Case: Devji @ Deviji Shivji Vs. Maganlal R. Athrana &amp; Others

courts below how found concurrently that the sub-lease in question was taken by respondent No. 4 alone, the only point urged by Mr. Sarjoo Prasad in support of the appeal is that respondent No. 4 being a partner in the Saurashtra Coal Concern, all the partners of the firm are liable under the lease inasmuch as the firm admittedly came into possession of the demised colliery. He points out that even according to respondents 1 to 3, they came into possession of the demised colliery immediately after the execution of the sub-lease, and wants this court to infer from this that the partnership had already come into existence before the lease was obtained. This, however, has never been the case of the appellant in the courts below. The only case which he put forward was that the lease was taken by respondent No. 4 on behalf of all the respondents. In other words his case was that respondent No. 4 was a benamidar for the partnership firm. It is only this case which the respondents had to meet, and in our judgment, it would not be proper to permit the appellant to make out an entirely new case at this stage. Apart from that, S. 22 of the Indian Partnership Act, 1932, clearly provides that in order to bind a firm by an act or an instrument executed by a partner on behalf of the firm, and the act should be done or the instrument should be executed in the name of the firm, or in any other manner expressing or implying an intention to bind the firm. The sub-lease was not executed in the name of the firm, and it has been found by the courts below that respondent No. 4 in obtaining the lease, did not act on behalf of the firm. This in substance means that in obtaining the sub-lease, the parties to it did not intend to bind the firm by that transaction.7. In support of his contention, Mr. Sarjoo Prasad has strongly relied upon the decision in Karmali Abdulla Allarakia v. Karimji Jiwanji, ILR 39 Bom 261 at p. 274 : (AIR 1914 PC 132 at p. 134). That was a case in which the question for consideration was whether one of the two partners is 1iable upon a hundi drawn by one of the partners, though the hundi was not drawn in the name of the firm. The Privy Council, following the decision in Gouthwaite v. Dockworth, (1810) 12 East 421 held that the other partner would be liable though on the face of it the hundi did not purport to be on behalf of the firm. That decision, however, does not help the appellant, because while the transaction in connection with which the hundi was drawn, was admittedly a partnership transaction in the case before us, it has been found that the transaction, that is the taking of the sub-lease, was not on behalf of the partnership. The next case relied upon was Mathura Nath v.Bageswari Rani, 46 Cal LJ 362 : (AIR 1928 Cal 57). In that case, the question was whether the firm is liable for the money borrowed by one of its partners. The High Court pointed out that this is a question of fact and depends upon the facts and circumstances of each particular case. In that case also, it was found that the liability arose upon a contract entered into by one of the partners in connection with the partnership business. This case is, therefore, similar to the one just referred to above. The third case relied upon is P. Veeranna v. G. Veerabhadraswami, ILR 41 Mad 427 (AIR 1919 Mad 1140) (FB). In that case, the question was whether the fact that one of the several partners had authority to acknowledge liability to save limitation as against his partners, had to be established only by direct evidence or whether it could be inferred from the surrounding circumstances. The High Court held that it was permissible to establish the existence of authority from the surrounding circumstances. The case is thus of no assistance to the appellant. The next case relied upon was Lakshmishankar Devshankar v. Motiram Vishuram, 6 Bom LR 1106. There, it was held that where money borrowed by one partner in the name of firm but without the authority of the co-partners has been applied to paying off the debts of the firm, the lender is entitled in equity to repayment by the firm of the amount which he can show to have been so applied and the same rule extends to money bona fide borrowed and applied for any legitimate purposes of the firm. It is difficult to appreciate how this case advances the present matter further, because here, the sub-lease has not been obtained in the name of the firm. The last case relied upon was Gordhandas Chhotalal v. Raghuvirdasji Gangaramji, 34 Bom LR 1137 : (AIR 1932 Bom 539 ). That again is a case in which the firm was held to be bound by the debts contracted by the managing partner for the purposes of the factory run by the firm. All the partners were held liable, because the transaction was entered into by the managing partner for the purpose of the partnership business. This case is similar to the one just referred to above and is, therefore, of no assistance to the appellant.8. Mr. Sarjoo Prasad also referred to two other decisions in Ram Kinkar v. Satya Charan, AIR 1939 PC 14 and Raja Sri Sri Jyoti Prasad Singh v. Samuel Henry Seddon. ILR 19 Pat 433 at p. 459 : (AIR 1940 Pat 516 at p. 527). In these cases, the defendants sought to be made liable were assignees of a lease, but that is not the case here. Indeed, Mr. Sarjoo Prasad quite rightly, conceded that respondents 1 to 3 cannot be made liable upon the ground that there was a privity of estate between them and the appellant.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]This, however, has never been the case of the appellant in the courts below. The only case which he put forward was that the lease was taken by respondent No. 4 on behalf of all the respondents. In other words his case was that respondent No. 4 was a benamidar for the partnership firm. It is only this case which the respondents had to meet, and in our judgment, it would not be proper to permit the appellant to make out an entirely new case at this stage. Apart from that, S. 22 ofthe Indian Partnership Act, 1932, clearly provides that in order to bind a firm by an act or an instrument executed by a partner on behalf of the firm, and the act should be done or the instrument should be executed in the name of the firm, or in any other manner expressing or implying an intention to bind the firm. The sub-lease was not executed in the name of the firm, and it has been found by the courts below that respondent No. 4 in obtaining the lease, did not act on behalf of the firm. This in substance means that in obtaining the sub-lease, the parties to it did not intend to bind the firm by thatMr. Sarjoo Prasad quite rightly, conceded that respondents 1 to 3 cannot be made liable upon the ground that there was a privity of estate between them and the appellant.