JUDGMENT
P.K. Shamsuddin, J.
1. Defendants Nos. 2 and 3 in O. S. No. 178 of 1978 on the file of the Court of the Subordinate Judge, Kozhikode, are the appellants. The suit was to recover Rs. 10,000 on the strength of two promissory notes executed by the first defendant.
2. The material averments in the plaint may be summarised as follows :
Defendants Nos. 1 to 3 are the partners of the firm “Mayo Pharmacy” and the first defendant is the managing partner. The first defendant, in his capacity as the managing partner, borrowed Rs. 5,000 on behalf of the firm on August 5, 1975, from the plaintiff and executed a promissory note in favour of the plaintiff, Subsequently, on October 9, 1975, the first defendant, in his capacity as the managing partner of Mayo Pharmacy, borrowed another sum of Rs. 5,000 and executed a promissory note. In spite of repeated demands, the defendants did not pay the amount. The plaintiff also caused to send a lawyer’s notice demanding payment, but that also did not yield any result. Hence the suit.
3. The first defendant remained ex parte. Defendants Nos. 2 and 3 filed separate written statements in which they contended that the plaint allegations are not true, that the promissory notes were the result of a conspiracy between the first defendant and the plaintiff with the object of defeating and defrauding defendants Nos. 2 and 3, that no amount was borrowed for the benefit of Mayo Pharmacy, that in January, 1976, the first defendant retired from the partnership of Mayo Pharmacy, that the first defendant had access to letter pads, seals, etc., belonging to the firm, that it was quite easy for the first defendant to misuse those letter pads, seals, etc., to concoct pronotes and that, therefore, the suit was liable to be dismissed.
4. Exhibit A-1 dated August 5, 1975, and exhibit A-2 dated October 9, 1975, are the promissory notes. They were typewritten in the letter heads of Mayo Pharmacy and the first defendant designating himself as managing partner of Mayo Pharmacy has signed the pronotes. The stand taken by defendants Nos. 2 and 3 is that the first defendant retired from the firm in January, 1976. This means that when exhibits A-1 and A-2 were executed, the first defendant was the managing partner.
5. In order to prove the transactions, PWs-1 and 2 were examined. PW-1 is the plaintiff. He gave evidence that the defendants were partners of Mayo Pharmacy and that the first defendant was its managing partner, that the first defendant in his capacity as managing partner of Mayo Pharmacy and for and on behalf of Mayo Pharmacy, borrowed Rs. 5,000 from him on August 5, 1975, and executed exhibit A-1 pronote, that on October 9, 1975, he likewise borrowed another sum of Rs. 5,000 and executed exhibit A-2 pronote for and on behalf of Mayo Pharmacy, that the first defendant signed the documents before him and PW-2, and that the husbands of defendants Nos. 2 and 3 were also there when the pronotes were executed and the amounts were borrowed. He also stated that, in spite of repeated demands, money was not paid and on July 23, 1978, he caused a lawyer’s notice, a copy of which is exhibit A-3, to be sent, that the said notice was returned by the first defendant and exhibit A-4 is the letter returned unserved and that the letters sent by the second and third defendants were received by them and exhibits A-5 and A-6 are the acknowledgments. In the cross-examination, he stated that the first defendant and the husbands of defendants Nos. 2 arid 3 demanded the amount and that they represented to him that the amounts were borrowed for and on behalf of the firm. Nothing has been brought out in the cross-examination to cast any doubt on the veracity of the testimony of PW-1.
6. PW-2 stated that he is the manager of Prathap Pharmaceuticals, that he was a witness to the execution of the pronotes, exhibits A-1 and A-2, and payment of consideration and that at the time of borrowing the money, the husbands of defendants Nos. 2 and 3 also accompanied the first defendant. In the course of cross-examination, he stated that the first defendant and the husbands of defendants Nos. 2 and 3 represented to PW-1 that the borrowing was for and on behalf of Mayo Pharmacy. Thus, PW-2 has corroborated PW-1 in all material particulars. Nothing has been elicited to discredit the testimony of PW-2. Neither defendants Nos. 2 and 3, nor their husbands have gone to the witness box to controvert the evidence of PWs-1 and 2 and their evidence stood unchallenged. It is in these circumstances that the court below decreed the suit as prayed for.
