Edwin vs Mercy George
2021 Latest Caselaw 13685 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM
                               PRESENT
              THE HONOURABLE MRS. JUSTICE MARY JOSEPH
        FRIDAY, THE 2ND DAY OF JULY 2021 / 11TH ASHADHA, 1943
                        RFA NO. 430 OF 2018
AGAINST THE DECREE AND JUDGMENT DATED 28.10.2016 IN OS NO.298/2008
               OF ADDITIONAL SUB COURT, NORTH PARAVUR
APPELLANTS/ 2ND AND 3RD DEFENDANTS:

    1      EDWIN
           AGED 20 YEARS,
           S/O.LATE GIGI.K.GEORGE, KACHAPPILLY HOUSE,
           MALLUSSERY P.O., VATTAPPARAMBU.
    2      ALWIN,
           AGED 15 YEARS,
           S/O.LATE GIGI K.GEORGE, KACHAPPILLY HOUSE, MALLUSSERY
           P.O., VATTAPPARAMBU, MINOR, REPRESENTED BY GUARDIAN AND
           GRANDFATHER K.K.GEORGE,S/O.KURIEN, AGED 81 YEARS,
           KACHAPPILLY HOUSE, MALLUSSERY P.O., VATTAPPARAMBU.

           DECLARED MAJORITY

           THE MAJORITY OF THE 2ND APPELLANT IS DECLARED AND
           ALLOWED THE 2ND APPELLANT TO PROCEED WITH THE APPEAL IN
           HIS OWN NAME AS PER ORDER DATED 07.08.2018 IN I.A. NO.
           1309/2018.

           BY ADVS.

           SRI.V.N.SUNIL KUMAR
           SRI.C.PURUSHOTHAMAN PILLAI


RESPONDENTS/PLAINTIFFS, 1ST AND 4TH TO 7TH DEFENDANTS:

    1      MERCY GEORGE,
           AGED 60 YEARS
           W/O.K.T.GEORGE, RESIDING AT KAITHARAN HOUSE, KARUKUTTY,
           REPRESENTED BY HER HUSBAND AND POWER OF ATTORNEY HOLDER
           K.T.GEORGE, KAITHARAN HOUSE, KARUKUTTY VILLAGE -683576.
    2      K.T.GEORGE,
           AGED ABOUT 66 YEARS,
           POWER OF ATTORNEY HOLDER, S/O.THARIAN, KAITHARAN HOUSE,
           KARUKUTTY VILLAGE -683576.
    3      K.BALACHANDRA NAIK (K.B.NAIK)
           AGED 62 YEARS
           S/O.SRI.NARAYANAN, RESIDING AT VADAKKOOTT HOUSE,
           RAIL CROSS ROAD, KARUKUTTY-683576.
 R.F.A.NO.430 OF 2018                 2


    4     THE MANAGER
          STATE BANK OF TRAVANCORE, ANGAMALI BRANCH-683572.
    *5    [C.K.PRABHAKARAN NAIR,
          S/O.KRISHNAN NAIR, AGED 60 YEARS, CHANDRATHIL HOUSE,
          KARUKUTTY- 683576
    6     ROSY
          W/O.JOSE, MANAVALAN HOUSE, AGED 58 YEARS, PADUVAPURAM
          P.O., KARUKUTTY-683576.
    7     BABITHA GEORGE,
          D/O.K.T.GEORGE, AGED 35 YEARS, KAITHARAN HOUSE,
          KARAYANPARAMBU, KARUKUTTY, NOW RESIDING AT MOLECULAR
          BIOLOGY DEPARTMENT, BONN UNIVERSITY, FEDERAL REPUBLIC
          OF GERMANY. ZIP CODE-531117] - DELETED

          RESPONDENT NUMBERS 5 TO 7 ARE DELETED FROM THE PARTY
          ARRAY AT THE RISK OF THE APPELLANTS AS PER ORDER
          DATED 12.09.2018 IN I.A. NO. 4/2018.

          R1 AND R2 BY ADVS.

