Karnataka High Court
Sri K S Shashidhar vs Smt Rashmi on 22 February, 2024
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NC: 2024:KHC:7598
RFA No. 1276 of 2008
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE C M JOSHI
REGULAR FIRST APPEAL NO. 1276 OF 2008 (MON)
BETWEEN:
1. SRI K.S SHASHIDHAR,
S/O SIDDALINGAIAH,
AGED ABOUT 39 YEARS.
2. SRI K.S MAHESH KUMAR,
S/O SIDDALINGAIAH,
AGED ABOUT 37 YEARS.
BOTH ARE R/AT NO.31, EWS,
8TH CROSS, MAHESH SARVAVASTHU
MALIGE, 2ND STAGE, KENGERI,
BANGLORE-560 060.
...APPELLANTS
(BY SRI M B CHANDRA CHOODA & SRI DAYANAND
HIREMATH, ADVOCATES)
AND:
Digitally signed SMT. RASHMI,
by
ANNAPURNA G W/O RAMAKRISHNA,
AGED ABOUT 30 YEARS,
Location: High
Court of NO.4, (43), DUBASIPALAYA MAIN ROAD,
Karnataka OPP:DURGA STORE, R.V COLLEGE POST,
BANGALORE-560 059.
...RESPONDENT
(BY SRI SHOWRI H.R, ADVOCATE)
THIS RFA IS FILED U/S 96 R/W S XLI R 1 OF CPC,
AGAINST THE JUDGMENT AND DECREE DATED 19.8.2008
PASSED IN OS.NO. 2920/2005 ON THE FILE OF THE XIX
ADDL.CITY CIVIL JUDGE, BANGALORE CITY, DISMISSING THE
SUIT FOR RECOVERY OF MONEY.
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NC: 2024:KHC:7598
RFA No. 1276 of 2008
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT AND COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, THE COURT DELIVERED THE
FOLLOWING:
JUDGMENT
Being aggrieved by the judgment and decree dated 19.08.2008 in O.S.No.2920/2005 passed by the learned XIX Additional City Civil and Sessions Judge, Bengaluru, dismissing the suit for recovery of money of a sum of Rs.27,170/-, the plaintiffs have approached this Court in appeal.
2. The parties would be referred to as per their ranks before the trial Court for the sake of convenience.
3. Brief facts of the case of the plaintiffs are as below:
The plaintiffs filed a suit in O.S.No.2920/2005 against the defendant for recovery of a sum of Rs.21,000/- along with interest contending that the defendant had purchased grocery from the plaintiffs amounting to Rs.21,000/- on 11.10.2003 in order to perform the house warming ceremony of her house. The -3- NC: 2024:KHC:7598 RFA No. 1276 of 2008 purchase was made by the defendant on credit basis and in spite of the repeated demands, she did not pay and ultimately, she had issued a cheque on 12.07.2004 for a sum of Rs.5,000/- but it was not honoured. A Police complaint by the plaintiffs also went in vain. Therefore, the plaintiffs were constrained to file this suit for recovery of the sum of Rs.21,000/- along with interest thereon.
4. The defendant appeared before the trial Court on service of summons and filed the written statement contending that the defendant had purchased grocery worth Rs.5,000/- but not Rs.21,000/-. It was alleged that when the plaintiffs insisted, she issued a cheque for a sum of Rs.5,000/- as security and had paid a sum of Rs.3,000/- by cash. The remaining sum of Rs.2,000/- was paid during the month of September-2004 but the plaintiffs did not return the cheque. Therefore, it was contended that the defendant is not at liable to pay any amount to the plaintiffs.
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NC: 2024:KHC:7598 RFA No. 1276 of 2008
5. On the basis of the above contentions, the trial Court had framed the following issues:
"1. Whether the plaintiffs prove that the defendant is liable to pay a sum of Rs.27,170/-?
2. Whether Plaintiffs prove that there is cause of action?
3. Whether the plaintiff is entitled for the decree sought?
4. What Order or Decree?"
6. In order to prove his case, plaintiff No.1 was examined himself as PW.1 and Exs.P1 to P10 were marked in evidence. The defendant entered the witness box as DW.1 but no documents were marked on her behalf.
