Full Judgment Text
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PETITIONER:
NANCHAND GANGARAM SHETJI
Vs.
RESPONDENT:
MALLAPPA MAHALINGAPPA SADALGE
DATE OF JUDGMENT30/01/1976
BENCH:
SARKARIA, RANJIT SINGH
BENCH:
SARKARIA, RANJIT SINGH
FAZALALI, SYED MURTAZA
CITATION:
1976 AIR 835 1976 SCR (3) 287
1976 SCC (2) 429
ACT:
Joint Hindu family If duty cast on members to inform
creditors by general notice regarding disruption of joint
Hindu family Creditor-Duty to inquire about the capacity of
executant of a document.
Partnership Act, 1932-Sections 4 and 5-Difference.
Limitation Act, 1908-Section 21(3)(b) "Manager of the
family for the rime being"-Meaning of-Erstwhile karta-If
could keep an old debt alive and extend limitation against
all the members of joint Hindu family.
HEADNOTE:
The plaintiff-appellant had business dealings with the
joint family of the defendants. He had instituted a suit
claiming a certain sum of money from the defendants, one of
the grounds being that even if the defendants proved that
there had been a partition in the family, the family was
still liable for the dues pertaining to the ancestral
business carried on by all the defendants either as members
of the joint Hindu family or as partners of a firm.
Defendant 3 (respondent) stated that there was disruption of
the joint family status on November 4, 1945. when defendants
1 and 2 and his deceased father unequivocally expressed
their intention to separate and divided their movables. He
denied that defendants 1 and 2 had ever acted as managers of
the joint family.
The trial Court and the High Court concurrently found
that the joint family of the defendants had disrupted on
November 4, 1945 and that no joint family business was in
existence on the date when the last dealing of the plaintiff
with the defendants took place.
On appeal to this Court, it was contended that even if
the joint family stood disrupted from November, 1945, in the
absence of public notice by defendants 1 and 2 regarding the
disruption of the joint family, the acknowledgements made by
them as karta of the joint Hindu family would be binding on
the erstwhile joint family under s. 45 of the Partnership
Act, 1932.
Dismissing the appeal,
^
HELD: (1) It is the duty of the creditor to ascertain
whether the person making the acknowledgement still holds
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his representative capacity as karta of the family. The law
does not cast any duty upon the members of the family to
inform the creditors by a general notice about the
disruption of the family. If the creditor fails to make an
enquiry and satisfy himself about the capacity of the
executant to represent the family at the time of making the
acknowledgement, he does so at his own peril. Disruption of
the joint family status puts an end to the representative
capacity of the karta and any acknowledgement of a debt made
by him after such disruption cannot save the creditor’s
claim from becoming time barred against the other members.
[298B-C]
Pramod Kumar Pati v. Damodar Sahu, ILR 1953 Cuttack
221; Rengaswami Ayyangar v. Sivprakasem Pillai, ILR 1942
Mad. 251 (F.B.); Mutayala Ramachandrappa v. Mutayala
Narayanappa, AIR 1940 Mad. 339, approved.
Kashiram Bhagshet Shete v. Bhaga Bhanshet Redij A.I.R.
1945 Bom. 511 over ruled.
(2)(a) The Legislature has excluded the joint Hindu
trading families from the operation of the Partnership Act.
Section 4 defines partnership as a relation between persons
who have agreed to share the profits of a business, and
according to s. 5 the Act governs only that relation of
partnership which arises from contract and not from status
such as the one obtaining among the members of a joint Hindu
family’ trading partnership, [297C-D]
288
(b) The words "manager of a family for the time being"
occurring in s. 21(3)(b) of the Limitation Act. 1908.
indicate that at the time when the acknowledgement was made
and signed, the person making and signing it, must be the
manager of a subsisting joint Hindu family. If at the
relevant time the joint Hindu family, as such, was no longer
in existence, any acknowledgement made by the erstwhile
karta of such family cannot keep the debt alive and extend
limitation as against all the members of the family, his
representative capacity as karta being co-terminus with the
joint status of the family. [297F-G]
(c) Coparceners do not derive their title through the
karta of the coparcenaty. In the instant case defendants 1
and 2 did not fulfil the requirements of sub-s. (1) of s. 21
of the Limitation Act. [298A]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1896 of
1968.
