State Of Kerala vs S.Satheesh

Shaji P. Chaly, J.

The State and its officials have preferred the appeal challenging the judgment of a learned single Judge dated 07.07.2021 in W.P.(C) No. 9932 of 2015; whereby the learned single Judge allowed the writ petition and set aside Exhibit P3 communication dated 04.08.2014 issued by the Assistant Executive Engineer, IIP Division No.I, Angamaly, appellant No. 4, informing the respondent/writ petitioner that the payment due to his firm is withheld until he produces the partnership deed to verify the clauses, and till getting clearance from higher office that there is no liability due to him against the firm of the first respondent.

Basic material facts for the disposal of the writ appeal are as follows:

The respondent/writ petitioner is the Managing partner of a firm by name M/s. K.N. Satyapalan and Co., which was constituted for carrying out the business of the Government contracts. The petitioner’s father Sri. Satyapalan was an ‘A’ class Government contractor having work all over the State. He had undertaken a work of “IIP—Constructing Low Level Canal from Ch:9000m to 9525M, and an agreement was executed by and between the said Sathyapalan and the Superintending Engineer, Project Circle, Piravom, the second appellant, on 16.06.2000. When the work was in progress, Sri. Satyapalan died on 07.07.2001.

According to the respondent/writ petitioner, the appellants compelled the wife of Satyapalan Smt. Syamala Satyapalan, who was his nominee to continue the work and also for receiving any money that may become due consequent to his death. Anyhow, a supplemental agreement was executed between the appellants and Syamala Satyapalan and accordingly she resumed the work. It is also submitted that the time for completion of the work was extended several times. It is submitted that the validity of the original agreement expired on 13.07.2002. Anyhow, the said contract was foreclosed and she was relieved from the obligation of continuing the work. Some writ petitions and other consequential proceedings were initiated by Syamala Satyapalan. Presumably on the basis of the directions issued by the Apex Court in Civil Appeal No. 1961-1962 of 2013, she filed O.S. No. 48 of 2014 before the Sub Court, Muvattupuzha against the appellants and the same is pending consideration.

Be that as it may, it is stated that Satyapalan, his sons, the petitioner herein and his brother, and Syamala Satyapalan together had constituted a partnership firm in the name and style of M/s. K.N. Sathyapalan and Co. The writ petitioner is the Managing Partner of the said firm. Smt. Syamala Satyapalan later retired from the firm with effect from 31.03.2013. It is the case of the writ petitioner that later he had undertaken the construction of Main Canal from Ch.24442m to 25000m, including the CD works entrusted by the appellants.

The case projected by the respondent/writ petitioner is that he completed the work to the satisfaction of the appellants and claimed the amount due to him. The fourth appellant namely Assistant Executive Engineer, IIP Division No. 1, Angamaly, Ernakulam, as per Exhibit P3 letter dated 04.08.2014 informed the petitioner that letter of credit received in favour of his firm for the payment of C.C.VIIIth and the final bill amounting Rs.30,01,268/-in respect of the above said work is withheld to realise the risk and cost liability fell due, on account of the failure of Smt Shyamala Sathyapalan to complete the work undertaken as a nominee of her deceased husband Satyapalan for an amount of Rs.93,03,057/-.

It is submitted that Syamala Satyapalan is not a partner of the firm and she has, in no way, connected with the work undertaken by the writ petitioner. It is also pointed out that the respondent or the firm has not entered into any agreement for the work undertaken by Smt. Syamala Satyapalan. Therefore, the action initiated by the appellants to withheld the credit received in favour of the writ petitioner for the work done by him independently is totally misconceived, illegal and unsustainable.

It was also contended that until the credit is realised before the 31st March, the fund will be lapsed and the writ petitioner would be injuriously affected. Other circumstances pointing out the adverse situations consequent to the loan availed by the petitioner are stated in the writ petition.