7. After hearing the arguments, the trial Court dismissed the said suit holding that the debt of Rs.21,000/- was not proved by the plaintiffs even though it was shown that there were money transactions between the plaintiffs and the defendant. The second ground on which the suit came to be dismissed was that the partnership firm of the plaintiffs was unregistered. -5-
NC: 2024:KHC:7598 RFA No. 1276 of 2008
8. Being aggrieved by the said judgment and decree, the plaintiffs are in appeal before this Court.
9. On issuance of notice, the respondent has appeared before this Court through her counsel.
10. On admitting the appeal, the trial Court records have been secured and heard the arguments by both the sides.
11. Learned counsel appearing for the appellant would submit that the trial Court has erred in holding that the plaintiffs constitute a partnership firm but it was unregistered and as such, the suit is not maintainable. He contended that the plaintiffs nowhere pleaded in the plaint that they constituted a partnership firm. What was stated in the plaint was that the plaintiffs were running a groceries store under the name 'M/s. Mahesh General Stores'. So also the defendant had not taken up any contention in her written statement that the suit is not maintainable on account of the plaintiffs constituted a unregistered partnership firm and is hit by Section 69 of -6- NC: 2024:KHC:7598 RFA No. 1276 of 2008 the Partnership Act, 1932 (hereinafter referred to as 'the Act, 1932' for short). It is submitted that a contention without a pleading could not have been upheld by the trial Court. Further, he submits that the trial Court comes to the conclusion that there existed a transaction between the plaintiffs the defendant and the fact that the defendant had purchased the grocery from the plaintiffs is not disputed. However, the defendant states that she had purchased groceries worth Rs.5,000/- but has failed to explain as to why she had to issue the cheque for Rs.5,000/- and had not collected it back from the plaintiffs. Therefore, it is submitted that the trial Court erred in holding that the transaction of Rs.21,000/- is not proved and also that the suit is hit by Section 69 of the Act, 1932.
12. In support of his contention he has placed reliance on the judgment in the case of HARDEO RAM VS. GIRDHAR LAL KANHAYIA LAL1, wherein it was held that the relation of partnership arises from contract and 1 AIR 1935 ALLAHABAD 280 -7- NC: 2024:KHC:7598 RFA No. 1276 of 2008 not from status and in particular, the members of Hindu Undivided Family carrying on a family business are not partners in the business. Therefore, father and son forming a joint hindu family do not come under the purview of Section 69 of the Act, 1932. He further relied on a decision in the case of RAGHUNATH SAHU AND ANOTHER VS. TRINATH DAS AND OTHERS2, wherein, it was held that a mere statement that parties are to be partners will not necessarily constitute them partners in law. Therefore, it has to be decided taking into account all the relevant facts taken together, keeping in view the three elements of partnership. The three elements of partnership are stated to be i) There must be an agreement entered into by all the persons concerned; ii) The agreement must be to share the profits of a business;
iii) the business must be carried on by all or any of the persons concerned acting for all. He further relied on the judgment in the case of N.A.MUNAVAR HUSSAIN 2 AIR 1985 ORISSA 8 -8- NC: 2024:KHC:7598 RFA No. 1276 of 2008 SAHIB AND ANOTHER VS. E.R.NARAYAN AND OTHERS3, wherein it was held that plea based on Section 69 of the Act, 1932 not raised in the written statement, cannot be allowed to be raised at a later stage.
13. Per contra, learned counsel appearing for the respondent contends that the PW.1 in the cross- examination clearly admits that it is a registered partnership firm but failed to produce the registration certificate. He contends that a suit is not maintainable on behalf of a partnership firm if it is unregistered. He submits that the contention of the bar for a suit under Section 69 of the Act, 1932 can be raised even without the pleading as it is a question of law. Secondly, he contends that the plaintiffs have not proved that the defendant had purchased grocery worth Rs.21,000/- from them. It is further submitted that the trial Court has rightly come to the conclusion that even though there was a transaction, 3 AIR 1984 MADRAS 47 -9- NC: 2024:KHC:7598 RFA No. 1276 of 2008 the debt of Rs.21,000/-by the defendant was not proved and therefore, is has rightly dismissed the said suit.
