Lodhi Colony

Indian Partnership Act, 1932; Section 32: Partnership firm-Liabilities of retiring partners against third party-Held: In the absence of an agreement between third party, new firm and retiring partners discharging retiring partners from liabilities or notice thereof by the retiring partners, their liabilities to third party continue. Creditor adopting reconstituted firm/new firm as debtor-Rights against the old firm-Held: Such an act of adoption of new firm as debtor does not deprive the creditor enforcing his rights against the old firm particularly when there existed no fresh agreement between him and the new firm-In the facts and circumstances of the case priori-assumption that creditor entered into an agreement to discharge retiring partner from liability does not follow. Words and Phrases: `Priori-assumption’-Meaning and applicability of Plaintiff-appellant, a Bank had filed two suits against the respondent- firms for recovery of certain amount borrowed by the firm from the Bank with interest. The firm was dissolved and taken over by one of the partners. Trial Court decreed the suit against the firm and the owner of the new firm. Appellant-Bank filed appeals praying for decree against all the partners of the old firm. The High Court affirmed the decree of the trial Court. Hence the present appeals. It was contended for the appellant-Bank that the loan was availed of by all the partners after jointly executing the requisite documents for getting the loan amount; that dissolution of the firm would not affect the liabilities of partners as inter se agreement between them was not binding on the appellant-bank; and that in view of provisions in the Partnership Act the retiring partners of the firm could not escape from their liabilities against the third party. On behalf of the respondents/partners it was submitted that since notice of dissolution of the firm was given to the appellant-Bank, retiring partners should not be held liable to discharge liabilities of the firm. =Allowing the appeals, the Court HELD: 1.1. Under sub-section (2) of Section 32 of the Indian Partnership Act the liability of the retiring partner as against third party would be discharged only if there is an agreement made by the retiring partner, with the third party, and the partners of the reconstituted firm. Of course, an agreement could be implied by the course of dealing between such third party and the reconstituted firm, after retirement of a partner. In the instant case, there was no agreement between the appellant-Bank and respondent nos.2 and 3 as regards their liability in respect of the dissolved firm. There is also no evidence to show that there was an implied contract between the appellant and respondent no.4, owner of the reconstituted firm, who allegedly agreed to discharge the liabilities of respondent nos.2 and 3. It is also pertinent to note that there was no public notice under sub-Section (3) of Section 32 of the Indian Partnership Act by respondent nos. 2 and 3. Even if there was a public notice, it may not alter the position as the alleged liabilities of respondent nos. 2 and 3 were incurred by them prior to the dissolution of the firm. [217-G, H; 218-A, B] Thummala Rama Rao and Ors v. Chodagam Venkateswara Rao and Ors., AIR (1963) A.P. 154, distinguished. Lindley and Banks on Partnership (Sixth Edition) page 358, referred to. 1.2. There is no priori presumption to the effect that the creditors of a firm do on the retirement of a partner, enter into an agreement to discharge him from liability. An adoption by the creditor of the new firm as his debtor does not by any means necessarily deprive him of his rights against the old firm especially when the creditor is not a party to the arrangement and then there is no fresh agreement between the creditor and the newly constituted firm. After the creditor has taken a new security for a debt from a continuing partner, it may be a strong evidence of an intention to look only the continuing partner for the payment due from the firm, it has long been recognized that partnership is not a species of joint tendency and that, in the absence of some contrary agreement, there is no survivorship as between partners, at least so far as it concerns their beneficial interests in the partnership assets. Having due regard to these principles, the High Court erred in confirming the judgment passed by the trial court and the plaintiff appellant had every right to proceed against all the defendants in the suit. Hence, the impugned decree is modified to the extent that there shall be a decree against all the respondents in both the suits. [219-D-G] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1337 of 1995. From the Judgment and Order dated 7.3.1994 of the Karnataka High Court in R.F.A. No. 631 of 1987. WITH C.A. No. 3765 of 1995. =2003 AIR 1311, 2003(1 )Suppl.SCR213 , 2003(6 )SCC265 , 2003(4 )SCALE648 , 2003(4 )JT578

CASE NO.: Appeal (crl.) 11 of 2000 PETITIONER: Karamjit Singh RESPONDENT: State (Delhi Administration) DATE OF JUDGMENT: 26/03/2003 BENCH: S. Rajendra Babu & G.P. Mathur JUDGMENT: JUDGMENT G.P. Mathur, J. Karamjit Singh has preferred this appeal against the judgment and order dated 2.2.1996 of the Designated Judge, New Delhi in Sessions Case No.140 of 1991, … Continue reading →