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IN THE COURT OF THE PRINCIPAL SENIOR CIVIL JUDGE , CHITTOOR.
Present :- Sri Y. Parusuram, B.Sc.,M.A.,M.L.,
Principal Senior Civil Judge.
Monday the Fifteenth day of April, 2013
O.S. No. 15 of 2003
Between:- M/s Master Chits ( Regd. ) rep. by its Managing Partner Sri B. Babu Rao ...
Plaintiff And:-
1. M/s Meenakshi & Co.( regd. ) D. No. 16-196, Devarajulu Reddy Street, Chittoor.
2. D. Raghunatha Chetty
3. K. Nataraja
4. V.Krishna Reddy (died)
5. K.I. Narasimha Reddy
6. A. Purushotham Reddy (died)
7. D. Venkatesam Ramesh
8. Smt. Krishnamoorthy Lakshmi
9. Guva Veedhi Kumaraswamy Reddy 10.Smt. D. Saraswathi
11.Narasimha Ravindra Babu 12.V. Mani 13.V. Vijayasekara Reddy 14.V. Thyagarajulu Reddy 15.N. Madhusudhana Reddy ( Added as per orders in I.A.No. 724/2004
Dt. 1-3-2006)
16.A. Hamsamma
17.A. Ashok Babu (Added as per orders in I.A.No. 524/2005
Dt. 1-3-2006)
...
Defendants
This suit coming on 15-3-2013 before me for final disposal upon perusing the material papers on record and upon hearing the arguments of Sri C. Sudhakar Gupta, advocate for plaintiff and of Sri M.
Subramanyam Reddy, advocate for 5th defendant, Sri N. Kesvaulu Reddy, 2 advocate for 7th defendant and Sri D. Rajendra Reddy, advocate for defendants for 13 to 17, the defendants 1 to 3, 8 to 12 having remained exparte, the defendants 4 and 6 having died pendenti lite, and having stood over for consideration till this day, this court made the following:-
J U D G M E N T
Suit is filed for recovery of a sum of Rs. 2,94,000-00 from the defendants 1 , 2 and 4 to 12 jointly and severally to pay the entire suit amount and to direct 3rd defendant to pay the suit amount from out of the estate of the deceased Partner K. Gopala Chetty with future interest and costs.
2. The averments mentioned in the plaint in brief are as follows:- Plaintiff is a registered partnership firm doing chit business under the name and style of Master Chits and place of business is at
Door No. 8-145, Jandamanu street, Chittoor and one B. Babu Rao is one of the partners of the plaintiff’s firm and the same is registered under
A.P. Chit Fund Act. 1st defendant is also registered partnership firm dealing in business of advancing money having its place of business at Door No. 16-186, Devarajulu Reddy Street, Chittoor . The 2nd defendant and defendants 4 to 12 are partners of 1st defendant firm and 3rd defendant is the son of late K. Gopal Chetty , who was also one of the partners of 1st defendant firm. 1st defendant as a subscriber of the chit bearing No. MC-4 under bye-law No. 373/98-99 run by the plaintiff and the chit value is Rs. 5,00,000/- and the amount is to be paid in 40 equal monthly installments. It is also mentioned in the plaint that the said chit was commenced on 2-2-1999 and terminated on 2-5-2002 .
The 1st defendant executed chit agreement in favour of the plaintiff on 23-1-1999. As per bye-law of the chit and terms and conditions of the chit, every subscriber shall pay monthly installments regularly and in case of default, the defaulted subscriber shall pay the defaulted installment amount with interest at 24% p.a. and the defaulted subscriber is not entitled for claiming dividends. In case of any default in 3 payment of installments, the entire outstanding installments including the future chit installments amount shall become payable at once.
Plaintiff also contended that 1st defendant through its partners 2nd defendant and 4th defendant participated in the auction in respect of 12th installment and became a prized subscriber having quoted dividend of Rs. 1,75,000/- and plaintiff paid the chit amount of Rs.
3,25,000/- after deducting the dividend amount to the 1st defendant under Banker’s cheque bearing No. 231628 dated 6-1-2000 of M/s
Lakshmi Vilas Bank Limited , Chittoor and the same was encashed by the 1st defendant. 1st defendant through its partners 2nd defendant and 12th defendant having jointly agreed to pay the installments and having received the money, have executed the demand promissory note towards future installments amount payable by the 1st defendant through its partners and that 1st defendant committed default in paying the chit installments and a sum of Rs. 2,62,500/- is payable by the 1st defendant towards the balance of 21 installments amount with interest. All the defendants have got knowledge about the day to day business transaction of the 1st defendant including the suit transaction.
In spite of repeated demands made by the plaintiff, 1st defendant failed to clear the entire dues and plaintiff issued a registered notice demanding the 1st defendant to pay the balance chit amount of Rs.
2,62,500/- with interest and that 3rd defendant gave a reply notice dated 17-12-2001 and 18-12-2001 with false claim. Since the suit transaction is for commercial purpose, and all the defendants are business persons, defendants are liable to pay the suit amount with further interest as per contract at 12% p.a. and that defendants are not entitled to claim any relief under A.P. Debt Relief laws. The defendants are found due a sum of Rs. 2,94,000/- as on the date of filing of the suit and also they are liable to pay interest at 12% p.a. from the date of suit till the date of realization. 2nd defendant and defendants 4 to 12 are partners of the 1st defendant firm and becoming subscriber of the plaintiff chit as 4 referred above and participated in the bidding and received the chit amount. 3rd defendant being the son of late K. Gopal Chetty who was a partner is liable to pay the suit amount from out of the estate of late K.
Gopal Chetty as 3rd defendant inherited the same and is in possession along with other defendants , who are partners . Hence the suit.