          SRI.ABRAHAM MATHEW (VETTOOR)
          SRI.ANIL ABEY JOSE

          R4 BY ADV.SRI.G.G.MANOJ




     THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON
    02.07.2021,   THE   COURT   ON       THE   SAME   DAY   DELIVERED   THE
    FOLLOWING:
 R.F.A.NO.430 OF 2018                 3




                              JUDGMENT

Dated this the 2nd day of July, 2021

This appeal is filed against the judgment and decree of

Additional Sub Court, North Paravur in O.S No.298 of 2008. The

appellants are defendants 2 and 3 in the Original Suit, who are

none other than the legal heirs of one Sri.Gigi K George who

was the Managing Partner of the firm namely 'Galaxy Granites

and Marbles'. They being minors at the relevant time of filing of

the suit, were represented by their grandfather, as their

guardian. Sri.Gigi K George and his wife committed suicide. The

firm had stopped it's business even prior to the death of the

father of the appellants. The firm became insolvent and

therefore the 4th defendant had filed an application as O.A

No.54/2008 in the Debt Recovery Tribunal, Ernakulam for

recovery of the sums due from it. From the 4 th defendant, the

7th defendant, daughter of the plaintiffs had availed an

educational loan of Rs.4,43,000/-. In a settlement arrived at

among the 4th defendant Bank and the 1 st plaintiff the liability

of the firm was fixed at Rs.54,92,000/-. 2 nd plaintiff was the

guarantor of the loan availed by the firm from the 4 th defendant

Bank and he alongwith the 1 st plaintiff, a partner of the firm

discharged the liability of Rs.66,20,000/- outstanding to the 4 th

defendant in order to save the properties mortgaged by Sri.Gigi

K George and furnished by the 2nd plaintiff as security at the

time of availing the loan, from being proceeded against legally.

Rs.4,30,000/- was availed by the 1 st plaintiff as housing loan,

Rs.3,25,000/- as agricultural loan and Rs.4,43,000/- as

educational loan for the 7th defendant. The 5th and 6th

defendants in the suit had furnished collateral security for the

educational loan availed for the 7th defendant. 5th to 7th

defendants are only formal parties in the suit as no relief was

sought against them.

2. The liability was discharged by the plaintiffs with a

view to avoid any legal proceedings being taken by the 4 th

defendant in the O.A against the properties mortgaged and

offered as security. The liability was discharged by an order

passed by the Debt Recovery Tribunal in I.A No.531/2008 in O.A

No.54/2008.

3. After discharging the liability by paying the amount to

the 4th defendant, plaintiffs approached the guardian of

defendants 2 and 3 and demanded for Rs.18,30,667/-, but he

did not pay any heed to their demand. Accordingly, the suit in

question was filed seeking to realize Rs.18,30,667/-, being the

proportionate share due from the deceased father of the

appellants with interest at the rate of 18% p.a from the date of

the suit till realisation.

4. The 1st defendant filed written statement wherein

liability to pay the money sought to be realised is denied.

According to him, the plaintiffs have no cause of action against

him and he is an un-necessary party to the suit. According to

him the suit is only to be dismissed with compensatory costs.

5. The guardian of the appellants also filed written

statement challenging the maintainability of the suit. It was

contended that the settlement stated to have been arrived at in

O.A No.54/2008 is unlawful, and is not binding on minors, that

an order has been passed in the O.A to proceed against the

properties of the minors only after exhausting the remedies

against other partners, that the judgment under challenge was

passed in utter ignorance of that order, that the amount claimed

in the plaint is incorrect, that the plaintiffs are not entitled to get

interest for the money sought to be realised, that the plaintiffs

have no cause of action as pleaded in the plaint and that the

suit is only liable to be dismissed. It is further contended that

the settlement allegedly arrived at with the 4 th respondent is

not binding on defendants 2 and 3 who were minors at the

relevant time.

6. The 4th defendant also filed written statement,

contending that the suit was filed on an experimental basis

suppressing material facts, that the plaintiffs are not entitled to

a charge decree as prayed for, that the liability of the firm and

the personal liability of the 1st plaintiff and defendants 5 to 7

were paid off, following a settlement arrived at between the

parties, and that Rs.66,20,000/- was paid to the 4 th respondent

in full and final settlement. Sri.Gigi K George, the father of

defendants 2 & 3 had availed a housing loan of Rs.3,80,000/- on

26.04.2002 and agricultural cash credit facility to the tune of

Rs.2,00,000/-. He created a mortgage in respect of the plaint

schedule property on 26.04.2002 for the loans availed by the

firm and housing loan availed by him in his personal capacity.

