A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION

 AT HYDERABAD.

F.A.  789/2006 against C.C 1383/2004, Dist. Forum-I, Hyderabad.

Between:

1. M. Madan Mohan Rao

S/o. M. L. Narasimham

R/o. 12-2-823/A/30,

Santoshnagar

Mehidipatnam

Hyderabad-500 028.                         ***                         Appellant/

                                                                                      O.P. No.3

2.  Capt. K. Kishan

S/o. Late Yellaiah

Plot No. 609,

Naveen Nagar Colony

Banjara Hills, Hyderabad                  ***                         Appellant/

                                                                                      O.P. No. 5

                                                          Vs.

1. C. Sathyanjani,

D/o. C.S. Narayana

R/o. 12-2-823/A/75/2

Santoshnagar Colony

Mehdipatnam, Hyderabad

2. C. Anuradha,

D/o. C. S. Naryana Rao

Rep. by her GPA

C. S. Narayana Rao

S/o. Suryanarayana Shastri

R/o. 12-2-823/A/75/2

Santoshnagar Colony

Mehdipatnam, Hyderabad                 ***                         Respondents/

                                                                                      Complainants.

3. M/s. Abheeshta  Finance Company

Flat No. 117, Sovereign Shelters

Behind Ganga Jamuna Hotel

Lakdikapool, Hyderabad-4. .             ***                         O.P. No. 1

4. A.P.V. Subbaiah

S/o. Late Rangaiah

Age: 68  years,  Business

R/o. D-81, Madhura Nagar

S.R. Nagar, Hyderabad-38.                ***                         O.P. No. 2

5. M. Sreenivas, S/o. M. V. Sastry

R/o. 12-2-823/A/28,

Geeta Apartments

Santoshnagar,  Mehidipatnam

Hyderabad-500 028.                         ***                         O.P. No. 4

6.  Smt. K. Vijaya Lakshmi

W/o. K. Shiva Kumar

R/o. 2-2-647/49,

Central Excise Colony

New Nallakunta

Hyderabad-500 013.                         ***                         O.P. No. 6. 

7. N. Venkateswara Rao

S/o. Late N. Krishna Rao

R/o. 2-2-1137/4/A,

New Nallakunta, Hyderabad.                                ***               O.P. No. 7

8. M/s. Abheesta Finance Pvt. Ltd.,

Partner,  Abheesta Finance Company

(A company incorporated under the

Companies Act, 1956) having its

Registered Office at D-1, 1^st Floor

Sukhmani Apartments, Lakdi-ka-pool

Hyderabad                                                            ***               O.P. No. 8

F.A.  870/2006 against C.C 1385/2004, Dist. Forum-I, Hyderabad

Between:

1. M. Madan Mohan Rao

S/o. M. L. Narasimham

R/o. 12-2-823/A/20,

Santoshnagar,  Mehidipatnam

Hyderabad-500 028.                         ***                         Appellant/

                                                                                      O.P. No.3

2.  Capt. K. Kishan

S/o. Late Yellaiah

R/o. Plot No. 609

Naveen Nagar Colony

Banjara Hills, Hyderabad                  ***                         Appellant/

                                                                                      O.P. No. 5

                                                          Vs.

1. C. Sathyanjani,

D/o. C. S. Narayana

R/o. 12-2-823/A/75/2

Santoshnagar Colony

Mehdipatnam, Hyderabad

2. C. Anuradha,

D/o. C. S. Naryana Rao

Rep. by her GPA

C. S. Narayana

S/o. Suryanarayana Shastri

R/o. 12-2-823/A/75/2

Santoshnagar Colony

Mehdipatnam, Hyderabad                 ***                         Respondents/

                                                                                      Complainants.

3. M/s. Abheeshta Finance Company

Flat No. 117, Sovereign Shelters

Behind Ganga Jamuna Hotel

Lakdikapool, Hyderabad-4. .             ***                         O.P. No. 1

4. A.P.V. Subbaiah

S/o. Late Rangaiah

Age: 68  years,  Business

R/o. D-81, Madhura Nagar

S.R. Nagar, Hyderabad-38.                ***                         O.P. No. 2

5. M. Sreenivas, S/o. M. V. Sastry

R/o. 12-2-823/A/28,

Geeta Apartments

Santoshnagar,  Mehidipatnam

Hyderabad-500 028.                                             ***               O.P. No. 4

6.  Smt. K. Vijaya Lakshmi

W/o. K. Shiva Kumar

R/o. 2-2-647/49,

Central Excise Colony

New Nallakunta

Hyderabad-500 013.                                             ***               O.P. No. 6. 

