1.The Appellants/Defendants 1 to 3 have preferred this First Appeal A.S.No.702/2002 as against the Judgment and Decree dated 24.02.1998 made in O.S.No.4932 of 1996 on the file of the Learned V Additional Judge, City Civil Court, Chennai.
2. The trial Court in the Judgment in O.S.4932/1996 dated 24.02.1998 has among other things held that 'the Defendants 1 to 3 are liable to pay Rs.1,85,701/- to the Plaintiff with 20% interest and also held that the rate of interest claimed by the Plaintiff is correct and resultantly, partly decreed the suit etc.,'. Further, the trial Court has also opined that the Plaintiff is entitled to Rs.1,85,701/- with 20% interest from the date of plaint till the date of decree and to claim further interest at 12% from the date of decree till the date of realisation from the Defendants D1 to D3 with proportionate cost. Moreover, it has held that the Defendants D4 to D7 are liable to the decree amount only to the tune of Rs.24,000/-' and as against the Defendants D8 and D9, it dismissed the suit and in regard to other reliefs, it has dismissed the suit.
3. The trial Court has framed four issues and one additional issue for determination in the case. On the side of the Respondent/Plaintiff, witness PW1 has been examined and Exs.A1 to A15 have been marked. On the side of the Appellants/Defendants, Witnesses D.Ws.1 to 3 have been marked and Exs.B1 to B21 have been marked.
4.On an appreciation of oral and documentary evidence available on record, the trial Court has passed a Judgment directing the Defendants 1 to 3 to pay a sum of Rs.1,85,701/- to the Respondent/Plaintiff along with interest at 20% p.a. From the date of plaint viz., 12.07.1988 till the date of Decree and thereafter, at 12% p.a. From the date of Decree till the date of realisation with proportionate costs. As regards the Defendants 4 to 7, the trial Court has held them liable to pay a sum of Rs.24,000/- only and in respect of the Defendants 8 and 9, it dismissed the suit and in respect of other reliefs also, it dismissed the suit.
5. Being dissatisfied with the Judgment and Decree in O.S.No.4932 of 1996 dated 24.02.1998 passed by the trial Court, the Appellants/Defendants D1 to D3 have projected this Appeal before this Court.
6.The points that arise for consideration in the Appeal are:
i) Whether the trial Court has got jurisdiction to
try the suit filed by the Respondent/Plaintiff?
ii) Whether the Respondent/Plaintiff has a cause of action to institute the present suit?
iii) Whether the Respondent/Plaintiff is entitled to claim a sum of Rs.4,09,799/- together with interest at 20% p.a. from the Defendants as prayed for in the plaint?
FINDINGS ON POINT No. 1 :
7. According to the Learned counsel for the Appellants/ Defendants D1 to D3, the trial Court has not appreciated Exs.A1 and A3 to A11 Invoices which have not been raised in Madras and the goods have not been sold and delivered in Madras and further, the orders for the supply of goods have not been placed at Madras and that no supplies have been made or effected by the Respondent/Plaintiff in Madras and therefore, no part of the cause of action has arisen within its jurisdiction.
8. Per contra, the Learned counsel for the Respondent/Plaintiff contends that as per the Agreement dated 01.09.1982 between the Plaintiff and the First Appellant/First Defendant, the First Appellant/First Defendant is liable to pay interest on the unpaid amount from the date of lifting or despatch until the actual date of payment at the rate fixed by the Respondent/Plaintiff from time to time in their Invoices and that the Defendants D2 to D7 being the partners of the First Defendant Firm who are jointly and severally liable to pay a sum of Rs.2,33,429/- towards principal and Rs.1,71,370/- towards interest at the prevailing rate fixed as per the invoices of the Plaintiff viz., 20% p.a. till the date of plaint and inasmuch as the suit claim is a commercial one, the Respondent/Plaintiff claims the further interest at the rate of 20% p.a. from the date of plaint till the date of realisation and as per the Agreement dated 01.09.1982, the First Defendant is bound to make payment to the Respondent/Plaintiff at Madras by way of crossed Demand Drafts/Cheques.