7. Learned counsel for defendants Nos. 2 and 3 submitted that, after closing the evidence, the case was posted to December 8, 1980, that, on December 5, 1980, he filed I. A. No. 4481 of 1980 seeking to reopen the case and I. A. No. 4482 of 1980 was filed to receive a document to file, but the learned Subordinate Judge dismissed the applications and decreed the suit as prayed for on December 6, 1980, and that, therefore, the judgment of the lower court should be set aside and the matter should be remanded to the lower court so as to give an opportunity to the defendants to adduce evidence. I do not find any substance in this contention. Defendants Nos. 2 and 3 had ample opportunity to adduce evidence. They did not want to adduce any evidence till the evidence was closed. From the order-sheet, it can be seen that the case was posted to December 6, 1980; and not to December 8, 1980, for judgment. The judgment was pronounced on December 6, 1980, and, accordingly, the applications for reopening the case and also for receiving additional documents in evidence were dismissed. It may be noticed in this connection that the prayer in the I.A. was only to reopen the case for the purpose of receiving a document and the prayer in I. A. No. 4482 of 1980 was only to receive the document in evidence. Though the document was not formally admitted or marked, learned counsel invited my attention to the said document which is the deed of partnership containing an extract of the resolution passed by the partners of Mayo Pharmacy dated January 13, 1976, resolving to delete Clause No. 14 of the deed of partnership of the firm appointing Sri P. Narendran as the managing partner of the firm with effect from the date of the resolution. He also invited my attention to Clause 24 of the partnership deed to the effect that the loans may be taken on the joint signatures of the managing partner and/or any other partners 1 to 4 duly authorised in this behalf by a majority decision of partners 1 to 4 and submitted that, in view of this provision, the first defendant alone could not have taken the loan. This document only shows that the firm resolved to delete Clause 14 appointing the first defendant as manager with effect from January 13, 1976. Exhibits A-1 and A-3 being documents executed prior to that date, this resolution will have no bearing on the impugned transactions.
8. In this connection, reference has also to be made to Section 32(3) of the Partnership Act. It lays down that :
“Notwithstanding the retirement of a partner from a firm, he and the partners continue to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the retirement, until public notice is given of the retirement.”
9. Section 45(1) provides that, notwithstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution until public notice is given of the dissolution. The mode of giving public notice has been laid down in Section 72 of the Partnership Act which says that a public notice has to be given by intimation to the Registrar of Firms under Section 63 and by publication in the Official Gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place or principal place of business. It is not proved or even contended that notice was given to the Registrar of Firms of the dissolution or retirement or a publication was effected in the Official Gazette. Therefore, even if the retirement was before the execution of the promissory notes, that would not have changed the position. In this case, the alleged retirement is subsequent to the execution of the promissory notes.
10. It will also be profitable to refer to Section 19 of the Indian Partnership Act, which reads as follows :
“19. Implied authority of partner as agent of the firm.–(1) Subject to the provisions of Section 22, the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm.
The authority of a partner to bind the firm conferred by this section is called his ‘implied authority’.
(2) In the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to–
(a) submit a dispute relating to the business of the firm to arbitration :
(b) open a banking account on behalf of the firm in his own name ;
(c) compromise or relinquish any claim or portion of a claim by the firm ;
(d) withdraw a suit or proceeding filed on behalf of the firm ;
(e) admit any liability in a suit or proceedings against the firm ;
(f) acquire immovable property on behalf of the firm ;
(g) transfer immovable property belonging to the firm ; or
(h) enter into partnership on behalf of the firm.”