7. N. Venkateswara Rao

S/o. Late N. Krishna Rao

R/o. 2-2-1137/4/A,

New Nallakunta, Hyderabad.                                ***               O.P. No. 7

8. M/s. Abheesta Finance Pvt. Ltd.,

Partner,  Abheesta Finance Company

(A company incorporated under the

Companies Act, 1956) having its

Registered Office at D-1, 1^st Floor

Sukhmani Apartments, Lakdi-ka-pool

Hyderabad                                                            ***               O.P. No. 8

F.A.  1395/2006 against C.C 1032/2005, Dist. Forum-I, Hyderabad.

Between:

1. M. Madan Mohan Rao

S/o. M. L. Narasimham

R/o. 12-2-823/A/30,

Santoshnagar

Mehidipatnam

Hyderabad-500 028.                         ***                         Appellant/

                                                                                      O.P. No.3

2.  Capt. K. Kishan

S/o. Late Yellaiah

R/o. 6-3-249/7/1/8

Naveen Nagar Colony

Banjara Hills, Hyderabad                            ***                         Appellant/

                                                                                                 O.P. No. 5

                                                          Vs.

1. Smt.  S. Savithri,

W/o. Ramacharyam

R/o. 16-3-992/3,

Saifabad Post Office

Malakpet, Hyderabad.                                 ***                         Respondent/

                                                                                                 Complainant.

2. M/s. Abheeshta Finance Company

Partnership firm, Rep. by its partners

Reg. Office : Flat No. D-1, 1^st Floor

Sukhmani Apartments,

Lakdikapool, Hyderabad-4. .                       ***                         O.P. No. 1

3. A.P.V. Subbaiah

S/o. Late Rangaiah

Age: 68  years,  Business

R/o. D-81, Madhura Nagar

S.R. Nagar, Hyderabad-38.                                   ***               O.P. No. 2

4. M. Sreenivas, S/o. M. V. Sastry

R/o. 12-2-823/A/28,

Geeta Apartments

Santoshnagar,  Mehidipatnam

Hyderabad-500 028.                                             ***               O.P. No. 4

5.  Smt. K. Vijaya Lakshmi

W/o. K. Shiva Kumar

R/o. 2-2-647/49,

Central Excise Colony

New Nallakunta

Hyderabad-500 013.                                             ***               O.P. No. 6. 

6. N. Venkateswara Rao

S/o. Late N. Krishna Rao

R/o. 2-2-1137/4/A,

New Nallakunta, Hyderabad.                                ***               O.P. No. 7

7. M/s. Abheesta Finance Pvt. Ltd.,

Partner,  Abheesta Finance Company

(A company incorporated under the

Companies Act, 1956) having its

Registered Office at D-1, 1^st Floor

Sukhmani Apartments, Lakdi-ka-pool

Hyderabad                                                            ***               O.P. No. 8

F.A.  1397/2006 against C.C 1057/2005, Dist. Forum-I, Hyderabad.

Between:

1. M. Madan Mohan Rao

S/o. M. L. Narasimham

R/o. 12-2-823/A/30,

Santoshnagar

Mehidipatnam

Hyderabad-500 028.                         ***                         Appellant/

                                                                                      O.P. No.3

2.  Capt. K. Kishan

S/o. Late Yellaiah

R/o. 6-3-249/7/1/B

Naveen Nagar Colony

Banjara Hills, Hyderabad                  ***                         Appellant/

                                                                                      O.P. No. 5

                                                          Vs.

1. Smt.  S. Savithri,

W/o. Ramacharyam

R/o. 16-3-992/3,

Saifabad Post Office

Malakpet, Hyderabad.                       ***                         Respondent/

                                                                                      Complainant.

