' MUHAMMAD KHALID MEHMOOD KHAN, J.---This second appeal has been filed by the appellant (Defendant No,3) against judgment and decree dated 11-11-1997 and 11-6-2003 passed by the learned Civil Judge and learned appeal court respectively.
2. Brief facts necessary for the disposal of present appeal are that respondent No,1 filed a suit for recovery of Rs,2,00,000 against the appellant as well as respondents Nos.2 and 3 on the basis of promissory note dated 14-9-1988 under Order XXXVII, C.P.C. Claiming that respondent No,2/defendant No,1 is a firm engaged in the business of indenting of automobile parts at 11 Rabbani Road, Old Anarkali, Lahore.
3. The appellant/defendant No,3 representing himself to be a partner in the firm having an employed authority of the partners to act in aid of said firm, requested the respondent No,1/plaintiff for allowing a loan investment for the promotion of firm business. He further represented that he will pay Rs,4000 per month as profit on the investment of Rs,2,00,000. The respondent No, 1/plaintiff on the representation of appellant advanced a loan to the tune of Rs,2,00,000 to a partnership firm i,e,, respondent No,2. According to the averments of plaint, respondent No,1 handed over the amount of Rs,2,00,000 to the appellant. The appellant in acknowledgment of the said amount executed a D.P Note dated 14-9-1988 and affixed the rubber stamp of firm along with his signatures. Till February, 1989 the appellant and respondents Nos.2 & 3 continue to pay monthly profit of Rs,4,000 as per agreement but thereafter they refused to pay the said amount and as such a suit was filed against the appellant and the respondents Nos.2 and 3 with the following prayer:-- "In view of the forgoing, it is respectfully prayed that:--
(a) A DECREE FOR Rs,2,00,000 along with interest/profit at Rs,4000 per month as stipulated in the investment from March, 1989 till the institution of this suit;
(b) It is further prayed that future interest at the said rate up to the date of decree may also be passed;
(c) Any other relief which this honourable court may, under the circumstances of the case deems fit and proper may also be granted to the plaintiff.
4. The pray shows that respondent has not claimed a joint and several decree against the defendants and even has not prayed a decree against individual defendant.
5. The appellant filed his own written statement and respondents Nos.2 and 3 filed their separate written statements. The appellant denied the execution of promissory note in his personal capacity and represented that amount was advanced by respondent No,1 to the firm and not to the appellant and as such the appellant is not personally responsible in any manner for repayment of the suit amount.
6. Out of divergent pleadings of the parties, the following issues were framed by the learned trial court:-- "ISSUES:
(1) Whether the name of defendant No,1 is liable to be deleted? OPD
(2) Whether the defendant No,3 executed the impugned promissory note dated 14-9-1988 after receiving its consideration on behalf of the defendants Nos.1 and 2? OPD
(3) Whether the defendants Nos.1 and 2 are liable to pay the amount mentioned in the impugned promissory note? OPP
(4) Whether the suit is not maintainable in its present form? OPD-3
(5) Whether the suit is barred by time? QPD-3
(6) Whether the plaintiff is entitled to the decree as prayed for? OPP
(7) Relief
7. Both the parties adduced their respective evidence and the learned trial court vide judgment and decree dated 11-11-1997 decreed the suit against the appellant only. The appellant assailed the said judgment and decree but without any success. Hence, the second appeal.
8. Learned counsel for the appellant submits that the D.P Note dated 14-9-1988, subject-matter of the suit, was executed by the appellant on behalf of Younas & Co. a partnership concern. Learned counsel further submits that evidence on record shows that appellant had not signed the promissory note in his personal capacity but executed on behalf of Younas & Co. Nor he is beneficiary of the amount. He submits that under section 28 of the Negotiable Instruments Act, if any person sign the promissory note, bill of exchange or cheque for and on behalf of principal is not liable to a person who induces him to sign upon belief that the principal alone would be held liable. He further submits that both the learned courts below have misread the record. It was proved on record that appellant is not personally liable of the amount of Rs,2,00,000 nor he even assured the respondent for the repayment of suit amount.
9. Learned counsel for the respondent supports the judgment and decree and submits that respondent has handed over the amount of Rs,2,00,000 and in consideration thereof the appellant executed the demand Promissory Note. He further submits that loan was allowed on the request and assurance of appellants, the cheques of profit and cash were handed over to the respondent by the appellant.
10. Heard. Record perused.
11. The averments of plaint shows that respondent No, 1 /plaintiff himself is claiming that he has allowed loan of Rs,2,00,000 to the firm Younas & Co. Younas & Co who paid profit to him till February, 1989.
