# NANCHAND GANGARAM SHETH v. MALLAVPA MAHALINGAPPA SADALGE

- **Citation:** [1976] 3 S.C.R. 287
- **Court:** Supreme Court of India
- **Decided:** 1976-01-30
- **Case number:** Civil Appeal No. 1896 of 1968
- **Bench:** R. S. Sarkaria, S. Murtaza Fazal Ali
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nanchand-gangaram-sheth-v-mallavpa-mahalingappa-sadalge-6774
- **Pages:** 12

## Headnote

28 7
Joint Hindu family-If duty cast on menibers to inform creditors by general
notice regarding disruption of joint Hindu fa111ily-Creditor-Duty to inquire
about the capacity of exccutant of a document.
Partnership Act, 1932-Sections 4 and 5-Difference.
Limitation Act, 1908-Section 2!(3)(b) "Manager of the family for the
time being"-Meaning of-Erstwhile kana-1/ could keep an old debt alive
and extend limitation against all the members of joini Hindu family.
The plaintiff·appellant had business dealings with the joint family of the
defendants.
He had instituted a suit claiming a certain sum of money from
the defendants, one of the grounds being that even if the defendants proved
that there had been a partition in the family, the family was still liable for
the dues pertaining to the ancestral business carried on .bY all- the defendants
either as members of the joint Hindu family or as partners of a firm.
Defendant 3 (respondent) stated that there was disruption of the joint family status
on November 4, 1945. when defendants 1 and 2 and his deceased father unequivocally expressed their intention to separate and divided their movables.
He denied that defendants 1 and 2 had ever acted as managers of the joint
family.
The trial Court and the High Court concurrently found that the joint family
of the defendants had disrupted on November 4, 1945 and that no joint family
business was in existence on the date when the last dealing of tho plaintiff
with the defendants took place.
On appeal to this Court, it was contended that even if the joint family
stood disrupted from November, 1945, in the absence of public notice by defendants 1 and 2 regarding the disruption of the joint family, the acknowledgements made by them as karta of the joint Hindu family would be binding on the
erstwhile joint family under s. 45 of the Partnership Act, 1932.
Dismissing the appeal,
HEID : ( 1) It is the duty of the creditor to ascertain whether the person
m~.king the acknowledgement still bolds his representative capacity as karta of
the family. The law does not cast any duty upon the mem~rs of tho family to
inform the creditors by a general notice about the disruption of the family.
If
the creditor fails to make an enquiry and satisfy himself about the capacity of
the executant to represent the family at the time of making the acknowledgement,
he does so at his own peril. Disruption of the joint family status puts an
end to the representative capacity of the karta and any acknowledgement of a
deht made by him after such disruption cannot save the creditor's claim from
bec:oming time barred against the other members. [298B-C]
Pramod Kumar Pati v. Damodar Sahu, ILR 1953 Cuttack 221; Rengaswami
Ayyangar v. Sivprakasem Pillai, !LR 1942 Mad. 251 (F.B.); Mutayala Ramacht:ndrappa v. Mutayala Narayanappa, AIR 1940 Mad. 339, approved.
Kashiram Bhagshet Shete v. Bhaga Bhanshet Redii A.i.R. 1945 Born. 511 over
rukd.
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(2) (a) The Legislature has excluded the joint Hindu trading families from
the operation of the Partnership Act. Section 4 defines partnership as a relation between persons who have agreed to share the profits: of a business, and
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according to s. 5 the Act governs only that relation of partnership which arises
fro.'.Il contract and not from status, such as the one obtaining among the mem·
bm of a joint Hindu family trading partnership, [297C-DJ
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288
SUPREME COURT REPORTS
[1976] 3 S.C.R.
(b) The words "manager of a family for the time being" occurring in
s. 21 (3) (b) of the Limitation Act, 1908, indicate that at the time when the
acknowledgement was made and signed, the person making and signing it, must
be the manager of a subsisting joint Hindu family.
If <ft the relevant time
the joint Hindu family, as such, was no longer in existence,
any
acknowledgement made by the erstwhile karta of such family cannot keep the debt
alive and extend limitation as against aJI the members of the family, his representative capacity as ka

## Text

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NANCHAND GANGARAM SHETH
v.
MALLAVPA MAHALINGAPPA SADALGE
January 30, 1976
[R. S. SARKARIA AND S. MURTAZA FAZAL ALI, JJ.]
28 7
Joint Hindu family-If duty cast on menibers to inform creditors by general
notice regarding disruption of joint Hindu fa111ily-Creditor-Duty to inquire
about the capacity of exccutant of a document.
