10/18/23, 9:30 AM P L D 1958 (W

P L D 1958 (W. P.) Karachi 251

Before Inamullah, J

THE PROVINCE OF WEST PAKISTAN‑Plaintiff

Versus

G. V. RATTANCHAND PIR MAHFOOZ (a firm)

Defendants

Suit No. 453 of 1950, decided on 18th December 1957.

(a) Partnership Act (IX of 1932), S. 6‑Existence of partner ship‑Rule to determine.

The main rule to be observed in determining the existence of a partnership is that

regard must be paid to the true conduct and intention of the parties as appearing from
the whole facts of the case. Though a right to participate in the profits of a trade is a
strong, test of partnership yet whether such relationship does or does not exist must
depend on the real intention and the conduct of the parties.

Where two persons, apart from receiving profit or commission, in their letters to
plaintiff gave the latter to understand 'that they were acting as partners, in other Words,
one was acting as agent to the other in a way that his acts would bind the other, the of
two constituted a firm of which they were the partners.

(b) Partnership Act (IX of 1932), S. 2 S‑-- Application‑Proof of credit allowed to firm
on faith of person holding himself out, as n partner necessary.

(c) Partnership Act (IX of 1932), S. l8‑-- Partner obtaining credit on his own
behalf‑Other partner not liable.

S. M. Sadiq for Plaintiff.

Dingomal for Defendants.

JUDGMVNT

INAMULLAH, J.--‑ The present suit was filed by the Province of Sind, now the
Province of West Pakistan, on 20th August 1950, for the recovery of Rs. 1,75,691‑15‑0
with interest thereon.

The facts giving rise to the suit, shortly put, are these :‑

In June 1947 the plaintiff arranged with the Government of Baluchistan to supply to
the then Government of Sind potatoes in specified quantities from July to December
1947. The defendant‑firm, Messrs. G. V. Rattanchand Pir Mahfooz agreed to lift the
potatoes as and when supplied by the Government of Baluchistan and sell the same in
the former Sind Province at the rate fixed by the Sind Government. According to the
arrangement, which continued up to the middle of August 1947, the defendants were to
make direct. payment to the Baluchistan Government.

In August 1947, communal riots broke out in Quetta, with the result that the Hindu :
agent of the defendant‑firm who used to take deliveries and make payments could not
do so as he had to come away from there. At the request of the defendants, the plaintiff
arranged with the, Government, of Baluchistan that they should send potatoes freight
paid to the plaintiff and the defen dants would remit the cost of potatoes and the freight
10/18/23, 9:30 AM P L D 1958 (W

by demand drafts to the Baluchistan Government. According to the arrangement; the

railway receipts used to be endorsed by the plaintiff to the defendants, together with
the bills with a view that the defendants may send the money to the Baluchistan
Government.

The defendants received Mds. 16961‑20 of potatoes valued Rs. 2,72,559‑7‑0. The
plaintiff paid Rs. 1,20,000 by two cheques. The balance payable was Rs. 1,52,559‑7‑0.
The plaintiff has added to this amount Rs. 110‑8‑0 as exchange over the two cheques.

The plaintiff has also claimed Rs. 13,000 on account of equalization fund maintained
for adjustment of price of potatoes in their hands. "

The plaintiff has claimed interest over the amount of claim from the date of the suit till
final payment, and costs of the suit.
The written statement has been filed by one Pir Mahfooz who had been; served with
the summons as a partner of the firm of G. V. Rattanchand Pir Mahfooz, defendants.
The main contentions raised, by Pir Mahfooz are these :]

He denies that there was any firm by the name of G. V. Rattanchand Pir Mahfooz.: G.
V. Rattanchand consisted of more than one partner and had carried on business near
.the Boulton Market, Karachi. He has also contended that the plaintiff did not deal with
the so‑called firm of G. V. Rattanchand Pir Mahfooz or acknowledged the existence of
the said firm. The suit, therefore, as framed was not maintainable. It is alleged that the
Government had appointed two separate agent, viz. (1) G. V..Rattanchand, and (2) Pir
Mahfooz. The arrange ment was that the payment would be made directly to the
Government of Baluchistan.

