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

2. The appellant holds permanent leasehold rights over a colliery called the Jealgora Govindpur Colliery and had worked the colliery himself for some time. On January 31, 1949, he granted a sub-lease of the colliery to respondent No. 4 for a term of five years. At that time, 2803 tons of slack and rubble coal was lying in the colliery, and under the terms of a separate agreement executed by respondent No. 4, he was liable to pay for this coal at the rate of Rs. 10/- per ton after selling it. According to the appellant, this coal was sold by respondent No. 4, but he was not paid its price amounting to Rs. 28,030/-. Further, according to him, royalty and commission were due to him from the respondents in respect of the coal extracted by them from the colliery, as also Rs. 1355/8/3 on account of a loan taken by them from him on February 17, 1949. The total claim was tentatively valued by him at Rs. 57,000/-. He joined respondents 1, 2 and 5 as defendants to the suit on the ground that these three persons along with respondent No. 4 formed a partnership firm known as Saurashtra Coal Concern which was joined in the suit as defendant No. 5 and is now, respondent No. 3 before us. The appellants case was that respondent No. 4 was a benamidar for the partnership firm and, therefore all the respondents were liable for the claim.3. Respondents 4 and 5, which are father and son, admitted the appellants contention that the lease was obtained by respondent No. 4 on behalf of the partnership firm, but their contention was that they surrendered their lease-hold interest to the appellant on November 1, 1950, which was accepted by him, and that he was, therefore, not entitled to the claim in respect of royalty and commission from them for the period subsequent to November. 1, 1950. Further, according to them, the coal which was lying in die colliery was not actually weighed at the time of the agreement and that the figure of 2803 tons was put down only as a rough estimate, According to them, on the date of the surrender of the lease by them there was a stock of more than 2803 tons of slack and rubble, etc., as well as soft coke, including the stock left by the appellant at the time of granting the sub-lease, because that could not be sold, and the appellant took possession of the entire stock lying in the colliery in November, 1950, alter promising to adjust it towards the dues. They, therefore, disclaimed all liability, to pay the price of 2803 tons of coal. They also denied having taken a loan from the appellant as alleged by him.4. No separate written statement ,was filed on behalf of respondent No. 3, but respondents 1 and 2, who were defendants 2 and 4 in the trial court, denied the appellants claim totally. According to them, respondent No. 4 took the sub-lease in his personal capacity and not on behalf of the other respondents. They averred that there was no privity of contract between them and the appellant and that, therefore, he was not entitled to a decree against them. The real facts, according to them, are that the respondent No. 4 took a sub-lease of the property from the appellant and gave a managing agency of the same to the Saurashtra Coal Concern of which the first respondent is the financing partner and the second respondent is the working partner. This concern was, they say, never a sub-lessee of the appellant. They also denied having anything to do with the stock of coal which the appellant is alleged to have sold to the 4th respondent.5. The trial court negatived the claim of the appellant in respect of the loan but decreed the claim for Rs. 28030/. as the price of coal and commission thereon against all the respondents. It further passed a preliminary decree for ascertaining the precise amount of royalty and commission which would be due to the appellant on account of the sub-lease. The trial court further said that the minimum amount under this head would be Rs. 26,000/.. respondents 1 to 3 preferred an appeal to the high court and the High Court accepted it. Thus, the position now is that the decree of the, trial court stands only against respondents and 5, hut has been set aside as against respondents 1 to 3.

Court's reasoning:
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.