2. M/s. Abheeshta Finance Company

Partnership firm, Rep. by its partners

Reg. Office : Flat No. D-1, 1^st Floor

Sukhmani Apartments,

Lakdikapool, Hyderabad-4. .                                ***               O.P. No. 1

3. A.P.V. Subbaiah

S/o. Late Rangaiah

Age: 68  years,  Business

R/o. D-81, Madhura Nagar

S.R. Nagar, Hyderabad-38.                                   ***               O.P. No. 2

4. M. Sreenivas, S/o. M. V. Sastry

R/o. 12-2-823/A/28,

Geeta Apartments

Santoshnagar,  Mehidipatnam

Hyderabad-500 028.                                             ***               O.P. No. 4

5.  Smt. K. Vijaya Lakshmi

W/o. K. Shiva Kumar

R/o. 2-2-647/49,

Central Excise Colony

New Nallakunta

Hyderabad-500 013.                                            ***               O.P. No. 6. 

6. N. Venkateswara Rao

S/o. Late N. Krishna Rao

R/o. 2-2-1137/4/A,

New Nallakunta, Hyderabad.                                ***               O.P. No. 7

7. M/s. Abheesta Finance Pvt. Ltd.,

Partner,  Abheesta Finance Company

(A company incorporated under the

Companies Act, 1956) having its

Registered Office at D-1, 1^st Floor

Sukhmani Apartments, Lakdi-ka-pool

Hyderabad                                                            ***               O.P. No. 8

F.A.  109/2009 against C.C 1032/2005, Dist. Forum-I, Hyderabad.

F.A.  110/2009 against C.C 1383/2004, Dist. Forum-I, Hyderabad.

      F.A.  111/2009  against C.C 1385/2004, Dist. Forum-I, Hyderabad

F.A.  112/2009 against C.C 1057/2005, Dist. Forum-I, Hyderabad.

Between:

M. Sreenivas, S/o. M. V. Sastry

R/o. 12-2-823/A/28,

Geeta Apartments

Santoshnagar,  Mehidipatnam

Hyderabad-500 028.                                   ***                         Appellant/

O.P. No. 4

                                                                   Vs.

1. C. Sathyanjani, D/o. C.S. Narayana

R/o. 12-2-823/A/75/2

Santoshnagar Colony

Mehdipatnam, Hyderabad                          ***                                                    

2. C. Anuradha,                                                            

D/o. C. S. Naryana Rao

Rep. by her GPA C. S. Narayana

S/o. Suryanarayana Shastri

R/o. 12-2-823/A/75/2

Santoshnagar Colony

Mehdipatnam, Hyderabad                 ***                         Respondents/

                                                                                       Complainants.

                                                                              (CD 1383 & 1385/2004)

1. Smt. Savithri,

W/o. Ramacharyam

R/o. 16-3-992/3,

Saifabad Post Office

Malakpet, Hyderabad.                       ***                         Respondent/

                                                                                      Complainant.

                                                                             (CD 1032 & 1057/2005)

2. M/s. Abheeshta Finance Company

Partnership firm, Rep. by its partners

Reg. Office : Flat No. D-1, 1^st Floor

Sukhmani Apartments,

Lakdikapool, Hyderabad-4. .                                ***               O.P. No. 1

3. A.P.V. Subbaiah

S/o. Late Rangaiah

Age: 68  years,  Business

R/o. D-81, Madhura Nagar

S.R. Nagar, Hyderabad-38.                                   ***               O.P. No. 2

4. M. Madan Mohan Rao

S/o. M. L. Narasimham

R/o. 12-2-823/A/30,

Santoshnagar

Mehidipatnam

Hyderabad-500 028.                                   ***                         O.P. No.3

5. Capt. K. Kishan

S/o. Late Yellaiah

R/o. 6-3-249/7/1/B

Naveen Nagar Colony

Banjara Hills, Hyderabad                  ***                                  O.P. No. 5

6.  Smt. K. Vijaya Lakshmi

W/o. K. Shiva Kumar

R/o. 2-2-647/49,

Central Excise Colony

New Nallakunta

Hyderabad-500 013.                                             ***               O.P. No. 6. 