The Government of Sind having appointed two separate agents and leaving it .to the
two agents to make arrangement between themselves, whether one was to lift for
Upper Sind and the other for Lower Sind or to apportion the commission. Messrs. Pir
Mahfooz & Co. made arrangements with Messrs. G. V. Rattanchand & Co., the other
agent, that Messrs. G. V. Rattanchand would lift all the potatoes from Baluchistan, pay,
for the same and sell it in the various Districts of Sind. Messrs. Pir Mahfooz & Co. in
their turn were to receive a fixed commission per maund of potatoes lifted by Messrs.
G. V. Rattanchand.

Pir Mahfooz denies that any arrangement, as disclosed in paras 5 and 6 of the plaint
was made with the Sind Government for payment by Pir Mahfooz & Co. or anyone on
their behalf. Pir Mahfooz contends that the Sind Government did not consult Pir
Mahfooz & Co., while entering into any such arrangement regarding the payment ; Pir
Mahfooz & Co., therefore; are not liable to make the payment, as the plaintiff had dealt
with Messrs: G. V. Itattanchand alone and thereby had altered the original arrangement
regarding' the payment. According to the original arrangement, the payment was to be
made directly to the Baluchistan Government.

In the alternative, it is stated in the written statement that if the Court were to find that
there was a firm by the name of G. V. Rattarichand Pir Mahfooz then. G. V.
Rattanchand having at his instance altered the original arrangement regarding the
payment for .the potatoes without the knowledge and consent of Messrs. Pir Mahfooz
& Co., the plaintiff could not recover the amount in suit from Pir Mahfooz & Co. or
the other partner.

Issue.No. I.‑The contention of defendant Pir Mahfooz was t4at there was no firm by
the name of Messrs. G. V. Rattanchand Pir Mahfooz. Messrs. G. V. Rattanchand & Co.
was a separate firm which carried on business in Boulton Market while the firm of Pir
Mahfooz was a distinct one. The suit as filed therefore was not maintainable.
10/18/23, 9:30 AM P L D 1958 (W

Issue No. I (sic).‑There is admittedly no written agreement of partnership between G.

V, Rattanchand and Pir Mahfooz. The question of partnership therefore has to be
determined from the dealings of G. V. Rattanchand and Pir Mahfooz towards each
other and with others.

Defendant Pir Mahfooz's case was, as stated in para. 9 of the written statement, that
Messrs. G. V. Rattanchand was to lift all the potatoes from Baluchistan, pay for the
same and sell and distribute in the various districts of Sind and that Messrs. Pir
Mahfooz & Co. were to be paid a fixed commission per maund for the potatoes lifted
by Messrs. G. V. Rattanchand & Co. Messrs. G. V. Rattanchand were to pay the price
to the Baluchistan Government for lifting the potatoes. It may be mentioned at the very
outset that the arrangement disclosed in the written statement and reiterated by Pir
Mahfooz in his statement is very vague. It is, no clear as to what for Messrs. G. V.
Rattanchand had agreed to pay a commission to Pir Mahfooz if the former was to do
everything in respect of lifting the potatoes from Baluchistan. It was contended by the
learned counsel for the plaintiff that the question of payment of com mission could
arise only if Pir Mahfooz was to do something for G. V. Rattanchand. In the present
case neither it is alleged in the written statement nor in the deposition of Pir Mahfooz
in the Court as to what for. the commission was to be paid. It was urged that inasmuch
as Pir Mahfooz was not to do anything in respect of lifting the potatoes from
Baluchistan the said payment is not commission but profit. It may also be noted that
the written statement does not disclose the amount of the commission to be paid
though Pir Mahfooz mentions in his deposition that the commission agreed upon was
‑/4/ per maund. It lay upon defendant Pir Mahfooz to give all the details of this
arrangement. He has failed to disclose any reason either in his statement or the written
statement as to why would G. V. Rattanchand pay any commission to Pir Mahfooz for
lifting the potatoes.

The receipt of profit or so‑called commission coupled with conduct of Pir Mahfooz
and G. B. Rattanchand as disclosed in the various letters addressed to the plaintiff
would show that G. V. Rattanchand and Pir Mahfooz were partners.