(Appeal by special leave from the judgment and order
dated the 21st September, 1962, of the Mysore High Court in
Regular Appeal (B) No. 287 of 1956).
H. B. Data and P. C. Bhartari for the appellant.
S. T. Desai and Naunit Lal for respondents 3 & 4.
The Judgment of the Court was delivered by
SARKARIA, J.-This is a plaintiff’s appeal by special
leave directed against a judgment of High Court of Mysore.
The following pedigree table will be helpful in
understanding the facts leading up to this appeal:
Mahalingappa
(died in 1922)
Mallappa Appa Saheb Neelkanth
Def. No. I Def. No. 2 (died on 8-7-46)
Chandrakant Smt. Balabi
Def. No. 3 (wife of Neelkanth Def.No.4).
The respondents are Hindus governed by Mitakshra School
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of Hindu Law. Mahalingappa, the prepositus of the joint
family died in 1922, survived by three sons, namely,
Malappa, Defendant 1, Appa saheb, Defendant 2, and Neelkanth
(The sons are hereafter referred to as ‘M’,‘A’ and ‘N’),
Mahalingappa and his sons constituted a joint Hindu family.
The family was trading in tobacco. Mahalingappa, J as Karta
was managing the joint family business. After his death, his
eldest son. Neelkanth, father of Chandrakant, Defendant 3,
began to look after the management of the family business
‘N’ also started C. N. Tennis Bidi Factory in the name of
his son, Chandrakanth, in 1942 or thereabout. ‘N’ died on
July 8, 1946. Thereafter, ‘A’ (Defendant 2) continued and
managed the joint family business and the family concerns
with the consent of the other members. After 1951, the
family business was managed by ‘M’ (Defendant 1).
The appellant had business dealings in tobacco and
money dealings with the Defendants’ joint family. There used
to be periodical verification of accounts and
acknowledgements were made from time to
289
time by the Manager of the family. The plaintiff’s accounts
were burnt in fire on October 22, 1949 and he had to
reconstruct the accounts from available information and’
documents.
On April 15, 1953 accounts were taken, and the amount
due from the defendants family to the plaintiff was worked
out and verified The accounts thus stated were acknowledged
and signed by Defendant 1 and by Defendant 4, as guardian of
her minor son, Defendant 3. A balance of Rs. 69,465/15/- was
found due to the plaintiff from the defendants.
With the preceding allegations, the plaintiff on
January 28, 1954 instituted the suit for the recovery of Rs.
75,000/-, comprising of Rs. 69,465/15/-, as principal, plus
interest at 12 per cent per annum Subsequently by an
amendment of the plaint, he added an alternative ground that
if the Defendants proved that there had been a partition in
the family, they were still liable for the dues pertaining
to the ancestral business carried on by all the defendants
either as members of the joint Hindu family or as partners
of a firm.
Defendants 1 and 2 in their joint written statement
admitted that there was an ancestral tobacco business of the
family managed by ’N’ till his death in 1946; that after N’s
death, the family business was managed by them (M & A) and
that all the defendants were jointly liable for the
plaintiff’s claim. The defendants denied that there was ever
a partition of the joint family. They however conceded that
a deed of partnership, an agreement and a partition award
had been brought into existence from time to time with the
sole object of lessening the burden of income-tax, and they
were not intended to be acted upon. It was added that after
the interim attachment of the property, Defendant 3, taking
advantage of these bogus documents, obtained an ex parte
decree to show that there had been division of the joint
family, and that this decree was not opposed by the
answering defendants because they were assured that it would
not be executed. They admitted that the appellant’s claim
was partially true, but denied correctness of the total
balance claimed as due. They further averred that the suit
was time-barred as the acknowledgement relied on by the
plaintiff was not legal and could not extend limitation,
that interest was wrongly calculated; that, if they (
Defendant 1 and 2) were held liable, they should be allowed
to pay in easy instalments.