7. N. Venkateswara Rao

S/o. Late N. Krishna Rao

R/o. 2-2-1137/4/A,

New Nallakunta, Hyderabad.                                ***               O.P. No. 7

8. M/s. Abheesta Finance Pvt. Ltd.,

Partner,  Abheesta Finance Company

(A company incorporated under the

Companies Act, 1956) having its

Registered Office at D-1, 1^st Floor

Sukhmani Apartments, Lakdi-ka-pool

Hyderabad                                                            ***               O.P. No. 8

Counsel for complainants:                M/s. A. Krishnam Raju

Counsel for O.P3 & O.P5                   M/s. G. Rajesham

Counsel for O.P.4                              M/s. M. Kalyana Ramakrishna

Counsel for O.P6 & O.P7                   M/s. A. Suryanarayana Murthy

QUORUM:

                         HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT     

&

SMT. M. SHREESHA, MEMBER

THURSDAY,  THIS THE FIFTH DAY OF FEBRUARY TWO THOUSAND NINE

Oral Order: (Per Hon’ble Justice D. Appa Rao, President)

                                                          *****

          These appeals relate to the Fixed Deposit Receipts (FDRS)  issued by  Opposite Party No. 1  M/s. Abheeshta  Finance Company,  a partnership firm to various deposit holders.  Though the  Dist. Forum disposed of these matters  under separate orders, they can be conveniently  disposed of by a common order  as the parties and the subject matter are one and the same.

2)       The parties are described as arrayed in the complaints for felicity of expression.

3)       In all these complaints, the complaint is that  Opposite Party No. 1  is a partnership firm  and the  Opposite Parties 2 to 8 are its partners.   Opposite Party No. 8 a company registered under the  Companies Act, 1956 is one of the partners of  Opposite Party No. 1.   Opposite Party No. 1  engaged in finance  business viz., lending monies for interest by issuing fixed deposit receipts.    The complainants had deposited various amounts under FDRS during the years 1996 – 1999 and the maturity period being one year.   Opposite Party No. 1 issued FDRS agreeing to pay the amount  with interest @ 14% p.a. on maturity.  They  were ‘auto renewed’  viz., automatically renewable from time to time.   The details of the FDRS and the names of the parties are as follows:

C.D. No. 1383/2004

Complainants  C. Sathyanjani   &  C. Anuradha

C.D. 1385/2004  

Complainants:  C. Sathyanajani   &  C. Anuradha

FDR Details of  C. Satyanjani.

C.D. 1032/2005  

Complainant::  Smt. S. Savithri   

C.D. 1057/2005  

Complainant::  Smt. S. Savithri   

When they approached the opposite parties for refund of amounts in January, 2004  they  promised that they would arrange necessary funds  and requested to come  again in the month of February, 2004.  But surprisingly  they  postponed payment, on that they issued  legal notice on 15.7.2004 demanding payment of amount for which they did not give any reply.   Therefore they claimed the amounts covered the FDRS  with interest @ 24% p.a., together with compensation and costs.

4)       Opposite Party No. 1 did not contest  and therefore it was set-exparte. While describing  opposite party No. 1 a partnership firm, names of none of the partners was made a mention.  It was mentioned as represented by partners.   

5)       Opposite Party No. 2 filed counter resisting the case.   He alleged that he was retired from business  8 years ago and had severed connections with R1.    His retirement was in accordance with the provisions of  Section 32 of the Indian Partnership Act and also the provisions of Companies Act.  It was in full knowledge of the complainants.   He was the Managing Director of  opposite party No. 8   a private limited company in the month of  October, 1993  in which  opposite parties 3, 4, 5, 6  and  father of  opposite party No. 7 were directors.   Opposite Party No. 1 was constituted under the provisions of the Indian Partnership Act, 1932 on 12.5.1994,  as a subsidiary to opposite party No. 8.   The father of  opposite party No. 4,  Sri M.V. Sastry was the founder of the organization.  He was a tax consultant.   He made his son as director, his brother-in-law as Executive Director  and his nephew as auditor.   Later  N. Krishna Rao, father of  Opposite Party No. 7 became the  Managing Director  by Board Resolution Dt. 26.9.1998,   the capital investment held by him  as on 1.4.1999 was adjusted against the loan taken by him.   The person who  renewed these FDRs  had no authority to renew  them on behalf of the firm.   He was only an employee of the organization.  Therefore he prayed that the complaint be dismissed.  