Partnership Act, 1932-Sections 4 and 5-Difference.
Limitation Act, 1908-Section 2!(3)(b) "Manager of the family for the
time being"-Meaning of-Erstwhile kana-1/ could keep an old debt alive
and extend limitation against all the members of joini Hindu family.
The plaintiff·appellant had business dealings with the joint family of the
defendants.
He had instituted a suit claiming a certain sum of money from
the defendants, one of the grounds being that even if the defendants proved
that there had been a partition in the family, the family was still liable for
the dues pertaining to the ancestral business carried on .bY all- the defendants
either as members of the joint Hindu family or as partners of a firm.
Defendant 3 (respondent) stated that there was disruption of the joint family status
on November 4, 1945. when defendants 1 and 2 and his deceased father unequivocally expressed their intention to separate and divided their movables.
He denied that defendants 1 and 2 had ever acted as managers of the joint
family.
The trial Court and the High Court concurrently found that the joint family
of the defendants had disrupted on November 4, 1945 and that no joint family
business was in existence on the date when the last dealing of tho plaintiff
with the defendants took place.
On appeal to this Court, it was contended that even if the joint family
stood disrupted from November, 1945, in the absence of public notice by defendants 1 and 2 regarding the disruption of the joint family, the acknowledgements made by them as karta of the joint Hindu family would be binding on the
erstwhile joint family under s. 45 of the Partnership Act, 1932.
Dismissing the appeal,
HEID : ( 1) It is the duty of the creditor to ascertain whether the person
m~.king the acknowledgement still bolds his representative capacity as karta of
the family. The law does not cast any duty upon the mem~rs of tho family to
inform the creditors by a general notice about the disruption of the family.
If
the creditor fails to make an enquiry and satisfy himself about the capacity of
the executant to represent the family at the time of making the acknowledgement,
he does so at his own peril. Disruption of the joint family status puts an
end to the representative capacity of the karta and any acknowledgement of a
deht made by him after such disruption cannot save the creditor's claim from
bec:oming time barred against the other members. [298B-C]
Pramod Kumar Pati v. Damodar Sahu, ILR 1953 Cuttack 221; Rengaswami
Ayyangar v. Sivprakasem Pillai, !LR 1942 Mad. 251 (F.B.); Mutayala Ramacht:ndrappa v. Mutayala Narayanappa, AIR 1940 Mad. 339, approved.
Kashiram Bhagshet Shete v. Bhaga Bhanshet Redii A.i.R. 1945 Born. 511 over
rukd.
A
B
c
D
E
F
G
(2) (a) The Legislature has excluded the joint Hindu trading families from
the operation of the Partnership Act. Section 4 defines partnership as a relation between persons who have agreed to share the profits: of a business, and
H
according to s. 5 the Act governs only that relation of partnership which arises
fro.'.Il contract and not from status, such as the one obtaining among the mem·
bm of a joint Hindu family trading partnership, [297C-DJ
A
B
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D
E
F
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288
SUPREME COURT REPORTS
[1976] 3 S.C.R.
(b) The words "manager of a family for the time being" occurring in
s. 21 (3) (b) of the Limitation Act, 1908, indicate that at the time when the
acknowledgement was made and signed, the person making and signing it, must
be the manager of a subsisting joint Hindu family.
If <ft the relevant time
the joint Hindu family, as such, was no longer in existence,
any
acknowledgement made by the erstwhile karta of such family cannot keep the debt
alive and extend limitation as against aJI the members of the family, his representative capacity as karta being co-terminus \vith the joint status of the
family.
[297F-Gl
( c) Coparceners do not derive their title through the kart a of the coparcenI
aty.
Jn the instant case defendants 1 and 2 did not fulfil the requirements of
4
sub--s. (I) of s. 21 of the Limitation Act. [298Al
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1896 of 1968.
(Appeal by special leave from the judgment and order dated the
21st September, 1962, of the Mysore High Court in Regular Appeal
(B) No. 287 of 1956).
H. B. Data and P. C. Bhartari for the appellant.
S. T. Desai and Naunit Lal for respondents 3 & 4.
The Judgment of the Court was delivered by
SARKARrA, J.-This is a plaintiff's appeal by special leave directed
against a judgment of High Court of Mysore. The following pedigce
table will be helpful in understanding the facts leading up to this
appeal :
Mal Jappa
Def. No. I
Mahalingappa
(died in ! 922)
I
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Appa Saheb
Def. No. 2
I
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Chandrakant
Def. No. 3
I
.
Sn1t. Balab1
(wife of Neelkanth
Def. No. 4).
I
Neelkanth
(died on R-7-46)
The respondents are Hindus governed
by Mitakshra School of
Hindu Law.
