 2 - HC - Indian Laws

Court rules in favor of plaintiff, holding firm liable for promissory note. Manager also found liable. Decree granted with costs.

The court found in favor of the plaintiff, ruling that the 1st defendant firm had indeed signed the promissory note, confirming it as a joint family firm. ... - Issues Involved:1. Whether the 1st defendant firm ever signed the promissory note annexed to the plaint.2. Whether the 1st defendant firm is not a joint family firm carrying on business in Bombay.3. Whether Narotamdas Gordhandas was at the time he signed the promissory note manager of the said joint family firm.4. Whether even if manager the joint family firm is liable under the said promissory note.5. Whether the transaction contained in the said promissory note is within the scope and purposes for which the joint family firm is carried on.6. Whether the said promissory note was not obtained from Narotamdas Gordhandas without consideration and whether the signature of Narotamdas Gordhandas was not obtained to the said promissory note upon the false representation of one Hirabhai Ghelabhai that he would not incur responsibility in respect thereof.7. Whether one Fatechand Ravaldas was not the agent of the plaintiff Bank in the transactions between the Bank and Hirabhai Ghelabhai.8. Whether the said Fatechand Ravaldas was not aware before the plaintiff Bank took the endorsement of the note to themselves that the said note had been obtained without consideration and upon false representation.9. Whether it was necessary to file suit 90 of 1908 in respect of the claim therein made.10. Whether that claim should not have been included in Suit 60 of 1908.11. General issue.12. Whether the suit lies against defendant, there being no allegation that the firm consists of two or more persons.Detailed Analysis:Issue 1: Whether the 1st defendant firm ever signed the promissory note annexed to the plaint.It is proved by the evidence for the defendant and not denied on behalf of the plaintiff, that Raghnathji Tarachand is the firm name of a piece goods business carried on at a shop in the Mulji Jetha Bazaar. Narotamdas, as the eldest male member of the family and the only proprietor who takes an active part in the business, has authority to sign for the firm and to use the firm's name. It is not denied that Narotam signed the promissory notes in suit with the signature Raghunathji Tarachand, the signature of the firm. Therefore, the notes were signed by the firm.Issue 2: Whether the 1st defendant firm is not a joint family firm carrying on business in Bombay.It is not denied that the firm is a joint family firm carrying on business in Bombay, and the evidence to prove it is ample and convincing. Therefore, the firm is a joint family firm.Issue 3: Whether Narotamdas Gordhandas was at the time he signed the promissory note manager of the said joint family firm.Narotamdas was the manager of the joint family firm at the date of the notes. This follows from the evidence recited in considering the first issue. Narotamdas is the manager because he is the sole adult proprietor and takes an active part in the management.Issue 4: Whether even if manager the joint family firm is liable under the said promissory note.The notes were signed in the course of a private clandestine transaction, which was not for the benefit of, and had no connection with, the business of the firm, and was a fraud on the firm. However, the firm is liable for debts honestly incurred in the business of the firm. The credit of the firm is pledged by a negotiable instrument, good on its face and transferred in due course. Therefore, the liability of the firm, whose signature is made by a person with authority to make that signature, is perfect, whether the transaction was or was not in the course of the firm's business.Issue 5: Whether the transaction contained in the said promissory note is within the scope and purposes for which the joint family firm is carried on.The transaction was not within the scope and purpose for which the firm was carried on. These particular transactions were not for the purpose of the firm's business.Issue 6: Whether the said promissory note was not obtained from Narotamdas Gordhandas without consideration and whether the signature of Narotamdas Gordhandas was not obtained to the said promissory note upon the false representation of one Hirabhai Ghelabhai that he would not incur responsibility in respect thereof.This issue is now admittedly immaterial, but it is not proved that the note was without consideration and was obtained by false representations. The consideration was very inadequate, nothing more than a mere promise, and Narotamdas was misled by the specious misrepresentations of Ghelabhai; but he was not misled to the extent of believing that he would incur no responsibility.Issues 7 and 8: Whether one Fatechand Ravaldas was not the agent of the plaintiff Bank in the transactions between the Bank and Hirabhai Ghelabhai and whether the said Fatechand Ravaldas was not aware before the plaintiff Bank took the endorsement of the note to themselves that the said note had been obtained without consideration and upon false representation.These issues are found for the plaintiff as already stated.Issues 9 and 10: Whether it was necessary to file suit 90 of 1908 in respect of the claim therein made and whether that claim should not have been included in Suit 60 of 1908.It is found in favor of the plaintiff. It is true that before Suit 60 was filed, the second note had fallen due and had been dishonored; but before that event happened, instructions had been given to file the suit on the note which had previously fallen due and been dishonored. In matters of this kind, promptness is of real importance, and it is not reasonable to deprive the plaintiff of certain costs because he did not stay his hand in the matter of the first suit in order that the second might be amalgamated with it before any suit was filed.Issue 11: General issue.This needs no remark.Issue 12: Whether the suit lies against defendant, there being no allegation that the firm consists of two or more persons.This is purely technical. It is said that the suit will not lie under Rule 365 because more than one partner is not alleged or disclosed by the plaint, and will not lie under Rule 375 because it is not a suit against one person. Both propositions may safely be allowed without disturbing the plaintiffs' rights. These two rules do not exhaust the possible cases. This case is one of a simplicity which does not require to be provided for by a special rule. It is a suit on a promissory note against the maker of the note.Conclusion:There will be a decree as prayed for against all the defendants with all costs. The decree will be against the firm of Raghunathji Tarachand and against the defendant of the second party as the representatives of Hirabhai Ghelabhai to the extent of the funds of Hirabhai Ghelabhai which have come to their hands.