9. It is the further contention on the side of the Respondent/Plaintiff that when the Agreement dated 01.09.1982 has been signed at Madras between the Respondent/Plaintiff and the First Defendant, the Respondent/Plaintiff has raised various invoices on 24.09.1985, 14.12.1985, 23.11.1985 and 23.12.1985 and when the First Respondent/Plaintiff delivered the fertilisers to the First Defendant on 22.11.1985 and other dates when the First Appellant/First Defendant issued various cheques to the Respondent/Plaintiff on 20.11.1985, 17.11.1985, 27.12.1985 and 07.01.1986, the said cheques have been dishonoured by the First Defendant's Bankers on 29.10.1987.
10. The core contention put forward on the side of the Respondent/Plaintiff is that the First Appellant/First Defendant is liable to effect payment to the Respondent/Plaintiff where the Plaintiff's principal Office is situated and since the part of the cause of action has arisen at Kamareddy, Andhra Pradesh where the goods have been delivered to the First Defendant.
11. In the Written Statement filed by the Appellants 1 and 2/Defendants 1 and 2, it is among other things averred that the First Appellant/First Defendant earlier at Kamareddy, Andhra Pradesh has been a Partnership Firm constituted of Defendant Nos.2 to 7, since 21.05.1975 as per the terms of Partnership Deed dated 27.08.1975 and on 15.11.1984, the Defendants D4 to D7 have retired from the Partnership with effect from 15.11.1984.
12. Added further, the Appellants 1 and 2/Defendants 1 and 2 have taken a plea that as per the Partnership Deed dated 28.03.1985, the First Appellant/First Defendant is a Partnership Concern consisting of i)Smt.Batchy Satyamma W/o Datta Rajaiah ii)Batchu Laxmipathi iii) Batchu Kistaish and later, the 8th Defendant and the original Defendants D2 and D3 have been impleaded in the suit and B.Anandkumar the 9th Defendant has been a minor on the date of suit and he has been admitted to the benefits of the Partnership and he has been made a party as though he is a Major and in fact, the plaint is materially defective.
13. According to the Appellants/Defendants D1 and D2, the First Appellant/First Defendant Partnership Company is carrying on its business at Kamareddy, Nizamabad District, Andhra Pradesh and at no other place, much less within the jurisdiction of this Court and the Third Appellant/Third Defendant has been appointed as a Dealer of the Respondent/Plaintiff's products on "Non Exclusive" basis and that the obligations thereunder are localised to perform and have been performed only at Kamareddy, Andhra Pradesh that the Appellants/Defendants D1 and D2 have not entered into any Agreement at Madras with the Respondent/Plaintiff.
14. The Respondent/Plaintiff has a Regional Office at Hyderabad and Warehouse facilities at Sanath Nagar, Hyderabad, at Nizamabad and at Kamareddy all situate in Andhra Pradesh and the application for the Dealership has been made at Kamareddy in the proforma furnished by the Respondent/Plaintiff Regional Office at Hyderabad and it has been accepted at Kamareddy and the communication of acceptance has been received there and also, the initial deposit of Rs.1,000/- has been made at Kamareddy and the same has been received by the Respondent/Plaintiff Regional Office at Hyderabad and as such, no part of cause of action has arisen based on this Agreement within the jurisdiction of this Court.
15. The contention of the Appellants 1 and 2/Defendants 1 and 2 is that all the material and essential obligations and rights of parties in respect of goods sold and delivered has arisen or incurred and or are enforceable only at Kamareddy and no orders have been passed with the Respondent/Plaintiff at Madras and no places have been made or effected by the Respondent/Plaintiff at Madras and no delivery of the Respondent/Plaintiff's products have been taken at Madras and indeed, the Respondent/Plaintiff has not sold any goods to the First Defendant at Madras and therefore, no part of cause of action has arisen within the jurisdiction of the trial Court.