Defendant 3 filed a separate written statement. He
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resisted the plaintiff’s claim, traversed the allegations in
the plaint, and denied that there was any acknowledgment
made on his behalf on April 15, 1953 by his mother,
Defendant 4. In the alternative he pleaded that she had no
authority to acknowledge the debt so as to bind him as he
was then a minor. Defendant 3 further stated that there was
a disruption of the joint family status on November 4, 1945
when M, A and N unequivocally expressed their intention to
separate, and divided the movables, and thereafter, a decree
for partition of the immovable property of the family was
passed in 1949 on the basis of an arbitration award.
Defendant 3 asserted that this decree had been acted upon by
the parties. He denied that Defendants 1 and 2 had ever
acted manager of the joint family with the consent of the
other members,
290
and added that this question could not- arise because of the
earlier division of the family.
Defendant 4 in her written statement denied the
plaintiffs’ claim and supported the contentions raised in
his written statement by Defendant 3. She stated that
Defendants 1 and 2, had taken her thumb impressions on
certain papers on the representation that they had been
properly managing the Tennis Bidi Factory which had fallen
to the share of her husband. She was never informed of the
contents of the documents by the Defendants, who took undue
advantage of her illiteracy.
The trial court held that the joint family had
disrupted in 1945 and the plaintiff was aware of this fact;
that the acknowledgements of the debt had been made by
Defendants 1 and 2 and not by Defendant 3, and on that
account the suit was within time only as against Defendants
1 and 2; that Defendant 3 had on attaining majority
repudiated his liability as partner; that the thumb-
impressions of Defendant 4 on the acknowledgement had been
taken by practising fraud; that in any case defendant 4 had
no authority to acknowledge the debt on behalf of her minor
son. The Court, however, upheld the appellant’s contention
that the old accounts had been destroyed in fire and that
the plaintiff was entitled to interest at 12 per cent per
annum. on these findings, the trial court decreed the
plaintiff’s claim in toto against Defendants 1 and 2 but
dismissed it against Defendants 3 and 4.
Against that judgment and decree of the trial court,
the plaintiff preferred an! appeal to the High Court. The
High Court has affirmed the findings of the trial court and
dismissed the appeal.
Hence this second appeal by the plaintiff.
Defendants 1 and 2 did not appeal against the decree of
the trial court which had consequently become final against
them.
It is common ground between the parties that during the
life-time of Mahalingappa, the family consisting of
Mahalingappa and his sons, was a joint Hindu family trading
in tobacco. It is further not disputed that after the death
of Mahalingappa, the surviving co-parceners continued to be
joint and Neelkanth, the eldest son of Mahalingappa, managed
the family business as Karta till November 4, 1945.
The first matter in controversy is, whether on November
4, 1945, on account of an unequivocal declaration of an
intention to separate made by the three sons of
Mahalingappa, there was a disruption of the joint family
status ? The courts below have concurrently answered this
question in the affirmative.
Mr. Datar, appearing for the appellant contends that
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this finding of the courts below that there was a division
in the family on November 4, 1945, was not based on any
evidence whatever and is consequently, unsustainable in law.
291
We are unable to accept this contention. The finding is
based on good evidence which has been found credit worthy
after due consideration by the two courts. Firstly, there is
a recital of the fact of division on November 4, 1945, in
the partnership deed, Ex. 197, dated October 25, 1946. This
deed has been written on a general stamp paper of the value
of Rs. 30. The date of the purchase of the stamp paper
accords with the date of the execution of the deed. This
document therefore, could not have been brought into
existence subsequently. Secondly, there was an endorsement
on the Income-tax Return Ex. 309, relating to the previous
year ending on November 4, 1945, that at the end of the year
there has been a change in the status of the family.