6)                 Opposite Party No. 3 filed counter adopted by  Opposite Party No. 5 denying their liability.   They alleged that the affairs of the firm were mismanaged.  They have no concern with the misdeeds committed by the others.   There is no provision for ‘auto renewal’.  This plea was taken with a view to bring the claim within the limitation.   The said endorsement was made by the  person who was not authorized to renew.   The claim was barred by limitation.   The complaints were  set up by Opposite Party No. 4 his  close relatives.    The dispute is of  civil nature to be adjudicated by a Civil Court.  Therefore they  prayed for dismissal of the complaints  with exemplary costs.

7)                Opposite Party  No. 4 filed counter alleging that  he was deaf and dumb by birth and not an active partner.   He was not aware of any of these transactions. He was not liable to pay any amount he being a  sleeping  partner.  He prayed that the complaint be dismissed.

8)                 Opposite Party No. 6 filed counter resisting the case.   While reiterating the facts alleged by Opposite Party No. 2  in his counter, she  stated that  Sri P. S. Bhaskar Rao who managed the affairs of the firm was not impleaded.   He along with his brother-in-law  Sri  M. V. Sastry and  his nephew  Sri V. Sridhar  controlled and managed the affairs  and when her husband visited for authentic statements they did not give it, as such she had retired from the firm  and the same was intimated to the  Registrar of Firms  on  1.6.2002 and her name was deleted from the list of  partners.  On  28.9.2002  a meeting was convened wherein her husband had attended on her behalf.  Her husband   reiterated her retirement.   By virtue of the resolution, Opposite Party No. 3 was managing the affairs.   The complainants never demand any amounts.   Sri P.S. Bhaskar Rao  misappropriated  about Rs. 43 lakhs.  When the other partners demanded the accounts   he got  these cases filed through the complainants.   Sri  P. Bhaskar Rao was signing the renewals,  without putting any date.   They were unauthorized endorsements.   Auto renewal does not save limitation.   The complaint was barred by limitation,  and therefore prayed that the complaint be dismissed with costs.

9)                Opposite Party No. 7 resisted the case reiterating the facts alleged by  Opposite Party No. 6 in her counter.   His father Sri N. Krishna Rao,  one of the directors/partners died on 21.12.2001.    He was neither a partner nor a director  of the company and he had nothing to do with  the business concerns.  Therefore he prayed that the complaint be dismissed with costs.

10)               The complainants filed their affidavit evidence and got marked  FDRs  and copy of  legal notices.  Refuting their evidence  the  opposite parties filed  Exs. B1 to B27 viz., minutes of the meeting, various  resolutions passed,  and endorsement of the  Registrar of Companies etc.

11)              The Dist. Forum after considering the evidence placed on record  directed Opposite Parties 1,3, 4, 5 and 8  to pay the amount covered under the FDRs  with interest  @ 12% p.a., from the date of deposit till  the date of complaint  and @ 9% p.a., from the date of filing of complaint till the date of realization together with costs of Rs. 2,000/-.   The complaint against Opposite Parties 2, 6, and 7  is dismissed. 

12)               Aggrieved by the said decision, Opposite Parties 3 and 5  preferred these appeals along with Opposite Party No. 4  with  delay petitions  contending that the Dist. Forum did not appreciate either the facts or law in correct perspective.  They  were neither managing the company nor of  the firm  or had anything to with  its affairs.   The Dist. Forum erred in holding that  endorsements  made by  Sri  Bhaskar Rao on renewals were binding. At any rate, he being one of the directors of R8, he cannot endorse on behalf of other partners.   Therefore they prayed that the complaint be dismissed against them also.

13)              Since the appeals preferred by other parties are being heard, we are of the opinion that the delay petition filed by Opposite Party No.  4  could be condoned.  The appeals preferred by Opposite Party No. 4  are also taken up  for hearing along with other appeals,  lest  contrary and conflicting orders might  be passed,  which would lead to unnecessary litigation, and multiplicity of proceedings.  