16. The Third Appellant/Third Defendant has adopted the Written Statements of the Appellants 1 and 2/Defendants 1 and 2. In the Written Statement (Adopted by the Third Defendant), the Defendants D4 to D7 have taken a plea that they were no doubt partners of the First Appellant/First Defendant, a Partnership Firm and the Second Defendant, the Third Defendant along with these Defendants have been carrying on business in fertilisers and general goods in Partnership under the name and style of the First Appellant/First Defendant's Company at Kamareddy since 21.05.1975 in terms of Partnership Deed dated 28.07.1975.
17. Further more that the Defendants 5 to 7 have retired from the Partnership with effect from 15.11.1984 and Batchy Sathyamma and B.Anandkumar have been admitted as partners and they along with the Defendants D2 and D3 have continued to carrying on business in fertilisers and general goods under the name and style of the First Respondent/Plaintiff at Kamareddy and at that time, B.Anandkumar, Son of Bachu Kistaiah (the Third Defendant) has been a minor and therefore, he has been admitted to the benefits of the Firm and he has been represented by his Father and Natural Guardian viz., the Third Defendant.
18.According to the Defendants 4 to 7, they are no longer partners in the First Respondent/Plaintiff's Company with effect from 15.11.1984 and the assets and liabilities have been taken over by the Defendants 2 and 3 who are the continuing partners of the First Respondent/First Appellant Firm and therefore, they are not at all liable to pay the said claim, as claimed by the Plaintiff and already, these Defendants have intimated the Assistant Commercial Tax Officer and the Income Tax Officer about their retirement from the Respondent/Plaintiff's Firm.
19. The 8th Defendant has taken a plea that he has been impleaded after filing of the suit and he has not been party to the suit when the suit has been filed on 12.07.1988 and she has become a partner of the First Appellant/First Defendant Partnership Concern with effect from 15.11.1984 as per Partnership Deed dated 28.03.1985 and she is not a party to the plaint alleged Agreement dated 01.11.1982 or any other Agreement with the Plaintiff and therefore, she is not liable under the suit Agreement and further, she is not a party to any of the sale transactions with the Respondent/Plaintiff and therefore, she is not liable in any manner in respect of them to the First Respondent/Plaintiff.
20.The contention of the 8th Defendant is that no part ofcause of action for the suit has arisen at Madras within the jurisdiction of the trial Court and since the suit claim is one for price of goods sold and delivered admittedly at Kamareddy the situs of such sale and obligation of the parties to the sale transaction arise only at Kamareddy and therefore, the proper Court to exercise the jurisdiction is the Court at Kamareddy in Andhra Pradesh.
21.The 9th Defendant in his Written Statement has stated that he has not been the partner of the First Defendant as per the Partnership Deed dated 27.08.1975 and the First Defendant Partnership has been reconstituted with effect from 16.11.1984 as per the Partnership Deed dated 28.03.1985 with Defendants 2, 3 and 8 as partners on the terms and he being a minor admitted only to the benefits of the said Partnership business is not answerable to act of the liabilities of the Partnership and he is not a Euo nominee or otherwise a party to the Agreement dated 01.09.1982 or any other Agreement and he is stranger to the suit contract and he is not anyway connected with the plaint mentioned sales.
22.In fact, the 9th Defendant has pleaded in the Written Statement that the Respondent/Plaintiff has no cause of action against him and that he is a permanent resident of kamareddy in Andhra Pradesh state and therefore, no part of the cause of action has arisen at Madras against him.
23. PW1 (Manager of the Respondent/Plaintiff) in his evidence has stated that Ex.A2 Agreement dated 01.09.1982 has been entered into between the Respondent/Plaintiff and the Appellant/First Defendant at Madras and that as per Ex.A1, Invoice in and by which the supplies have been effected by the Respondent/Plaintiff in favour of the Appellant/First Defendant, the Ex.A2 Agreement dated 01.09.1982 has been entered into between the Respondent/Plaintiff and the Appellant/First Defendant and on the basis of Ex.A1 Invoice, the Second Defendant through the First Defendant has to receive supplies from the Respondent/Plaintiff and distribute the same and the orders have been obtained orally from the First Defendant and not in writing and in Hyderabad, they have a Regional Office and still the distribution right is with the First Defendant.