Before I deal with the documents in which Pir Mahfooz or Messrs. G. V. Rattanchand
have described themselves as partners to each other I may briefly state the rule of law
in determining the existence of partnership. The main rule to be observed in
determining the existence of a partnership is that regard must, be paid, to the true
conduct and intention of the parties as appearing from the whole facts of the case. This
rule is embodied in section 6 of the Partnership Act, 1932. It is also well established
that though a right to participate in the profits of a trade is a strong test of partnership
yet whether such relationship does or does not exist must depend on the real intention
and the conduct of the parties, I would now deal with the documents which are either
addressed by G. V. Rattanchand or Pir Mahfooz to the plaintiff as partners. The
following are letter's addressed by G. V. Rattanchand as partner of Pir Mahfooz to the
plaintiff :‑

(1) Exh. 7/29 dated 1st October 1947, letter from G. V. Rattanchand Pir Mahfooz &
Co. to the Director, Civil Supplies, requesting not to send more potatoes.

(2) Exh. 7/32 dated 2nd October 1947, letter from G. V. Rattanchand Pir Mahfooz to
the Director giving statement of the receipt of potatoes and the sale thereof.

(3) Exh. 7/33 dated 3rd October 1947, this is also a letter from G. V. Rattanchand Pir
Mahfooz to Director, Civil Supplies giving the statement of receipt of potatoes
and their sale.
(4) Exh. 7/52 dated 15th October 1947, letter from G. V. Rattanchand Pir Mahfooz &
Co. to Director Civil Supplies.
10/18/23, 9:30 AM P L D 1958 (W

(5) Exh. 7/42 dated 10th October 1947; letter G. V. Rattan chand Pir Mahfooz & Co. to
Director, Civil Supplies.

(6) Letters Exh. 7/5 Exh. 7/46, Exh.: 7/47, Exh. 7/48, Exh. 7/49, Exh. 7/50, Exh. 7/51,
Exh. 7/55. All these are letters of different dates from G. V. Rattanchand and Pir
Mahfooz & Co. to Director, Civil Supplies, giving the state ment of the receipt
of potatoes and their sale from time to time.

All these letters have been signed by G. V. Rattanchand for Messrs. G. V. Rattanchand
and Pir Mahfooz & Co.

There are also letters which have been signed by Pir Mahfooz on behalf of G. V.
Rattanchand & Pir Mahfooz & Co. They are as under :‑

(1) Exh. 7/8 dated 14th July ' 1947, by Pir Mahfooz for Messrs. G. V. Rattanchand and
Pir Mahfooz & Co. to Director, Civil Supplies, Government of Sind, Karachi.
Pir Mahfooz had written this letter on behalf of G. V. Rattan chand Pir Mahfooz
& Co. to request Baluchistan Government not to send potatoes to Sind through
any other channel except through Messrs. G. V. Rattanchand and Pir Mahfooz
& Co.

(2) Exh. 7/59 dated 19th November 1947 by Pir Mahfooz as partner of "Pir Mahfooz,
G. V. Rattanchand & Co."

This is a very detailed letter on behalf of Pir Mahfooz, G. V. Rattanchand & Co. to the
Additional Director, Civil Supplies, Karachi protesting against the supply of potatoes
to Sind by Baluchistan Government through any other agent except Pir Mahfooz, G. V.
Rattanchand & Co.

A perusal of this letter would show that it had been written on behalf of Pir Mahfooz
G. V. Rattanchand & Co. Pir Mahfooz tried to explain this letter by stating that he had
signed it as partner of Pir Mahfooz and not as a partner of "Pir Mahfooz, G. V.
Rattanchand & Co." I do not accept this explanation. If Pir Mahfooz wanted to write
only as a partner of Pir Mahfooz & Co: it was not necessary for him to, have written at
the top of the letter as under :‑

"From
Pir Mahfooz, G.. V. Rattanchand & Co, Khori Garden,
Karachi."

This explanation is a belated one.

(3) Exh. 7/60 dated 19th November 1947. This is also a letter from Pir Mahfooz, G. V.
Rattanchand & Co. to the ‑Additional Director Civil Supplies, Karachi.

