M/s. Juggilal Kamlapat v. M/s. Sew Chand Bagree AIR 1960 Cal. 463

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G.K. MITTER, J. – This is an application in execution of a decree on an award made by
the Bengal Chamber of Commerce dated June 14, 1950 on a dispute between Juggilal
Kamlapat, the award holders, and Sew Chand Bagree, against whom the award was made.
The decree was passed on May 28, 1951 for a total sum of over Rs. 31,000/-.
(2) The award was given in respect of a contract entered into between Sew Chand Bagree
and Juggilal Kamlapat on Sep. 25, 1948. The application is being opposed by Manik Chand
Bagree and Moti Chand Bagree whose case is that the firm of Sew Chand Bagree was
dissolved in Oct. 1945 by mutual consent of its partners and that thereafter their brother
Jankidas Bagree started a new business in the name of Sew Chand Bagree with which they the
other brothers had no concern. Sew Chand Bagree the individual, was the father of the three
persons already mentioned. From a copy of entries in the Register of firms maintained by the
Registrar of Firms, West Bengal, it appears that the business of Sew Chand Bagree was
established in the year 1924, that it was formerly a joint Hindu family business and that the
partnership firm was started on October 28, 1933. The three partners shown in the said record
are Manik Chand Bagree, Moti Chand Bagree and Jankidas Bagree. This document does not
show that there has been any change in the constitution of the firm ever since its inception. It
is contended by the award holders that no change in the constitution of the firm having been
notified an no public notice of the dissolution of the firm having been given under the
provision of the Indian Partnership Act, all the partners continue to be liable for any act done
by any of them. The award holders further do not admit that there was a dissolution of the
firm in the year 1945 as alleged by the Bagrees. On the evidence adduced I must hold that
there was a dissolution of the firm. On this finding the question is whether sub-section (1) of
Sec. 45 of the Partnership Act is brought into play or whether the point is covered by the
proviso to the said sub-section.
(8) Mr. Tiberwalla, Counsel for the Juggilal Kamlapat, argued that it had not been
established by the evidence that the firm of Sew Chand Bagree had ever been dissolved. He
submitted that no attempt had been made to get any alteration in the constitution of the firm
noted in the records of the Registrar of Firms up to the year 1959 although dissolution is
alleged to have taken place in the year 1945. Counsel submitted that the Bagrees had not
examined any disinterested third party to show that the dissolution, if any, was known to
outsiders, that no advertisement of the dissolution had appeared in any newspaper, that there
was no evidence of the issue of any circular with regard to it and that no broker other than
Sriratan Damani had been examined. He relied strongly on the absence of the books of
account of Sew Chand Bagree and contended that the same, if produced, would have
established that the firm had never been wound up. There is certainly some force in these
contentions, specially the comment on the non-production of the books of account. But I
must hold on a consideration of the entire evidence adduced that the firm had been dissolved.
The deed of agreement prepared by Messrs. Dutt and Sen and signed by the Bagree brothers,
the issue of the trade license by the Corporation of Calcutta, the opening of the account with