24.DW1 in his evidence has stated that he is the third Defendant in the case and the Second Defendant is his brother and the 8th Defendant is his Mother and the 9th Defendant is his son and in the First Defendant Firm, the present partners are the 8th Defendant , the Second Defendant himself and the 9th Defendant and other Defendants are not partners in the First Defendant Concern.
25. It is the evidence of DW1 that from 01.09.1982, they have been having business dealing with the Respondent/Plaintiff and Ex.A2 is the Agreement entered into between the Plaintiff's Concern and themselves and in Ex.A2, Agreement, he has signed on behalf of the Defendant Concern and Ex.A2 has been written at Kamareddy Village.
26.DW1 in his cross-examination has categorically stated that from the year 1985, Defendants 2, 3 and 8 and 9 have been originally the partners in the Partnership Firm and he has informed the Respondent/Plaintiff about the new partners joining in the concern Firm in the year 1985 and the Partnership building has been handed over to the sales Officer of the Respondent/Plaintiff.
27.A reading of Ex.A2 Agreement dated 01.09.1982 entered into between the Secretary of the Respondent/Plaintiff Corporation and the Partner of the First Defendant Company indicates that Clause 16 specifically enjoins that 'The Courts at Madras only shall be deemed to be the Courts of jurisdiction in respect of any suits, Claims, disputes arising out of or relating to the Agreement'. In fact, in Ex.A2 Agreement, it is seen that the Respondent/Plaintiff's Secretary R.Ravi has signed at the office address of the Respondent/Plaintiff's Company at SPIC Ltd., 97 Mount Road, Guindy, Chennai 32. The preamble portion of Ex.A2 Agreement also refers to the printed letters which speaks of the Respondent/Plaintiff's Company Registered Office address at 36-40, Armenian Street, Madras 600 001 and its Principal Office at 97, Mount Road, Guindy, Madras 600 032 and in fact, the Third Defendant has signed on behalf of the First Appellant/First Defendant Company in the said document. Indeed, the First Appellant/First Defendant's Company's name has been seen from the rubber stamp letters found therein and the address of the First Appellant/First Defendant's Company is mentioned as Guni Road, Kamareddy 503 111.
28. It is to be noted that in a contract for Sale of Goods and a suit on such a contract normally may be filed at the place where the goods are deliverable or the price payable, as opined by this Court. Notwithstanding the fact that DW1 (the Third Defendant) has deposed in his evidence that he has signed in Ex.A2 Agreement on behalf of the First Defendant Firm at Kamareddy Village, on going through the tenure and contends of Ex.A2 Agreement, this Court comes to an inevitable conclusion that Ex.A2 Agreement dated 01.09.1982 has been entered into between the Respondent/Plaintiff and the concerned parties only at Madras and not at Kamareddy in Andhra Pradesh and as per Section 20 of the Civil Procedure Code, the making of a contract is part of the cause of action and since Ex.A2 Agreement dated 01.09.1982 has been signed between the parties at Madras, the suit filed by the Respondent/Plaintiff at Madras on the file of the City Civil Court, Chennai is perfectly maintainable in law and the trial Court has jurisdiction to try the suit and the point No.1 is answered in favour of the Respondent/Plaintiff. FINDINGS ON POINT No.2:
29.It is to be pointed out that in Law a partner is said to retire when he ceases to be a member of the Firm bringing to an end the subsisting relations between the other members or between the Firm and third parties.
30.The retirement of a partner severs the Partnership between the Retiring Partner and Continuing Partner leaving the Partnership amongst the latter unaffected and the Firm continued with the changed Constitution comprising the Continuing Partners.
31.Generally, each partner is liable as if a decretal debt is his personal liability except in the case of minor whose liability is limited to his assets in the Partnership, as opined by this Court.
32. As per Section 25 of the Indian Partnership Act, 1932 every partner is liable jointly with all other partners and also severally for all acts of the Firm done while he is a Partner.