3. Defendants 1 to 3 remained exparte. 4th defendant died. Defendants 5,6,7, 8 filed written statements separately and 9th defendant remained exparte. 10th defendant filed written statement. 11th defendant remained exparte. Defendants 12 and 13 filed written statements separately and defendants 14 and 15 adopted the written statement of 13th defendant. 16th defendant adopted the written statement of 6th defendant and also adopted the additional written statement of 17th defendant.
In this case 4th defendant died and defendants 13 to 15 are added as legal representatives of 4th defendant as per orders dated 1-3-2006. 6th defendant died and defendants 16 and 17 are added as legal representatives of 6th defendant.
4. The contentions mentioned in the written statement of 5th defendant in brief are as follows:- It is false to state that plaintiff firm is a registered partnership firm and that D. Babu Rao is not one of the partners of the partnership firm and he has no right to file the present suit on behalf of plaintiff firm and suit is liable to be dismissed.
The contention of the plaintiff that 1st defendant is a registered partnership firm is false and present suit is a collusive one filed at the instance of defendants 2 and 4 and the said transaction is nothing to do with the 5th defendant . It is false to state that 1st defendant participated in the bid and agreed the bye-laws 373/98-99. The 5th defendant never agreed to be a subscriber in chit and never paid any installments as contended in the plaint. The 5th defendant is nothing to do with the alleged chit agreement dated 23-1-1999 and the said agreement appears to have been brought into existence at the instance of Raghunadha Chetty ( 2nd 5 defendant herein ) and that 1st defendant never authorized anybody to be a member in the chit or to become a member of the chit . Defendants 2 and 4 have no right and authority to represent the 1st defendant firm.
Due to enmity plaintiff and defendants 2 and 4 colluded together and got the present suit filed. The allegation that they( defendants 2 and 4) have participated in the chit is not correct and must have been in their individual capacity for which their acts are not binding on the 1st defendant and other defendants. After issuing a notice , 5th defendant made enquires and questioned about the illegal acts of the plaintiff, for which 1st plaintiff represented that the chit was subscribed by D.
Raghunadha Chetty (2nd defendant herein ) in his individual capacity and plaintiff also furnished Xerox copy of cheque dated 6-1-2000 issued in the name of D. Raghunadha Chetty. Therefore the D. Raghunadha
Chetty ( 2nd defendant ) alone is liable to pay any amount due towards chit since it is individual chit. The beneficiary is not the 1st defendant . Defendants 2 and 4 colluded together and brought into existence the alleged suit promissory note and the alleged agreement dated 23-1- 1999. It is false to state that outstanding amount due by the 1st defendant is a sum of Rs. 2,62,500/-. The 5th defendant is nothing to do with the suit transaction. After receipt of the notice issued on behalf of plaintiff, 5th defendant approached the plaintiff and plaintiff promised him that he has nothing to do with the suit transaction. Hence 5th defendant did not issue any reply. It is false to state that 1st defendant has to pay balance amount of Rs. 2,62,500/-. The copy of ledger filed into the court is not correct. Payment of amount to D. Raghunadha
Chetty indicates the plaintiff’s conduct and collusiveness of the suit. The suit is liable to be dismissed with costs.
5. The contentions mentioned in the written statement of 6th defendant in brief are as follows:- 6th defendant denied the said plaint averments . Apart from that contended that 6th defendant came to know that an amount of Rs. 3,25,000/- was paid by the plaintiff to D.
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Raghunadha Chetty ( 2nd defendant ) and that he encashed the same and the said transaction is nothing to do with the 1st defendant and 6th defendant. The 1st defendant was not paid any amount and as such the question of execution of demand promissory note in favour of the plaintiff does not arise and that even if there is any such promissory note executed by the 1st defendant, represented by its partners for Rs.
3,50,000/- 2nd defendant and 12th defendant , it is not supported by consideration and therefore the promissory note is not binding on the 6th defendant. The 2nd defendant colluded with the plaintiff and created certain documents and thereby 2nd defendant swindled the money of the 1st defendant. It is false to state that all the defendants have got knowledge about the day to day business of the 1st defendant. The plaintiff never made any demand on the defendants and no notice was served on 6th defendant. The 6th defendant is not a businessman and he is an agriculturist living by cultivation and he invested a sum of Rs.
25,000/- in the 1st defendant firm, but the invested amount was swindled by some of the partners of the defendant firm and 6th defendant received nothing from 1st defendant firm. It is false to state that 6th defendant is not entitled to claim any relief under A.P. Debt Relief
Act. He also contended that there is no cause of action and calculations made in the memo of valuation and ledger are incorrect. Plaintiff is not entitled to claim any relief in the suit and 6th defendant is not liable to pay any amount to the plaintiff. Hence the suit is liable to be dismissed.
7. The 7th defendant also denied the said averments mentioned in the plaint. Apart from that 7th defendant contended that plaintiff firm did not comply section 69(2) of the Indian Partnership Act, 1932 and hence the suit is hit by section 69(2) of the Act and that suit is barred by limitation. The court fee paid and memo of valuation is not correct. Since the transaction of the 2nd defendant is his individual transaction with the plaintiff’s firm and the said transaction is not binding on the 1st defendant’s firm and so also on the other defendants. The 1st 7 defendant never authorized the defendants 2 and 12 to execute suit documents on behalf of 1st defendant’s firm for their individual benefits.
1st defendant firm never enrolled as a subscriber in the alleged plaintiff’s firm and no partner is authorized to do so and defendants 2 and 12 are close relatives. 2nd defendant being brother in law of the plaintiff, colluded together at the instance of the 2nd defendant all the suit documents were created and fabricated for unlawful gain. 1st defendant firm did not authorize the 2nd defendant to execute any document on behalf of the 1st defendant firm for his personal benefit. The alleged cheque was issued in the name of 2nd defendant by the plaintiff’s firm and it clearly establishes that 2nd defendant enrolled as subscriber of the plaintiff’s firm in his individual capacity and hence 7th defendant is not liable to any acts done by defendants 2,4 and 12. The 7th defendant never gave any consent to 2nd defendant and 12th defendant to act on behalf of 1st defendant’s firm as such 7th defendant is not liable to pay any amount to the plaintiff’s firm and the suit is liable to be dismissed with costs.