A statement is filed by the appellants in the writ petition refuting the claims and demands raised by the writ petitioner. The basic contention advanced in the statement is in regard to the default on the part of Smt. Syamala Satyapalan to complete the work and her consequential liabilities due to the termination of the work at her risk and cost.

The case of the appellants in the statement is that it is clear from Annexure R4(a) letter addressed by Shyamala Satyapalan, writ petitioner and his brother S. Umesh to the Superintending Engineer, Edamalayar Irrigation Project Circle, Piravom, itself that the respondent/writ petitioner as well as Smt. Syamala Satyapalan and family members are all partners of the firm M/s. Satyapalan and Co.

That  apart,  it  is  contended  that  from  Exhibit  P4 Reconstitution deed 01.03.2013,  it  is  clear  that  Syamala Satyapalan has retired from the partnership firm with effect from 31.03.2013. Whereas, the liability has accrued even prior to that and the notice regarding the same was issued to the contractor as early as on 12.08.2010. Other contentions are also raised.

The learned single Judge, after taking into account the rival submissions made by the parties, has arrived at the conclusion that the appellants cannot contend that the agreement executed by Smt. Syamala Satyapalan and the appellants was with an intention to bind the firm in her capacity as a partner of the firm. It is also found that the said aspect is evident from Exhibit R4(a) letter produced by the appellants which had preceded the agreement in question. It is further observed by the learned single Judge that even though in Exhibit R4(a), the legal heirs of late Satyapalan had expressed the willingness of the firm to carry out the work, the appellants have chosen to execute the agreement with Syamala Satyapalan in her individual capacity.

Therefore, it was found that neither Syamala Satyapalan nor the appellants have intended the agreement to bind the firm and ultimately the learned single Judge has arrived at the conclusion that no liability alleged to have been incurred as a result of the agreement executed by and between the appellants and the Syamala Satyapalan can bind the firm. The said agreement is produced as Exhibit P6 along with the reply affidavit filed by the writ petitioner. Other findings are also rendered by the learned single Judge that the partnership firm of the writ petitioner is, in no way, liable to make any payment towards the alleged liabilities due from Mrs. Syamala Satyapalan. It is, thus, challenging the legality and correctness of the judgment of the learned single Judge the writ petition is filed.

The paramount contention advanced by the appellants is that the learned single Judge has not appropriately appreciated the facts; and it was ignoring the contentions in the statement of the appellants that Exhibit R4(a) letter was written by Syamala Satyapalan, writ petitioner and his brother S. Umesh, and therefore, the reliefs granted in the writ petition ignoring the said document cannot be sustained under law.

It is further stated that consequent to the death of Satyapalan, Smt. Syamala Satyapalan was inducted as a partner in the partnership firm of the respondent on 09.07.2001 and therefore, the said firm had liability. It is also the case of the appellants that the writ petitioner was carrying out contract works along with his father and he is well experienced in that field. Apart from contending that M/s. Satyapalan and Co. has sufficient men and machinery and technical management to execute any kind of work, other contentions are also raised to contend that the writ petitioner namely S. Satheesh, the son of Satyapalan and Smt. Syamala Satyapalan, are liable to make good the loss suffered by the appellants on account of termination of the work undertaken by the Smt. Syamala Satyapalan at her risk and cost.

We have heard the learned Senior Government Pleader Sri. K.V Manoj Kumar for the appellants, Sri. P. Prijith for the first respondent, and perused the pleadings and material on record.

The sole question to be considered is whether any manner of interference is required to the judgment of the learned single Judge.