Mahalingappa, the prepositus of the joint family died in
19'.!2, survived by three sons, namely, Malappa, Defendant 1, Appasaheb, Defendant 2, and Neelkanth (The sons are hereafter referred
to as 'M'. 'A' and 'N'), Mahalingappa and his sons constituted a joint
Hindu family.
The family was trading in tobacco.
Mahalingappa,
as Karla was managing the joint family business.
After his death, his
eldest son, Neelkanth. father of Chandrakant, Defendant 3, began to
look after the management of the family business 'N' also started C. N.
Tennis Bidi Factory in the name of his son, Chandrakanth, in 1942
or thereabout.
'N' died on July 8, 1946.
Thereafter, 'A' (Defendant 2) continued and managed the joint family business and the family concerns with the consent of the other members. Nter 1951,
the family business was managed by 'M' (Defendant 1).
The appellant had business dealings in tobacco and money dealings
with the Defendants' joint family.
There used to be periodical verification of accounts and acknowledgements were made from time to
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NANCHAND v. MALLAPPA (Sarkaria, /.)
289
time by the Manager of the family.
The plaintiff's accounts were
burnt in fire on October 22, 1949 and he had to reconstruct the accounts from available information and documents.
On April 15, 1953 accounts were taken, and the amount due from
the defendants' family to the plaintiff was worked out and verified.
The accounts thus stated were acknowledged and signed by Defendant
1 and by Defendant 4, as guardian of her minor son, Def~ndant 3. A
balance of Rs. 69,465/15/- was found due to the plamtdI from the
defendants.
With the preceding allegations, the plaintiff on January 28, 1954
instituted the suit for the recovery of Rs. 75,000/-, comprising of
Rs. 69,465/15/-, as principal, plus interest at 12 per cent per annum.
Subsequently by an amendment of the plaint, he added an alternative
ground that if the Defendants proved that there had been a partition
in the family, , they were still liable for the dues pertaining to the
ancestral business carried on by all the defendants either as members
of the joint Hindu family or as partners of a firm.
Defendants 1 and 2 in their joint written statement admitted that
there was an ancestral tobacco business of the family managed by 'N'
till his death in 1946; that after N's death, the family business was
managed by them (M & A) and that all the defendants were jointly
liable for the plaintiff's claim. The defendants denied that there was ever
a partition of the joint family. They however conceded that a deed of
partnership, an agreement and a partition award had been brought into
existence from time to time with the sole object of lessening the burden of income-tax, and they were 11ot intended to be acted upon. It
was added that after the interim attachment of the property, Defendant
3, taking advantage of these bogus documents, obtained an ex parte
decree to show that there had been division of the joint family, and
that this decree was not opposed by the answering defendants because
they were assnred that it would not be executed. They admitted that
_the appellant's claim was partially true, but denied correctness of the
total balance claimed as due.
They further averred that the suit was
time-barred as the acknowledgement relied on by the plaintiff was not
legal and could not extend limitation, that interest was wrongly calculated; that if they ( Defendant 1 and 2) were held liable, they should
be allowed to pay in easy instalments.
Defendant 3 filed a separate written statement.
He resisted the
plaintiff's claim, traversed the allegations in the plaint, and denied that
there was any acknowlegement made on his behalf on April 15, 1953
by his mother, Defendant 4.
In the alternative he pleaded that she
had no authority to acknowledge the debt so as to bind him as he was
then a minor. Defendant 3 further stated that there was a disruption
of the joint family status on November 4, 1945 when M, A and N
unequivocally expressed their intention to separate, and divided the
moYables, and thereafter, a decree for partition of the immovable property of the family was passed in 1949 on the basis of an arbitration
award.
Defendant 3 asserted that this decree had been acted upon
by the parties,
He denied that Defendants 1 and 2 had ever acted
manager of the joint family with the consent of the other memhers,
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290
SUPREME COURT REPORTS
[1976] 3 $.C.R.
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and added that this question could not arise because of the earlier
division of the family.
Defendant 4 in her written statement denied the plaintiffs' claim
and supported the contentions raised in his written statement by Defendant 3.
She stated that Defendants 1 and 2, had taken her thumbimpressions on certain papers on the representation that they had been
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properly managing the Tennis Bidi Factory which had fallen to the
share of her husband.
She was never informed of the contents of
the documents by the Defendants, who took undue advantage of her
illiteracy.