11. The transactions under exhibits A-1 and A-2 do not fall in any of the Clauses (a) to (h) of Section 19 and, therefore, the first defendant had the implied authority to borrow money on behalf of the firm. Section 22 of the Indian Partnership Act lays down that, in order to bind a firm, an act or instrument done or executed by a partner or other person on behalf of the firm shall be done or executed in the firm name or in any other manner expressing or implying an intention to bind the firm. The only question that has to be determined is whether the negotiable instruments in the present case conform to the requirement contained in Section 22 of the Partnership Act. I shall deal with this aspect when I deal with the next contention raised by learned counsel.
12. The next contention raised by learned counsel for the appellant is that the promissory notes, exhibits A-1 and A-2, were executed only by the first defendant and that it would not indicate that the promissory notes were executed on behalf of the firm. In this connection, he relied on a Division Bench ruling of this court in M. Rajagopal v. K.S. Imam Ali, AIR 1981 Ker 56. This court observed (at page 40) :
“The consistent view taken in the above decisions is, therefore, to hold that when liability is sought to be fastened on an undisclosed principal on the strength of a negotiable instrument, it is not enough if the principal’s name is disclosed in some way but it must be disclosed in such a way that by any fair interpretation of the instrument it should be possible to hold that the undisclosed principal is the real person liable for the debt. When there is a conflict between Sections 19 and 22 of the Partnership Act on the one hand, and Sections 26, 27 and 28 of the Negotiable Instruments Act on the other, the latter Act should prevail. A claim against a firm based on a written contract by one partner in the course of business with authority to act will be held to be binding on the firm. But when such a claim is made on the strength of a promissory note or a bill of exchange, the court will have to be satisfied that the negotiable instrument discloses the liability of the firm clearly.”
13. In the above case, apart from the fact that the promissory note was executed on the letter-head of the firm, there was nothing in the document to indicate that the amount was borrowed on behalf of the firm. Learned counsel also relied on the following observation of the Privy Council in Sadasuk Janki Das v. Kishan Parshad, AIR 1918 PC 146 (at page 39) :
“It is of the utmost importance that the name of a person or firm to be charged upon a negotiable document should be clearly stated on the face or on the back of the document so that the responsibility is made plain and can be instantly recognised as the document passes from hand to hand.”
14. The same view has been expressed in Sitaram Krishna Padhye v. Chimandas Fatehchand, AIR 1928 Bom 516, D. Johnstone v. Mt. Jan Bibi, AIR 1928 Lah 722, Punjab United Bank Ltd. v. Mohammed Hussain, AIR 1934 Lah 358 and Rangaraju v. Firm Sait Devichand Bhootaji, AIR 1945 Mad 439. The dictum laid down in all these decisions is that when one of the partners of a firm signs a pronote, in order that all the partners are liable under it, it is necessary that not merely the firm’s name should be disclosed “in some way”, but it must be disclosed in such a way that, on any fair interpretation of the instrument, the firm must be the real person liable upon the bill.
15. Another Division Bench of this court considered the legal effect of a promissory note executed by one of the partners in K.A. Lona v. Dada Haji Ibrahim Hilari and Co., AIR 1981 Ker 86. On the question of the implied authority of a partner to borrow money, for and on behalf of the firm, the Division Bench observed as follows (at page 98) :
“A reading of Sections 18 and 19 of the Partnership Act makes it clear that every partner is an agent of the firm for the purpose of carrying on business and the act of the partner which is done to carry on only in the usual way, business, of the kind carried on by the firm binds the firm subject of course to the provision of Section 22 of the Act.”
16. On the question of implied authority under Section 20, the Division Bench said (at page 99) :
“Section 20 of the Indian Partnership Act contemplates a contract between the partners to extend or restrict the implied authority of a partner. Such a restriction shall Hot affect an act done by a partner on behalf of the firm falling within his implied authority unless the person with whom he has dealings knows of the restriction or does not know or believe that partner to be a partner.”
