1. The appeal arises out of judgment and order dated 24.2.2000 passed by the Presiding Officer, Debts Recovery Tribunal, Calcutta, in T.A.No. 311 of 1995.
2. The plaintiff-appellant Bank instituted a suit for realisation of Rs. 31 lakh and odd alleged to have been given to the Firm namely respondent-defendant No. 1 of which respondent-defendant Nos. 2,3 and father of respondent-defendant Nos. 4 to 7 (since dead) were the partners, 3. In course of hearing of the claim before the Debts Recovery Tribunal, the defendant entered appearance. Defendant No. 1 the Firm filed a written statement but did not contest up to the last. Defendant No. 2 also filed a separate written statement but did not contest up to the last. Defendant Nos. 4 to 7 filed a joint written statement and contested the matter till the end.
4. It is the case of the plaintiff-appellant that defendant No. 1 was a partnership firm of which defendants 2, 3 and father of defendants 4 to 7 were partners. On the death of their father, defendants 4 to 7 being his heirs and legal representatives joined the business. Defendants 1,2,3 and father of defendants 4 to 7 approached the Bank for loan on different counts which were granted in accordance with the rules after the partners executed necessary banking documents including letter of guarantee in favour of the Bank. Thereafter the firm did not maintain proper books of account and also did not submit proper statements and the loan was also regularised. Thereafter, a suit was filed after serving of notice on the partnership firm and also the partners.
5. The case of the defendants 4 to 7 is that their father Saral Nath Ghosh did not leave behind any assets and as such they did not inherit any property not even ancestral property from their father. It is also their (sic) say that (sic) they are not liable for the debts of their father.
6. The learned Presiding Officer of the Debts Recovery Tribunal, after considering the evidence adduced by the parties including banking documents, evidence given by PW- J on behalf of the Bank and DW-1 on behalf of the defendants 4 to 7 was satisfied that defendants 4 to 7 did not inherit any property from their father Sara! Nath Ghosh. As such they v/ere not liable for the father's debts. However, he came to the conclusion that the plaintiff-appellant Bank had succeeded to prove their claim in toto and accordingly decreed the claim case ex pane against defendant'Nos. 1,2 and 3 but dismissed the same on contest against the rest i.e. defendants 4 to 7." 7. Being aggrieved the plaintiff Bank preferred this appeal alleging that their claim should not have been dismissed against defendants 4 to 7. Their case is that Sara! Nath was a partner and his liability, as a partner, was payable by his heirs on his death. It is also their case that the Bank has succeeded to prove their case against respondents 4 to 7 not only because they are the legal representatives of their father but also because their father was a guarantor for payment of Bank's claim which devolved on his heirs after his death. It is also alleged that the finding of the Tribunal that respondents 4 to 7 did not inherit the properties which included household assets of their father can only be decided by the Recovery Officer at the time of execution of the Certificate. They have also relied on the deed of partnership and also the letter of guarantee in which father of respondents 4 to 7 was a party.
8. The point for determination is whether the judgment and order of the learned Presiding Officer of Debts Recovery Tribunal, Calcutta, can sustain, 9. The learned Advocate appearing for the appellant relied on the letters of guarantee as also the partnership deed in support of his contention that the liability of the heirs of the Saral Nath Ghosh is two-fold namely, as partner and as guarantor. He also relied on Sections 129 and 131 of the Indian Contract Act in support of his contention that notwithstanding the death of Saral Nath, the guarantee continued and was binding on his heirs. He also placed reliance on Section 42 of the Partnership Act and by referring to the relevant portion of the partnership deed wanted to submit that notwithstanding ihe death of Saral Nath Ghosh the partnership firm continued to exist.