This letter was written by Pir Mahfooz as a partner of Pir Mahfooz G. V. Rattanchand
& Co. Pir Mahfooz in this letter had given the account on behalf of the firm of the
potatoes received from 12th July 1947 to 29th October 1947. A perusal of this letter
would show that; this was written by Pir Mahfooz on behalf of the, partnership, firm.
The concluding portion of this letter runs as under

" So we have Rs. 13,616‑2‑0 as balance in the Equalisation Fund. We have still
to lift about 13,000 maunds of potatoes from Baluchistan."

It is clear from the above that Pir Mahfooz was acting as a partner of the firm and not
in his individual capacity.
10/18/23, 9:30 AM P L D 1958 (W

From the correspondence addressed by G. V. Rattanchand and Pir Mahfooz to the

Government it is clear that they on their part gave to understand to the plaintiff 'that
they were acting as partners. In other words, one was acting as agent to the other in
away that his acts would bind the other partner. The essence of partnership is that one
partner acts as an agent for the other so as to bind him for his acts in relation to the
business. It has not been urged in the present case that in relation to the acts in respect
of which G. V. Rattanchand or Pir Mahfooz have written to the Government, they
would not bind each other. "Partnership" within the meaning of section 41 of the
Partnership Act is "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", considering the intention
of) G. V. Ratanchand and Pir Mahfooz as expressed in their letters, addressed to the
plaintiff, I have no, doubt that they purported' to act as partners. I would, for the
reasons given above, hold that there was a firm of G. V. Rattanchand Pir Mahfooz.

Issue No. 2.‑In view of .what I have held above and the correspondence that I have
already mentioned above addressed by G. V. Rattanchand and Pir Mahfooz to the
plaintiff, it is clear that they had agreed to lift potatoes from Baluchistan. So far as the
question of payment is concerned, I would hold that there is no evidence before me ‑to
hold that it was the defendants viz. G. V: Rattanchand Pir Mahfooz who had agreed to
make payment as disclosed in paras 2 and 3 of the plaint. Mr. Sadiq, the learned
advocate for the plaintiff, has not been able to cite a single letter on behalf of G. V.
Rattan chand Pir Mahfooz to show that they had agreed in the name of the firm to
make payment to the Baluchistan Government. On the other hand, letters Exh. 7/3
dated 4th July 1947 and Exh. 7/4 dated 19th June 1947 would show that the payment
was to be made by Messrs. P. M. Mahfooz & Co. and G. V. Rattanchand as separate
firms. By letter dated 4th July 1947 the Government appointed Pir Mahfooz and G. V.
Rattan chand as agents in respect of lifting potatoes from Baluchistan. A copy of this
letter was sent to them separately. Exh. 7/4 also makes it clear that there were to be two
agents who were to make payment against Railway Receipt to Baluchistan
Government. I would, for these reasons, hold that the defen dant firm did not agree as
alleged in paras 2 and 3 of the plaint to make, payment but that the individual firms
viz. G. V. Rattan chand and Pir Mahfooz had agreed to make payment to the
Baluchistan Government.

Issue No. 3.‑From the documents filed by the plaintiff it would appear that the
Government of Sind had appointed Pir Mahfooz & Co. and G. V. Rattanchand in their
individual capacity for lifting potatoes from Baluchistan. Pir Mahfooz applied to the
Additional Director of Civil Supplies, Government of Sind, on 21st June 1947 (Exh.
7/2) in respect of lifting the entire quota of potatoes from Baluchistan. G. V.
Rattanchand also applied on 16th June 1947 (Exh. 7) for lifting potatoes from
Baluchistan. The Government, by their resolution dated 4th July 1947 (Exh. 7/3),
appointed Messrs. P. M. Mahfooz & Co. and Messrs. G. V. Rattanchand as agents.
They are both mentioned as "Messrs." which shows that they were appointed as agents
separately. A copy of the resolution was also sent to them separately as would appear
from the note in Exh. 7/3. It has not been alleged by the plaintiff that the Government
of Sind did not appoint Pir Mahfooz & Company and G. V. Rattanchand as agents in
their individual capacity. So far as the Sind Government was concerned, the term of
appointment would appear to be that the payment will be made by the agents to the
Baluchistan Government against the Railway Receipt. This is clear from Exh. 7/4
dated 19th June 1947.