14. He also relied on the judgment in the case of LOONKARAM SETHIA ETC VS. MR. IVAN E. JOHN AND OTHERS4, wherein it was held that the Section 69 is mandatory in character and its effect is to render a suit by a plaintiff in respect of right vested in him or acquired by him under a contract, which he entered into as a partner of an unregistered firm, whether existing or dissolved, void. In other words, a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Section 69 of the Act, 1932. He further relied on the decision in the case of M.A.HUSSAIN AND ANOTHER VS. S.PANCHAMAL VASUDEV GANAPATH KAMATH AND BROS. AND ANOTHER5, wherein it was held that the two requirements which must be fulfilled before a suit can be instituted to enforce a contractual right by the firm 4 AIR 1977 SC 336 5 AIR 1970 MYSORE 299
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 or on behalf of the firm are that the firm is registered one and that the persons suing are or have been shown in the register of firms as partners. He also relied on the judgment in the case of THE ANDHRA PRADESH CO- OPERATIVE WOOL SPINNING MILLS LIMITED AND ANOTHER VS. G.MAHANANDI AND COMPANY WOOL MERCHANTS AND OTHERS6, wherein it was held that plea that the plaintiff firm is not a registered firm and hence, the suit is not maintainable is a jurisdictional fact and not a question of fact. Therefore, it need not have been pleaded in the written statement by the defendant to take such defence at hearing. Lastly, he relied on the decision in the case of BLOOM DEKOR LIMITED VS. SUBHASH HIMATLAL DESAI AND OTHERS7, which is relating to a company but not the partnership firm. Therefore, the said decision cannot be made applicable to the case on hand in anyway.
6 AIR 2003 ANDHRA PRADESH 418 7 (1994) 6 SCC 322
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NC: 2024:KHC:7598 RFA No. 1276 of 2008
15. After hearing the arguments by both the sides, the points that arise for consideration are as below:
1. Whether the plaintiff has proved that the defendant has purchased the goods worth Rs.21,000/- and failed to pay the same?
2. Whether the provisions of Section 69 of the Partnership Act, 1932 bereft of pleadings is applicable to the facts of the present case?
Reg. Point No.1:
16. The plaintiffs in the plaint have contended that they were running a business under the name and style 'Mahesh Sarva Vastu Malige' and was registered as 'M/s.Mahesh General Stores'. They were running the grocery business and had obtained the license under the Karnataka Shops and Business Establishments Act and was an assessee to the sales tax. The defendant was a regular customer and she purchased grocery worth Rs.21,000/- on 12.10.2003 on credit basis. It is stated that the bill was also issued to the defendant and the defendant had signed the credit bills. It is their contention that the defendant did not pay the amount and therefore,
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 they insisted, when a cheque of Rs.5,000/- given but it was not honoured. Thereafter, they had issued notice and it was replied by the defendant denying the claim and therefore, they were constrained to file the suit.
17. Per contra, the defendant contends that she had purchased the goods worth Rs.5,000/- on credit basis and later, she has paid the said sum of Rs.5,000/- in two installments of Rs.3,000/- and Rs.2,000/- and therefore, there are no dues to be paid by her.
18. In order to prove the transaction of Rs.21,000/- , the plaintiff relies on his own testimony as PW.1 and the Exs.P2 and P10, which are the cheque issued by the defendant and the bill book maintained by him. Obviously, the defendant had not produced any documentary evidence to show that she had paid the sum of Rs.5,000/- in two installments of Rs.3,000/- and Rs.2,000/-. Evidently, these payments were made subsequent to her issuing the cheque as per Ex.P2. Therefore, if a part payment was made, it could be expected from any prudent
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 person that he or she obtains the receipt for payment of such part payments. No such documentary evidence is available on record.
19. However, the burden of proving the debt of Rs.21,000/- is on the plaintiffs. The plaintiffs rely on the bill book produced at Ex.P10. It shows that Ex.P10(a) to
(d) are the credit bills and each of the pages of these bills have the signature of the plaintiff No.2 and the signature of the customer. Evidently, these bills are the carbon copies or the duplicate bills and it is the case of the plaintiffs that the original had been issued to the defendant. A perusal of the signature of the customer, on Ex.P10(d) would show that the defendant had signed it. On the leaf at Ex.P10(d), the signature of the defendant is visible but on the other pages, it is not clearly visible. Evidently, the total amount of the credit bill in Ex.P10(d) is Rs.21,000/-.
