Kissendoss v. Khatau Makanjee Spinning And Weaving Co. Ltd.

Wallis, C.J:— This is a suit by the plaintiffs against the members of a joint trading family who acted as agents for the plaintiffs. The suit was brought more than three years after the termination of the agency and is admittedly barred, unless there was an acknowledgement in writing by the defendants or their duly authorized agent to take the case out of the statute. The only acknowledgment relied on is the schedule of liabilities signed by defendant 1, who was the managing member of the family, after presents his petition in insolvency. The leanud Judge on the evidence came to tbs conclusion that the petition was filed with the cognizance and authority of the other defendants and with the intention of evading the demands of their creditors and decreed the suit, and defendant 2 has appealed. It has recently been held in Srigopal Ghiranjilal v. Dhanalal Ghasiram(1) and other cases that an insolvent by entering a debt in the schedule which he has to sign makes a sufficient acknowledgment of the debt to satisfy the provisions of Section 19 of the Lim. Act, though the Law in England is different. It is however quite another thing to treat such an acknowledgment as made by the insolvent, on behalf of any one but himself, in obedience to the statutory duty imposed upon him, and I see no reason for so holding.

2. In England the insolvency of a partner operates as a dissolution of the partnership but not so in India under the Contract Act, and an insolvent partner though his share had vested in the Official Assignee might conceivably continue to take part in the management of the business.

3. Under Section 21 of the Lim. Act, however, one partner is not to be rendered liable by reason only of a written acknowledgment signed by another partner, and the fact that a partner has been adjudicated an insolvent and has in conseqnence filed a signed schedule of debts does not, in my opinion, raise any implication that he was authorized to make that acknowledgment or did in fact make it on behalf of the other partners or of any one but himself. There may, I think, be circumstances which raise an implication of authority in one partner to bind the other partners by a written acknowledgment of indebtedness, but such implication can only extend to acknowledgments made in the ordinary course of the partnership business and cannot be extended to acknowledgments made in the course of such a purely personal matter as insolvency proceedings, where the insolvent cannot be considered as purporting to act on behalf of any one but himself. Similarly with regard to acknowledgments by the managing member of a joint Hindu family, it is well settled that a managing member has implied authority to make acknowledgments within the statute, and it has been contended before us that the fact that he has been adjudicated an insolvent does not determine his position as managing member, or that at any rate he may still be allowed to go on acting as managing member, as it is suggested, the evidence shows that he did in two cases and if so the implication of authority continued. Evan supposing however that he could retain the position of managing member and the implied authority to make acknowledgments in the ordinary course of the joint family business, I do not think that he can he considered to have been acting or authorized to act under that implied authority in signing his schedule in the insolvency proceedings. Prima facie, as I have said in so signing he is acting for himself and for himself only under the statutory duty. The learned Judge has drawn the inference that the object with which the petition was filed was to throw the whole of the previous liabilities on defendant 1 and to enable the business to go on as before, and has drawn the further conclusion that the petition must have been filed with the cognizance and authority of the other defendants. The proceeding was not, however, a proceeding on behalf of the other defendants or defendant on their authority but was the personal act of defendant 1 and for the reasons already given, it seems to me, with great respect, the signature cannot be treated either as made on behalf of the other defendants or as in fact authorized by them. I would therefore allow the appeal as regards the appellant and dismiss the suit as against defendant 2 with costs throughout as regards him.

Phillips, J.:— The point on which the learned Chief Justice has decided this appeal was not taken in the course of arguments, but a large number of reported cases were cited which do not seem to me to have any very definite bearing on the present case. If defendant 1's acknowledgment had been made in the ordinary course of business, the question whether it was sufficient to bind the I other defendants would have been one of considerable difficulty, but taking, it as an acknowledgment made in accordance with statutory provisions and not in the ordinary course of business, I agree that it cannot be presumed to have been signed on the authority of the other defendants and on their behalf, and concur in the order proposed.

S.N/R.K

4. Appeal allowed.