14)               The complainants claimed the amounts deposited under various FDRs issued by  Opposite Party No. 1 a partnership firm dealing in money lending business.  The complaint was silent as to the person who among the opposite parties  had issued the FDRs.   A perusal of  FDRs issued by the firm discloses that  some of the FDRs were signed by one of the partners as well as Managing Partner and some of the FDRs  were issued by the director and Managing Director of   M/s. Abheeshta Finance Pvt. Ltd.

15)              In C.D. 1057/2005 ( F.A. 1397/2006)  xerox copies of FDRs  filed. The originals said to have been issued by a partner and Managing Director  of R8 wherein endorsements were made,   mentioning that the same was extended till 24.9.2000, 24.9.2001 and 24.9.2002 were not filed.    In Ex. A2 the name of  Aruna was scored off and the name of  Smt. S. Savitry was introduced.

16)              In C.D. 1032/2005 (F.A. 1395/2006)  xerox copies of  FDRs filed. The originals said to have been issued by the director and Managing Director of  M/s. Abheeshta Finance Pvt. Ltd., wherein  endorsements were made mentioning that the same was extended till 28.6.1999, 28.6.2000, 28.6.2001 and 28.6.2002 were not filed.  In Ex. A1  the name of   A. Aruna was scored off  and the name of  Smt. S. Savitry  was introduced.  So also in Ex. A2  the name of  A. Latha was scored off and the name of  Smt. S. Savitry was introduced. 

17)     It is very important to note that for the reasons not explained the complainant did not file original  FDRs in the above CDs issued by  R1.   Xerox copies  of FDRs were marked on behalf of the complaints.  When the opposite parties questioned the validity of these transactions, necessarily the complainants  ought to have filed the originals.   Non explanation  of non-filing of originals necessarily  had to be viewed adversely.  More so, when the opposite parties contend the authority of the person who issued these receipts etc.

18)              In C.D.  1383/2004  (F.A. 789/2006)   Exs. A1 to A7  FDRs  were issued on various dates in 1999 and Ex. A8  on 22.11.2000.    They were not even renewed when their maturity dates were mentioned as 2000-2001.    An endorsement was made by mentioning the word  ‘Auto Renewal’.  The name of the person who made such an endorsement and the date when it was renewed, was not even mentioned.

19)              In C.D. 1385/2004  (F.A. 870/2006)  Ex. A1  was issued on  9.4.1999, Ex. A2 on 9.11.1996 and Ex. A3  on 10.1.2001. The dates of maturity  were 9.4.2000, 9.11.1997 and 10.1.2002 respectively.   Ex. A2 was renewed on  9.3.2000.   In Ex. A1 & A3  there was a mention ‘Auto Renewal’  without mentioning the name of the person who made it  or the date of renewal.   The complaint was silent  in this aspect except mentioning  that it is ‘Auto Renewal’ which expression does not  find a place in any  of the FDRs.   There cannot be an automatic renewal  without any endorsement extending the maturity period till the amounts are paid,   unless there is a clause in the FDR.   It is an unknown concept obviously pitched up for saving limitation.   For all these FDRs  issued in the year 1999-2000,   the complaints were filed more or less  in  September, 2004.   

20)              In the ‘Cause of action’ para the averment that was made is   “ The cause of action for the complainant arose on 30.6.1999, 5.7.1999, 19.7.1999, 26.8.1999, 1.9.1999, 16.9.1999, 22.9.1999, 22.9.2000 and 22.11.2000 when the fixed deposits were made and on several other dates when the deposits got auto-renewed  and in January, 2004 when the complainants demanded the payment under the FDRs  and finally on 15.7.2004  when a legal notice was issued calling upon the opposite parties to refund the amount under the FDRs mentioned herein above.”   The dates on which these ‘auto renewals’ were made was not even mentioned.  It is not known as to the exact concept of ‘auto renewal’.  At least, no condition was stipulated in any of these receipts.

21)              The Dist. Forum did not address to the question of limitation and as to how such an endorsement would save limitation even assuming the person who endorsed had the authority to renew the FDR. Even when the opposite parties disputed these endorsements questioned the authority or competency of the person who signed  it, the complainants did not expatiate  by filing  the affidavit evidence of the person concerned.    It is not known why the complainants did not file original FDRs in C.D. 1032/2005 and  C.D. 1057/2005.   The affidavit is repetition of the complaint except stating that  FDR is  ‘auto renewal’ without there being any endorsement to that effect.   Ex-facie the claims are barred by limitation.  No provision of law is shown as to how the deposits of the year 1999-2000 could be claimed in 2004.