Rs.66,20,000/- was paid to the 4th defendant and liability of the

firm was cleared off. The loan personally availed by Sri.Gigi K

George has not been re-paid and a sum of Rs.4,43,841/- was

outstanding as on 16.02.2008. A sum of Rs.1,59,123/- was

outstanding as on 16.02.2008 towards the loan availed as

agricultural loan. The plaintiffs have no right to proceed against

the properties, which were mortgaged with the 4th defendant.

The plaintiffs have no cause of action and therefore the suit was

only liable to be dismissed.

7. Before the court below, the plaintiffs as well as the

defendants adduced evidence. On the side of the plaintiffs, 2 nd

plaintiff was examined as PW1 and Exts.A1 to A4 were marked.

The 1st defendant did not participate in the trial held. Other

defendants did not adduce any oral evidence, and their

documentary evidence is confined to a single document marked

as Ext.B1. All the parties were heard.

8. The trial court on appreciation of the evidence and

evaluation of the arguments advanced by the respective counsel

representing the parties has decreed the suit, directing

defendants 2 and 3 to pay a sum of Rs.18,30,667/- to the

plaintiffs with interest at the rate of 10% per annum from the

date of the suit till the date of the decree and future interest at

the rate of 6% from the date of the decree till realisation and

costs. The trial court has made it clear that the liability of

defendants 2 and 3 to pay the sum decreed is limited to the

extent, the assets of their deceased father is inherited by them.

Aggrieved by the decree and judgment passed as above,

defendants 2 and 3 are now in appeal.

9. The arguments raised by Sri.V.N Sunil Kumar, the

learned counsel for the appellants are three fold. It was

contended firstly that, in the partnership firm namely 'Galaxy

Granites and Marbles', the father of the appellants, the 1 st

defendant and the 1st plaintiff in the suit were partners. Loan

was availed from the 4th respondent and when the re-payment

was defaulted the Bank has moved O.A.No.54/2008 before the

Debt Recovery Tribunal. A settlement was arrived at there,

excluding the appellants, who are minors. According to him,

settlement having been arrived at among the partners, without

the juncture of the appellants, who were minors at the relevant

time is illegal. The argument secondly advanced was that an

order passed by the Debt Recovery Tribunal directing to proceed

against the minors' assets only after exhausting remedies

against others was totally overlooked by the court below while

passing the judgment under challenge and therefore, the

judgment and decree suffers. The argument thirdly advanced

was that the partnership firm being unregistered, cannot be

sued against in view of the specific bar under Section 69 of the

Indian Partnership Act, 1932.

10. The learned counsel for the respondents contended

on the contrary that the firm not being, a party to the suit, the

argument that the suit is barred under Section 69 of the Indian

Partnership Act is untenable. According to him, the liability

towards the 4th defendant was discharged by the 2nd plaintiff as

guarantor to the loan availed therefrom, when property

belonging to the appellants' father and those offered as security,

were about to be proceeded against legally. According to him,

since the liability of the appellants to the Bank had been paid off

by the plaintiffs, the 2nd plaintiff as guarantor is entitled to get

the proportionate share, realised from the surviving partners

and appellants. According to him, the contentions raised by the

learned counsel for the appellants being devoid of any merits,

the judgment and decree under challenge are liable to be

confirmed.