There is not only the evidence of Pir Mahfooz before this Court that there was an
arrangement between Pir Mahfooz and G. V. Rattanchand that G. V. Rattanchand
would lift the potatoes from Baluchistan, pay for the same and distribute it in Sind, but
the conduct of the plaintiff also lends support to the state ment of Pir Mahfooz that the
payment was to be made by G. V. Rattanchand alone and not by Pir Mahfooz. I will
deal with this aspect of the question under issue No. 6. I would hold for the purposes of
10/18/23, 9:30 AM P L D 1958 (W

this issue that the term of appointment with the Government for lifting potatoes was
that money will be paid against Railway Receipt to the Baluchistan Government.

Issue No. 4.‑It is stated in para. 4 of the plaint that the Hindu agent in Baluchistan was
the agent of the defendant firm. This fact is denied in para. 4 of the written statement. I
am inclined to hold, in view of letter (Exh. 7/8) dated 14th July 1947 that the Hindu
agent in Baluchistan was the agent in Baluchistan of the defendant firm. The relevant
portion of this letter addressed on behalf of G. V. Rattanchand Pir Mahfooz is as under
:‑

" The Baluchistan Syndicate even after the arrival of our representative has
been sending potatoes into Sind through opera trade channels ";

The reference to the representative in this letter on behalf of the firm clearly establishes
the contention of the plaintiff as put forward in para. 4 of the plaint that the Hindu
representa tive was the agent of the defendant firm. The decision of this issue in favour
of the plaintiff has not any material effect upon the question whether the liability for
payment is that of G. V. Rattanchand or that of the defendant firm. The question of
payment would depend upon the agreement between the plaintiff and the defendant
firm. The agreement, from the correspondence produced before me, between the
plaintiff and the defendants, appears to be that though the defendants were to act in
partnership yet the payment was to be made by G. V. Rattanchand alone. I would deal
with this aspect of the question in more detail while dealing with the other issues.

Issues Nos. S, 6, 7, 8 and 9.‑These issues are interlinked and can be conveniently taken
up together. The learned advocates for the parties also took up these issues together. It
would appear from the allegation made in the plaint that the arrange ment of payment
against Railway Receipt to the Baluchistan Government continued till the middle of
August 1947 and thereafter, owing to communal riots, the payment could not be made
against deliveries at Quetta. It is stated in the plaint that on the request of the "
defendants " the plaintiff arranged with the Baluchistan Government " that they should
send con signments of potatoes freight paid to the plaintiff and that the defendant
would remit the cost of potatoes and freight by demand draft to the Baluchistan
Government ". The plaintiff agreed to this request of the defendants. The Railway
Receipts used to be endorsed by the plaintiff to the defendants and the bills
accompanying the Railway Receipts were delivered to the defend ants so that the
defendants may send the money due on each Railway Receipt inclusive of freight to
the Baluchistan Govern ment. The plaintiff, after August 1947, received 16961 maunds
and 23 (sic) seers of potatoes, the value of which inclusive of freight payable to the
Government of Baluchistan, came to Rs. 2,72,559‑7‑0. The defendants paid by two
cheques a sum of Rs. 1,20,000 only.

So far as Pir Mahfooz is concerned, he contends that there was no such arrangement. If
there was any arrangement between G. V. Rattanchand and the plaintiff for lifting
potatoes and pay ment being made not against the Railway Receipt but later on, he is
not aware of the same.

Considering the documents that have been produced before me in Court, I am of the
view that the arrangement for pay ment was made only with G. V. Rattanchand in his
individual capacity and not on behalf of G. V. Rattanchand Pir Mahfooz. I would now
consider the documents and the circumstances which have led me to this conclusion.