Hindustan Commercial Bank Ltd., and the letter written to Bank of Baroda Ltd., all
corroborate the oral testimony adduced on behalf of the Bagrees. The contracts of Juggilal
Kamlapat with Manik Chand Bagree in a name and style other than Sew Chand Bagree tend
to prove the disruption in the family. On the evidence as a whole I accept the case of the
Bagrees that the firm of Sew Chand Bagree had come to an end in the year 1945.
(13) The registration of the firm under the Act is not compulsory but unless the firm is so
registered it cannot file a suit to enforce a right arising out of a contract. The application for
registration must comply with the provisions of Sec. 58 of the Act. Registration is effected
under Sec. 59. Provision is made for recording of (a) alterations in the firm’s name, (b)
changes in the names and addresses of partners, (c) changes in and dissolution of the firm
under Secs. 60 and 63 of the Act. Under Sec. 68 “any statement, intimation or notice
recorded or noted in the Register of Firms shall, as against any person by whom or on whose
behalf such statement, intimation or notice was signed, be conclusive proof of any fact therein
stated.” Under Sec. 72 of the Act a public notice under the Act relating to the retirement of a
partner from the registered firm or to the dissolution of a registered firm etc., has to be given
by notice to the Registrar of Firms and by publication in the local official Gazette and in at
least one vernacular newspaper circulating in the district where the firm to which it relates has
its place or principal place of business. For the proper interpretation of S. 45 of the
Partnership Act, Mr. Tibrewalla referred me to a judgment of Garth C. J., in Chundee Churn
Dutt v. Eduljee Cowasjee Bijnee [ILR 8 Cal 678]. This judgment turned on the interpretation
of Sec. 264 of the Contract Act of 1872 which provided:
“Persons dealing with a firm will not be affected by dissolution of which no
public notice has been given unless they themselves has notice of such dissolution.”
(19) Section 45 sub-s. (1) of our Act without the proviso is no doubt somewhat similar to
Sec. 36 sub-section (1) of the English Act but the provisions of the two Acts are not identical.
Under Sec. 45 notwithstanding the dissolution of a firm the liability of the partners continues
until public notice is given of the dissolution in respect of any act which would have bound
the firm if done before the dissolution. But the proviso to this sub-section restricts the scope
of it considerably and exempts the estate of a partner who dies or who is adjudicated an
insolvent or of a partner, who not having known to the person dealing with the firm to be a
partner, retires from the firm if the act is done after the date on which he ceases to be a
partner. Under Sec. 36(1) of the English Act an apparent member continues to be liable to an
outsider unless the latter has notice of the change in the firm. But even if there be no such
notice a partner who was not known to the outsider as such ceases to be liable after his
retirement under Sub-sec. (3) of Sec. 36. In the Indian Act the proviso replaces sub-sec. (3)
of the English section. The only difference between Sec. 36 sub-sec. (1) of the English Act
and Sec. 45 sub-sec. (1) of the Indian Act seems to be that under the former any one who is an
apparent member continues liable while under the latter any one who was a member, whether
apparently so or not remains liable until public notice of dissolution as given. But the proviso
to the Indian Section cuts down the liability in the case of a partner who was not known as
such to the person seeking to make him liable. Except for the use of the qualifying word
“apparent” in sub-sec. 1 of Sec. 36 of the English Act the effect seems to be the same.

(20) “The proper function of a proviso” said Lord Macmillan in M. and S. M. Rly. Co. v.
Bazwada Municipality [AIR 1944 PC 71]. “is to except and deal with a case which would
otherwise fall within the general language of the main enactment, and its effect is confined to
that case”. But for the proviso the dissolution of a firm would not have affected the liability
of a partner who had gone out of it or of a dormant partner until public notice of the
dissolution was given. The effect of the proviso is to except the case of a partner who was not
known to the person dealing with the firm to be a partner and who has retired from the firm
without any public notice of dissolution being given.
(21) It was admitted by Rameshwar Agarwalla that he did not know Manik Chand Bagree
and Moti Chand Bagree to be partners of Sew Chand Bagree until six months or a year ago
and even this he came to know only from a copy of the entries made in the records of the
Register of Firms. These persons, therefore, were not known to Juggilal Kamlapat to have
been partners of the firm and they had gone out of the firm before the contract in this case was
entered into. Clearly the proviso is attracted to the facts of this case and Manik Chand Bagree
and Moti Chand Bagree cannot be made liable for payment of the decretal amount.
(22) Mr. Tibrewalla argued that the exception, if any, is limited to the case of a partner
who “retries from the firm” and does not apply to the case of a dissolution of the firm
whereby the relationship of all the partners inter se is put an end to for ever. In my view, this
contention has no substance because the case of a retiring partner is expressly provided in
Sec. 32 of sub-sec. (3) and the proviso to the said sub-section. It certainly would have been
better if instead of the words “retires from the firm”, the legislature had used the expression
“severs his connection with the firm”. Probably the actual words used have been taken from
the English Act. Without entering into speculation of this kind it is not difficult to find out
what the legislature intended. It appears to me, however, that the contingencies of death,
insolvency, retirement and even expulsion of a partner having already been provided for by
the Indian Act in Secs. 35, 34, 32 and 33 of the Act respectively, Sec. 36 might well have
dealt with the case of a dissolution of firm simpliciter.
(23) The fact that the entries in the record of the Registrar of Firms still show that Manik
Chand Bagree and Moti Chand Bagree, does not help the decree-holder in this case. If the
decree-holder had adduced evidence to the effect that these records had been scrutinized by it
before the transaction was entered into the position might have been different.
(25) The application will, therefore, be dismissed with costs as against Moti Chand
Bagree and Manik Chand Bagree. There will be an order in terms of prayer (a) as against
Jankidas Bagree.