Thirdly, there is the Arbitration Award (Ex. 294) dated
November 3, 1948, followed by the decree (Ex. 295). This
award is a registered document. The material recitals in
this document are as under:
"The plaintiff (Chandrakant Nilkanth) and the
defendants Nos. 1, 2 and 3 (Mallappa, Appasaheb and
Basawabai, widow of Mahalingappa) were members of joint
family. During the lifetime of the plaintiff’s father,
he and the defendants Nos. 1, 2 and 3 were living joint
and all the three persons carried on the business of
the joint family. Thereafter as the minds of the
plaintiff’s father and of the defendants Nos. 1 and 2
were prejudiced on account of some domestic reasons,
they began to live separately in the year 1945.
Thereafter they took accounts of the transactions, with
desire to get their immovable and movable properties
and other business partitioned and got the capital
amount in that business partitioned on 4th November
1945. So also they effected partitions in the other
movables and the ornaments etc., of the family
Now the defendants Nos. 1 and 2 are objecting
about the maintenance to be given to the defendant No.
3 (widow of Mahalingappa) as per agreement deed
The contentions of the defendants Nos. 1 and 2 are
as follows:
We and our deceased eldest brother Sri
Nilkanthappa were living joint. It is true that on 4th
November 1945 we all three together have taken the
accounts of the business and have made divisions in the
capital of the business. It is true that accordingly we
have proportionately divided the remaining movable
articles and the ornaments etc. and have taken the
same...."
The award bears the signatures of the three
arbitrators, and on its basis the court passed a decree on
August 9, 1949. That suit was instituted by Chandrakant, and
Basawwa, widow of Mahalingappa, Suryakant, an illegitimate
son of Nilkanth, Mallappa Mahalingappa Sadalge and Appasaheb
were impleaded as defendants. Under the award, provision was
made for the maintenance of Smt. Basawwa and the residence
of Suryakant, the illegitimate son of Nilkanth.
292
The conclusion based on the above documentary evidence
was reinforced by the courts below with admissions made by
Defendants 1 and 2, in cross-examination, and also with an
inference drawn against the plaintiff and Defendant 1 on
account of the non-production of the account-books. In our
opinion, the court below were justified in drawing the
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inference because Defendant 1, as is apparent from his
written statement, is colluding with the plaintiff, and all
circumstances suggest that these account-books must be with
defendant 1.
The case of Defendant 3 is that on November 4, 1945,
the accounts of the joint family were worked out and closed.
It was found that there was a capital balance of Rs.
64,023/11/- which was equally divided among the three
brothers and the fact of this division was noted in the
account books which were in the possession of Defendant 1.
In the witness-box, Defendants 1 and 2 admitted that on
November 11, 1945, each of the brothers got Rs. 21,340/3/9
and credit entries to that effect were made in the khata of
each brother in the account-books of the shop.
Defendant 3 by an application (Ex. 169) called upon
Defendant 1 to produce in court the account-books, in his
possession. Notice of this application was received by
Defendant’s Counsel on July 18, 1955. Despite this notice
defendant 1 did not produce the account books when he
appeared in the witness-box on July 21, 1955. He made a lame
excuse that the account books had been given to Javali
pleader after the service of summons in this suit on him
(defendant 1) because that pleader had asked him to bring
the books containing the plaintiff’s accounts. But the
defendant gave him the books of the Bidi Factory and not of
M. B. Sadalge shop. Defendant 1, in cross-examination,
clearly admitted that he had given to Javali pleader only
those account books which contained the plaintiff’s Khata
"and not of previous years". By any reckoning, this means
that he did not hand over the account books relating prior
to the years 1949 to Javali Pleader. Admittedly, after the
death of Nilkanth. he was managing the business upto 1950,
and, as such, was supposed to be in possession of the
account-books. The courts below were there fore, right in
rejecting the explanation given by him for non-production of
the account-books. The explanation regarding the non
production of the books, given by defendant 2, who had
managed the business after 1951, was equally unsatisfactory
and was rightly discarded.