33. In the present case, a perusal of Ex.B2, the xerox copy of the Partnership Deed dated 27.08.1975 shows that Defendants D2 to D7 are the Partners of the First Defendant Firm. Also, as evidenced from Ex.B2 Partnership Deed after the retirement of the Defendants D4 to D7 from the First Defendant Firm, the other Defendants viz., Defendants D2, D3, D8 and D9 have become Partners. The 7th Defendant as DW3 in his evidence has stated that in the First Defendant Partnership Firm, Defendants D4 to D7 have been the Partners and they retired from the Partnership on 15.11.1984 itself. The Defendants D2, D3, D8 and D9 are the Partners of the First Partnership Firm as per the stand of the Defendants. Suffice it for this Court to point out that from the unequivocal evidence of DW1 and DW3 coupled with Exs.B2 and B3, it is quite evident that the Defendants D4 and D5 have retired from the First Defendant's Firm on 15.11.1984. However, the First Respondent/Plaintiff has filed the suit making a claim on the basis of Invoices Exs.A1, A4, A6, A8 and A10 and has also produced delivery Note Exs.A3, A7, A9 and A11 to fortify its stand that the goods have been supplied to the First Appellant/First Defendant's Firm.
34.DW3 (the Seventh Defendant) has admitted in his evidence that a sum of Rs.24,000/- only due to the Respondent/Plaintiff when the Defendants D4 to D7 have been Partners to the First Defendant Firm and therefore, the First Respondent/Plaintiff has a good cause of action against the Defendants D4 to D7 to the extent of Rs.24,000/- only, in the considered opinion of this Court.
35.As per Ex.A10 dated 14.12.1985, Carbon copy of the Invoice from Warehouse Delivery Note cum Invoice of the Respondent/Plaintiff, addressed to the First Appellant/First Defendant's Company, the main suit has been filed on 13.07.1988. However, the 8th Defendant has been impleaded as per Order in A.O.1528 of 1989 on 19.07.1989. Inasmuch as the suit in C.S.No.936 of 1988 on the file of this Court has been filed on 13.07.1988 and because of the fact that the 8th Defendant has been impleaded only on 19.07.1989 as per the order made in A.O.1528/89, this Court is of the considered view that the suit against the 8th Defendant is clearly beyond the limitation. As regards the plea taken that the suit as against the 9th Defendant is barred by limitation, it is to be pointed out that the Minor 9th Defendant has attained majority on 03.07.1990 and as per Ex.B8 School Certificate, his date of birth is 02.07.1972.
36. From the perusal of Ex.B9 Partnership Deed dated 18.03.1991, it is quite clear that the Defendant Nos.8, 9, 3 and 2 have been the Partners of the First Appellant/First Defendant Firm. As seen from Ex.B10 the Xerox copy of the Partnership Deed dated 01.04.1992 executed between the Defendants 8, 2 and 3 on the one side and 9th Defendant on the other, that the Partnership of the First Appellant/First Company which has come into existence on 25.01.1975 has been reconstituted on 16.11.1984 and 01.04.1990 and that the Defendants 2 and 3 have severally authorised to negotiate and obtain any loan for and behalf of the Firm from any Bank, Corporation or person by pledging movable or immovable property of the Firm or otherwise and that in terms and conditions or Agreement entered into by them in this regard shall stand ratified by other parties and that the Second and Third Defendants are the Managing Partners of the same, etc.,
37.In terms of Section 30 (7) of the Indian Partnership Act 1932, when a Minor becomes a Partner, then his rights and liabilities as a minor continue upto the date on which he becomes a partner, but he also becomes personally liable to third parties for all acts of the firm done since he was admitted to the benefit of the Parntership and his share in the property and profits of the firm shall be the share to which he is entitled as a minor.