8. The contentions mentioned in the written statement of the 8th defendant in brief are as follows:- 8th defendant contended that this court has no jurisdiction to entertain the suit and that plaintiff’s firm did not comply the provisions of Chit Funds Act and that 1st defendant has no legal entity and that 1st defendant must be represented by an individual, in the absence of the same the suit is not maintainable against the 1st defendant as it is not represented by an individual. 1st defendant never became a member of the chit of the plaintiff and never agreed to be a subscriber for any chit and never paid any installments to the plaintiff and so 8th defendant is nothing to do with the alleged chit transaction and the agreement. 1st defendant did not receive any amount from the plaintiff under the alleged chit , as 1st defendant never enrolled in the chit. In the year 1995 itself the 8th defendant retired from 1st defendant’s firm by closing her account and so 8 after that she is no way connected with the 1st defendant and 8th defendant also gave a reply to the plaintiff firm dated 18-12-2001 and that 8th defendant is not a necessary party to the suit proceedings. S.
Babu Rao has no locus standi to file the suit. It is denied that 3rd defendant is the sole legal heir as contended by the plaintiff. It is false to state that 1st defendant is subscriber of the chit. The 8th defendant further denied the allegation that 1st defendant participated in the auction through its partners 2nd defendant and 4th defendant in respect of 12th installment . It is also denied that plaintiff paid the chit amount of
Rs. 3,25,000/- by way of Banker’s cheque and that 1st defendant encashed the same. 8th defendant further denied that allegations that 1st defendant has committed default in paying the chit installments and a sum of Rs. 2,62,500/- is payable by 1st defendant towards balance of 21 installments. It is false to state that all the defendants got knowledge about the day to day business transaction of the 1st defendant including the suit transaction. The 8th defendant also contended that 8th defendant closed her account and finalized the account with the 1st defendant’s firm in the year 1995 itself. The defendants 2, 4 and 12 have no right to represent the 1st defendant and they are not empowered to enter into any agreement or execute any document on behalf of 1st defendant firm.
Plaintiff colluded with the said defendants 2, 4 and 12 and got filed the frivolous suit by creating documents to have wrongful gain and the acts of said defendants 2,4 and 12 are not binding on the 1st defendant and other defendants. Copy of notice issued to the 1st defendant and to the 12th defendant dated 13-12-2001 was served on 8th defendant and 8th defendant gave reply to the same on 18-12-2001. 8th defendant also denied that as on the date of filing of the suit, the defendants are due a sum of Rs. 2,94,000/- and that they are liable to pay the same with interest at 12% p.a. There is no cause of action to file the suit. There are no merits in the suit and the suit is liable to be dismissed with costs.
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9. The contentions mentioned in the written statement of 10th defendant are as follows:- 10th defendant denied that plaintiff is a registered firm and that first defendant is a subscriber of the chit of the plaintiff’s firm. The 10th defendant is not aware of the such alleged chit. Plaintiff colluded with 2nd defendant and 12th defendant and that at the instance of 2nd defendant , all the suit documents are cooked up for unlawful gain to the plaintiff. The 2nd defendant is not authorized to execute any document on behalf of 1st defendant for his personal benefit and that 1st defendant never enrolled in the chit and that never received any chit amount. The 10th defendant came to know that 2nd defendant himself enrolled and subscribed the chit and not as a
Managing Partner or member of the 1st defendant firm and this defendant also came to know that 2nd defendant in his individual capacity has taken the money from the plaintiff , but created documents in the name of the firm. No amount was paid to the 1st defendant firm by the plaintiff and even if plaintiff has paid any amount to the 2nd defendant , it is 2nd defendant who is personally liable to pay the amount and not from the 10th defendant. It is fasle to state that 1st defendant encashed the cheque and in fact no cheque was issued in the name of the 1st defendant firm and it was issued in the name of the 2nd defendant in his individual capacity, for which the 1st defendant firm or 10th defendant are not liable. The promissory note dated 6-1-2000 executed by 2nd defendant in favour of plaintiff is not binding on the 10th defendant, as it is not executed by the 1st defendant’s firm and the said promissory note is not supported by consideration. It is false to state that 1st defendant committed default. He also contended that after receiving notice, the 10th defendant approached the plaintiff Babu Rao who pleaded that 10th defendant has got nothing to do with the transaction entered into with the 2nd defendant and the amount that was paid to the 2nd defendant is in his individual capacity and not in the name of the firm and consequently no reply was given . The 10 description of 1st defendant firm is false and that 1st defendant ‘s firm can not be represented as it is and it ought to have been represented by human being and therefore the plaint is defective. A fraud is played by the plaintiff in collusion with the 2nd defendant and 12th defendant to fasten the alleged liability over the partners of 1st defendant’s firm illegally. If at all 1st defendant firm is a member in the alleged chit, the cheque ought to have been issued in the name of firm , but not in individual name. The 10th defendant contended that 1st defendant’s firm was dissolved long ago and it is not in existence. No individual is entitled to deal with the partnership firm for the benefit derived by him individually and also contended that no cheque was issued in the name of the 1st defendant firm and 1st defendant did not utilize the money and 10th defendant being erstwhile partner of the firm, is not liable to pay the amount. The said Babu Rao has no right to represent the firm which is unregistered and the suit is liable to be dismissed with costs.