As I have already stated above, on behalf of the plaintiff Mr. Mumtaz Ali Muhammad
Kazi who is now Superintendent, Statistical Bureau of West Pakistan Government, has
been examined in this Court. His statement makes it clear that the Sind Government
used to endorse the Railway Receipts in favour of G. V. Ratanchand. It is noteworthy
that the witness does not say that the Railway Receipts used to be endorsed in favour
10/18/23, 9:30 AM P L D 1958 (W

of the defendants G. V. Rattanchand Pir Mahfooz. The relevant portion of his statement
reads as under

" After the riots the Government of Baluchistan despatched potatoes to the
Government of Sind with the Railway Receipts and not to the defendants or to
their agents. These R. Rs. were endorsed by the Sind Government in favour of
G. V. Rattanchand. Government had arranged with G. V. Rattarchand that G. V.
Rattanchand would make payment against R. R. G. V. Rattanchand was given
these R. Rs. contrary to the arrangement without payment because he requested
that due to disturbed conditions he could not make any immediate payments. G.
V. Rattanchand used to submit periodical statements about delivery of the
potatoes that he used to take ".

That the arrangement for payment of the price for lifting potatoes was between the
Government of Sind and G. V. Rattanchand is also borne out by letter Ex. 7/44, dated
15th October 1947. This letter to my mind is very important. It is addressed to Messrs.
G. V. Rattanchand alone. The relevant portion of the letter reads as under

" The described accounts together with Railway Receipts received from the
Director of Civil Supplies, Baluchistan are sent herewith. You are requested to
arrange to send cheque in favour of the Director of Civil Supplies, Quetta for
the total amount of Rs. 1,89,957‑12‑0 being the cost of potatoes including
freight etc., imported by you from Baluchistan at an early date under advice to
this Department ".

To my mind this letter very strongly supports the contention of Pir Mahfooz that the
arrangement in respect of payment was only with G. V. Rattanchand and not with him.
The demand, as it would appear from the above letter, has been made only to Messrs.
G. V. Rattanchand and not to Pir Mahfooz. This letter, in my opinion, amounts to a
clear admission on behalf of the plaintiff so far as the question of payment is
concerned. It would appear from para. 7 of the plaint that in all nine railway receipts
have been sent to the plaintiff which were in due course endorsed to Messrs. G. V.
Rattanchand. Out of these nine Railway Receipts seven are mentioned in Ex. 7/44
reproduced above. The last two Railway Receipts mentioned in para. 7 of the plaint
were not mentioned in this letter as they related to November and this letter was
written in October 1947. The total amount of the cost of potatoes supplied till October
as given in para. 7‑of the plaint also comes to the same amount as given in the letter
Ex. 7/44. The potatoes supplied after October 1947 comes to about Rs. 82,601. It
would appear, therefore, that so far as the bulk of the supply of potatoes is concerned,
the plaintiff's own document shows that the payment in respect of the same was to be
made by Messrs. G. V. Rattanchand alone and not by Pir Mahfooz. This is further
supported by Exs. 7/42, dated 10th October 1947 and 7/55, dated 29th October 1947.
These are two letters in respect of payment of Rs. 70,000 and Rs. 50,000 by two
cheques by G. V. Rattanchand. Mr. Mumtaz Kazi also admitted, after seeing these two
letters that the payments referred to in para. 10 of the plaint were made by G. V.
Rattanchand. These documents and the statement of Mr. Mumtaz Kazi for the plaintiff
very clearly establish that the plaintiff had made an arrangement with Messrs. G. V.
Rattanchand alone for pay ment of the potatoes lifted after August 1947. I am also of
the view that this arrangement must have been made at the instance of G. V.
Rattanchand himself. I would accept the statement of Pir Mahfooz made in this Court
in respect of these facts.

The plaintiff has satisfactorily proved that the Baluchistan Government after August
1947 sent the same quantities of potatoes as is mentioned in para. 10 of the plaint. This
would appear from Ex. 7/44 and the statement of Mr. Mumtaz Kazi. There is no
evidence on behalf of Pir Mahfooz to discredit the statement‑ of Mr. Mumtaz Kazi that
the Government of Baluchistan supplied during September and November 1947, 16961
maunds and 23 seers of potatoes.
10/18/23, 9:30 AM P L D 1958 (W

I may mention that there is no oral or documentary evidence on record on behalf of the
plaintiff to establish that there was any arrangement between the plaintiff and G. V.
Rattanchand Pir. Mahfooz for the payment of the price of potatoes supplied by the
Baluchistan Government. As I have already pointed out upto October 1947 the
plaintiff's attitude definitely was that the payment should be made by Messrs. G. V.
Rattanchand. It seems that after G. V. Rattanchand migrated to India the Government
of Sind thought it convenient on the basis of letters addressed by Pir Mahfooz and
Rattanchand as partners to put up a claim against Pir Mahfooz as partner of G. V.
Rattan chand.