The trial court held that the joint family had disrupted in 1945
and the plaintiff was aware of this fact; that the acknowledgements of
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the debt had been made by Defendants 1 and 2 and not by Defendant
3, and on that account the suit was within time only as
against
Defendants 1 and 2; that Defendant 3 had on attaining majority
repudiated his liability as partner; that the
thumb-impressions
of
Defendant 4 on the acknowledgement had been taken by practising
fraud; that in any case defendant 4 had no authority to acknowledge
the debt on behalf of her minor son.
The Court, however, upheld the
D
appellant's contention that the old accounts had been destroyed in fire
and that the plaintiff was entitled to interest at 12 per cent per annum.
On these findings, the trial court decreed the plaintiff's claim in toto
against Defendants 1 and 2 but dismissed it against Defendants 3 and
4.
Against that judgment and decree of the trial court, the plaintiff
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preferred an! appeal to the High Court.
The High Court has affirmed
the findings of the trial court and dismissed the appeal.
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Hence this second appeal by the plaintiff.
Defendants 1 and 2 did not appeal against the decree of the trial
court which had consequently become final against them.
It is common ground between the parties that during the life-time
of Mahalingappa, the family consisting of Mahalingappa and his sons,
was a joint Hindu family trading in tobacco.
It is further not disputed that after the death of Mahalingappa, the surviving co-parceners
continued to be joint and Neelkanth, the eldest son of Mahalingappa,
managed the family business as Karla till November 4, 1945.
The first matter in controversy is, whether on November 4, 1945,
on account of an unequivocal declaration of an intention to separate
made by the three sons of Mahalingappa, there was a disruption of the
joint family status? The courts below have concurrently answered
this question in the affirmative.
Mr. Datar, appearing for the appellant contends that this finding
of the courts below that there was a division in the family on November 4, 1945, was not based on any evidence whatever and is consequently, unsustainable in Jaw.
'
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NANCHAND v. MALLAPPA (Sarkaria, l.)
291
We are unable to accept this contention.
The finding is based on
good evidence which has been found creditworthy after due consideration by the two courts. Firstly, there is a recital of the fact of division
on November 4, 1945, in the partnership deed, Ex. 197, dated October
25, 1946.
This deed has been written on a general stamp paper of
the value of Rs. 30.
The date of the purchase of the stamp paper
accords with the date of the execution of the deed.
This document
therefore, could not have been brought into existence subsequently.
Secondly, there was an endorsement ou the Income-tax Return Ex.
309, relating to the previous year ending on November 4, 1945, that
at the end of the year there has been a change in the status of the
family.
Thirdly, there is the Arbitration Award (Ex. 294) dated
November 3, 1948, followed by the decree (Ex. 295). This award is
a registered document. The material recitals in this document are
as under:
'The plaintiff (Chandrakant Nilkanth) and the defendants Nos. 1, 2 and 3 (Mallappa, Appasaheb and Basawabai, widow of Mahalingappa) were members of joint family.
During the lifetime of the plaintiff's father, he and the defendants Nos. l, 2 and 3 were living joint and all the three persons carried on the business of the joint family. Thereafter,
as the minds of the plaintiff's father and of the defendants
Nos. 1 and 2 were prejudiced on account of some domestic
reasons, they began to live separately
in the year 1945.
Thereafter they took accounts of the transaction,, with desire
to get their immovable and movable properties and other
busines; partitioned and got the capital amount in that business partitioned on 4th November 1945. So also they effected partitions in the other movables and the ornaments etc., of
the family ....
Now the defendants Nos. 1 and 2 are objecting about the
maintenance to be given to the defendant No. 3 (widow of
Mahalingappa) as per agreement deed ....
The contentions of the defendants Nos. 1 and 2 are
as follows :
We and our deceased eldest brother Sri Nilkanthappa
were living joint. It is true that on 4th November 1945 we
all three together have taken the accounts of the business
and have l)lade divisions in the capital of the business.
It
is true that accordingly we have proportionately divided the
remaining movable articles and the ornaments etc. and
have taken the same .... "
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The award bears the signatures of the three arbitrators and on its
?asi.s the court passed a decree on August 9, 1949.
That suit was
mshtutcd by C:han?~akant, and Basawwa, widow of Mahalingappa,
Suryakant, an dleg1hmate son of Nilkanth,
Mallappa Mahalingappa
H
Sadalge and Appasaheb were impleaded as defendants.
Under the
award, prO\ision was made for the maintenance of Smt. Basawwa and
the residence of Suryakant, the illegitimate son of Nilkanth.
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SUPREME COURT REPORTS
[1976] 3 S.C.R.