10. The 12th defendant in his written statement contended that he resigned from the partnership firm and severed his connections with the 1st defendant’s firm long ago and he has no connection with the 1st defendant at any time thereafter and that suit as framed is not correct as 1st defendant firm was not represented by anybody as per the plaint. No bye-law of the alleged agreement was served on the 12th defendant and 12th defendant is not aware of the alleged execution of chit agreement by 1st defendant’s firm and execution of chit agreement must be collusive affair effected between 2nd defendant and plaintiff’s firm and 12th defendant has nothing to do with the allegations made in the plaint. The 12th defendant has no knowledge about the participation of the 2nd defendant and 4th defendant in the alleged auction. He also contended that no amount is paid by 1st defendant’s firm on 6-1-2000 and that 1st defendant’s firm nor any other partners have encashed the cheque amount as pleaded in the plaint. There is collusion between 2nd defendant and plaintiff’s 11 firm in the entire transaction connected to the alleged chit by the plaintiff . The 12th defendant never signed on the pronote as alleged in the plaint along with 2nd defendant. The alleged signatures in the promissory note are fabricated and the signature of the 12th defendant was obtained in respect of another transaction , for which there was also exchange of notices and the said signature might have been used by the plaintiff and 2nd defendant and created the suit pronote by forging his signature. It is a fact that there was a exchange of notice between plaintiff’s firm and 12th defendant and issuance of reply by 12th defendant was not mentioned in the plaint and the contents of the said reply was not denied by the plaintiff in the plaint, which amounts to admission of the contents of the reply notice issued by the 12th defendant. The 12th defendant was not a partner of the 1st defendant firm at the time of alleged chit and 1st defendant firm was never a subscriber of the alleged chit with the plaintiff firm. The 2nd defendant used the name of the 1st defendant’s firm in collusion with the plaintiff to claim false and frivolous claims against the erstwhile partners of the 1st defendant’s firm. The 12th defendant also contended that this court has no jurisdiction to entertain the suit. The plaintiff’s firm never gave any cheque in favour of 1st defendant’s firm and that 1st defendant’s firm has not subscribed any chit with the plaintiff’s firm and so the 12th defendant is not liable to pay any amount to the plaintiff and the alleged issuance of cheque and chit transaction are collusive affairs between plaintiff’s firm and 2nd defendant in his individual capacity and hence 12th defendant is not liable to pay any amount and the suit is liable to be dismissed with costs.
11. The contentions mentioned in the written statement of the 13th defendant in brief are as follows:- The plaintiff is not a registered firm under A.P. Chit Funds Act and plaintiff has to prove the same as per the provisions of section 69 of Partnership Act. The 1st defendant is a partnership firm in which 4th defendant was one of the 12 partners . The contention that 3rd defendant is only a legal heir of late
K. Gopal Chetty is not admitted by 13th defendant. It is false to state that 1st defendant through its partners defendants 2 and 4 have participated in the auction in respect of 12th installment became a prized bidder having forgone dividend of Rs. 1,75,000/- . 13th defendant also contended that plaintiff did not pay the chit amount of Rs.
3,25,000/- after deducting the forgone amount to the 1st defendant under Banker’s cheque No. 231628 drawn on Lakshmi Vilas Bank Limited
dated 6-1-2000 and that 1st defendant encashed the same . He also
contended that 1st defendant has not participated in the auction of the chit and no amount was paid to the 1st defendant. The 13th defendant came to know that a sum of Rs. 3,25,000/- was paid to D. Raghunadha
Chetty ( 2nd defendant herein ) and said D. Raghunadha Chetty encashed the same and so the transaction is nothing to do with the 1st defendant and 13th defendant. The 1st defendant was not paid any amount and therefore question of 1st defendant , represented by two of its partners executing the demand promissory note in favour of the plaintiff does not arise. Even if there is any promissory note dated 6-1-2000 was executed by 1st defendant by its partners 2nd defendant and 12th defendant for
Rs. 3,50,000/- , the same is not supported by consideration and the suit promissory note is not binding on this defendant. The 13th defendant came to know that 2nd defendant colluded with the plaintiff, created certain documents and thereby 2nd defendant swindled the money of the 1st defendant and caused huge loss to the 13th defendant and other defendants. It is false to state that all the defendants got knowledge about the day to day business of the 1st defendant and the suit transaction is false. The 13th defendant is not aware of the receipt of the chit amount by the 1st defendant. The 4th defendant and 13th defendant are not businessmen and 13th defendant is an agriculturist eking out his livelihood by doing cultivation. 4th defendant invested a sum of Rs.
25,000/- in the 1st defendant’s firm , but the said invested amount 13 was swindled by some of the partners and 13th defendant did not receive any thing from the 1st defendant’s firm. The 13th defendant also contended that joint family of 13th defendant and 4th defendant are nothing to do with the suit transaction and even if 4th defendant is found liable to pay any amount, the same may be out of the estate of the 4th defendant in the joint family. The memo of valuation and ledger are incorrect. Plaintiff is not entitled to claim any relief in the suit and 13th defendant is not liable to pay any amount to the plaintiff. The suit is liable to be dismissed with costs.
12. The contentions mentioned in the additional written statement of the 17th defendant in brief are as follows: - The 17th defendant contended that the suit is not maintainable against the 17th defendant as well as his mother 16th defendant who are legal heirs of the deceased 6th defendant. The 17th defendant as well as 16th defendant are not personally liable to pay any amount to the plaintiff , as no amount was utilized for the joint family of this defendant by the 6th defendant. There are no merits in the suit and the suit is liable to be dismissed with costs.
13. Basing on the pleadings, the following issues were settled for trial:- (1) Whether the plaintiff firm is a registered one and the suit is properly filed by the authorized person ? (2) Whether 1st defendant firm is not a registered firm? (3) Whether the suit transaction is true, valid and binding on all the defendants ? (4) Whether the interest claimed is correct ? (5) To what relief ?
