P L D 1961 (W (PLP)

WAHIDUDDIN AHMAD, J.‑--This is a first appeal against the judgment of Mr. B. G. Kazi, the then First Class Sub‑Judge, Larkana, dated 11th October 1956 in First Class Suit No. 19 of 1954. The appellants brought a suit for the recovery of Rs. 6,275 on the basis of a mortgage‑deed (Exh. 66) dated 21st November 1949 and in the alternative claimed a simple money decree against the respondents on the basis of a personal covenant contained in it. They alleged that the respondents borrowed from them a sum of Rs. 10,000 on the security of about 51 acres, 37 ghuntas of agricultural land, situated in Deh Bugti Balochan and Deh Wah Nabibux, Taluka Larkana, payable within ten months. Out of this amount the respondents paid Rs. 5,000 and failed to pay the balance of the amount of Rs. 5,

000. They claimed $s. 1,275 as damages for loss of interest on loan at 6% per annum from 11th September 1950 to 23rd November 1954. Respondent Mazharali resisted the suit on several grounds. He alleged that the amount of Rs. 10,000 was in fact a contribution made by the appellants in respect of a partnership entered into on behalf of Messrs Kalawala Rice Mill at Bero Chandio with his uncle Sher Muhammad and himself about the agency obtained in the year 1949 from the Sind Food-grains Nationalization Board and the mortgage was a sham transaction, According to him the agency was obtained in the name of Sher Muhammad because under the rules only the owners of agricultural land could obtain it, but in fact it was a partnership business and both Messrs Kalawala Rice Mills and he were partners of Sher Muhammad in the said agency. Under the terms of the partner?ship Sher Muhammad was to give security of his lands in the sum of about Rs. 2,00,000 and the appellants were to contribute Rs. 10,000 towards the cash security for obtaining the agency on the security of his lands. It was pleaded that as the amount in dispute relates to a partnership business the suit was not maintainable. It was also pleaded that the alleged mortgage was hit by the provisions of sections 3 and 8 of the Sind Rural Credit and Land Transfer Act, 1947, and was not enforceable in respect of the land secured under the mortgage. The respondent ,further pleaded that the suit should be thrown out as the partnership was not registered under section 69 of the Partnership Act and the suit was barred by limitation. Mr. B. G. Kazi, the then learned First Class Sub‑Judge, Larkana, found that the respondent was an agriculturist and under the provisions of the Dekhan Agriculturists Relief Act was entitled to lead evidence to show the real nature of the transaction. On merits he gave the following findings:‑ (1) That the appellants advanced the loan as capital contri?bution towards the partnership business of rice agency obtained from Sind Food-grain Nationalization Board in the name of Sher Muhammad; (2) That the appellants entered into a partnership on behalf of Messrs Kalawala Rice Mills with Sher Muhammad and the respondents for carrying on the rice agency business; (3) That the mortgage‑deed was a sham transaction and inoperative under sections 3 and 8 of the Sind Rural Credit and Land Transfer Act, 1947; (4) That the suit was barred by limitation under Art. 106 of the Limitation Act as the partnership between the parties was dissolved in 1950. (5) That the partnership being unregistered, the suit was bad under section 69 of the Partnership Act. Mr. Castellino, the learned counsel for the appellants, has attacked the judgment of the learned Subordinate Judge on three?fold grounds; firstly, that the finding that the sum of Rs. 10,000 was advanced as capital contribution towards the alleged partner?ship was not based on any reliable evidence; secondly, that the finding that the claim is barred by limitation under Art. 106 of the Limitation Act is not correct, and thirdly, that the suit could not be thrown out as it did not fall within section 69 of the Partner?ship Act. He, however, conceded that the finding of the learned Subordinate Judge that the mortgage (Exh. 66) was hit by the provisions of sections 3 and 8 of the Sind Rural and Land Transfer Act, 1947, was correct and contended that on this finding the mortgage was ineffective against the lands mortgaged with the appellants but the right of the appellants to base their claim on the personal covenant contained in the document (Exh. 66) was available to them and the appellants were entitled to succeed on the alternative claim. We will take up the points taken up by the learned counsel separately. The most important question for determination in this appeal is whether the amount of Rs. 10,000 as alleged by the respondent was contributed by the appellants towards the alleged partnership between Messrs Kalawala Rice Mills, Sher Muhammad and the respondent to carry on the rice agency of Sind Food-grains Nationalization Board secured in the name of Sher Muhammad, the uncle of the respondent. It will be noticed that the respondent executed a mortgage‑deed on 21st November 1949 in favour of the appellants and the recital of this document clearly states that the amount of Rs. 10,000 was advanced by the appellants as loan to him, but since the respondent is an agriculturist he was entitled under section 10 (a) of the Dekhan Agriculturists Relief Act to lead evidence to show that the