Bench:
- S B Sinha
- Harjit Singh Bedi
Facts:
• Appellants herein were defendant Nos. 4 to 7 in the suit. Plaintiff-respondent No.1 filed the suit against them and four others. They are admittedly partners of defendant No.1 firm, M/s. AR. AS & P.V.PV, registered under the Partnership Act, 1932. Defendant No.3 P. Shankar (Respondent No.4 herein) was also a partner in the said firm.
• Allegedly, Defendant No.2, P V Purushothaman (Respondent No.3 herein), was described as the Managing Partner of the said firm and fraudulently obtained an advance from the plaintiff where for a personal guarantee was furmished by the defendant No.2. Indisputably a cheque for a sum of Rs.50 Lakhs was issed in the name of Defendant No.1.
• Plaintiff-Respondent filed the aforementioned suit for realisation of a sum of Rs. 70,30,000/- with interest @20% p.a. inter alia alleging that all the defendants were jointly and severally liable therefor. An application under Order 38, Rule 5 of CPC was filed by the plaintiff.
• Appellants in their written statement inter alia raised a contention that since the amount of Rs. 50 Lakhs were purported to be taken in advance by the defendant No.2 in connivance with Defendant Nos. 3 & 8, had not been used for the benefit of the partnership firm, no order of attachment could be issued as against the appellants herein.
• The said contention was accepted by the Single Judge of the High Court and he held that, the plaintiff was not entitled to seek any interim order calling upon the defendants to execute a security.
• An intra court appeal was preferred there against wherein a Division Bench of the High Court by the reason of impugned order allowed the appeal preferred by plaintiff-respondent.
• The Appellants were now thus before the Supreme Court.
Appellant's Contentions:
• In obtaining the said purported loan from the plaintiff-respondent, defendant Nos 2,3 & 8 played a prime role. As defendant No.2 was stated to be the Managing Partner of the firm, which he was not, and in fact only his son (defendant No.3) was a partner, the purported loan was granted by the plaintiff without even caring to ascertain as to who are the partners of the aforesaid firm.
• He further drew the attention of the Court to various provisions of the Partnership Act and in particular, Sections 2(a), 18,19,22 and 28 thereof for advancing the proposition that the firm would be bound only when a transaction is entered into by a partner of the firm and that to subject to the limitations contained in the aforementioned provisions.
Respondent's Arguments:
• The counsel appearing on behalf of the respondents, on the other hand supported the impugned judgment.
• The amount of loan was advanced by a cheque and the cheque was drawn in the name of the partnership firm. Coincidentally the appellants were the partners thereof at the relevant time.
• Having regard of the fact that they purported to have retired from the partnership firm in the year 2001 and the transaction herein took place in 2000, prima facie the liability of the appellants cannot be ignored.
Judgment:
The appeal was dismissed, and order as to costs.
Relevant Paragraph:
13. Appellants, in our opinion, are not seriously prejudiced thereby. The court while exercising its jurisdiction under Order XXXVIII Rule 5 of the Code of Civil Procedure is required to form a prima facie opinion at that stage. It need not go into the correctness or otherwise of all the contentions raised by the parties. A cheque had been issued in the name of the firm. The appellants are partners thereof. A pro-note had been executed by a partner of the firm. Thus even under the Partnership Act prima facie the plaintiff could enforce his claim not only as against the firm but also as against its partners.
14. Sections 2(a) ; 18 ; 19 ; 22 and 28 to which our attention has been drawn, instead of assisting the appellants, prima facie assist the plaintiff-respondent. Allegations against defendant Nos. 2, 3 and 8 are required to be gone into at the hearing of the suit. The Court at this stage is required only to form a prima facie opinion. The plaintiff is entitled to secure his interest keeping in view the amount involved in the suit. For the said purpose a detailed discussion in regard to the question as to whether defendant No.2 was a partner or not is not of much relevance.
15. In any view of the matter as the appellants are not seriously prejudiced if they furnish the security, this, in our opinion, is not a fit case where this Court should exercise its jurisdiction under Article 136 of the Constitution of India.