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NC: 2024:KHC:7598 RFA No. 1276 of 2008
20. The second document relied by the plaintiffs is Ex.P2, the cheque issued by the defendant. The defendant contends that when there was delay in payment, the plaintiffs insisted for the payment and therefore, as a security, she had given the cheque stating that she would pay the amount in cash. The defendant states that a sum of Rs.3,000/- was paid and in September-2004, she paid the remaining sum of Rs.2,000/-. It is pertinent to note that the transaction took place on 12.10.2003 and it is not known why the defendant did not pay the amount till September-2004. When she contend that she did not have the habit of purchasing the goods on credit basis, it is surprising that she had not paid the amount till September-2004 as stated by her in cross-examination. It is also pertinent to note that when she had received the credit bill and she had issued the cheque, it is not possible to believe that she had paid a sum of Rs.3,000/- and Rs.2,000/- in two installments.
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NC: 2024:KHC:7598 RFA No. 1276 of 2008
21. The PW.1 in his testimony, states that the defendant issued the cheque for Rs.5,000/- and it was a open cheque and when he went to encash the same, he was informed that there was insufficient funds in the account. The cross-examination in this regard is clear and he has stated that the cheque was not honored by the bank.
22. It is pertinent to note that the reason for the plaintiffs claiming a sum of Rs.21,000/- even though the defendant had purchased goods worth Rs.21,000/- is not forthcoming in the cross-examination of PW.1. There was no reason for enmity between the plaintiffs and the defendant. The plaintiffs were traders and were running a grocery shop and the defendant was purchasing the grocery from them. If at all the defendant was paying the amount in cash, there was no reason for the plaintiff to claim Rs.21,000/- from her. So also, there was no reason for the defendant to issue a cheque of Rs.5,000/- as security. Therefore, the contention of the defendant that
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 the plaintiffs have concocted the documents and have falsely claimed the money from the defendant is not acceptable.
23. It is also pertinent to note that the parties had approached the Police and they had advised to resolve the dispute in the Court. When we examine the probability of the circumstances, it is evident that there was no reason for the plaintiffs to make a false claim against the defendant. There have been documents which show that the defendant had entered into a transaction of purchase of goods and the fact that there was a transaction is an admitted. If so, why the plaintiff had issued a cheque for Rs.5,000/- as a security is also a circumstance which goes against the defendant. When we examine the evidence available on record in the form of oral testimony of PW.1 and DW.1, coupled with the documents produced by the plaintiff, it is clear that there was a transaction between the plaintiffs and defendant and there is no reason to hold that the transaction was not for Rs.21,000/- but it was
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 only for Rs.5,000/-. Ex.P10 probabilizes the case of the plaintiff. Therefore, it is evident that the trial Court has lost track of the events and failed to appreciate the evidence on the touchstone of the preponderance of probability.
24. The trial Court in the impugned judgment holds that in the cross-examination of the PW.1, it was suggested that the signature on Ex.P2 is concocted and if the cross-examination is read with the evidence of DW.1, it is not in line. A perusal of the cross-examination of PW.1 regarding Ex.P2 would show that nowhere he has disputed the signature on Ex.P2-Cheque issued by the defendant. What was stated by him is that the name of the payee is in different ink and the amount mentioned is in a different ink. On the other hand, the cross-examination of PW.1 shows that she has admitted Ex.P2 bears her signature. It is pertinent to note that the Ex.P4, which is the endorsement issued by the Police nowhere mention that a sum of Rs.4,000/- was paid or was due. It is pertinent to
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 note that in the reply notice issued by the DW.1, which is produced at Ex.P9, she states that the Police had advised to pay a sum of Rs.4,000/- and close the dispute. Therefore, it is evident that the trial Court unnecessarily brought in irrelevant parts of the cross-examination to hold that the claim of the plaintiffs is unbelievable.
