1966 PLP 444 (PTD)

Clause (h) of subsection (2) of section 19 of the Partnership Act provides:‑ "In the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to enter into partnership on behalf of the firm." The above provision invites some investigation of fact but as no such plea was taken by the defendants, the plaintiff was, not called upon to meet the same by producing evidence. No witness was examined by the defendants to prove that the partners of the five firms had no authority to enter into any partnership on behalf of their respective firms. No direct question was put to the witnesses examined by the plaintiff as to whether the partners bad any authority to enter into the partnership on behalf of the firms. Only one question was put to the witness No. 4 for the plaintiff in cross‑examination namely, as to whether M. Ismail & Co. (plaintiff), has any partnership deed and whether, in accordance with the terms of that deed, Mr. Idris was authorised to make the plaintiff firm a member, of the City Chamber Yarn Corporation? The answer to this was that there was a partner ship deed according to which Mr. Idris was authorised to enter into partnership on behalf of the plaintiff as a member of the City Chamber Yarn Corporation. No other question was put to any of other witnesses examined by the plaintiff asking whether the other members of the other firms had any authority to enter into a partnership. The plaintiff's witness No. 3 Mubinuddin Ahmed, is the Joint Secretary of City Chamber of Commerce. No' question was put to him whether the members of the five firms who entered into the partnership, namely, the City Yarn Corporation, had any authority to enter into the partnership. In cross‑examination it was brought out that there was a resolution for formation of the City Chamber Yarn Corporation. As there was no plea raised in the defence that the members of the firms who entered into the partnership had no authority from their respective firms to enter into j partnership, these questions cannot be allowed to be agitated at this stage inasmuch as it requires further investigation. Furthermore, the question was put to witness No. 4 for the plaintiff to the effect as to whether Mr. Idris, member of M. Ismail & Sons, had authority to enter, into a partnership and the answer was that Mr. Idris was authorised to enter into partnership of‑ City Chamber Yarn Corporation on behalf of Messrs Ismail & Sons, namely the plaintiff. So we cannot accept‑ the finding of the learned Subordinate Judge that the formation of the City Chamber Yarn Corporation was by unauthorised: members of the five firms. We hold clause (h) of subsection (2) of section 19 of the Partnership Act does not apply to the facts of the present case and that there is nothing on record to show that the City Chamber Yarn Corporation" was not properly constituted by the five firms. Second ground urged by the learned Advocate is that the learned Subordinate Judge was wrong in holding that the suit is not maintainable 'in view of the provision of section 69 subsection (2) of the Partnership Act. In developing this point it has been argued that it is an admitted fact that the City Chamber Yarn Corporation was not a 'registered firm and that the evidence on record has sufficiently proved that the City Chamber Yarn Corporation has been dissolved and as such any member can institute a suit on behalf of the dissolved firm. For this proposition he has relied on clause (a) subsection (3) of section 69 of the Partnership Act which provides:‑ "Subsections (1) and (2) shall apply also to a claim of set‑off or other proceeding to enforce a right arising from a contract, but shall not affect‑ (a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to re4lise the property of a dissolved firm." Secondly it has been contended that, according to the terms of the deed (Exh. 2), the plaintiff has been authorised to realise their assets and meet the liabilities of the dissolved firm, namely, the City Chamber Yarn Corporation. In our opinion, as it is not a suit by the firm but by one of the members of the dissolved firm the present suit at the instance of the plaintiff cannot be held to be hit by subsections (1) and (2) of section 69 of the Partnership Act. It appears from Exh. 2 (a registered deed of dissolution of partnership of the firm "the City Chamber Yarn Corporation") that the members of the said firm were Osmania of Asadgunj proprietor, defendant No. 3, Haji Nuruzzaman & Sons, defendant No. 4 M. Omar Meah & Brothers, defendant No. 5 and M. Ismail & Sons, plaintiff. The relevant paragraph of Exh. 2 is:‑ "Whereas the Lifting Agency for cotton yarn having terminated in December 1954 and there being no immediate prospect of any further business of the kind all the said partners are desirous of terminating the said partnership with immediate effect, and as the same time assigning to the partner, M. Ismail & Sons, Feringhee Bazar Road, Chittagong, all their rights, title and interest in or relating to the outstanding claims and suits of the City Chamber Yarn Corporation." This deed is a registered one and it was executed by' all the firms. So, according to this Exh. 2 the plaintiff is entitled to institute the suit, if not otherwise barred the provisions of subsections (1) and (2) of section 69 do not stand as a bar. In order to substantiate his contention that, clause (a) to subsection (3) of section 69 of the Act authorises the plaintiff to sue in order to realise the damage, the learned Advocate for the appellants has relied on the following cases Sudhangsu Birnal Biswas v. Md. Mustafa Chowdlhury and others (P L D 1959 S C (Pak.) 319); Sohanlal Pachisia cg Co. v. Bilasray Khemani and others (A I R 1954 Cal. 179); Bajranglal Maniram Singhvi Agarwal v. Annadilal Ramchandra Potdar and another (A I R 1944 Nag. 124). It appears to us that the aforesaid cases support the view we have already expressed. Mr. Ruhul Islam relying on the provision of section 135‑A of the Transfer of Property Act has argued that in view of the subrogation in favour of the Insurance Company the suit at the