In the light of what has been said above, it cannot be
held that there was no legal evidence before the courts
below to base the finding that the joint family had
disrupted on November 4, 1945.
It is next contended by Mr. Datar that even if there
was some declaration of separation in 1945 and subsequently
a decree for partition based on an award was passed in 1949,
then also, such declaration, award and decree were never
acted upon. It is submitted that in holding to the contrary,
the High Court has committed several errors of record and
misconstrued important documentary evidence.
293
According to Mr. Datar, the under-mentioned documentary
evidence unmistakably shows that the declaration of 1945,
the award of 1948 and the partition decree of 1949 were not
acted upon:
(1). Affidavits Exhts. 221, 247 and 248 sworn on July
20, 1946, before a Magistrate by Defendants 2, 4 and 1
stating that they are members of a joint Hindu family and
Defendant 2 is the manager of the family. In the affidavit
Ex. 247, Smt. Balabai gave her consent to the management of
the affairs of the joint family by defendant 2.
(2). Application dated August 13, 1946 (Ex. 182), by
Defendant 1 to Sales-tax officer for transfer and
registration of the licence, and application Ex. 208, dated
September 30, 1946 made by defendants 1 and 2 on their
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behalf and on behalf of Chandrakant Defendant 3 informing
the City Surveyor about the death of Neelkanth and
requesting him to enter the Khata in the names of all the
three defendants 1 to 3.
(3) Income-tax returns Exhs. 309 to 314 filed after the
death of Neelkanth.
(4). Resolution, Ex. 335, passed by the Board of
Directors in the meeting held on July 30, 1946 permitting
defendant 2 to redeem, in the capacity of Karta of the joint
family, goods pledged with the Nipani Branch of the Bank by
Neelkanth deceased.
(5). Ex. 147, statement, dated September 26, 1953, by
defendant 3 requesting the City Surveyor, Nipani that his
joint share in Nipani Revision Survey Nos. 1254 and 1264 may
be cancelled and the name of defendant 1 may be entered
again for both the numbers. Emphasis is on a sentence in
this statement to the effect: "Two months have passed since
the said partition".
In accordance with this statement. the mutation Ex.
263, was attested.
Both the courts below have fully considered this
evidence, along with other evidence, and come to the
conclusion that these documents do not discount or alter the
fact that the joint family had disrupted on November 4,
1945. The High Court has given reasons why the evidence
furnished by the deed of partnership (Ex. 197) and the
Arbitration Award, (Ex. 294) can be safely accepted.’
In regard to Exs. 221, 247 and 248, the High Court has
said that there is no evidence as to for what purpose these
affidavits were sworn to and has rightly emphasised that in
the absence of such evidence, it is difficult to draw any
inference about the implications of their contents.
Regarding the affidavit Ex. 247, purporting to have been
sworn by Smt. Balabai, the High Court has said that she must
have been mentally depressed being in mourning on account of
the death of her husband which occurred only 12 days
earlier; that she was an illiterate woman who thumb-marked
whatever documents were presented to her, without
understanding its contents. In this connection, the High
Court referred to the statement of defendant 1, wherein he
has admitted that during defendant 3’s minority, defendant 1
and defendant 2 were the only persons who looked after the
business and defendant 4 never objected to whatever they
did. and that they used
294
to take defendant 4’s thumb-impression whenever they thought
it necessary in connection with the dealings of M. B.
Sadalge shop.
As regards the applications Exs. 182 and 208, the High
Court said, there was nothing inconsistent in the recitals
of these documents, to show that there was no partition of
the joint family. The recital in Ex. 208 was found to be too
technical to spell out the full legal implications of the
words "in the joint family".
Referring to the Income-tax returns Exs. 310, 311 and
314, submitted on March 15, 1948, November 12, 1949 and
February 13, 1954, respectively, the High Court noted that
these refer to the accounts of the two concerns and contain
somewhat different description in the management. In Ex.