transaction in question was not a mortgage and the amount advanced under it was in respect of the alleged partnership. But all the same in law the burden of proving that the mortgage‑deed was a sham transaction and the transaction in fact was in respect of a partnership lay heavily on the respondent. Three witnesses were examined by the parties in the case in support of their pleas. P. W. Muhammad Zakaria (Exh. 73) one of the appellants stated that they had advanced the amount in dispute as loan to the respondent. On the other hand, D. W. Mazhar Ali (Exh. 65), the respondent, examined himself and one Muhammad Shahban (Exh. 68), a stamp vendor, from whom the stamp papers for the mortgage‑deed and the alleged partnership deed were purchased, as witnesses in the case. D. W. Muhammad Zakaria stated that the amount of Rs. 10,C00 was contributed towards the partnership of the agency business and was witnessed by a regular partnership deed executed on behalf of Messrs Kalawala Rice Mills by the appellants, Mazharali and Sher Muhammad. He stated that the original partnership deed, was handed over to the appellants but a copy was retained by Sher Muhammad. The respondent, however, made no attempt to summon this document and did not even produce his uncle Sher Muhammad in support of his main defence. Thus the best evidence on the point was not produced by the respondent. On the question of the manner and the circumstances in which the alleged partnership was brought about, the respondent's statement is full of contradictions. In his examination‑in‑chief he stated that the talk for entering into the partnership took place between him and the appellants but in his cross‑examination he admitted that the talk for the partnership took place between Sher Muhammad and the appellants. The statement of D. W. Muhammad Shabhan does not also throw any light on the case of the respondent. His statement only shows that on 19‑11‑49 deceased Gul Muhammad, his father‑in‑law, sold two stamp papers of Rs. 20 each to Sher Muhammad. There is nothing to show for what purpose these stamp papers were sold and is not helpful for the decision of the point at issue. At any rate in the face of material contradiction it is difficult to place implicit reliance on the statement of Mazharali respondent. It was therefore necessary for the learned Subordinate Court to consider whether there was some other important circumstantial evidence in support of the alleged partnership. The learned Subordinate Court placed much reliance on the fact that the appellants did not produce Messrs Kalawala Rice Mill's account books and a cheque alleged to have been given by the respondent to the appellants in respect of the balance amount of Rs. 5,

000. It, however, appears that none of the two documents was asked or summoned by the respondent from the appellants. In these circumstances it is difficult to understand how the learned Judge raised adverse inference in respect of these documents against the appellants. The learned Subordinate Judge relied on the fact that in the mortgage deed it was stated that the amount of Rs. 10,000 was obtained by the respondent as loan from the appellants to help Sher Muhammad for depositing it as a security towards the agency obtained from the Sind Food-grains Nationalization Board. But this fact alone neither proves nor leads to the conclusion that the alleged partnership existed between the parties and Sher Muhammad. On the contrary it only discloses that the appellants by way of abundant‑ caution got this fact inserted in the document for showing that the loan was advanced for a legal purpose. The learned Subordinate Judge has also made fetish out of the admission of Muhammad Zakaria that the appellants advanced the loan in question to the respondent without interest because he had agreed to sell his paddy at a concessional rate and the appellants were to share the profit made out of the sale of paddy. This fact also does not help the respondent's case. It appears to us that the circumstances on which the learned Subordinate Judge based his conclusion are not sufficient to discharge the heavy burden and, do not in the least prove the respondent's case. On the other hand the very fact that the respondent paid, on 29‑4‑1952 a sum of Rs. 5,000 and gave a post dated personal cheque No. .38688 on the Provincial Bank, Larkana, dated 31‑7‑52 shows that the alleged partnership never existed between the parties. There is no reliable evidence that this post dated cheque was given on the condition that the appellants would cash it after settlement of partnership accounts. No such demand was ever made from the appellants and the evidence on this point remained uncorroborated. Halving regard to the fact that the respondent failed to produce Sher Muhammad, his uncle, and the accounts of the agency maintained by Sher Muhammad, the best evidence to support his case and other lacunas in the respondent's case, it is perfectly clear to us that he had miserably failed to make out a case of the alleged partnership and the learned Subordinate Judge was not at all justified in deciding this issue in favour of the respondent. It was however urged by Mr. Abdul Raoof, the learned counsel for the respondent, that the suit was rightly thrown out as the partnership between the two appellants was not registered under section 1 9 of