instance of the plaintiff is not maintainable. Section 135‑A of the Transfer of Property Act provides: ‑ "(1) Where a policy of marine insurance has been. assigned so as to pass the beneficial interest therein, the assignee of the policy is entitled to sue thereon in his own name; and the defendant is entitled to make any defence arising out of the contract which he would have been entitled to make if the action had been brought in the name of the person by or on behalf of whom the policy was effected. (2) Where the insurer pays for a total loss, either of the whole, or, in the case of goods, of any apportionable part, of the subject‑matter insured, he thereupon becomes entitled to take over the interest of the insured person in whatever may remain of the subject‑matter so paid for, and he is thereby subrogated to all the rights and remedies of the insured person in and in respect of that subject‑matter as from the time of the casualty causing the loss. (3) Where the insurer pays for a partial loss, he acquires no title to the subject‑matter insured, or such part of it as may remain, but he is thereupon subrogated to all rights and remedies of the insured person as from the time of the casualty causing the loss, in so far as the insured person has been indemnified by such payment for the loss. (4) Nothing in clause (e) of section 6 shall affect the provisions of this section. "Clause (e) of section 6 provides: "a mere right to sue for compensation for a fraud or for harm illegally caused cannot be transferred." Before we enter into the proposition of the law we propose to take up into consideration the fact as presented in this case on this question. The City Chamber Yarn Corporation was dissolved as per Exh. 2 on 1st October 1955 and all the right, title and interest in or relating to the suit of said City Chamber Yarn Corporation were assigned to the plaintiff M. Ismail & Sons. We. have already observed that the plaintiff a is in a position, after the dissolution of the firm, to institute a suit or take recourse to any remedy for management or realisation of the assets of the dissolved firm. From Exh 6, the letter of subrogation dated 9‑6‑55 executed by the City Chamber Yarn Corporation in favour of Queensland Insurance Company Limited (defendant No. 7) Eastern Bank. Building, Sadarghat Road, Chittagong, dated the 9th June 155, appears that as Rs. 21,318 for Water Damage loss of 300 bales cotton yarn was paid by the Insurance Company it was agreed that though all their right, title and interest in the said goods were abandoned, the City Chamber Yarn Corporation would use its best endeavours to recover and pay to the Insurance Company the amount of any proceeds or any other amounts which might hereafter become due to this interest, and would undertake and agree to allow any relative proceedings to be taken in its name, if required and assist. According to the terms of this subrogation the City. Chamber Yarn Corporation was authorised to act as an agent of and on behalf of the said Insurance Company and the same power having been delegated to the plaintiff firm, namely, M. Ismail & Sons and the firm having been dissolved, the plaintiff is also entitled to realise money amounting to Rs. 21,318 by way of suit or otherwise. Now coming to the interpretation of section 135‑A of the Act it has been contended by Mr. Ruhul Islam that after the introduction of section 135‑A in the Transfer of Property Act the law authorising any firm after subrogation to realise the money on its behalf or for the insurer has been repealed. While on the other hand, it has been contended by the learned Advocate for the appellant that previously law was that both the insurer and the insured after subrogation could institute a suit. This amendment has not in any way taken away those rights either by implication or expressly rather this amendment has clarified the previous position. The learned Advocate for the appellant has relied on the following cases in support of his contention:‑ The case of East and West Steamship Co. v. Queensland Insurance Co. (P L D 1963 S C 663) and the case of Indian Trade and General Insurance Co. Ltd. v. Union of India (A I R 1957 Cal. 190) and the learned Advocate for the respondent has relied on the, following cases in support of his contention: the case of Santuram Hari v. Trust of India Assurance Co. and another (A I R 1945 Dom. 11) the case of Textiles and Yarn Ltd. v. Indian National Steamship Co. Ltd. (A I R 1964 Cal. 362) the case of Lala Kapurchand Godha and others v. Mir Nawab Himayatalikhan Azamjah (A I R 1963 S C 250) and the case of Shah Mulji Dioji, (a Firm) v. Union of India (A I R 1967 Nag. 31). In the Supreme Court case P L D 1963 S C 663 relied on by the learned counsel for the appellant the insurer instituted the suit on the plea that the insured assigned the policy to the insurer. No objection was taken as there was no appearance on behalf of the defendant and accordingly the suit was decreed ex parte. In the Supreme Court it was pleaded that in the absence of any written instrument of assignment the plaintiff was not entitled to institute the suit and secondly that view of the provision of section 135‑A of the Transfer of Property Act the insurer being subrogated in, place of, the insured could sue. As regards the first ground it was observed that the procedural law of Pakistan did not countenance the failure of a suit for misjoinder or non joinder of the parties, that it was the law that objection on this ground would not be entertained unless it was taken at the earliest possible opportunity and as the same was not taken at the earliest possible opportunity that contention could not be entertained. As to the subrogation under section 135‑A of the Transfer of Property Act it was observed that as the insurer on payment was subrogated in place of the insured, the suit at the instance of the insurer was maintainable. From the above it is clear that the question whether in the circumstances before the insured was also in a position to sue making the insurer pro forma defendant was not before their