310, relating to the year ending October 24, 1946, it is
stated that N’ and defendants 1 and 2 were Kartas of the
family. In Ex. 311, defendant 2 is mentioned as the manager
of the "old Hindu Undivided Family". Similarly, Ex. 314,
purports to have been filed by the H.U.F. relating to the
year 1949-50 but this was filed on Feb. 13, 1954 after the
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institution of this suit. The income-tax returns Ex. 312 and
313 relate to the previous years ending on 12-11-1947 and
22-12-48. Ex. 312 was submitted on December 26, 1949 and Ex.
313 on December 22, 1953, both by defendant 2. The status of
the assessee in these two returns is mentioned as "Firm".
Ex. 315, is the income-tax return relating to the
income-tax year 1948-49, the previous year of which ended on
November 12, 1947. It was filed by defendant 4 as guardian
of her minor son, defendant 3, on December 22, 1949. The
status of the assessee therein is shown as ‘Individual’. It
relates to the business which was being run under the style
of M/s. M. B. Sadalge. It is mentioned in this return that
each of the three defendants .1, 2 and 3 has 1/3 share in
the business Ex. 316 is the order of the Income-tax officer
passed on June 20 1950 wherein it is stated that 1/3 share
of defendant 1 in the profits of this firm was assessed on
that date.
Ex. 309 is the income-tax return relating to the
previous year ended on November 4, 1945. It was filed by
defendant 2 in 1946, after Neelkanth’s death. The High Court
has attached great weight to an endorsement on this return,
which is to the effect, that there had been a change in the
family status. at the end of the year. This endorsement has
been omitted from the printed copy of Ex. 309. Consequently,
at one stage, it was maintained by the counsel for the
appellant that in repeatedly referring to this endorsement
the High Court had committed an error of record. We
therefore, sent for the original. We find that this
endorsement is very much there in the original. This
endorsement was a valuable piece of evidence to show that,
in fact, there had been a disruption of the joint family
status at the end of the previous year, 1944-45, on November
4, 1945.
Thus the evidence furnished by the income-tax returns
was conflicting. But the aforesaid endorsement on Ex. 309
was a clincher. It was a statement made ante litem motam. It
confirmed the testing of
295
Defendant 2 that the partition had taken place in 1945 and
this tilted the balance against the contention of the
plaintiff. In such evidentiary value, it out-weighs the
income-tax returns, Ex. 310, 311 and 314, in which the
status of the assessee is shown as H.U.F. The High Court was
therefore, not wrong in holding that all these documents
taken together do not show "that the family of the
defendants had continued to be joint."
Discussing the resolution (Ex. 335)of the Board of
Directors passed on July 30, 1946, the High Court said that
this resolution was passed only 22 days after the death of
Neelkanth and therefore, there was nothing unusual if all
the members authorised defendant 2 to redeem the pledged
goods as manager of the joint family.
In our opinion, it was not’ unreasonable to hold that
the recital in this resolution with regard to defendant 2
being the authorised manager of the joint family, was made
as a matter of expediency, and did not discount the case of
defendant 4 that the joint family had disrupted on November
4, 1945.
The High Court found that the racital in Ex. 143, that
the partition had taken place two months prior to this
application, was obviously a mistake, as it was nobody’s
case that the partition had taken place in 1953. This
inference also was not implausible. This document contains
other palpable errors of a similar nature. For instance,
therein the age of defendant 3 is mentioned as twenty years,
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while he was hardly eighteen.
The High Court found that the documentary evidence
furnished by the partnership deed (Ex. 197) dated October
25, 1946, the award (Ex. 294) dated October 30, 1948, and
the decree (Ex. 295) dated September 15, 1949, passed on its
basis was entirely reliable. It further found that these
documents had been acted upon. In this connection, the High
Court, ’rightly relied upon the admissions of defendant 1 in
cross-examination. In the witness-box, defendant 1 had
conceded that all the immovable property that had been
allotted to defendant 2 under the award had been sold away
by him, and that pursuant to the award, Rs. 7,000/- had been
paid to Heerabai and her son, Suryakant. Defendant 1 further
significantly admitted that on October 25, 1946 Rs. 16000/-
and odd were to the credit of defendant 3 in the account
books of M. S. Sadalge Shop. By virtue of the receipt, Ex.