10. On the other hand, the learned Advocate representing respondent Nos. 4 to 7 relied on some portions of the W.S. filed by defendant No.1 namely, para 10 in order to bring home his point that defendants4 to 7 never joined the partnership business after death of their father. He also relied on para 3 of the plaint of the claim case and argued that apart from their status as legal representatives even the plaintiff Bank did not saddle his clients with the liability as partners. He also relied on some passage on Hindu Law by Mayne and Mullah dealing with the liability of a son with regard to the debts left by his father. His contention is that unless the creditors can prove that deceased had left property in the hands of his sons, the latter is under no obligation to satisfy the debts, It was also argued that in the event of a conflict / between personal law and the contractual law the former is to prevail. He has also placed reliance on a number of decisions apart from textual Hindu Law. Reliance has been placed on a decision reported in ILR 1938,132 dealing with the liability of heirs for the debts of the deceased wherein it is stated that heirs are not personally liable for such debts but their liability is only to the extent of the assets inherited by the sons from the deceased. Reliance has also been placed, on a decision reported in AIR 1956Travancore, Cochin, dealing with the liability of a legal representative where also it is held that they are not personally liable. The decision reported in AIR 1963 Patna 151 is however not to the point. The decision reported in AIR 1950 Calcutta 1 deals with the liability of a son regarding the debts of his father. It is stated that a son is not bound to satisfy the debts of his father from his own personal assets. He also relied on a decision reported in AIR 1958 Madras 385 which also deals with the liability of a legal representative. The decision reported in AIR 1966 SC 1697 deals with the effects of the admission.
So also the decision reported in XXXIX CWN 277.
11.1 have given my careful consideration to the submissions to the learned Advocates representing both the sides. I have also carefully perused the documents, evidence and also the decisions cited at the Bar. I have Carefully scrutinised the reasons given by the learned Presiding Officer below for coming to the conclusion in his judgment.
12. There are certain facts which are not in dispute.
Respondent-defendant No. 1 was a partnership firm and defendant Nos.
2,3 and father of defendant Nos. 4 to 7 were the partners. The deed of partnership in para-19 categorically says that in the event of death of any one of the partners, the partnership will not be dissolved but it shall continue and unless the existing partners agree to admit heirs of the deceased partner or partners or if the heirs of the deceased partner refuse to join the partnership the capital assets and goodwill and undivided profits of the deceased partners shall be distributed according to the law of inheritance. Therefore, notwithstanding the death of Saral Nath Ghosh, the partnership business namely, the defendant No. 1 firm, must be said to be continuing. The evidence given by PW-1 in course of cross-examination on behalf of the respondents is also to the same effect.
13. Now the question will be whether the existing partners namely, defendant Nos. 2 and. 3 admitted defendants4 to 7 as partners on thedeath of their father Saral Nath. Unfortunately, these defendants viz. defendants 2 and 3 in spite of filing the written statement did not contest up to the last and as such the averments in the written statement cannot be taken advantage of by either the appellant or the respondent. The learned Advocate representing both the sides, however, wanted to take advantage of such averments which were in their favour but even if they are considered as admissions, they cannot be taken into consideration since it is not binding on either party specially when apart from filing written statement, they neither contested nor stepped in the witness box.
14. There is however no evidence that the partnership firm was reconstituted with respondent Nos. 4 to 7. But at the same time, the 2nd part of Clause 19 of partnership deed namely, division of the share of the deceased amongst the legal representatives cannot be said to have been complied with, in view of the categorical statement of respondent No. 5 while deposing on behalf qf respondents 4 to 7. Of course, this witness pretended ignorance about all matters connecting partnership and even posed as ignorant about the status of his father Saral Nath vis-a-vis the partnership firm. This is something which is difficult to believe.
15. Lets now turn to the letter of guarantee executed by Lt. Saral Nath Ghosh. It categorically says "the guarantee shall be continuing security binding me/us and my/our personal representatives....". It further says "in.the event of my/or any of us dying or becoming under disability, the liability of the executor's administrations or legal representative of such person so doing and his state shall continue....". Therefore, this letter of guarantee categorically binds the respondent Nos. 4 to 7 being the heirs of Lt. Saral Nath Ghosh who executed the letter of guarantee in favour of the Bank.
16. In course of my narration, I have shown that the finding of the learned Presiding Officer of Debts Recovery Tribunal, so far as it relates to the liability of the firm and its partners has not been disputed in this appeal. The figure arrived at by the Presiding Officer also is not in dispute. The contesting respondents 4 to 7 are disputing only their liability to pay the loan. While dealing with the partnership deed, I have shown that the partnership firm did not come to an end with the death of Sara! Nath Ghosh, but it continued with the existing partners namely, defendants 2 and 3. There is no positive evidence that the heirs of Saral Nath Ghosh namely, respondents 4 to 7 join the partnership or the firm was reconstituted with them. As a matter of fact, even the plaint of the claim case does not specifically mention any reconstruction of the partnership firm after the death of Saral Nath Ghosh, but they alleged that his heirs stepped into the shoes of Saral Nath Ghosh on his death. In view of the specific clause in the partnership deed namely, para-19 the existing partners had an option to admit the heirs of the deceased. Since it is not the specific case of the Bank and in the absence of any evidence to that effect, it cannot be .said that respondents 4 to 7 join the partnership business.