38.As a matter of fact, as per Section 30 of the Indian Partnership Act, a minor cannot become a Partner though, with the consent of adult partners he may be admitted to the benefits of Partnership. In Ex.B10, Partnership Deed dated 01.04.1992, the age of the 9th Defendant has been mentioned as 19. However, the 9th Defendant has been impleaded on 19.07.1989 only after Ex.A10 Invoice dated 14.12.1985. Hence, it is held that the suit filed against the 9th Defendant is beyond the period of Limitation. In the light of the qualitative and quantitative detailed discussions referred to supra, this Court comes to the conclusion that the Respondent/Plaintiff has cause of action as against the Defendants 4 to 7 to the extent of Rs.24,000/- only and as against the Defendants 8 and 9, the claim is barred by Limitation and in respect of the Defendants 1 to 3, the Respondent/Plaintiff has a cause of action and the point No.2 is answered accordingly. FINDINGS ON POINT No.3:
39.According to the Learned counsel for the Appellants/Defendants 1 to 3, the trial Court ought to have held that the principal amount recoverable by the Respondent/Plaintiff has been only a sum of Rs.9,331/- and not the claim of Rs.4,04,799/- and in fact, the amount sought to be recovered from the Defendants has been comprised of Rs.2,33,429/- being the principal of Rs.1,76,370/- being the interest and the trial Court held that the First Defendant has paid a sum of Rs.2,24,098/- (Rs.1,92,000/- - Rs.32,098/-) should have held that a sum of Rs.2,24,098/- has to be deducted from Rs.2,33,429/- and not from Rs.4,04,799/-.
40.Further, the Learned counsel for the Appellants contends that the trial Court has committed an error in holding that the Respondent/Plaintiff has to recover a sum of Rs.1,85,701/- together with interest thereon at 20% p.a. from the date of plaint till the date of Decree and further interest at 12% p.a. from the date of Decree till the date of realisation from the Appellants/Defendants 1 to 3 and moreover, the proper suit ought to have been filed by the Respondent/Plaintiff should be rendition of accounts and the suit for recovery of money for goods sold delivered is not the appropriate one.
41.It is to be pointed out that in clause 9 of Ex.A2 Agreement dated 01.09.1982, it is mentioned that the Dealer (the First Appellant/First Defendant Firm) indicates to make prompt payment at Madras for each consignment of product(s) lifted by him according to the procedures mutually agreed between the Principal and the Dealer, etc., and the price(s) payable by the Dealer shall be the ruling price(s) on the date of actual lifting by him or the price(s) on the date of actual lifting by him or the price(s) ruling on the date of direct despatch to him and in the event of any delay in effecting such payments for goods consigned, the Dealer shall, in addition to any other liabilities for demurrage or wharfage or other charges, be liable to pay interest, at the rate fixed by the Principal from time to time, to the Principal on the unpaid amount from the date of lifting or despatch until the actual date of payment.
42.A perusal of the plaint shows that the suit claim being a commercial cause, the Respondent/Plaintiff claims a further interest at the rate of 20% p.a. from the date of plaint till the date of realisation apart from claiming the prevailing rate of interest at 20% p.a. upto the date of plaint as per the prevailing rate fixed as per invoice of the Respondent/Plaintiff. Indeed, the Respondent/Plaintiff has claimed the rate of interest at 20% p.a. on the overdue amount and this rate of interest at 20% p.a. has been printed in Exs.A4, A6, A8, A10. Just because the rate of interest on overdue amount is mentioned as to be charged at 20% p.a. on the overdue amount in some of the invoices marked as Exhibits before the trial Court, it cannot be concluded that the Defendants have agreed to the said rate of interest in respect of the amount due which they have to be paid to the Respondent/Plaintiff.
43.In the instant case on hand, the Respondent/Plaintiff has laid the suit on the basis of five invoices viz., Exs. A1, A4, A6, A8 and A10 and 5 invoices amount comes to Rs.2,39,107/- as per the averment made in the plaint but the Respondent/Plaintiff has claimed only a sum of Rs.2,33,429/- as the amount due to be paid to it after adjusting the payment made by the Defendants and that apart, the Respondent/Plaintiff also claimed 20% interest for the aforesaid principal amount. To put it precisely, the Respondent/Plaintiff claims a sum of Rs.4,04,799/-. However, the Appellants/Defendants in their Written Statement have stated that Rs.1,92,000/- has been paid to the Respondent/Plaintiff and further, a sum of Rs.32,098/- has been paid as per cheque bearing No.423365.
