Case Summary : Allahabad Bank v S.M. Engg Industries

Author : Abhishek Darmora

CITATION : (1992) 2 CALLT 138 HC

BENCH : Justice A. N. Ray

DATE OF THE JUDGEMENT : 30 January, 1992

FACTS OF THE CASE :

This bank suit is against six defendants. The 2^nd defendant carried on business under the name of 1^st Defendant. The case is – In the year 1982 a partnership constituted by defendant Nos. 2, 3, and 4, they adopted the same name as is now borne by the 1^st defendant. The 5^th and 6^th defendant are sought to be made liable by the bank as guarantors in respect of 1^st defendant after it became partnership concern. Several sums of money were advanced by the bank to 2^nd defendant. And several documents were executed by 2^nd, 3rd and 4^th defendants whereby the entire liability then outstanding to the debit of 2^nd defendant was taken over by firm.

The 4^th defendant is wife of 5^th.and they have contested the suit. The 2^nd,3^rd & 6^th defendant has not participated in proceedings. As per the evidence she herself is a house wife. And as she was prepared to speak only in Malayalam, they could not take her evidence. Her husband came & gave evidence on her behalf.

It is the further case of 4^th and 5^th defendant, they were swindled by Sunil Malhotra & Sant Pal Kapoor. Mr. Kutty asserted that apart from obtaining a reconnection of electricity, the 2^nd defendant did nothing in matter of recommencement of business under the partnership. The case of Kutty is that one Bijon Roy and one Kohli of bank came along with defendant No’s. 2 and 3 to Mr. Kutty for the purpose of persuading him to join the partnership. It is alleged that these two bank officials held out promises to give loan and advances to partnership in case the single venture of 2nd defendant was changed into partnership.  And then there was no document regarding it.

ISSUES RAISED:

1- Is 4th defendant liable as a partner of the 1^st defendant firm and if so, to what extent?

2- Did 4^th & 5^th defendant act on the basis of the representation made by plaintiff?

3- Were 4^th & 5^th defendant induced to execute the alleged deed of partnership?

4- Are the document dated 13^th & 18^th may, 1982 illegal, null and void?

5- Are the 4^th & 5^th defendant liable as guarantors as alleged in the plaint? If so, to what extent?

6- To what reliefs, if any, is the plaintiff entitled against the 4^th & 5^th defendants?

JUDGEMENT OF THE CASE:

 The amount of money due to bank upon loans already advanced in May 1982 was Rs.3,24,947.60. The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does not of itself make such persons partners.

In the result, as against the defendant No.2 there shall be a decree for Rs.4,09,905.90 less the sum of – 49,960\-. There shall be interest pendent lite @13%p.a. on the principal sum of 2,67,000.

ANALYSIS OF THE CASE:

In this case, it was a bank suit, which was against six defendants. A partnership was constituted by 2^nd, 3rd, 4th defendant adopting the same name as of 1^st defendant, while several sum of money were also advanced by the bank. And even then they were not even ready to participate in proceedings. Evidence were given and further it was stated that there will be no order as to costs excepting as indicated above.