14. Issues 1 and 2: The case of the plaintiff is that plaintiff’s firm is a registered one represented by its Managing partner
B. Babu Rao and that 1st defendant is a partnership firm dealing business of advancing money having its place of business at Chittoor bearing Door
No. 16-186,Devarajulu Reddy Street, Chittoor and defendants 4 to 12 are 14 partners of 1st defendant’s firm and that 3rd defendant is the son of late K. Gopal Chetty , who was also one of the partners of the 1st defendant’s firm and that 3rd defendant is the sole legal heir of said
Gopal Chetty and that 1st defendant is a subscriber of the chit bearing
No. MC-4 under bye-law No. 373/98-99 run by the plaintiff and that value of the chit is Rs. 5,00,000/- to be subscribed in 40 monthly installments at the rate of Rs. 12,500/- per month and that chit was commenced on 2-2- 1999 and terminated on 2-5-2002 and that 1st defendant through its partners defendants 2 and 4 participated in the auction in respect of 12th installment and became prized subscriber having foregone dividend of Rs. 1,75,000/- and plaintiff paid chit amount of Rs.
3,25,000/- to the 1st defendant by way of Banker’s cheque and 1st defendant encashed the same and 1st defendant firm through its partners defendants 2 and 12 executed demand promissory note in favour of the plaintiff for Rs. 3,25,000/- promising to pay the installments having received the money and that 1st defendant’s firm committed default in paying the chit installments and a sum of Rs.
2,62,500/- is payable by the 1st defendant towards balance of 21 installments and that all the defendants have got knowledge about the day to day business of the 1st defendant and its dealings with the plaintiff and suit transaction and subsequently 1st defendant failed to clear the entire dues. Therefore the defendants are liable to pay suit amount. Whereas the defendants contended that plaintiff’s firm is not a registered one and 1st defendant firm is also not a registered firm and the acts of the defendants 2 and 4 are not binding on the partners and that 1st defendant firm never participated in the auction through its partners defendants 2 and 4 and that defendants 2 and 12 did not execute promissory note in favour of the plaintiff agreeing to repay the balance of chit amount and therefore the 1st defendant firm or its members are not liable to pay the balance of chit amount.
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15. In the first instance we have to ascertain whether plaintiff firm is a registered one so also we have to ascertain whether 1st defendant firm is registered one since the defendants denied the contention of the plaintiff that plaintiff firm is a registered one and 1st defendant firm is registered one.
16. P.W.1 in his chief examination stated that Ex.A.1 is acknowledgment of registration of firm dated 27-10-2007 and Ex.A.23 is certified copy of Form-A issued by District Registrar, Chittoor relating to the plaintiff firm and that Ex.A. 23 contains the details of partners of plaintiff firm from the date of inception till today.Ex.A.1 is acknowledgment of registration of firm issued by Registrar of firm,
Chittoor. On perusal of Ex.A.1 it is mentioned in Ex.A.1that the statement has been filed and names of firm Master chits, Jandaman Street, Chittoor has been entered the Register of firms as No. 46 of 1998 at Chittoor. As per Ex.A.1 plaintiff firm is a registered one. On perusal of Ex.A.23 it was issued by District Registrar, Chittoor and it is a true copy of Form-A and it contains the names of partners and it also shows that date of registration as 30-6-98 i.e. even prior to the filing of the suit itself, the
Master chits which is name of the firm was registered under Registrar of firms maintained under section 59 of Indian Partnership Act, 1932. On perusal of another document filed on behalf of plaintiff in Ex.A.21 shows that Master chits is a registered one and that chit agreement was executed at Chittoor at D. No. 8-146, Jandamanu street, Chittoor , number of tickets held 40 each subscriber holding one, bye-law No. 373/98-99.
Therefore this document reveals that plaintiff firm is a registered one.
17. The other contention of the defendants is that 1st defendant firm is not a registered one and that suit can not be filed against unregistered firm The said contention is not accepted. As per
Section 69 of Indian Partnership Act, a suit is to be filed by registered partnership firm only and not by unregistered firm. But it can file the suit against even unregistered firm for recovery of amount due and there is 16 no bar to it. When it is specific plea of the defendants that the 1st defendant firm is not a registered firm, the burden is heavy on the plaintiff to prove that 1st defendant firm is a registered one. But plaintiff did not file any proof to that effect. Therefore the plaintiff failed to prove the contention that 1st defendant is a registered one. Even then as per section 69 of Indian Partnership Act, the plaintiff is entitled to recover the amount due from unregistered firm provided partners are on record.
Therefore it is clear that plaintiff firm is a registered one and the suit is properly filed by the authorized person and that 1st defendant firm is not a registered firm. Thus these issues are answered accordingly.
18. Issues 3 : The main contention of the defendants is that 1st defendant never participated in the chit run by the plaintiff and that 1st defendant did not participate in the bid through its partners defendants 2 and 4 and became successful bidder and did not obtain the amount after foregoing amount of Rs. 1,75,000/- and that plaintiff did not pay Rs. 3,25,000/- to the 1st defendant and that defendants 2 and 12 did not execute promissory note in favour of plaintiff for due payment of chit installments and even if there is such participation by defendants 2 and 4 in the bid and executed promissory note by defendants 2 and 12, it is in their individual capacity in collusion with the plaintiff and it is not binding on the other partners. The said contention of the defendants is not accepted. As per section 25 of Indian Partnership Act every partner is liable jointly with all the other partners and also severally for all acts of the firm done while he is a partner. Ex.A.2 is the chit agreement in which 2nd defendant signed on behalf of Sri Meenakshi and Company as a
Manager. Ex.A.3 is the agreement of guarantee in which 2nd defendant signed as Manager of the 1st defendant firm and 12th defendant V. Mani signed as guarantor. Ex.A.4 is the letter of acknowledgment issued in favour of the plaintiff by Manager D. Raghunadha Chetty ( 2nd defendant herein ) on behalf of Meenakshi and Company ( 1st defendant firm) in which 2nd defendant signed on behalf of 1st defendant and 12th defendant 17 signed as guarantor for Rs. 3,25,000/- towards chit MC-4. Ex.A.5 is the letter of authorization dated 6-1-2000 issued in favour of the plaintiff ‘s
Managing Partner and Foreman authorizing the plaintiff to take commission of Rs. 10,000/- out of Rs. 1,75,000/- and the balance may be equally distributed among the members of the chit No. MC-4. Ex.A.6 is the promissory note for Rs. 3,50,000/- executed by defendants 2 and 12 and they signed on behalf of 1st defendant firm. Therefore the documentary evidence available on record shows that defendants 2 and 4 participated in the auction of the chit run by the plaintiff and became successful bidders and received Rs. 3,25,000/- after deducting the dividends of foregone amount of Rs. 1,75,000/- and that defendants 2 and 12 executed promissory note dated 6-1-2000 in favour of plaintiff for due repayment of the chit installments.