44.DW2 (Accountant of the First Appellant/first Defendant Firm) has produced Day Book for the year 1984-1985, 1985-1986, Ledger for the year 1985-1986 and they have been marked as Exs.B12 to B14. In his evidence, DW2 has stated that he has been serving in the First Appellant/First Defendant's Firm from 1976 till date and he is writing the First Appellant/First Defendant Firm's accounts in Telugu and he writes the stock Book, Ledger, Day Book and on receipt of the stock, he will write the same in the Stock Book and in Ex.B14, page No.121 relates to the Respondent/Plaintiff's accounts which is Ex.B17 and he has filed the English Translation and the Defendants have paid Rs.1,92,000/- to the Respondent/Plaintiff through the Demand Draft and the said Note is in Ex.B15 at page No.145 and for Rs.50,000/-, the Defendants have got a discussion from the Respondent/Plaintiff and that apart, the Defendants obtained a commission of Rs.1 Lakh.
45.DW2 in his evidence has further stated that Ex.A2 Invoice amount of Rs.32,098/- has been paid through cheque bearing No.423365 and that they have not raised objection towards the claim of interest.
46.DW1 (the Third Defendant) in his evidence has stated that as per the accounts, they have paid Rs.2,76,000/- to the Respondent/Plaintiff and they have not agreed for payment of interest and he has not signed in invoices agreeing to pay the interest.
47.DW3 (the Seventh Defendant) in his evidence has deposed that from 15.11.1984, they are not the partners and they have retired from the Partnership and during the year 1982, he has been the Partner in the First Appellant/First Defendant Firm and that he and the Defendants 4 to 6 when they have been the Partners in the First Appellant/First Defendant Firm at that time, there has been due a sum of Rs.24,000/-.
48.As far as the present case is concerned, the Respondent/Plaintiff in the suit has claimed a sum of Rs.4,04,799/- with interest at the rate of 20% p.a. on the principal sum of Rs.2,33,429/- from the date of plaint till the date of Decree and later, claimed interest at 20% p.a. on the decretal amount from the date of Decree till the date of payment. Out of the aggregate sum of Rs.4,09,799/-, a sum of Rs.1,71,370/- represents towards interest claimed at the prevailing rate as per some of the invoices of the Respondent/Plaintiff at 20% p.a., etc., on a scrutiny of the trial Court Judgment, the trial Court in paragraph No.12 has stated that 'if we give credit to Rs.1,92,000/- (being the amount paid to the Respondent/Plaintiff's Company by the Defendants as per Ex.B15, Entry) and also a sum of Rs.32,098/- paid through the cheque then the balance to which the Defendants are liable comes to Rs.1,85,701/- (Rs.4,09,799/- - Rs.2,24,099/-), etc.,
49.It is the contention of the Learned counsel for the Appellants/Defendants 1 to 3 that the trial Court has committed an error by taking a sum of Rs.2,24,099/- being the amount representing a sum of Rs.1,92,000/- + Rs.32,098/- paid by the Defendants to the Respondent/Plaintiff from and out of the total suit claim of Rs.4,09,799/- and this kind of procedure adopted by the trial Court is not a correct one as per the principal of appropriation as per Section 60 of the Indian Partnership Act. In this connection, it is not out of place for this Court to point out that the Honourable Supreme Court in the decision MEGHRAJ AND OTHERS V. M.S.T.BAYABAI AND OTHERS, AIR 1970 SC 161, has held that the normal rule for appropriation of payments in case of money decrees to be made in the first instance is towards satisfaction of interest and then towards principal. However, after amendment of Or.21 R.1 in the year 1976, it is not open to the Decree Holder to appropriate payments received to the non-interest bearing part of the decretal amount but they have to apply first towards interest bearing part of the decretal amount, if any. Whether a part payment should be treated towards principal or interest, the general Principle, subject to any contract to the contrary is that it should be first applied to the interest and after interest, is fully paid off, the remainder, if any, will go to satisfy the principal, especially where simple (and not compound) interest is payable. This is consistent with common justice; to apply the part-payment in the first place, to the principal would be to deprive the creditor of the benefit of which he is entitled under the contract. If a loan agreement has not provided for adjustment of payments first towards principal, then firstly it has to be adjusted against interest and only thereafter, against principal.
