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Case Summary : Allahabad Bank v S.M. Engg Industries

Author : Abhishek Darmora

CITATION : (1992) 2 CALLT 138 HC

BENCH : Justice A. N. Ray

DATE OF THE JUDGEMENT : 30 January, 1992


This bank suit is against six defendants. The 2nd defendant carried on business under the name of 1st Defendant. The case is – In the year 1982 a partnership constituted by defendant Nos. 2, 3, and 4, they adopted the same name as is now borne by the 1st defendant. The 5th and 6th defendant are sought to be made liable by the bank as guarantors in respect of 1st defendant after it became partnership concern. Several sums of money were advanced by the bank to 2nd defendant. And several documents were executed by 2nd, 3rd and 4th defendants whereby the entire liability then outstanding to the debit of 2nd defendant was taken over by firm.

The 4th defendant is wife of 5th.and they have contested the suit. The 2nd,3rd & 6th defendant has not participated in proceedings. As per the evidence she herself is a house wife. And as she was prepared to speak only in Malayalam, they could not take her evidence. Her husband came & gave evidence on her behalf.

It is the further case of 4th and 5th defendant, they were swindled by Sunil Malhotra & Sant Pal Kapoor. Mr. Kutty asserted that apart from obtaining a reconnection of electricity, the 2nd defendant did nothing in matter of recommencement of business under the partnership. The case of Kutty is that one Bijon Roy and one Kohli of bank came along with defendant No’s. 2 and 3 to Mr. Kutty for the purpose of persuading him to join the partnership. It is alleged that these two bank officials held out promises to give loan and advances to partnership in case the single venture of 2nd defendant was changed into partnership.  And then there was no document regarding it.


1- Is 4th defendant liable as a partner of the 1st defendant firm and if so, to what extent?

2- Did 4th & 5th defendant act on the basis of the representation made by plaintiff?

3- Were 4th & 5th defendant induced to execute the alleged deed of partnership?

4- Are the document dated 13th & 18th may, 1982 illegal, null and void?

5- Are the 4th & 5th defendant liable as guarantors as alleged in the plaint? If so, to what extent?

6- To what reliefs, if any, is the plaintiff entitled against the 4th & 5th defendants?


 The amount of money due to bank upon loans already advanced in May 1982 was Rs.3,24,947.60. The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does not of itself make such persons partners.

In the result, as against the defendant No.2 there shall be a decree for Rs.4,09,905.90 less the sum of – 49,960\-. There shall be interest pendent lite @13%p.a. on the principal sum of 2,67,000.


In this case, it was a bank suit, which was against six defendants. A partnership was constituted by 2nd, 3rd, 4th defendant adopting the same name as of 1st defendant, while several sum of money were also advanced by the bank. And even then they were not even ready to participate in proceedings. Evidence were given and further it was stated that there will be no order as to costs excepting as indicated above.

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