17. In the light of the principles enunciated in the above decision, it cannot be contended that the first defendant alone could not have borrowed the money unless it is established that the plaintiff was aware of such restriction on the basis of Clause 24 of the deed of partnership. The promissory notes involved in the above decision were executed in the letter head of the firm and it contained the full name, description and address of the partnership firm and the promissory note was signed by one partner, but he did not put the name of the firm or put his description as managing partner under the signature. In the body of the note, the promise was not that “I promise to pay”, but that “we promise to pay”. The Division Bench held that the expression “we” was deliberately used for the purpose of disclosing the liability of the firm, the Division Bench held that this coupled with the fact that promissory notes were executed on the letterheads, which contained the full name, description and address for the firm indicated that they were executed on behalf of the firm.
18. In the instant case, the promissory notes are executed in the letterheads of the firm which contained the full name, address and telephone number of the firm. It was signed by the first defendant and seals are seen affixed with the words “for Mayo Pharmacy” and “managing partner”. Similarly, in exhibit A-1 also, seals are seen affixed with words “Mayo Pharmacy” and “managing partner”. The first defendant has signed below the words “for Mayo Pharmacy” and Mayo Pharmacy respectively in exhibits A-1 and A-2 and above the words “managing partner” in exhibits A-1 and A-2. This makes it abundantly clear that the promissory notes were executed for the firm “Mayo Pharmacy”. Applying the principles enunciated in the above decision to exhibits A-1 and A-2, it has to be held that the documents disclose that the instruments were executed on behalf of the firm. These documents also conform to the provisions of Section 22 of the Partnership Act which lays down that, in order to bind the firm, an act or instrument executed by a partner or other person on behalf of the firm shall be done or executed in the firm’s name or in any other manner expressing or implying an intention to bind the firm.
19. It was next argued by learned counsel that all the partners have not been impleaded and that, therefore, the suit is bad for non-joinder of parties. No such plea has been taken in the written statement of defendants Nos. 2 and 3. He also contended that the suit is against named individuals and not against the firm and that, therefore, the suit is not maintainable. This contention also has not been taken either in the written statement of defendants Nos. 2 and 3 or in the memorandum of appeal. Learned counsel placed great reliance on a Division Bench ruling of the Allahabad High Court in Yadav Ram v. Laxman Singh Bisht, AIR 1978 All 123, in support of this contention. The court said (at page 129) :
“It is true that a firm does not have a legal entity, but Order 30, Rule 1, Civil Procedure Code permits that two or more persons claiming as partners may sue or be sued in the name of the firm”.
20. In my view, the above ruling will not, in any way, support the contention of learned counsel. On the other hand, it proceeds on the basis that two persons claiming as partners may sue or be sued. A firm is not a juristic person and what is contained in Order 30, Rule 1, is merely permissive in character and it does not enjoin that the only manner in which a suit by or against a firm can be brought is in the form prescribed by this rule. A plaintiff bringing a suit against a firm may implead all the members of the firm as defendants in that suit and conversely, the members of a firm can sue jointly in their individual names, and such a suit will nonetheless be a suit against the firm or by the firm (see Kuver Bank Ltd. (In Liquidation) v. State of West Bengal, AIR 1960 Cal 81).
21. It may also be noted that the defendants did not adduce any evidence. Neither defendants Nos. 2 and 3, nor their husbands came forward to give evidence disputing the liability of defendants Nos. 2 and 3 or the firm “Mayo Pharmacy” for the amounts borrowed on exhibits A-1 and A-2 or to controvert the evidence of PWs-1 and 2 that the husbands of DWs-2 and 3 had accompanied the first defendant when exhibits A-1 and A-2 were executed and consideration received. Their evidence on this aspect stood uncontroverted.
22. The foregoing discussion would show that there is no merit in the various contentions raised by learned counsel. The appeal fails and it is, accordingly, dismissed. In the circumstances of the case, there will be no order as to costs.