I will now take up the question whether Pir Mahfooz having been alleged to be a
partner of G. V. Rattanchand can be held to be liable under the circumstances which I
have mentioned above for the payment of the balance of money due from G. V.
Rattanchand.

Mr. Sadiq, the learned Advocate on behalf of the plaintiff, contended that in view of
section 28 of the Partnership Act, 1932, Pir Mahfooz having represented himself to be
a partner of G. V. Rattanchand is liable to make the payment. In my opinion this
section will have no application to the circum stances of the present case. In order to
apply the provisions of section 28 of the Partnership Act, it would be necessary for the
plaintiff to prove that they had allowed credit to G. V. Rattanchand on the faith that Pir
Mahfooz was a partner of G. V. Rattanchand. This is a question of fact. In the first
place it has not been alleged in the plaint that the plaintiff had given credit to Mr.
Rattanchand only because Pir Mahfooz represented himself to be a partner of G. V.
Ratanchand. In the second place, as would appear from what I have discussed above,
the plaintiff was dealing with Messrs G. V. Rattanchand in his individual capacity and
that G. V. Rattanchand had also made payment as G. V, Rattanchand to the plaintiff.

It was next contended by Mr. Sadiq, relying on section 18 of the Partnership Act, that a
partner is the agent of the firm for the purpose of the business of the firm. It is true that
a partner is the agent of the firm for the purposes of the business of the firm but the
question is what was the business of the firm. In this case it is not the ordinary business
of purchasing goods and selling it in the market, but the business related to taking of
potatoes from the Government of Baluchistan on payment of price against the Railway
Receipt. The definite understanding was that potatoes will be taken on payment of
price against Railway Receipt. Moreover, unless it can be shown that Messrs G. V.
Rattanchand entered into this arrangement with the Sind Government for taking
potatoes on credit in the name of the firm, he cannot bind Pir Mahfooz. It was observed
in Ram Chandra Sahu and another v. Kaseem Khan and another (28 C W N 824) by
Mookerjee and Rankin, JJ. that " the ultimate use by a firm of money borrowed by a
‑partner individually on his own credit does not make the firm liable for the loan. The
circumstance that the firm obtains the benefit of a transaction entered into by one .of its
members, as pointed out by . . . . . may show that he entered into the contract as the
agent of the firm. But the fact is no more than evidence that this was the case, and the
question upon which the liability or non‑liability of the firm depends is, not whether
the firm obtained the benefit of the contract, but did the firm by one of its partners or
otherwise enter into the contract ". The circumstances of the present case clearly
disclose that G. V. Rattanchand alone in order to finance the venture took credit from
the Sind Government on his own behalf and not so as to bind the other partner Pir
Mahfooz. There is nothing on the record to show that Pir Mahfooz ever paid any
amount of money to Government or that Government made any demand whatsoever
upto 1947. The period of contract in question was upto December 1947 only. It was
only after Rattanchand had left for India that the Government thought it fit to foist the
res ponsibility of payment on Pir Mahfooz also.

Mr. Sadiq also relied on section 21 of the Partnership Act and contended that because
of the communal riots an emer gency was created and what was done by G. V.
10/18/23, 9:30 AM P L D 1958 (W

Rattanchand in order to take credit from Government was done to protest the firm from
loss and therefore Pir Mahfooz was also bound by the Act of G. V. Rattanchand. There
is no force in this conten tion. 1n the first place, this was not the case of the plaintiff in
his plaint. In the second place, the communal riots at Quetta gave rise to only this
emergency that payment could not be made at Quetta but had to be made in Sind. The
Baluchistan Government having agreed to send Railway Receipts to Sind trade it easy
for G. V. Rattanchand to make the pay ment. It was difficult, no doubt, because of
communal riots to make payments at Quetta. Moreover, because of the communal riots
the Sind Government should not have given credit to G. V. Rattanchand and if the
Government did so it must bear its consequences. Pir Mahfooz cannot be made to bear
the consequences of the failure of the Sind Government to give delivery of Railway
Receipts only against payment, as was originally arranged.