The conclusion based on the above documentary evidence was
reinforced by the courts below with admissions made by Defendants
1 and 2, in cross-examination, and also with an inference drawn against
the plaintiff and Defendant 1 on account of the non-production of the
account-books. In our opinion, the court below were justified in
drawing the inference because Defendant 1, as is apparent from his
wrtiten statement, is colluding with the plaintiff, and all circumstances
suggest that these account-books must be with defendant 1.
The case of Defendant 3 is that on November 4, 1945, the accounts of the joint family were worked out and closed.
It was found
that there was a capital balance of Rs. 64,023/11/- which was equally divided among the three brothers and the fact of this division was.
noted in the account books which were in the possession of Defendant 1.
In the witness-box, Defendants 1 and 2 admitted IDat on
November 11, 1945, each of the brothers got Rs. 21,340/3/9 and
credit entries to that effect were made in the khata of each brother
in the account-books of the shop.
Defendant 3 by an appljcation (Ex. 169) called upon Defendant 1 to produce in court the account-books, in
his
possession.
Notice of this application was received by Defendant 1 's Counsel on
July 18, 1955.
Despite this notice defendant 1 did not produce the
account books when he appeared in the witness-box on July 21, 1955.
He made a lame excuse that the account books had been given to
Javali pleader after the service of summons in this suit on him ( defendant 1) because that pleader had asked him to bring the books containing the plaintiff's accounts. But the defendant gave him the books
of the Bidi Factory and not of M. B. Sadalge shop.
Defendant 1,
in cross-examination, clearly admitted that he had given to
J avali
pleader only those account books which contained
the
plaintiff's
Khata "and not of previous years".
By any reckoning, this means
that he did.not hand over the account books relating prior to the years
1949 to Javali Pleader.
Admittedly, after the death of Nilkanth, he
was managing the busines's upto 1950, and, as such, was supposed to
be in possession of the account-books.
The courts below were therefore, right in rejecting the explanation given by him for non-production of the account-books.
The explanation
regarding
the
nonproduction of the books, given by defen?ant 2, who had mapaged the
business after 1951, was equally unsatisfactory and was nghtly discarded.
In the light of what has been said above, it cannot be held t~at
there was no legal evidence before the courts below to base the findtng
that the joint family had disrupted on November 4, 1945.
It is next contended by Mr. Datar that even if there was some
declaration of separation in 1945 and subs.equently a
decree
for
partition based on an award was passed m 1949, then. also, ~uch
declaration award and decree were never acted upon. It 1s submitted
that in holding to the contrary, the High Court has committe.d several
errors of record and misconstrued important.documentary evidence.
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(NANCHAND v. MALLAPPA (Sarkaria, J.)
293
According to Mr. Datar,
the
under-mentioned
documentary
A
evidence unmistakably shows that the declaration of 1945, the award
of 1948 and the partitjon decree of 1949 were not acted upon :
(1). Affidavits Exhts. 221, 24 7 and 248 sworn on July 20, 1946,
before a Magistrate by Defendants 2, 4 and 1 stating that they are
members of a joint Hindu family and Defendant 2 is the manager of
the family.
In the affidavit Ex. 24 7, Sm!. Balabai gave her consent
to the management of the affairs of the joint family by defendant 2.
(2). Application dated August 13, 1946 (Ex. 182), by Defendant
1 to Sales-tax Officer for transfer and registration of the licence, and
application Ex. 208, dated September 30, 1946 made by defendants
1 and 2 on their behalf and on behalf of Chandrakant Defendant 3
informing the City Surveyor about the death of Neelkanth and requesting him to enter the Khata in the names of all the three defendants 1
to 3.
(3) Income-tax returns Exhs. 309 to 314 filed after the death
of Neelkanth.
( 4). Resolution, Ex. 335, pased by the Board of Directors in t~e
meeting held on July 30, 1946 permitting defendant 2 to redeem, Ill
the capacity of Karta of the joint family,
goods pledged ·with the
Nipani Branch of the Bank by Neelkanth deceased.
(5). Ex. 147, statement, date<l September 26, 1953, by defendant 3
requesting the City Surveyor, Nipani that his joint share in
Nipani
Revision Survey Nos. 1254 and 1264 may be cancelled and the name
of defendant 1 may be entered again for both the numbers. Emphasis
is on a sentence in this statement to the effect : "Two months have
passed since the said partition".
In accordance with this statement, the mutation Ex. 263,
was
attested.
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Both the courts below have fully considered this evidence, along
with other .evidence, and come to the conclusion that these documents
do not discount or alter the fact that the joint family had disrupted
on November 4, 1945. The High Court has given reasons why the
F
evidence furnished by the deed oI partnership (Ex. 197)
and
the
Arbitration Award, (Ex. 294) can be safely accepted.
In regard to Exs.