19. D.W.1 in his cross examination stated that 2nd defendant has been looking after the affairs of the 1st defendant firm and that 2nd defendant used to sign on the documents on behalf of 1st defendant firm and that he can not say the names of the persons and firm from whom 1st defendant firm borrowed money. He also stated that he did not verify till today whether 1st defendant firm contributed suit chit with the plaintiff and that he did not make enquiry with the 2nd defendant about the suit chit transaction and that so far he did not see the said cheque under which consideration was passed to 1st defendant by the plaintiff and that till today 1st defendant firm is not dissolved.
This portion of evidence of D.W.1 clearly reveals that the 1st defendant firm is in existence even now and that 2nd defendant has been looking after the affairs of the 1st defendant and he used to sign the documents on behalf of 1st defendant firm.
20.D.W.2 in his cross examination stated that 2nd defendant has been managing the day to day business of the 1st defendant firm and that he does not know to whom 1st defendant firm shall discharge the debts and that he did not see the account books of the 1st defendant 18 firm at any point of time till today and he also specifically stated that out of 12 partners, only 2nd defendant represented the 1st defendant firm in all matters. He also stated that till today he did not issue any notice to 12th defendant questioning about his execution of suit document in favour of plaintiff.
21. D.W.3 in his cross examination stated that it is true that 2nd defendant received the suit chit amount as partner of 1st defendant and that defendants 2 and 12 are the partners of 1st defendant who represented the suit transaction.
22. D.W.4 in his cross examination stated that 2nd defendant received suit chit amount as partner of 1st defendant and that defendants 2 and 12 are the partners of 1st defendant who represented the suit transaction and that both plaintiff firm and 1st defendant firm are registered ones.
23. Thus the evidence of D.Ws. 1 to 4 itself reveals that suit transaction is a genuine one and that 2nd defendant used to look after the affairs of the 1st defendant firm and the documentary evidence also reveals that 2nd defendant received the chit amount from the plaintiff firm on behalf of 1st defendant firm and both defendants 2 and 12 executed demand promissory note for payment of balance amount on behalf of 1st defendant firm. Therefore the acts of the defendants 2 and 12 are binding on the other partners as per section 25 of the Indian Partnership Act and therefore the 1st defendant firm represented by all the partners are liable to pay the suit amount.
Whereas 3rd defendant as sole legal representative of Gopal Chetty former partner , is liable to pay out of the estates of deceased Gopal Chetty.
24. On the other hand plaintiff proved the suit transaction by adducing oral and documentary evidence.
25. P.W.1 in his chief examination affidavit stated that he is partner of the plaintiff firm and that plaintiff is a registered partnership firm dealing with the business of running chits etc. under 19 the name and style of Masters chits having its place of business at
Door No. 8-148, Jandamanu Street, Chittoor and that plaintiff is a registered under A.P. Chit Fund Act. Ex.A.1 is the acknowledgment of
Registrar of firm dated 27-10-2007. He also stated that defendants 2, 4 and 12 are the partners of the 1st defendant firm and that 3rd defendant is the son of late Gopal Chetty, who was also one of the partners of the 1st defendant firm and during the pendency of the suit, 4th defendant died and hence defendants 13 to 15 are impleaded as legal representatives of the 4th defendant . He also stated that 6th defendant also died during pendency of the suit and hence defendants 16 and 17 are added being legal representatives of the deceased 6th defendant . He also stated that 1st defendant is subscriber of chit bearing No.4 under bye-law No. 373/98-99 run by the plaintiff. The chit value is Rs. 5,00,000/- and total number of chit installments is 40 monthly installments at the rate of Rs. 12,500/- per month and that 2nd defendant and 12th defendant stood as guarantors to the plaintiff for due payment of chit installments. He also stated that chit was commenced on 2-2-1999 and terminated on 2-5-2002 . Chit agreement in Ex.A.2 executed by 1st defendant dated 23-1-99 which contains the terms and conditions of the chit. Defendants 2 and 12 have executed agreement of guarantee in Ex.A.3 dated 2-2-99. As per bye-laws of the chit and terms and conditions every subscriber shall pay monthly installments regularly and that in case of default in paying installments the defaulted subscriber shall pay the defaulted installment amount with interest at 24% p.a. and defaulted subscriber is not entitled for any dividend and that in case of default in paying installments the entire outstanding installments including the future installments amount shall become payable at once. 1st defendant through its partners , defendants 2 and 12 participated in the auction conducted on 3-1-2000 in respect of 12th installment and became prized subscriber having quoted dividend of Rs. 1,75,000/- . He also stated that plaintiff firm has paid the chit 20 amount of Rs. 3,25,000/- after deducting the dividend amount to the 1st defendant by way of Banker’s cheque bearing No. 231628 of M/s
Lakshmi Vilas Bank Limited, Chittoor dated 6-1-2000 and that 1st defendant encashed the said cheque and that 1st defendant did not have Bank account, then the cheque was issued in the name of 2nd defendant. 1st defendant through its partners 2nd defendant and 12th defendant jointly executed a demand promissory note dated 6-1-2000 in favour of plaintiff for Rs. 3,50,000/- having received chit amount and towards payment of future 28 installments by 1st defendant. He also stated that he was present at the time of execution of chit agreement by the 1st defendant represented by 2nd defendant and 12th defendant and execution of promissory note by 1st defendant through said partners 2nd defendant and 12th defendant. 