Lordships of the Supreme Court for decision. So this is no authority on the proposition of law that after the subrogation the insurer alone can only sue. Mr. Mozammel Huq, the learned Advocate for the appellant, has drawn our attention to some observation of his Lordship Akbar, J. in his judgment. We do not find any specific observation on this point and if there had been any such observation though might be obiter it would have been a guidance to us. Because any observation by the Supreme Court even obiter is binding on us. Similarly the cases relied on by the learned Advocate for the respondent are not of much assistance in this case. According to the statements made in this case and the evidence it has been established that the case will be governed by the provision of subsection (3) of section 135‑A of the Transfer of Property Act inasmuch as the insurer paid for partial loss and as such he was thereupon subrogated to all rights and remedies of the insured person as from the time of the casualty causing the loss, in so far as the insured person has been indemnified by such payment for the loss," but the insurer acquired no title to the subject‑matter insured or such part of it as remained. In the present case from Exh. 2 it appears that there has been subrogation and the plaintiff retained right to sue on behalf and for the insurer and as such it cannot be said that in view of the provision of section 135‑A the suit at the instance of the plaintiff is not maintainable. Furthermore, according to our view E though the introduction of section 135‑A of the Act only has given right to the insurer after subrogation to sue on his own behalf but that has not taken away the right of the insured to file a suit fort and on behalf of the insurer after getting compensation from the insurer. We accordingly find no substance in the contention of Mr. Ruhul Islam. It had been found by the learned Subordinate Judge that the suit was bad for defect of parties. We do not find any substance in this contention inasmuch as all the members of the City Chamber Yarn Corporation have been made parties and it has not been shown to us by learned Advocate for the respondent that any interested and necessary person has been left out. Now coming to the merits of the case, we find that this point has been found in favour of the plaintiff. The learned Advocate for the respondent has contended that the finding of the learned Subordinate Judge that there was a damage of goods while in custody of the defendant No. 1 is shaky as it is seen from the judgment that the learned Subordinate Judge was not sure in which way the decision would be given. Of course, we find that there is something in the judgment to indicate in favour of this contention but; however, after going through the judgment and the evidence we are satisfied that the decision given on this point is a correct one. It has been claimed by the plaintiff's witnesses that the goods were shipped in good condition. It has been claimed by the defendant's witness that the goods were not shipped in good condition: But the evidence on both 'sides is very shaky as the witnesses examined by the parties were not in fact present while goods were shipped at Karachi. But, however, the other materials on the record go to show that the goods were shipped in good condition in Karachi. Relying on Exh. C Bill of Lading it has been contended on behalf of the respondent that the goods were in damaged condition. The entry in the bill of lading on which reliance has been placed for this purpose is "All bales hoops rusty and wrappers torn." The above note in the bills of lading in our opinion does not show that the goods were shipped in damaged condition or wet. It only goes to show that all the "bales hoops rusty and wrappers torn". The goods were bound with rusty hoops and wrapped with torn covers. These do not indicate that the goods were in damaged condition or wet at the time of shipping. So from this it cannot be held that the goods were not shipped in good condition. Next question is in whose custody the goods were damaged, whether in the custody of the jetty authority or in the ship. Earliest material on this point is the report of the Captain of the ship to the effect that there was heavy storm after the ship left Karachi port and he apprehended that some goods might have been damaged by the rough weather. Thereafter we get the tally slips which have been marked in this case and they are B series. From these tally slips it appears that the goods were delivered to the jetty authority' in damaged condition and also being wet. So we are of the view that the goods were damaged while in the custody of the defendant No. 1 and not in the custody of the jetty authority, defendant No. 2‑A. This leaves us as to the quantum of damage. After the goods were received by the plaintiff, the information was given to the agent of the defendant No. 1 to have a survey ‑but as there was no response by the defendant No. 1 or his agent the goods were surveyed by the plaintiff through Lloyds surveyor. Witness No. 1 for the plaintiff has deposed that he carried on the survey in Shed No. 2 of No. 3 New Mooring Jetty Chittagong on 13th and 15th November 1954. He examined those bales and gave his opinion about the condition of the cotton yarn in the bales. He made a survey as the Lloyds did not have a person competent to examine the cotton yarn. His report has also been marked as Exh. 8 in this case. Witness No. 2 is a clerk under the Lloyds Co. Ltd. He has deposed that the survey of 96 bales was conducted by him and Mr. Swain, and Dr. Raliman was the chemical analyst. Their services were requisitioned by him. The survey was done by a competent authority and it cannot be said that this survey or the report as to the damage was obtained by undue influence by the plaintiff and as such we hold that the damage caused to the goods is as found by the surveyor. We accordingly allow the appeal with costs, set aside the judgment and decree of the trial Court and decree the suit with costs. TAIBUDDIN, J.‑I agree.. R. B. A. Appeal accepted.