22)              The Dist. Forum having dismissed the complaint against  Opposite Parties 2, 6 and 7 stating that they had no concern with the partnership firm or the company  directed that  the amounts to be paid by  Opposite Parties  1,3, 4, 5 and 8.   Evidently the complainant did not prefer any appeal  against the said order.   The order has become final  as far as opposite parties  2, 6 and 7 are concerned.    Opposite Parties 3, 4 and 5  preferred these appeals alleging that they could not be made liable when the complaints were dismissed against other partners.   Evidently, they did not issue  FDRs nor they signed on the endorsement of renewal to fasten liability. 

23)              A perusal of the documents filed by the appellants would undoubtedly indicate that  M/s. Abheeshta Finance Pvt. Ltd., a company registered under the Companies Act, 1956 was constituted   on 15.9.1993 consisting of following Directors  evidenced under Ex. B6.

1.   Avula  Peda Venkata Subbaiah, S/o. Late Rangaiah

2.   Moduga Madan Mohan Rao, S/o. Late M.L. Narasimham

3.   Mylavarapu Srinivas, S/o. M. V. Sastry

4.   Kanuganti Kishan, S/o. Late K. Yellaiah

5.   Kaparti Vijaya Laxmi, W/o. K. Shiva Kumar.

Later  a partnership firm  the opposite party No. 1 under the name and style of M/s. Abheeshta Finance Company was constituted  on 12.5.1994 with the following partners evidenced under Ex. B25.

1.   Avula  Peda Venkata Subbaiah, S/o. Late Rangaiah

2.   Moduga Madan Mohan Rao, S/o. Late M.L. Narasimham

3.   Mylavarapu Srinivas, S/o. M. V. Sastry

4.   Kanuganti Kishan, S/o. Late K. Yellaiah

5.   Kaparti Vijaya Laxmi, W/o. K. Shiva Kumar.

6.   N. Krishna Rao, S/o. Late Veeraswamy.

7.   M/s. Abheeshta Finance Private Limited.

24)              We may clarify herein that  M/s. Abheeshta Finance Private Limited, a company incorporated under the Companies Act  was made as a partner to  the partnership firm having  40% share vide Ex. B25 Dt. 12.5.1994.   Opposite Party No. 1 was incorporated  with the same nomenclature under the provisions of  Indian Companies Act, 1956  came into existence on  23.4.1999  on conversion of M/s. Abheeshta  Finance (P) Ltd  with the name  ‘ M/s. Abheeshta Chit Funds (P) Ltd.   

          In the partnership deed clause 7 reads as follows :

“The an account/s  may be opened in any bank/s in the name of the partnership firm and such account/s shall be operated  under the join signatures of Sri P.S. Bhaskar Rao who is hereby authorized to operate the account/s  and any one of the partners  namely Sri A.P.V. Subbaiah, Sri M. Madan Mohan Rao and Sri M. Srinivas.”

25)              The complainant did not implead  M/s. Abheeshta Finance Pvt. Ltd.,  one of the partners of Opposite Party No. 1.   The complainants had filed a  complaint against the  firm,  without mentioning who was  representing the firm.   It is settled proposition of  law that   Partnership is not a legal entity, like a company, it is a group of individual partners¹. The firm name is only a compendious name given to the partnership, and the partners are real owners  of assets².  A partnership firm is not a distinct entity  and the partnership  property belongs to all the partners  constituting the firm³.

26)              We may also state that one  partner cannot represent on behalf of all the partners,  particularly renewing the deposit which was time barred,  unless there is an express authority given by all the parties.   It is not known whether all the partners have issued these FDRS with a view to bind the firm and signed with the seal of the firm.  Had the complainant proved that the Managing  Partner has executed  the bond and therefore the other partners of the firm were also liable, it would have been different. 

27)              It is settled law that a  partner is under no liability  to the firm in respect of the debts subsequently  incurred by other partners at the  time when he was not a partner.    The firm cannot be held liable for an act done by a partner, if such act is beyond the scope of  the apparent authority of such partner. 