11. The partnership deed had been marked during trial of

the suit as Ext.A1 and this Court is convinced therefrom that the

firm was unregistered. Sub Clause II of Clause 16 of Ext.A1 has

relevance in the context and is extracted hereunder:

"II. In the case of death or retirement or insolvency of anyone of the partners, the firm shall not be dissolved but shall be continued by the remaining partners either along with the heirs or legal representatives of such outgoing partners, or otherwise, on such terms and conditions as may be mutually agreed upon." (Emphasis supplied)

12. The impact of death of a partner on the continuance

of the firm is discussed in the extract above. It says that the

firm, after the death of one of it's partners will continue with

the surviving partners or with the legal representatives of the

deceased partner, if inducted, based on terms mutually agreed

among them. The father of the appellants was the Managing

Partner of the firm and he died. Absolutely no evidence is

forthcoming to establish that the firm has been reconstituted by

inducting the appellants, who are the legal heirs of the deceased

partner. What was pleaded in the plaint was that prior to the

death of the father of the appellants itself, the firm had become

defunct. But to establish the said factum also no evidence is

available. However, in the absence of any evidence regarding

induction of appellants into the firm and non-functioning of the

firm, the only probability is that the firm, with its existing

partners who are the 1st plaintiff and 1st defendant is continuing.

Ext.A1 also provides for the manner in which the profits and the

liabilities of the firm are shared by it's partners.

13. The appellants did not raise any dispute on the liability

of the firm towards the Bank. The Bank proceeded against the

appellants, being the legal heirs of the deceased Managing Partner

of the firm, who were represented by their legal guardian, in view

of their status as minors. Therefore, the appellants cannot

plead ignorance of the settlement effected by the 2 nd plaintiff

with the Bank. For that reason itself, the contention on lack of

participation in settlement will fail. It is pertinent to note that

evenafter attaining the age of majority no challenge was raised

against the settlement arrived at in the O.A.

14. As rightly pointed out by the learned counsel for the

respondents, the juncture of the firm is not necessary in a suit

for realistaion of the proportionate share of money paid by the

plaintiffs in discharge of the liability of the partners to the

Bank, towards the loans availed therefrom. The firm being not a

party to the suit, the argument that the suit is barred under

Section 69 of the Indian Partnership Act also fails.

15. The order allegedly passed by the Debt Recovery

Tribunal in O.A.No.54/2008, was not produced before the court

below. Evenif such an order was passed by the Debt Recovery

Tribunal that would only be confined to the proceedings therein

and not to the suit on hand, which was filed strictly for

realistaion of the money in terms of the liability, the father of

the appellant had towards the 4 th defendant, and already

discharged by the plaintiffs, who are partners of the firm as well

as guarantors to the loan transaction. Since they have

discharged the entire liability to the 4th respondent, including

that of the father of defendants 2 and 3, they are entitled to get

the proportionate share, in terms of money, realised therefrom.

Therefore, even if an order referred to above is passed in the

O.A, it has no relevance in the context of the case on hand. The

order referred to was not placed on record also. In the said

circumstances, the said argument is repelled.

16. The fact that plaintiffs discharged the liability of the

firm towards the Bank is also not in dispute. Ext.A2 marked by

plaintiffs in evidence would convince that any liability is not

outstanding from the firm to the 4th defendant. It is also an

undisputed factum that the 1 st plaintiff, 1st defendant and

Sri.Gigi K George who is the father of defendants 2 and 3 are

the three partners of the firm and as stipulated in Ext.A1,

liability of each of them, is in the proportion

33.34%:33.33%:33.33%.

17. Ext.B1 is a copy of the request made by the 4 th

respondent before the Debt Recovery Tribunal seeking to

proceed against the immovable properties. When the above

request was made, to save the property mortgaged from sale

that the plaintiffs, one of the principal debtor and guarantor

have proceeded to clear off the whole liability. When the entire

liability of the firm stands discharged by plaintiffs as evidenced

from Ext.A2, and as stipulated in Ext.A1, they are entitled to

realise the proportionate share of the liability of other partners

in cash. Admittedly, the plaintiffs reserve their right to realise

the proportionate share from the other partner. The plaintiffs

proceeded to realise the proportionate share of liability, from

defendants 2 and 3 being the legal heirs of one of the partners

who is no more. The suit was filed for the purpose and the

court below has decreed it. It has also found correctly that the

liability of defendants 2 and 3 is limited to the extent they

inherit the assets of their father. The court below is perfectly

justified in doing so.

Appeal fails for the reasons and is dismissed with costs.

Sd/-

MARY JOSEPH JUDGE NAB