221, 247 and 248, the High Court has said
that there is no evidence as to for what purpose these affidavits were
sworn to and has rightly emphasised that in the
absence of such
evidence, it is difficult to draw any inference about the implications of
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their contents.
Regarding the affidavit Ex. 247, purporting to have
been sworn by Smt. Balabai, the High Court has said that she
must
have been mentally depressed being in mourning on account of the
death o~ her husband which occurred only 12 days earlier; that she
was an illiterate woman who thumb-marked whatever documents were
presented to her, without understanding its contents. In this connection, the High Court referred to the statement of defendant 1, wherein
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he has admitted that during defendant 3's minority, defendant 1 and
defendant 2 were the only persons who looked after the business and
defendant 4 never objected to whatever they did. and that they used
294
SUPREME COURT REPORTS
[1976] 3 S.C.R.
A to take defendant 4's thumb-impression whenever they
thought
it
necessary in connection with the dealings of M. B. Sadalge shop.
As regards the applications Exs. 182 and 208, the High Court
said, there was nothing inconsistent in the recitals of these documents,
to show that there was no partition of the joint family.
The recital
in Ex. 208 was found to be too technical to spell out the full legal
B
implications of the words "in the joint family".
Referring; to the Income-tax returns Exs. 310, 311
and 314,
submitted on March 15, 1948, November 12, 1949 and February 13,
1954, respectively, the High Court noted that these refer to
the
accounts of the two concerns and contain somewhat different description in the management.
In Ex. 310, relating to the year ending
c October 24, 1946, it is stated that 'N' and defendants 1 and 2 were
Kartas of the family.
In Ex. 311, defendant 2 is mentioned as the
manager of the "old Hindu Undivided Family". Similarly, Ex. 314,
purports to have been filed by the H.U.F. relating to the year 1949-50
~
but this was filed on Feb. 13, 1954 after the institution of this suit.
The income-tax returns Ex. 312 and 313 relate to the previous years
ending on 12-11-1947 and 22-12-48. Ex. 312 was submitted
on
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Demember 26, 1949 and Ex. 313 on December 22, 1953, both by
defendant 2. The status of the assessee in these two returns is mentioned as "Firm''.
Ex. 315, is the income-tax return relating to the income-tax year
1948-49, the previous year. of which ended on November 12, 1947.
It was filed by defendant 4 as guardian of her minor son, defendant 3,
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on December 22, 1949. The status of the assessee therein is shown as
'Individual'.
It relates to the business which was being run under
the style of M/s. M. B. Sadalge.
It is mentioned in this return that
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each of the three defendants 1, 2 and 3 has 1 /3 share in the business
Ex. 316 is the order of the Income-tax Officer passed on June 20
1950 wherein it is stated that l /3 share of defendant 1 in the profits
of this firm was assessed on that date.
F
Ex. 309 is the income-tax return relating to the previous year
ended on November 4, 1945. It was filed by defendant 2 in 1946, after
Neelkanth's death.
The High Court has attached great weight to an
endorsement on this return, which is to the effect, that there had been
a change in the family status at the end of the year. This endorsement
has been omitted from the printed copy of Ex. 309. Consequently, at
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one stage, it was maintained by the counsel for the appellant that
in repeatedly referring to this endorsement the High Cour~ ~ad committed an error of record.
We therefore, sent for the ongmal. We
find that this endorsement is very much there in the original.
This
endorsement was a valuable piece of evidence to show that, in fact,
there had been a disruption of the joint family status at the end of the
previous year, 1944-45, on November 4, f945.
H
Thus the evidence furnished by the income-tax returns was conflicting. But the aforesaid endorsement on Ex. 309 was a
clinch~r. It
was a statement made ante !item motam. It confirmed the testmg of
' •
NANCHAND v. MALLAPPA (Sarkaria, J.)
295
Defendant 2 that the partition had taken place in 1945 and this tilted
the balance against the contention of the plaintiff.
In such evidentiary
value, it out-weighs the income-tax returns, Ex. 310, 311 and 314,
in which the status of the assessee is sho\vn as H.U.F.
The High
Court was therefore, not wrong in holding that all these documents
taken together do uot show "that the family of the defendants had
continued to be joint".
Discussing the resolution (Ex. 335)of the Board of
Directors
passed on July 30, 1946, the High Court said that this resolution was
passed only 22 days after the death of Neelkanth and therefore, there
was nothing unusual if all the members authorised defendant 2 to
redeem the pledged goods as manager of the joint family.
