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TMI Blog1940 (9) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... two partners: (1) the firm of I.S. C. Machado and (2) Germain Machado. On 20th June, 1938, the Machado cloth shop was due and owing to the Travancore National and Quilon Bank in the sum of Rs. 10,179-6-2 in respect of advances made to them, secured by a promissory note executed by the partners of the cloth shop. From the deed of dissolution of the Machado cloth shop it will be found that Germain Machado ceased to have any interest in that concern from 31st May 1938 and that concern is now solely run by the firm of I.S. C. Machado. On a demand made by the Bank against the Machado cloth shop the firm of I.S. C. Machado claimed to set off the amount due to them by the Bank, i.e., the sum of Rs. 8,636-3-6, against the amount due by the Machado cloth shop, namely, Rs. 10,179-6-2. The question is whether the set-off is permissible. The amount due by the Bank to the firm of I.S. . C. Machado which consisted of three partners, was an amount due in respect of a joint claim and we may treat that firm as entity 'A'. The amount due to the Bank by the Machado cloth shop is an amount due by a firm consisting of entity 'A' and another 'B'. The question is, to a claim by the Bank against A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty of a debtor in any case where he had at the time of giving credit to the debtor, notice of an act of bankruptcy committed by the debtor, and available against him." Section 47 of the Presidency Towns Insolvency Act and section 46 of the Provincial Insolvency Act are almost identical in terms). It is thus clear that before a set-off can be claimed there must be a mutuality of debts or credits or dealings, i.e., the set-off is available only between the same parties and in the same right as the claim. Applying this principle a joint debt is not allowed to be set-off against a separate debt nor a separate debt against a joint debt and the principle is thus stated in Halsbury's Laws of England: "A joint debt and a several debt cannot be set off against each other. Thus in an action for a debt due from the defendant to the plaintiff separately the defendant cannot set off a debt due from the plaintiff jointly with others who are not co-plaintiffs in the action, but he may set off a debt from the plaintiff severally as well as jointly with others." (Vol. 29, page 490). To put the matter concretely, (1) C has a claim against A and B jointly. A cannot set off a debt due to hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst a separate debt. It was found that the note was a joint and several note. Following the principle of the decision in Fletcher s case ( supra ) the set-off was allowed. In the course of the argument, Byles, J., referred to the observation of Parke, B., in King v. Hoare [1844] 13 M W 494. in regard to the distinction between a joint and several contract. As the observation is very instructive, I shall quote it: "The distinction between the case of a joint and several contract is very clear. It is argued that each party to a joint contract is severally liable, and so he is in one sense, that if sued severally and he does not plead in abatement, he is liable to pay the entire debt. But he is not severally liable in the same sense as he is on a joint and several bond which instrument though on one piece of parchment or paper in effect comprises the joint bond of all and the several binds of each of the obligors and gives different remedies to the obligee." These principles were applied to cases of insolvency. In Ex Parte Stephens [1805] 8 RR 75 the question arose thus. The firm of Castell and Powell owed Stephens a sum of 3320-11-11. Stephens and her brother ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Indian Companies Act and Insolvency Acts are almost similar in terms to the corresponding sections in English law. Prima facie the same principles ought to govern in the Indian law. But there is a difference in Indian law in regard to the liability of joint promisors, because every case of a joint promise is treated as a joint and several promise section 43 of the Indian Contract Act runs thus: "When two or more persons make a joint promise the promise may in the absence of express agreement to the contrary compel any (one or more) of such joint promisors to perform the whole of the promise." Thus the liability is joint and several and if a debt is incurred by the members of a partnership they will be jointly and severally liable ( vide section 25 of the Indian Partnership Act). This is a distinct departure from the English law, though it must be observed that so far as amounts due to members of a firm are concerned, the claim will be a joint claim both in Indian and English law, because section 45 of the Indian Contract Act says: "When a person has made a promise to two or more persons jointly, then, unless a contrary intention appears from the contract, the right to c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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