The other alternative mentioned in the same para of the partnership deed is that the capital assets, goodwill and undivided profits of the deceased partners shall be distributed amongst the heirs according to the law of inheritance. Defendant No. 5 in course of DW-1, however, stated that they did not inherit any property from their father. He was deposing on behalf of all theheirsof Saral Nath Ghosh. Heeven ruled out inheriting any assets from their father. His categorical evidence is that excepting education they did not receive anything from their father. This is something which is very difficult to believe. This witness had little respect for truth. In course of his examination-in-chief he pretended ignorance about his father being a partner of the respondent firm. But in course of cross-examination, he admitted that after retirement, his father became connected with the respondent firm. It is his evidence that his father was an M.Sc. Ph.D.and was Chief Chemist of M/s. Bengal Chemicals. This Tribunal can take judicial notice of the fact that it was a prestigious company and as such to be the Chief Chemist of such a company is something of much significance. Obviously, his father received certain benefits on his retirement and that is also the evidence of DW-1. However, this is not the proper Forum to adjudge the quantity of assets received by respondents 4 to 7 from their father specially when there is no sufficient evidence on record. But one thing is certain that DW-1 was not speaking the whole truth. It is also difficult to believe that after the death of Saral Nath Ghosh his heirs did not make any attempt to get hold of the benefits due to their father from the partnership firm. The evidence of DW-1 that they never made any enquiry of the assets and liabilities of their father with regard to the respondent firm is not at all believable specially when the partnership deed itself gives them categorically their rights to get the share of their deceased father in the undivided profits and in terms of the deed, this will have to be paid even from capital assets and goodwill of the firm.
This question is however left open for the Recovery Officer at the time of execution of the certificate.
17. I have shown that Saral Nath Ghosh executed the deed of guarantee binding himself and his heirs for the claim of the Bank. In terms of the deed, it is a continuing guarantee and notwithstanding the pretended ignorance of DW-1, the respondents.4 to 7 must share the liability of their father as guarantors for the claim of the Bank. The finding of the learned Presiding Officer that in the absence of oral and documentary evidence adduced by the Bank to prove that Saral Nath Ghosh left any asset in the hands of the defendants 4 to 7 cannot be supported notwithstanding the deficiency of evidence on the part of PW-1 and official of the Bank for it is next to impossible to state on oath the internal matters era family. The learned Presiding Officer missed the clause in the deed of guarantee which binds respondent Nos.
4 to 7. Even if the said respondents do not inherit any property either from their father or from the partnership firm they cannot avoid the liability in view of the averments of the deed of guarantee. Therefore, this part of the finding of the Presiding Officer cannot stand.
Asaresult, there is no impediment for issuing certificate against all the respondent-defendants and the impp^ned judgment and order needs a modification to that effect. Accordingly it is : That the judgment and order of the learned Presiding Officer stands modified to the extent as stated below : The claim case shall be deemed to have been allowed ex parte against defendants 1,2, 3 and on contest against defendants 4 to 7 with costs against all the defendants. The applicant Bank is entitled to realise a sum of Rs. 31,63,173.08 (Thirty-one lakh sixty-three thousand one hundred seventy-three and eight paise only) from all the defendants jointly and severally. The applicant Bank is also entitled to realise interest @ 15% per annum over and above the aforesaid sum during the period from 24.3.1994 i.e. date of filing of the original suit to the date of actual realisation of said sum from the defendants. The defendants are directed to. make the payments within two months from the date of the order failing which the Presiding Officer shall proceed to realise the amount in accordance with law.
Let a certificate be issued accordingly in respect of the defendant-respondents by the Presiding Officer of the Debts Recovery Tribunal, Calcutta. The appeal is accordingly disposed of on contest.