50. Added further, the right conferred by Section 60 of the Indian Contract Act can be exercised by the Aggregator only at the time when he receives the payment. Hence, Section 60 does not give him any right to consolidate all the debts unilaterally viz., without the consent of the Debtor, etc.,
51.Ordinarily, law requires proof not only Account Books generally, but of each item. The Books of Account must be held to have been proved in the absence of its Writer on proof of its proper maintaining and keeping as per decision of the Hon'ble Supreme Court RAM JANKI DEVI AND ANOTHER V. JUGGI LAL KAMLAPAT, AIR 1971 SC 2551.
52.Though a plea has been raised on behalf of the Appellants/Defendants that the Respondent/Plaintiff has not proved the accounts entries in respect of a suit claim, it must be borne in mind that it is the evidence of PW1 (Joint Manager of the Plaintiff) that they have filed the suit only on the basis of dishonoured cheques and moreover, the dishonoured cheques have been marked as Exs.A12 to A20. Therefore, it is not open to the Appellants/Defendants 1 to 3 to take a stand that the Respondent/Plaintiff has not produced the Account Books and therefore, its claim has to be negatived and the plea taken by the Appellants in this regard is outrightly rejected by this Court.
53.The Respondent/Plaintiff has claimed a sum of Rs.2,33,429/- towards principal amount due from the Defendants. Even though the some of the Invoices marked on the side of the Respondent/Plaintiff speaks of charging of interest at 20% p.a. for the overdue amount on the side of the Respondent/Plaintiff, no satisfactory proof established that the Defendants have agreed to pay 20% interest p.a. for the overdue amount and in the absence of the same, this Court is of the considered view that the Respondent/Plaintiff is only entitled to claim interest at the rate of 12% p.a. for the principal amount of Rs.2,33,429/- from the date of lifting or despatch till the date of realisation from the Appellants/Defendants 1 to 3. Admittedly, the First Appellant/First Defendant has remitted through Demand Drafts, the following amounts on the following dates: Rs. Ps.
1.20.12.1985 ... 68,000.00
2.21.12.1985 ... 7,000.00
3.27.12.1985 ... 20,000.00
4.15.02.1986 ... 10,000.00
5.16.04.1986 ... 70,000.00
6.21.04.1986 ... 10,000.00
7.31.06.1986 ... 7,000.00
and later through a Cheque, a further sum of Rs.32,098/- has been paid. Thus, the aforesaid two amounts will have to be appropriated towards outstanding interest, then only to the principal, in the considered opinion of this Court and only after making appropriations in the manner as mentioned supra, the Appellants/Defendants 1 to 3 are directed to pay the balance amount together with interest accrued thereon till the date of payment towards the loan transaction/Running Account with proportionate costs and only to this extent, the Respondent/Plaintiff is entitled to claim and the point No.3 is answered accordingly.
54. In the result, the First Appeal is allowed in part leaving the parties to bear their own costs. The Respondent/Plaintiff is entitled to claim interest at the rate of 12% p.a. for the principal amount of Rs.2,33,429/- (Rupees Two Lakhs Thirty Three Thousand Four hundred and Twenty Nine) from the date of lifting or despatch till the date of realisation from the Appellants/Defendants 1 to 3. Further, the Respondent/Plaintiff is directed to appropriate a sum of Rs.1,92,000/- paid and by the First Defendant by way of Demand Drafts, a further sum of Rs.32,098/- paid by cheque, firstly towards payment of interest and later towards principal, as per Section 60 of the Indian Contract Act and for the outstanding amount due to be paid by the Appellants/Defendants D1 to D3, they are directed to pay the same along with interest accrued thereon till the date of payment towards the loan transaction/Running Account with proportionate costs and in the above terms, the Judgment and Decree of the trial Court shall stand modified.