167, dated August 9, 1949, defendants 1 and 2 acknowledged
the deposit of Rs. 16005-15-0 in favour of the minor
Defendant 3, payable with interest at Rs. 6/- per cent per
annum. Defendant 1 admitted the correctness of the contents
of this receipt. It is undisputed that subsequently,
defendant 3 has not only obtained a decree on the basis of
this receipt against defendant 1, but has taken out its
execution.
The High Court has also dismissed the effect of the
agreement (Ex. 99) which was executed between defendants 1,
2 and defendant 4 as the guardian of the minor, defendant 3
on April 12, 1950. The main object of this agreement was to
safeguard the interests of the minor in the management of
the two partnership businesses, namely,
296
M. B. Sadalge Shop and Tennis Bidi Factory in the name of
Chandrakant Neelkant Sadalge. By this agreement, defendants
1 and 2 were called upon to credit to the business whatever
amounts they had spent from out of the partnership assets.
The power of each of the defendants with regard to
withdrawal of funds from partnership chest for personal
expenses, was also restricted. This arrangement continued to
be in force till the partnership was dissolved by another
registered deed on April 20, 1951.
Reference has already been made to Ex. 316, an order
dated June 20, 1950, of the Income-tax officer showing that
defendants 1, 2 and 3 were being assessed on the basis that
each of them had 1/3rd share in the business. In a joint
Hindu family business, no member of the family can say that
he is the owner of one-half, one-third or one-fourth. The
essence of joint Hindu family property is unity of owner
ship and community of interest, and the shares of the
members are not defined. Similarly, the pattern of the
accounts of a joint Hindu family business maintained by the
Karta is different from those of a partnership. In the case
of the former the shares of the individual members in the
profits and losses are not worked out, while they have to be
worked out in the case of partnership accounts.
In view of all that has been said above, we are of
opinion that the concurrent finding of the courts below to
the effect, that the joint Hindu family of the defendants
had disrupted on November 4, 1945, does not suffer from any
legal infirmity or gross error which would justify our
interference in this appeal by special leave. We therefore,
take it that no joint Hindu family of the defendants, nor
any joint business of such a family was in existence either
on October 15, 1949 when the last dealing (vide Ex. 394) of
the plaintiff with defendants 1 and 2 took place, or when on
April 15, 1953 the accounts were stated and admitted.
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Indeed, on-the date, April 15, 1953, on which the
plaintiff’s cause of action arose, even the partnership was
not in existence, the same having stood dissolved since
April 20, 1951.
Mr. Datar next contends that even if the joint status
of the family stood disrupted from November, 1945, then
also, on the principle of s. 45, Partnership Act, the
acknowledgements made by defendants 1 and 2, representing
themselves, jointly or severally, as Karta of the joint
Hindu trading family, would, in the absence of public notice
to the traders in general or particular notice to the
plaintiff, be binding of all the erstwhile members of the
joint family. Reliance for this contention has been placed
on a Single Bench judgment of the Bombay High Court in
Kashiram Bhagshet Shete v. Bhaga Bhanshet Redij(1).
As against this, Mr. Desai submits that Kashiram’s case
(supra) does not lay down the law correctly. Counsel
maintains that the contrary view taken by the other High
Courts in these cases is sound : Pramod Kumar Pati v.
Damodar Sahu(2); Rengaswami Ayyanagar v.
(1) A.I.R. 1945 Bom. 511 (2) I.L. R. 1953 Cuttack
221.
297
Sivyurakasam Pillai(1); Muthyala Ramachandrappa v.
Muthyala Narayanappa (2) .