1.   Comptroller & Auditor General Vs. Kamlesh Vadilal Mehta (2003) 2 SCC 349.

2.   N. Khandervali Saheb Vs.  N. Gudu Saheb,( 2003) 3 SCC 229.   

3.   Malabar Fisheries Co. Vs. I.T. Commissioner, Kerala AIR 1980 SC 176.

28)              We may also state herein that the case of Opposite Party No. 2 & 6  was that they were retired and therefore they were not liable.  The complainants contend that no publication or notice as required u/s 32 of the Indian Partnership Act, 1932  was issued and therefore the said retirement has no affect.    The  appellant contended that a partner who had retired was not liable, even if no public notice of retirement was given if creditors were informed  individually.   He further contended that even the knowledge of retirement provided to the agent of the creditor on whose behalf  the agent dealt with  would remain binding on the creditor.   He contended that  Opposite Party No. 8  having admitted  that he dealt with the deposits of the complainants herein on their behalf, and having knowledge it would bind on the complainants.  In support of his contention  he relied the decision  in  Jain Nautumal Vs. Wadhwan & Sri Vivenkanand Co-operative Housing Society reported in AIR 1986 Guj. 162 and ‘C. Assiamma Vs. State Bank of Mysore’ reported in AIR 1990 Ker. 157. 

Undoubtedly  a partner  who has retired is not liable even if no public notice of his retirement  has been given.  We may add that without dissolving the firm  and continuing the ongoing business  a partner may retire from the partnership, a situation clearly comprehended  by Section 32 of Indian Partnership Act, 1932. 

29)         At the cost of repetition,  it may be stated that endorsement of renewal was not made by  any of these appellants though they were authorized to operate the accounts.

30)               Admittedly  Opposite Party No. 7 son of N. Krishna Rao  is not a partner.  He was impleaded as the L.R. of  one of the partners  viz., N. Krishna Rao.  In fact N. Krishna Rao died on 21.12.2001.   Section 35 of the Indian Partnership Act, 1932  reads as follows :

35. Liability of estate of deceased partner - Where under a contract between the partners the firm is not dissolved by the death of a partner, the estate of a deceased partner is not liable for any act of the firm done after his death.

There is no clause in the agreement contrary to the above provision.  Therefore the assets of the deceased  partner cannot be held liable for the obligations of the firm  incurred after  the death of the deceased partner.  At no stretch of imagination R7 could be mulcted with liability.

31)              The question as to the constitution and reconstitution of the firm, company  and the partners or directors therein are to be determined  in the light of the questions  raised.   The name of  R6 was deleted as the partner from the Registrar of firms evident from the documents filed by her.  It is not known why she was impleaded.

32)              In the light of contentions taken by the opposite parties  and particularly  in view of the fact that  there was no endorsement  acknowledging the liability  and the authority of the person who signed under the word ‘Auto Renewal’, we believe that such an endorsement would not extend the limitation  unless the person who made such an endorsement has the  requisite authority  and in the light of various contentions taken by the opposite parties that some of them had  retired and others had no concern whatsoever and we are of the opinion that these questions could not be determined in summary proceedings  under the Consumer Protection Act.   It is not a straight case where the amounts being collected under the FDRs.   Serious questions of fact and law including that of collusion etc. were raised, we believe that this is a fit case where  the Civil Court could go into these questions  and determine the matter.   The Dist. Forum did not advert to any of the contentions raised by the  appellants in this regard.   We believe that these contentions could not be gone into with the scanty evidence placed by the complainant.    For the FDRs issued in the year 1999,   they filed the complaints  in 2004 beyond the period of limitation on the ground that there was  renewal without amplifying as to the date of renewal.  

33)               Having considered the entire evidence placed on record, we are of the opinion that the appeals have to be allowed setting aside the order of the Dist. Forum.

34)              In the result the appeals are allowed setting aside the order of the Dist. Forum.  Consequently the orders passed against the appellants are set-aside.   However, in the circumstances of the case each party to bear its own costs.

                   PRESIDENT                                               LADY MEMBER

                                              Dt. 05.  02. 2009.

*pnr

“UP LOAD – O.K.”