TMI Blog1980 (10) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-12-1970 to which they were parties. It was also held that all the defendants were liable for the suit amount. Hence this appeal. 2. The details of the promissory notes are as given below; 1) 15-12-1968 by D1 for ₹ 12,000/- 2) 10-3-1988 by D1 for ₹ 20,000/- 3) 25-4-1968 by D1 for ₹ 20,000/- 4) 15-5-1968 by D1 for ₹ 12,000/- 5) 31-10-1968 by D1 D2 for ₹ 23,000/- Though promissory notes Nos. 1, 3, 4 and 5 were executed in favour of the plaintiff's mother, wife, sister and mother (?) all of them were subsequently endorsed by the respective promises in favour of the plaintiff. It is not disputed that the suit will be in time, if the agreement Ext. A8 contains an acknowledgment of the liability. The appellants' case is that it does not amount to an acknowledgment in law. Ext. A8 is an agreement entered into by defendants 1 to 4 in the presence of P. Ws. 1 and 2 admitting their liability to pay the amounts due to the plaintiff. The appellants' counsel submits that the statements contained in Ext. A8 will not in law create an acknowledgment of the liability to save limitation. We will examine the statements contained in Ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against defendants 2 and 3. 6. Before considering the question of law on this aspect, it is necessary to see how the promissory notes themselves read. Ext. A1 is executed by the 1st defendant. It is written in a letter-head which bears the name K. M. S. Bus Service. Palghat. The executant describes himself as Proprietor, K. M. S. Bus Service. Palghat. Ext. A2 is also executed by the 1st defendant in the same letter-head describing himself as the Proprietor. K. M. S. Bus Service. Ext. A3 is executed by the 1st defendant describing himself as Managing Partner, K. M. S. Bus Service, Palghat but on a plain paper. Ext. A4 is executed by the 1st defendant describing himself as Managing Partner. K. M. S. Bus Service which is also on a plain paper. Ext. A5 is executed by the 1st defendant and the 2nd defendant on the letter-head wherein they are described as Proprietors of the K. M. S. Bus Service. The question for consideration is whether on the details supplied by the promissory notes, the partners of the firm could be made liable. 7. It is not disputed that defendants 1, 2 and 3 were partners of the firm. The question would still remain whether the promissory notes liability could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Partnership Act which provided that an act done by one partner was binding on the other partners. The learned Judge did not advert to any of the provisions of the Negotiable Instruments Act. 9. The law as to negotiable instruments is different from the rule of law applicable to simple contracts in writing. In the latter ease oral evidence can be Riven to fasten liability on an undisclosed principal. The peculiar feature of a negotiable instrument is that it passes right by mere delivery and every successive holder has a claim against the parties on it For this reason a negotiable instrument must indicate on its face the persons who ate bound for its payment. In cases of partnership firms, if the name of the firm appears on the bill or note, a partner can be bound by it, though he has not signed it, for the signature of the firm is deemed to be the signature of all the persons who are partners of the firm. If the note, on its face, discloses the name of the firm bound for its payment, execution by the firm or by one partner, will be sufficient to fasten liability on all the partners by the operation of the provisions of the Partnership Act. The mere fact that a note is dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e description of the executant the court held that the person liable on the hundis was Athale and not any alleged firm passing under the name of Gangadhar and B. Friends. The original decree against the firm was set aside. 12. In Johnstone v. Mt. Jan Bibi, (AIR 1928 Lah 722) a pro-note executed by G. with the name shown as below fell for consideration. The Lahore Cotton Baling Press , signed by G alone. A suit was brought against G and H on the ground that H was a partner and a decree against H was also prayed for. The High Court accepted the appellant's case that the heading of the paper with the name of the firm did not necessarily lead to any inference that G was acting on behalf of the Press. The heading was given, according to the learned Judge, merely as his address. The prayer to make the other partner liable was disallowed, and the court declined to go into the question whether there was a partnership firm in existence. Thus the mere use of a letter-head, it was held, did not by itself lead to an inference that there was an undisclosed principal which was bound by the promissory notes. 13. In Punjab United Bank, Ltd. v. Mohammad Hussain, (AIR 1934 Lah 358) a Divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise be sufficient to bind the firm, for the latter section must yield to the special provisions of the Negotiable Instruments Act. Despite the fact that the executant of the promissory note had power as Managing Partner to execute promissory note binding on the firm, the learned Judge declined to give a decree against the other partner since the instrument on a fair interpretation did not disclose the name of the firm as the party liable thereon. 15. The consistent view taken in the above decisions is therefore to hold that when liability is sought to be fastened on an undisclosed principal on the strength of a negotiable instrument, it is not enough if the principal's name is disclosed in some way, but it must be disclosed in such a way that by any fair interpretation of the instrument it should be possible to hold that the undisclosed principal is the real person liable for the debt, When there is a conflict between Sections 19 and 22 of the Partnership Act on the one hand and Sections 26, 27 and 28 of the Negotiable Instruments Act, the latter Act; should prevail, A claim against a firm based on a written contract by one partner in the course of business with authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