the partnership Act. The argument of the learned counsel for the respondent is that admittedly the appellants advanced the loan in question to the respondent on the understanding that the respondent will supply paddy to them at a concessional rate and they will share the profits from such transaction. On these facts he argued that there existed a partnership between the appellants and as it was not registered under section 69, the suit was rightly held to be not maintainable. The learned counsel in this connection invited our attention to section 8 of the Partnership Act and strongly contended that a partnership can also be in respect of only one adventure. There can be no quarrel with this proposition, but in this case there is no positive evidence to show that any partnership business was carried on by the two appellants for the purchase of paddy. On the other hand the evidence of Muhammad Zakaria only goes to 4 show that they advanced the loan to respondent without interest because they thought they would make profit out of the supply of paddy by the respondent. In our opinion this alone does not lead to the conclusion that the appellants were carrying on any paddy business and as such the question of getting the alleged partnership registered under section 69 did not arise.) Even otherwise, it will be noticed that the loan in question was advanced by the appellants in their personal name and a suit brought in their own name can't be thrown out merely on the allegation that the ultimate benefit will go to the partnership business. In Goverdhandas Takersey v. M. Abdur Rahman and another (A I R 1942 Mad. 634) one of the partners filed a suit on an agreement in his name. But the contention that since the ultimate benefit of the contract would go to the partnership business, the suit should be considered to have been brought on behalf of the partnership and falls under section 69 was not accepted in that case. This case was recently considered by a Division Bench of this Court consisting of Inamullah and Wahiduddin, JJ. in second Appeal No. 5 of 1957, decided on 7‑10‑1960 and the principle enunciated in this decision was approved. In our opinion the same principle can be applied to this case even if it is accepted that there existed any partnership between the appellants in respect of paddy business. Apart from this, the objection about the partnership between the two appellants was not raised before the learned trial Judge. The objection in this form for the first time was taken before us in view of the statement of P. W. Muhammad Zakaria and being a mixed question of law and fact cannot be allowed to be raised in appeal. We find no force in this objection and hold that the suit was maintainable and not barred under section 69 of the Partnership Act. Mr. Abdul Raoof, the learned counsel for the respondent; further argued that since the mortgage‑deed was found to be an illegal transaction under section 8 of the Sind Rural Credit and Land Transfer Act, 1947, it is inadmissible in evidence and the appellants can only fall back on the original oral agreement to advance loan. He argued that, in such circumstances the document in question will not be taken into consideration and the time will run against the respondent on the basis of the oral agreement. According to him the suit was governed by Art. 56 of the Limitation Act and as it was flied beyond three years, it was clearly barred by time. This contention also is fallacious. It is correct that the mortgage‑deed (Exh. 66) is hit by section 8 oft the aforesaid provision of law but that does not mean that the mortgage, deed is a void document and inadmissible in evidence It appears to us that the document in question can be used for 0 collateral purposes and was rightly admitted in evidence to invoke the personal covenant for obtaining a simple money decree. The document (Exh. 66) being a registered document will come within the purview of Art. 116 of the Limitation Act and as the F suit was filed within six years of its execution, the suit is well within time for simple money decree. This view is fortified by 4 decision of their Lordships of the Privy Council in A I R 1940 P C

240. Accordingly we hold that the view of the learned Subordinate Judge that the suit was governed by Art. 106 of the Limitation Act is erroneous and it is not barred by time. The respondent is an agriculturist and there is no agreement between', the parties about the payment of interest. Mr. Castellino frankly admitted that Muhammad Zakahia in his statement had given' up the claim for interest against the respondent and appellants' claim in this respect is not maintainable. Accordingly the appellants' claim for interest is disallowed. He also conceded that the respondent being an agriculturist should be given reasonable time to pay the amount due from him. On the view taken by us the appellants are entitled to a decree for Rs. 5,000 but in the interest of justice we would direct that this amount will be paid in two yearly instalments of Rs. 2,500 each. The respondent will pay the first instalment on the 7th of November 1961 and the second instalment on the 7th of November 1962, but in default of the first instalment the whole amount will fall due against him. As a result the appeal is allowed to the extent of Rs. 5,000 with costs throughout. Appeal allowed.