1st defendant committed default in paying the chit installments and a sum of Rs. 2,62,500/- is payable by the 1st defendant towards balance of 21 installments amount with interest. Defendants got knowledge about the day to day business of the 1st defendant and also suit transaction and that in spite of repeated demands , 1st defendant failed to clear the entire dues. He also stated that he issued registered notice dated 13-12-2001 on behalf of plaintiff to the 1st defendant to pay the entire balance of chit amount of Rs. 2,62,500/- with interest. He also stated that 3rd defendant gave a reply notice dated 17-12-2001 with false claim. Defendants 9 and 12 have also gave a reply notice dated 18-12-2001 with false allegations and that 5th defendant filed written statement with false allegations. 5th defendant has taken a plea that cheque issued by the plaintiff in the name of 2nd defendant and denied that 1st defendant has not received consideration under the suit chit transaction. He also stated that plea taken by 5th defendant about non receipt of consideration by the 1st defendant is totally incorrect. The allegation that 5th defendant met him and that he informed him that claim is only against 1st defendant and hence 5th defendant did not give any reply to his notice dated 18-12-2001 21 are false and that 5th defendant has not met P.W.1. He also stated that 6th defendant has taken a plea that cheque issued by the plaintiff was encashed by the 2nd defendant and the said allegations are false, made in collusion with other defendants to evade payment to the plaintiff. The other allegation in written statement that 2nd defendant colluded with the plaintiff and created documents etc. are false. 8th defendant filed written statement stating that he retired from partnership firm in the year 1995 and that he is not liable to pay the amount to the plaintiff and that he was not present on the date of suit transaction and the said allegation is false as he was partner as on the date of suit transaction.
He also stated that 10th defendant also filed written statement with false allegations and that prior to filing of the suit plaintiff firm received registered notice dated 28-8-2000 issued by the counsel for the 12th defendant and that said notice was not only sent to the plaintiff, but also to the partners of 1st defendant. He also stated that in the said notice 12th defendant V. Mani clearly admitted about the present suit transaction and further 12th defendant questioned other defendants about the non maintaining proper accounts by the 1st defendant firm and also alleged that other defendants of 1st defendant firm for their illegal benefits did not account for the suit chit amount. In the said notice it is alleged that other defendants of 1st defendant firm are misusing the amount of the firm without maintaining proper accounts and accordingly 12th defendant called for the other partners of 1st defendant firm to clear of his account from 1st defendant Meenakshi and Company and to pay the income of said Meenakshi and Company and to submit proper accounts. He also stated that he gave reply to the said notice immediately through his counsel to the counsel of 12th defendant. He also stated that 12th defendant having admitted about the suit transaction in the registered notice dated 28-8-2000 prior to the filing of the suit, has filed written statement with false allegations totally contra to his own admissions of the suit transaction in his earlier 22 registered notice dated 28-8-2000. He also contended that defendants are liable to pay entire balance of installments amount with interest at 12% p.a. i.e. suit amount of Rs. 2,94,000/- with future interest. As defendants are not agriculturists and the suit transaction is a commercial one , defendants are liable to pay the suit amount with future interest at 12% p.a. from the date of filing of the suit. The legal heirs of deceased 4th defendant and 6th defendant who are defendants 13 to 17 are liable to pay the suit amount from out of the estate of the deceased defendants 4 and 6.
26. Plaintiff also marked documents through P.W.1.
Ex.A.5 is the letter of authorization given by 1st defendant. Ex.A.6 is the promissory note dated 6-1-2000 executed by defendants 2 and 12. Ex.A.7 is the ledger pertaining to the plaintiff firm suit transaction. Ex.A.8 is the relevant entry at page 17 and Ex.A.9 is the relevant entry at page
45. Ex.A.10 is the notice dated 28-8-2000 issued by the 12th defendant to the plaintiff and other defendants. Ex.A.11 is the office copy of reply notice got issued by P.W.1 to the 12th defendant. Ex.A.12 is the office copy of legal notice dated 13-12-2001 got issued by the plaintiff to the defendants. Ex.A.13 is reply notice got issued by 3rd defendant dated 17-12-2001 . Ex.A.14 is the reply notice dated 18-12-2001 got issued by 9th defendant. Ex.A.15 is the office copy of legal notice dated 18-12- 2001 issued by the 12th defendant. Ex.A.16 is certified true copy of intimation under section 143 (1) of Income Tax Act, issued by Income tax Authority for the assessment year of 2002-2003. Ex.A.17 is the certified true copy of similar kind of document for the assessment year 2003-2004. Ex.A.18 is the certified true copy of similar kind of document for the assessment year 2004-2005. Ex.A.19 is also certified true copy of similar kind of document for the assessment year 2005- 2006. 10th defendant made endorsement on the copy of receipt issued by P.W.1 acknowledging her receiving of original receipt in Ex.A.20.
Ex.A.21 is the certified copy of entire suit chit transaction document.
23
Ex.A.22 is duplicate copy of partnership deed through D.W.3. Ex.A.23 is the certified copy of Form-A issued by District Registrar, Chittoor relating to the plaintiff.
27. The learned counsel for the 7th defendant contended that plaintiff did not file register of firms showing current partners of the firm as on the date of filing of the suit. Therefore suit is not maintainable and in support of his contention he relied upon a decision “ M/s. Shreeram Finance Corporation Vs. Yasin Khan and others” reported in AIR 1989 Supreme Court 1769. The said citation is not applicable to the present facts and circumstances of the case, in view of filing of Ex.A.23 Form-A on behalf of plaintiff firm. He also contended that plaintiff firm is not a registered firm , hence suit is not maintainable and relied upon a decision “ The Andhra Pradesh Co-
operative Wool Spinning Mills Limited and another Vs. G. Mahanandi
and Company Wool Merchants and other” reported in AIR 2003 Andhra
Pradesh 418. The said citation is not helpful to the defendants in view of filing of Ex.A.23 ( certified copy of Form-A issued by District Registrar,
Chittoor).