25. Under these circumstances, it is evident that the circumstances and the evidence available on record suggest that the defendant had purchased goods worth Rs.21,000/- but had not paid the amount to the plaintiff. Consequently, point No.1 is answered in the affirmative. Reg. Point No.2:
26. The defendant has raised the contention that the PW.1 admits in the cross-examination that it is a registered partnership firm and therefore, the claim of the plaintiffs is hit by Section 69 of the Act, 1932. It is the case of the plaintiffs that they are the brothers and they are running the grocery shop. Nowhere in the plaint it is stated that it is a registered partnership firm. In the cross-
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 examination, PW.1 was questioned as to whether it is a registered partnership firm. He stated that it is a registered partnership firm. His assertion that it is a registered partnership firm is clear. However, the registration certificate is not produced but the certificate under the Shops and Business Establishments Act is produced at Ex.P1.
27. As noted supra, the judgment of the Allahabad High Court in the case of HARDEO RAM (Supra) lays down that the relation of the partnership arises from the contract and not from the status. There is no question on behalf of the defendant to the PW.1 as to whether they are sharing the profits. The essential ingredients of the partnership firm are as laid down in the case of RAGHUNATH SAHU (Supra). The three elements of the requirements of a partnership firm should have been elicited in the cross-examination to establish that it was a unregistered partnership firm. However, PW.1 in the cross- examination states that it is a registered partnership firm,
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 but the ingredients that are essential to establish that it is a partnership are not elicited in the cross-examination.
28. The second aspect to be noted is that the plaintiffs are brothers. Nowhere in the plaint they contended that it is a partnership firm. Nowhere in the written statement the defendant contended that the suit is hit by provisions of Section 69 of the Partnership Act, 1932. If a contention was raised that the plaintiffs' firm is not a registered partnership firm, that would have been met by the plaintiffs. Nowhere the plaintiffs contended that they formed a partnership firm and therefore, it was necessary for the defendant to raise such an issue. If such a contention was raised in the written statement, the plaintiffs could have met such a contention either by producing the registration certificate of the firm or by stating that it is the family business or that is the proprietary business. Therefore, it is evident that simply because the PW.1 was questioned in cross-examination, it
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 cannot be concluded that it is registered partnership firm and as such, it is hit by Section 69 of the Act, 1932.
29. Learned counsel appearing for the defendant has placed reliance on the judgment in the case of THE ANDHRA PRADESH CO-OPERATIVE WOOL SPINNING MILLS LIMITED (Supra) to contend that such a contention need not be raised in the written statement as it is a question of law. Ofcourse, the question whether the plaintiffs's is the registered partnership firm or not can be a question of law, but the question whether it is a partnership firm or not is invariably a question of fact. Simply because the plaintiffs in the cross-examination had stated that it is a partnership firm, it cannot be accepted. The defendant if at all she knew that it is unregistered partnership firm, it should have been stated in her written statement. In the judgment of THE ANDHRA PRADESH CO-OPERATIVE WOOL SPINNING MILLS LIMITED (Supra), it was observed that it is plaintiffs who can lead and prove that the firm is a registered one, if at all it is
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 and therefore, the burden to plead and prove that it is registered firm and therefore, it is entitled to maintain the suit against the third party is always on the firm in view of the legislative mandate under Section 69 of the Act, 1932. In the case on hand, there is no pleading on behalf of the plaintiffs also. There is no pleading of behalf of the defendant also. Therefore, the said question could not have been subject matter of the dispute. It was a suit for recovery of money simplicitor on account of the sale of goods. Hence, it has to be held that the plaintiffs being the brothers were running the business under the name and style 'Mahesh Sarva Vastu Malige' and as such, the conclusions reached by the trial Court are not sustainable in law. Hence, the appeal deserves to be allowed and hence, the following:
ORDER The appeal is allowed.
The plaintiff is entitled to recover a sum of Rs.27,170/- along with interest at the rate of 6% per
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NC: 2024:KHC:7598 RFA No. 1276 of 2008 annum on the principal sum of Rs.21,000/- from the date of the suit till realization.
Accordingly, the suit is decreed with costs.
Sd/-
JUDGE NR/-List No.: 1 Sl No.: 38