Kashiram’s case (supra) decided by an eminent single
Judge certainly supports the proposition propounded by Mr.
Datar. Applying the principle of s. 45 of the Partnership
Act, 1932, the learned Judge held that unless intimation of
the severance of joint status between the members of the
joint family is given to the outside creditors who had
dealings with the joint family through its karta, either by
public notice or individual notice in that behalf, the karta
would be deemed to continue to represent the family and to
have power to incur debts for family necessity and to make
acknowledgements or part-payments in ‘s respect of the same
so as to extend the period of limitation. With great respect
to the learned Judge, we do not think that this is a correct
enunciation of the law on the point. Firstly, the
legislature has, in its wisdom, excluded joint Hindu trading
families from the operation of the Partnership Act. Section
4 of that Act defines ’partnership’ as "the relation between
persons who have agreed to share the profits of a business
carried on by all or any of them acting for all". Section 5
further makes it clear that this Act governs only that
relation of partnership which arises from contract and not
from J status such as the one obtaining among the members of
a joint Hindu family trading partnership. Secondly, the
question whether an acknowledgement made by the karta of an
erstwhile joint Hindu family after its severance, would
extend limitation against all the former members of that
family, turns primarily on an interpretation of clause (b)
of sub-section (3) of s 21 read with s. 19 of the
Limitation Act, 1908. Clause (b) of s. 21 (3) provides:
"Where a liability has been incurred by or on
behalf of a Hindu undivided family as such, an
acknowledgement or payment made by or by the duly
authorised agent of, the manager of the family for the
time-being, shall be deemed to have been made on
behalf of the whole family".
The key words in this clause are the manager of the
family for the time being’. These words unerringly indicate
that at the time when the acknowledgement is made and
signed, the person making and signing it, must be the
manager of a subsisting joint Hindu family. If at the
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relevant time the joint Hindu family as such was no longer
in existence because of division, or disruption of its joint
status, any acknowledgement made by the erstwhile karta of
such family cannot keep the debt alive and extend limitation
as against all the members of the family, his representative
capacity as karta being co-terminus with the joint status of
the family.
Explanation (II) to s. 19 lays down that for the
purpose of this section "signed" means signed either
personally or by an agent duly authorised in this behalf.
Section 21(1) provides that the expression "agent duly
authorised in this behalf" in ss. 19 and 20 shall in the
case of a person under disability include his lawful
guardian or manager or an agent duly authorised in this
behalf. It is well settled that
(1) I.L.R. 1942Mad. 251 (F.B.) (2) A.I.R. 1940 Mad.
339.
298
coparceners do not derive their title through the karta of
the coparcenary. Defendants 1 and 2 do not fulfil the
requirements of this sub-section.
It is therefore the duty of the creditor to ascertain
after due enquiry whether the person making the
acknowledgement still holds his representative capacity as
karta of the family. The law does not cast any duty upon the
members of the family who do not figure in the endorsement
or writing admitting the debt to inform the creditor by a
general notice about the disruption of the family. If the
creditor fails to make an enquiry and satisfy himself’ about
the capacity of the executant to represent the family at the
time of making the acknowledgement, he does so at his own
peril. Disruption of the joint family status, as already
noticed, puts an end to the representative capacity of the
karta and any acknowledgement of a debt made by him after
such disruption cannot save the creditors’ claim from
becoming time barred against the other members.
The above enunciation of the law is in accord with the
view taken by a Full Bench of the Madras High Court in
Rangaswamy Ayyangar v. Sivprakasam Pillai (supra) and by a
Division Bench consisting of Varadachariar and Abdur Rahman
JJ. in Muthyala Ramachandrappa v. Muthyala Narayanappa
(supra), and by a Division Bench of the Orissa High Court in
Pramod Kumar Pati v. Damodar Sahu (supra).
We approve of the law enunciated on the point by the
High Courts in these cases.
No other point has been argued before us in this appeal
which fails and is dismissed with costs.
P.B.R. Appeal dismissed.
299