The detailed deliberation of facts made above would make it clear that Satyapalan was carrying out contract works in his own name while executing the work as per the agreement entered in the year 2001. It is an admitted fact that even though in Ext.R4(a) letter, the names of the writ petitioner as well as his brother is shown along with their mother Smt. Syamala Satyapalan expressing willingness to undertake the balance work, the appellants have executed the agreement with Smt. Syamala Satyapalan alone for the completion of the balance work. It is an admitted fact that after the death of Satyapalan, Smt. Syamala Satyapalan and his children namely the writ petitioner and his brother S. Umesh have formed a partnership firm. The appellants have no case that the incomplete work of late Satyaplan was undertaken by the firm at any point of time. It is true, in Ext.R4(a) letter, Smt. Syamala Satyapalan and her children have expressed their inclination to carry out the remaining work of late Satyapalan. But, the Department has chosen to execute the supplemental agreement in favour of Smt. Syamala Satyapalan, who was the nominee to receive money if any, fell due on the basis of the contract work of Sathyapalan in case of his death.

This being the facts, merely because Smt. Syamala Satyapalan was a partner in the firm constituted by the writ petitioner and his brother, it cannot be said that the said firm has undertaken the work that was entrusted to Smt. Syamala Satyapalan after the death of Satyapalan. From, Ext.P4 partnership deed, it is clear that Smt. Syamala Satyapalan resigned from the partnership firm on 01.03.2013 and thereafter, the business of the firm was being carried on by the writ petitioner as well as his brother S. Umesh.

To put it otherwise, the facts and circumstances that are put forth by the rival parties would make it explicitly vivid that there was no liability for the partnership firm on account of the work undertaken by Smt. Syamala Satyapalan, after the death of Satyapalan. Therefore, when the firm has not undertaken the incomplete work of Satyapalan, neither the partners of the firm nor the firm can be made liable for any loss, especially in view of Section 25 of the Partnership Act, 1932 dealing with the liability of a partner for acts of the firm; which stipulates that every partner is liable jointly with all the other partners and also severally, for all acts of the firm done while he is a partner. Even going by the case projected by the appellants, it is clear that Smt. Syamala Satyapalan alone had undertaken the work which was entrusted by late Satyapalan. Merely because some offer was made by the writ petitioner and his brother in Ext.R4(a) letter, that cannot bind the writ petitioner or his brother for the agreement executed by the appellants with Smt. Syamala Satyapalan.

Yet another aspect to be noted is that even though in Ext.R4(a) letter, the writ petitioner and his brother offered to undertake the work, the Department has chosen to enter into an agreement only with Smt. Syamala Satyapalan. That will clearly eliminate the writ petitioner from any alleged liability due to the default on the part of Smt. Syamala Satyapalan. This is more so in view of Section 22 of the Act, 1932 dealing with the mode of doing act to bind firm; which stipulates that in order to bind a firm, an act or instrument done or executed by a partner or other person on behalf of the firm shall be done or executed in the firm-name, or in any other manner expressing or implying an intention to bind the firm. Further, the appellants have not produced any documents in order to attribute any liability to the respondent/writ petitioner.

The issue with respect to the liability of a partnership firm and the individual partners was considered by the Apex Court in Devji v. Magan Lal R.Atharana and others [AIR 1965 SC 139], in which the Apex Court has held that ‘sub-lease was not executed in the name of the firm, and it has been found by the courts below that respondent No. 4 in obtaining the lease, did not act on behalf of the firm. This in substance means that in obtaining the sub-lease, the parties to it did not intend to bind the firm by that transaction’.

Therefore, we are of the considered and definite opinion that the writ petitioner Sri. S. Satheesh, who has undertaken a new work by executing a fresh and new agreement with the appellants, has no manner of liability for the incomplete work undertaken by Shyamala. If any liability has fallen due on account of the work entrusted to Smt. Syamala Satyapalan, writ petitioner is not liable to make good the loss alleged to be remaining against Smt. Syamala Satyapalan consequent to the termination of the work at her risk and cost.

This being the situation, we are of the view that the appellants have not made out a case of any jurisdictional error or other legal infirmities justifying our interference in the appeal preferred by the State and its officials.

Needless to say, writ appeal fails and accordingly, it is dismissed.