In our opinion, it was not nnre~sonable to hold that the recital in
this resolution with regard to defendant 2 being the authorised manager
of the joint family, was made as a matter of expediency, and did not
discount the case of defendant 4 that the joint family had disrupted
on November 4, 1945.
The High Court found that the racital in Ex. 143, that the partition had taken place two months prior to this application, was obviously a mistake, as it was nobody's case that the partition had taken
place in 1953.
This inference also was not implausible.
This document contains other palpable errors of a similar nature.
For instance,
therein the age of defendant 3 is mentioned as twenty years, while
he was hardly eighteen.
The High Court fonnd that the documentary evidence furnished by
A
B
c
D
the partnership deed (Ex. 197) dated October 25, 1946, the award
E
(Ex. 294) dated October 30, 1948, and the decree (Ex. 295) dated
September 15, 1949, passed on its basis was entirely reliable. It further found that these documents had been acted upon.
In this connection, the High Court, rightly relied upon lhe admissions of defendant 1 in cross-examination. In the witness-box,
defendant 1 had
conceded that all the immovable property that had been allotted to
defendant 2 under the award had. been sold away by him, and that
F
pursuant to the award, Rs. 7 ,000 /- had been paid to Heerabai and
her son, Suryakant.
Defendant 1 further significantly admitted that
on October 25, 1946 Rs. 16000/- and odd were to the credit of
defendant 3 in the account books of M. S. Sadalge Shop. By virtue
of the receipt, Ex. 167, dated August 9, 1949, defendants 1 and 2
acknowledged the deposit of Rs. 16005-15-0 in favour of the minor
Defendant 3, payable with interest at Rs. 6/- per cent per annum.
G
Defendant 1 admitted the correctness of the contents of this receipt.
It is undisputed that subsequently, defendant 3 has not only obtained
a decree on the basis of this receipt against defendant 1, but has taken
out its execution.
The High Court has also discussed the effect of the agreement
(Ex. 99) which was executed between defendants 1, 2 and defendant
H
4 as the guardian of the minor, defendant 3 on April 12, 1950. The
main object of this agreement was to safeguard the interests of the
minor in the management of the two partnership businesses, namely,
296
SUPREME COURT REPORTS
(1976] 3 S.C.R.
A M. B. Sadalge Shop and Tennis Bidi Factory in the name of Chandrakant Neelkant Sadalge. By this agreemenl, defendants 1 and 2 were
called upon to credit to the business whatever amounts they had spent
from out of the partnership assets.
The- power of each of the defendants with regard to withdrawal of funds from partnership chest for
personal expenses, was also restricted. This arrangement continued
to be in force till the partnership was dissolved by another registered
B deed on April 20, 1951.
c
D
E
F
Reference has already been made to Ex. 316, an order dated June
20, 1950, of the Income-tax Officer showing that defendants 1, 2 and
3 were being assessed on the basis that each of them had 1 /3rd share
in the business.
In a joint Hindt! family business, no member of the
family can say that he is the owner of one-half, one-third or onefourth.
The essence of joint Hindu family property is unity of ownership and community of interest, and the shares of the members are
not defined.
Similarly, the pattern of the accounts of a joint Hindu
family business maintained by the Karla is different from those of a
partnership.
In the case of the former the shares of the individual
members in the profits and losses are not worked out, while they have
to be worked out in the case of partnership accounts.
In view of all that has been said above, we are of opinion that the
co.ncurrent. finding of the courts below to the effect, that the joint
Hindu family of the defendants had disrupted on November 4, 1945,
does not suffer from any legal infirmity or gross error which would
justify out interference in this appeal by special leave.
We therefore,
take it that no joint Hindu family of the defendants, nor any joint
business of such a family was in existence either on October 15, 1949
when the last dealing (vide Ex. 394) of the plaintiff with defendauts
1 and 2 took place, or when on April 15, 1953 the accounts were
stated and admitted.
Indeed, on the date, April 15, 1953, on which
the plaintiff's cause of action arose, even the partnership was not in
existence, the same having stood dissolved since April 20, 1951.
Mr. Datar next contends that even if the joint status of the family
stood disrupted from November, 1945, then also, on the principle of
s. 45, Partnership Act, the acknowledgements made by defendants 1
and 2, representing themselves, jointly or severally, as Karla of the
joint Hindu trading family, would, in the absence of public notice to
G
the traders in general or particular notice to the plaintiff, be binding
on all the erstwhile members of the joint family.
Reliance for this
contention has been placed on a Single Bench judgment of the Bombay
High Court in Kashiram Bhagshet Shete v. Bhaga Bhanshet Redij(').
As against this, Mr. Desai submits that Kashiram's case
(supra)
does not lay down the law correctly.
