TaxTMI 
TaxTMI 
1943 (5) TMI 11
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....ange. So also in the case of the second set of defendants there has been a change of parties owing to the death of Madho Prasad, but it is admitted that the other four are in the same position as their father and under the same but no greater liability than he was. These defendants are content, if liable at all, to have the decree executed against them for such of the property as they will inherit from their father, feeling themselves bound to follow the doctrine of pious obligation of the sons to pay the father's debts. The two families are most conveniently referred to under the names of their original respective kartas, and their Lordships will deal with the first set under the name of Bhola Nath and the second under that of Madho. The question which has to be decided is whether Madho and his family are liable as well as Bhola Nath and his sons. 2. The Appellants are a firm of money-lenders carrying on business at Kharagpur in the district of Midnapur in Bengal and at Jugselai in the district of Singbhum in the then Province of Bihar and Orissa. Madho had been for many years in the service of the Bengal Nagpur Railway, but after a year and a half's furlough finally re....
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....; Signed on 19th March 1938. Rs. A.P. Drew Rupees seven thousand for paying royalty to the State. 7,000-0-0 Signed, Madho Prasad, by my own pen. Date, 19th March 1938. Signed, Bholanath Brij Behari, by the pen of Bholanath. Date, 19th March 1938. Rupees seven thousand for paying royalty. The first entry in this document was as appears on its face, signed by Bholanath on behalf of both parties on 28th December 1927: the second and third by Madho on 19th March 1938 and the third by Bholanath on the same date. It is upon its terms that the appellants founded their case before their Lordships' board. Its form and implication will be considered later. Meanwhile it is only necessary to say that the entry is found in the plaintiffs' hatchita for 1927-29, i.e., a book kept specially for accounts written or corrected by the hand of those signing them. At the same time the appellants opened a new ledger account headed Madho Prasad Bholanath Brij Behari, Thikadars of Panposh with Rs. 47,637-3-3 as the opening debit balance. This account continued in the names of Madho Prasad Bholanath and Brij Behari until the present ....
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....st signature in the hatchita purporting to be signed on 19th March 1928, was a forgery, admitted the second signature, but said it did not amount to an undertaking to be liable for the Rs. 7000, alleged that the sum of Rs. 16,000 had been paid on account of the other debt above referred to which he owed the plaintiffs, and pleaded in para. 10 that Bholanath being unable to defray the expenses of the business applied to him for funds on condition of taking him as partner with a 9 annas share, and that he, Madho, having accepted the offer began to contribute money from April 1926. The first contention therefore of the plaintiffs at the trial was that Madho was a partner from the start of the business in 1923, and of Madho that he never was interested in it because no partnership had ever been concluded and that he was not liable in respect of his alleged signature in the hatchita since that was a forgery. In the Court of the Subordinate Judge the plaintiffs succeeded on their main case, the Court holding that Madho was a partner from 1923 and was liable jointly and severally with Bholanath for the sum claimed subject to certain modifications reducing it to Rs. 61,070-7-6. The materia....
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....ment of Rs. 16,000 was made by Madho for credit of the Jugselai account, i.e., his joint account with Bhola. From this decision Madho appealed, and the appeal was originally heard by Manohar Lall and Chatterji JJ. Both learned Judges agreed with the Subordinate Judge in holding (1) that the signatures of Madho were genuine; (2) that Madho was a partner with Bholanath and Brij Behari; (3) that Madho was liable for the sum of Rs. 7,000. Of these findings the last is not now in dispute and the other two are concurrent findings of fact and therefore will be followed by their Lordships. The two Judges, however, differed as to the time at which they found Madho to have become a partner: Manohar Lall J., believing it to have been in October 1926, and Chatterji J., in April of the same year. This divergence is not, however, of much importance since the representatives of the appellants were content to accept the later date unless the board was of opinion that Madho had been a partner from 1923. They differed also as to the intention and effect of Madho's signature to the hatchita in respect of the sum of Rs. 47,637-3-3 and as to whether if Madho's signature imported a promise to pa....
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....rch 1928. But, they added, this debt including interest falls far short of Rs. 16,000. It is true, they continued, that in their previous judgments they had held the defendant Madho liable for Rs. 7000, but the question of the Rs. 16,000 had not then been at all gone into, and in view of the decision of the learned Judge they were bound to give effect to the contention that the payment of the Rs. 16,000 must be applied to the debt of Rs. 7,000. The result was that they held the plaintiffs not entitled to any relief against the respondent Madho. It will be observed that though a partnership has been held to have existed between Bholanath and Madho from some time in 1926 and was acknowledged in evidence by both the respondents, yet its terms were ill defined. Indeed it appears that shortly after the Rs. 7,000 were borrowed some difference arose between the two sets of defendants as a result of which Madho at one time refused to advance further money, that attempts were made to reconcile the two parties and to agree to terms of partnership, and that a partnership agreement bearing as its only date the year 1929 was actually drafted but never signed. It contained, however, according....
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....he purpose of ensuring that Madho who had no other proof of his partnership should obtain it in this way. Their Lordships do not find themselves able to accept these arguments. As appears from his evidence, Madho was under an obligation to repay Bholanath's indebtedness to the extent of Rs. 1,50,000 so far as incurred for Jharbera. It is true that the indebtedness of Rs. 47,637-3-3 may have included money borrowed for purposes other than the Jharbera business, but the account in which it appeared had been credited with payments of money derived from these other businesses for which the borrowings were made, and therefore it may well have been and the parties may have recognized that in taking an account the total sum or indeed much more had been spent on Jharbera and not repaid. In such circumstances Madho may well have been willing to undertake a liability for a sum which would almost certainly prove to be less than that which he had undertaken to provide. Nor does it seem likely that the signature was obtained or given merely to verify the sum owing by the old firm when the new partnership commenced. That is not the object of signing a hatchita and in any case it is quite ....
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....t fact since they placed no reliance upon it. Their allegation, it is pointed out, was that Madho was liable all along and that from the start they only advanced money on the strength of his liability. Indeed, their moonib said in evidence: I cannot give any reason for adding the name of Madho in the khata, Madho asked us to do so. We would not have added had he not requested-he did not give any reason." And again; "We did not try to get the signature of Madho on it, (i.e., the hatchita). If Madho did not come for the Rs. 7,000 on 19th March 1928, his signature would not have been there and the chita would have been without it. We did not think it essential to get his signature." Moreover, in the deposition of Ganesh Lal who had been the senior member of the plaintiff firm but died before the suit in respect of the other loan made to Madho was heard, but whose deposition was put in evidence both in that suit and in this, it is stated: "If Madho Prasad did not sign this hatchita on 19th March 1938, we could still have made him liable for the Rs. 47,637 odd." No doubt it is true to say upon this evidence that the plaintiffs did not think that they were g....
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.... are: "When at the desire of the promisor the promisee or any other person has done or abstains from doing or does or abstains from doing or promises to do or abstain from doing something, such act or abstinence or promise is called a consideration for the promise." Similarly S. 25, Indian Partnership Act, provides: "Every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner." In the present case it was submitted the promisee forebore nothing in consideration of obtaining a fresh partner who should assume responsibility for the debt. The original debtor was still liable to the full extent and nothing had been given up: all that had happened was that the promisee had acquired someone else to answer his debt. But the bringing about of a joint liability is not the only result of two persons entering into partnership, whether in England or India, and being accepted as debtors by the former creditors of one of them. For instance, the partnership assets would have to be taken in execution before the private assets of the individual partners were touched and the separate property of any partn....