28. The learned counsel for the 7th defendant also contended that merely because the nomenclature of a firm is in the name of a particular person or persons, it cannot be held that the said firm belongs to such person or persons in the absence of any proof to that effect and in support of his contention he relied upon a decision “
Chodey Sanyasi Rao Vs. Cheekati Parasuram Naidu (died) by L.Rs. and
others” reported in 2004 (4) ALD 609 (DB). The said citation is not applicable to the present case. The learned counsel for the 7th defendant also contended that section 69(2) of Indian Partnership Act, prohibits the institution of a suit on behalf of a partnership firm unless the firm has been registered and the persons suing are or have been shown in the Register of Firms as partners of the firm and that plaintiff did not file register of firms extract to show that plaintiff is one of the 24 partner on the date of filing of the suit and in support of his contention he relied upon decisions “ Firm Sitaram Agarwal Vs. Harnath and another”
reported in AIR 1970 Rajasthan 99 and “ Y. Venkata Subbarao Vs. Y.
Chenchayya” reported in Andhra Law Times 1975 A.P. 144. The said citations are not helpful to the 7th defendant in view of my above discussion since plaintiff filed Ex.A.23.
29. The learned counsel for 7th defendant contended that as per section 19(2) of Partnership Act there is implied authority to transfer an asset or relinquish claim and that transfer of promissory note by managing partner in favour of another partner if effected with the authority of all the other partners is valid and that in the present case no partner authorized the 2nd defendant to subscribe chit in plaintiff firm and no authorization of partners of 1st defendant is filed into the court by the plaintiff and in support of his contention he relied upon a decision “B.V. Narasimhulu Chetty Vs. Ratakonda Krishna Murthy and others” reported in AIR 1986 Andhra Pradesh 177. The facts and circumstances of the said case are not applicable to the facts of the present case.
30. The learned counsel for 7th defendant contended that as per section 22 of Partnership Act if an act done or instrument executed by a partner or other person to be binding upon Firm, such act or instrument should have been done or executed by such person on behalf of firm, in name of firm, must be expressly or impliedly done with an intention to bind the firm and it must relate to business of firm and in support of his contention he relied upon a decision “ Padmavathi
Finance Corporation, Nandyal Vs. S.V. Metal Unit, Kurnool and others”
reported in 2009 (5) ALD 587. The said citation is not useful to the defendants , because in the evidence it is clearly stated as discussed above that 2nd defendant was looking after the affairs of the 1st defendant firm and that he used to sign the documents on behalf of 1st defendant firm and therefore it is clear that on behalf of firm , 2nd 25 defendant acted for the benefit of firm and his acts are binding on other partners as per section 25 of Indian Partnership Act.
31. Thus plaintiff proved the suit transaction by adducing oral and documentary evidence. Therefore it is clear that suit transaction is true, valid and binding on all the defendants. Thus this issues is answered in favour of plaintiff, against the defendants.
32. Issue No. 4: Interest is claimed only at 12% p.a.
and since the suit transaction is a commercial transaction, the interest claimed is correct.
33. Issue No. 5: In the result, the suit is decreed with costs for a sum of Rs. 2,94,000-00 with future interest on principal amount of Rs. 2,62,500-00 at 6% p.a. from the date of filing of the suit till realization. The defendants 1,2 and 4 to 12 jointly and severally , the 3rd defendant from out of the estate of the deceased partner K. Gopal
Chetty are liable to pay the suit amount.
Dictated to Personal Assistant and after transcription
by him, corrected by me and pronounced in open court this the 15th day of April, 2013.
PRINCIPAL SENIOR CIVIL
JUDGE,
CHITTOOR.
Appendix of Evidence Witnesses examined :-
For Plaintiff : - Defendants:- P.W.1 B. Babu Rao D.W.1 K. Narasimha Reddy D.W.2 D.Venkatesam
Ramesh D.W.3 V.Vijayasekhar
Reddy D.W.4 A. Ashok Babu Exhibits marked :-
For Plaintiff:- Ex.A.1Firm Registration certificate issued by District Registrar, Chittoor. Ex.A.2Chit agreement executed by the defendant No.1 26
Ex.A.3Agreement of guarantee executed by D1 and D12 Ex.A.4Letter of acknowledgment Ex.A.5Letter of authorization submitted by defendant No.1 Ex.A.6Promissory note dt. 6-1-2000 executed by defendant No.1 Ex.A.7Ledger pertaining to the plaintiff firm Ex.A.8Relevant entry at page No. 17 Ex.A.9Relevant entry at page No. 45 Ex.A.10Notice dt. 28-8-2000 sent by the counsel for defendant No.12 to the plaintiff and other defendants Ex.A.11Office copy of reply notice Ex.A.12Office copy of notice dt. 13-12-2001 Ex.A.13Reply notice dt. 17-12-2001 Ex.A.14Reply notice dt. 18-12-2001 Ex.A.15Reply notice dt. 18-12-2001 Ex.A.16Notice issued by Income tax Officer for the assessment year 2002-2003 Ex.A.17Notice issued by Income tax Officer for the assessment year 2003-2004 Ex.A.18Notice issued by Income tax Officer for the assessment year 2004-2005 Ex.A.19Notice issued by Income tax Officer for the assessment year 2005-2006 Ex.A.20Receipt dt. 22-10-2008 for Rs.50,000/-issued by the plaintiff Ex.A.21Certified copy of entire suit chit transaction issued by Registrar of chits. Ex.A.22Duplicate copy of partnership seed Form-A issued by District Registrar, Chittoor. Ex.A.23
For Defendants:- -Nil-
P S C J