Counsel maintains that the conH
trary view taken by the other High Courts in these cases is sound :
Pramod Kumar Pali v. Damodar Sahu('); Rengaswami Ayyangar v.
(I) A.LR. 1945 Born. 511
(2) 1.L R. !953 Ci ttack 221.
'
I
•
NANCHAND v. MALLAPPA (Sarkaria, J.)
297
Sivyurakasam
Pillai('); Muthyala Ramachandrappa
v.
Muthyala
A
Narayanappa(').
Kashiram's case (supra) decided by an eminent single Judge certainly supports the proposition propounded by Mr. Datar. Applying
the principle of s. 45 of the Partnership Act, 1932, the learned Judge
held that unless intimation of the severance of joint status between the
members of the joint family is given to the outside creditors who had
dealings with the joint family through its karta, either by public notice
or individual notice in that behalf, the karta would be deemed to continue to represent the family and to have power to incur debts for
family necessity and to make acknowledgements or part-payments in
respect of the same so as to extend the period of limitation.
With
great respect to the learned Judge, we do not think that this
is
a
correct enunciation of the Jaw on the point.
Firstly, the legislature
has, in its wisdom, excluded joint Hindu trading families
from
the
operation of the Partnership Act. Section 4 of that Act defines
'partnership' as "the relation between persons who have
agreed to
share the profits of a business carried on by all or any of them acting
for all".
Section 5 furth'1f makes it clear that this Act governs only
that relation of partnership which arises from contract and not from
status such as the one obtaining among the members of a joint Hindu
family trading partnership.
Secondly,
ihe
question
whether
an
acknowledgement made by the karta of an erstwhile joint Hindu family
after its severance, would extend limitation against all
the former
members of that family, turns primarily on an interpretation of clause
(b) of sub-section (3) of s. 21 read withs. 19 of the Limitation Act,
1908. Clause (b) of s. 21(3) provides:
"Where a liability has been incurred by or on behalf of
a Hindu undivided family as such, an acknowledgement or
payment made by or by the duly authorised agent of, the
manager of the family for the time-being, shall be deemed to
have been made on behalf of the whole family".
The key words in this clause are 'the manager of the family for
the time being'.
These words unerringly indicate that at the
time
when the acknowledgement is made and signed, the person making and
signing it, must be the manager of a subsisting joint Hindu family. If
at the relevant time the joint Hindu family as such was no longer in
existence because of. division, or disruption of its joint status, any
acknowledgement made by the erstwhile karta of such family cannot
keep the debt alive and extend limitatfon as against all the members
of the family, his representative capacity as karta being co-terminus
with the joint status of the family.
Explanation (II) to s. 19 lays down that for the purpose of this
section "signed" means signed either personally or by an agent duly
authorised in this behalf. Section 21 (1) provides that the expr~ssion
"agent duly authorised in thi~ behalf" in ss. 19 and 20 shall in the
case of a person under disability include his lawful guardian or manager or an agent duly authorised in this behalf. It is well settled that
(I) I.L.R. 1942Mad. 251 (F·B.)
(2) A.I.R. 1940 Mad. 339.
B
c
D
E
F
G
H
298
SUPREME COURT REPORTS
[1976] 3 S.C.11.
A
coparceners do not derive their title through the karta of the . coparcenary. Defendants 1 and 2 do not fulfil the requirements of this
sub-section.
It is therefore the duty of the creditor to ascertain after due enquiry
whether the person making the acknowledgement still holds his representative capacity as karta of the farni!y.
The law does not cast any
B
duty upon the members of the family who do not figure in the endorsement or writing admitting the debt to inform the creditor by a general
notice about the disruption of the family. If the creditor fails to
make an enquiry and satisfy himself about the capacity of tne executant to represent the family at the time of making the acknowledgement, he does so at his own peril. Disruption of the joint family
status, as already noticed, puts an. end to the representative capacity
C
of the karta and any acknowledgement of a debt made by him after
such disruption cannot save the creditors' claim from becoming timebarred against the other members.
D
E
The above enunciation of the law is in accord with the view taken
by a Full Bench of the Madras High Court in Rangaswamy Ayyangar
v. Sivprakasam Pillai (supra) and by a Division Bench consisting of
Varadachariar and Abdur Rahman JJ . .in Muthyala Ramachandrappa
v. Muthyala Narayanappa (supra), and by a Division Bench of the
Orissa High Court in Pramod Kumar Pati v. Damodar Sahu (supra).
We approve of the law enunciated on the point by the High Courts
in these cases.
No other point has been argued before us in this appeal which
fails and is dismissed with costs.
~
P.B.R.
Appeal dismissed.