Mr. Dingomal, the learned Advocate for Pir Mahfooz, relied on section 22 of the
Partnership Act and contended that in order to bind his client the plaintiff must prove
that‑the credit was taken by G. V. Rattanchand on behalf of the firm. As I have already
mentioned above the plaintiff has failed to prove that G. V. Rattanchand had taken
credit m the name of the firm. In fact, the plaintiff had given it to G. V. Rattancliand
alone and not to Pir Mahfooz as is clearly borne out by letter Ex. 7/44.

It appears to me that there was x partnership between the parties for the single venture
viz., to get, potatoes from Baluchistan on payment and to distribute the same in Sind
and that the payment was to be made by G. V. Rattanchand alone. Pir Mahfooz was to
get some nominal profit as ire was not to invest any money. It would be reasonable to
conclude from the statement of Mumtaz Kazi, the letter Ex. 7/44, and the payments
made by. G. V. Rattanchand that the Government had given credit to G. V. Rattanchand
alone and that he alone was liable to make the payment and not Pir Mahfooz. Under
these circumstances it is too late,in the day to foist the refponsi bility on Pir Mahfooz.

I would, for the reasons given above, hold that G. V. Rattanchand alone is responsible
for the payment of the amount due to the Government and not Pir Mahfooz.

Issue No. 10.‑The Government has claimed a sum of Rs. 13,000 on account of
equalisation fund maintained " for adjustment of the price of potatoes ". Exh. 7/7,
dated I 1 th July 1947 makes it clear as to what is Equalization Fund. The Government
had added two rupees to the price of potatoes at which they were to be sold in Sind. In
the words of this notification (Ex. 7/7) : " The excess of Rs. 2 per maund will have to
be credited to the Equalization Fund. The amount so collected in the Equalisation Fund
will be utilized to subsidize sales of potatoes after September 1947, when the retail
price of Baluchistan potatoes will have to be decreased to conform to prices of potatoes
imported from Punjab and N.‑W. F. P ". The contention of Mr. Dingomal in respect of
the Equalisation Fund was that as the necessity to subsidize sales of potatoes after
September 1947 did not arise, the plaintiff is not entitled to any decree for the said
amount. Para. 17 of the written statement in respect of this Fund runs as under :

" The statements in para. 11 are denied. It is denied that the plaintiffs are
.entitled to receive the amount on account of equalisation fund or to appropriate
the same. Liability for the same is denied ".

So far as the question of Equalization Fund is concerned, Ex. 7/60, dated 19th
November 1947 is very important. This is an account of the Equalisation Fund. The
concluding portion reads as under :

" So we have Rs. 13,626‑2‑0 as balance in the Equaliza tion Fund . . . We want
to utilize the Equalization Fund and we suggest that as per your Letter No.
M‑138/47, dated 11th July 1947, henceforth no amount should be charged for
the Equalization Fund ".
10/18/23, 9:30 AM P L D 1958 (W

It is clear from the above that the equalization fund amount as claimed by the plaintiff
is admitted by Pir Mahfooz. He, in fact, has admitted some thing more than is now
claimed by the Government. He has failed to establish that he was entitled to utilise the
same as mentioned in his letter Ex. 7/60. He has not stated anything before this Court
as to how he was entitled to utilize the equalization fund or whether he in fact did
utilise it. Under the circumstances Pir Mahfooz having admitted the equalization fund,
he is liable to pay the same.

The suit is decreed for Rs, 13,000 claimed by the plaintiff as equalization fund and the
balance of the claim is dismissed. The parties to receive and bear costs in proportion to
their success and failure.

A. H. Order accordingly.
10/18/23, 9:30 AM P L D 1958 (W

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