12. In evidence the P.W.1 has himself admitted that promissory note was signed by the appellant on behalf of other defendants. The said P.W.1 further deposed that the appellant was the employee of the firm i,e,, respondent No,2. The said P.W further admits that the profit of Rs,4,000 per month was paid to the plaintiff/respondent No,1 some time through cheque and some time in cash. P.W.2 when appeared as his own witness deposed that there is rubber stamp affixed on the promissory note which pertains to the company. P.W.3 in his statement admits that after the execution of promissory note he received profit 5 times, 3 times in the shape of cash and 2 times in the shape of cheques drawn on Middle East Bank. In his cross-examination he admits that it is correct that respondent No,2 is a partnership firm which was established on 5-7-1978 through a written agreement. He further admits that in partnership firm there were four partners namely Mehmood Ahmad, Shagufta Ijaz, Shahid Mehmood and Sardara Bibi. He admits that Mark-A is the partnership deed. He further admits that on 25-6-1985 on the death of Sardaran Bibi a new partnership firm was constituted which is mark-B. He further admits that this firm was got registered by him. He admits that Mark-A is copy of registration and the original of these are with him. D.W.3 is Assistant Manager Emirates Bank International. He appeared and produced notification (S.B.P) regarding merger of Middle East Bank in Emirates Bank as Ex. D.W.3/1. He admits that Younas & Co. Was maintaining its accounts with us. He produced Ex. D.W.3/2 account opening form, letter dated 22- 12-1982 regarding partnership Ex.D.W.3/3. He deposed that company, respondent No,2, has given mandate to respondent No,3, the appellant on the basis of which he was authorized to operate the account. He produced Ex.D.W.3/4 the authority letter and copy of letter No,2614 of 1983 issued by respondent No,2 as Exh.D.W.3/5. He produced copy of statement of account as Exh.D.W.3/7 of the firm and photo copy of cheques as Exh. D.W.3/9 and confirmed that original cheque is with him.
Exh. D.W.3/9, cheque is dated 23-11-1988. Exh. D.W.3/10 is a cheque drawn on the account of respondent No,2. Perusal of these cheques show that these are in the name of Aziz Chughtai and Aslam Chughtai amounting to Rs,4,000 and Rs,8,000 each. The defence of appellant is that he has signed the promissory note as an agent of respondent No,2, the firm, and as such he is not personally liable to pay. The document placed on record by the Bank Officer clearly shows that respondent No,2 was the partnership firm. The firm was maintaining its account with the Middle East Bank which was subsequently merged as Emirates Bank International. Firm was issuing cheques of the agreed profit to respondent No,1 further the account was being operated by the appellant on the basis of authority given by account holder, available on record as Exh.D.W.3/4.
13. The above said facts show that respondent No,2 was a firm and the appellant was its employee and he was performing the duties in terms of his employment with respondent No,2. The respondent No,1 has himself admitted in plaint that he allowed loan to a firm and in his statement he admits that the appellant was the employee of respondent No,2. Both the courts below have ignored the defence of appellant and held that he is personally liable on the basis of promissory note Exh.P-1. No doubt the appellant's signatures on the promissory note and also on the receipts are admitted by the appellant himself but the said admission is as an agent of the principal who is a firm and is the beneficiary of loan. Point required resolution in terms of pleadings of the parties and evidence produced is whether the appellant has executed D.P Note in his personal capacity or as an agent of respondent No,2, the firm? From the evidence available on record it is an admitted fact that the promissory note bears a rubber stamp of Muhammad Younas & Co. But the promissory note is signed by the appellant. The receipt is on the letterhead pad of Muhammad Younas & Co. And had been signed by the Accounts Officer and the appellant in his capacity as Manager of Muhammad Younas & Co. In the presence of documentary evidence, as well as oral evidence, the controversy stand resolved in favour of appellant.
14. The argument of learned counsel for the respondent that appellant is personally liable because he had signed the promissory note and received consideration and it has been proved in evidence that firm has not authorized him to receive the money and execute the promissory note. He relied on Section 28 of the Negotiable Instrument Act which is read as under:-- "28. Liability of agent signing: (1) Where a person signs a promissory note, bill of exchange or cheque without adding to his signatures words indicating that he signs it as an agent for and on behalf of principal or in a representative character, he is personally liable thereon but the mere addition to his signatures of words describing him as an agent or as filling a representative character does not exempt him from personal liability.
' Notwithstanding anything contained in subsection (1) any person signing a promissory note, bill of exchange or cheque for and on behalf of the principal is not liable to a person who induces him to sign upon the belief that the principal alone would be held lia.
15. The provisions of section 28 are clear and unambiguoble "us which clearly shows that if there are words indicating that the person signing a promissory note did so for an on behalf of principal or in representative capacity the person did not assume any personal liability by signing the promissory note. The promissory note shows that rubber stamp of the partnership firm is available on it and the appellant has signed the same being the Manager of the said firm which is further proved from the record that the appellant was operating the account of the firm under the mandate of firm maintained with Emirates Bank International. No doubt under first part of section 28 the executant of a promissory note cannot absolve himself from personal liablity merely on the ground that there are words added to a signatures which indicate that he was acting as an agent or in representative capacity but the beneficiary of the promissory note has to prove this intention of the executant. In the present case, the executant is admittedly employee of firm Muhammad Younas & Co. He was acting as Manager Accounts of the said firm and further, the firm has allowed him to operate their accounts maintained with the Bank. It is not the case of the firm that the amount of Rs,2,00,000 alleged loan was embezzled by the appellant or he was not credit to their account. The respondent/plaintiffs own admissions are sufficient to disprove their claim against the appellant when he admits that the appellant was an employee of firm Muhammad Younas & Co. They allowed loan to Muhammad Younas and Co. In the plaint, respondent No,1 has admitted categorically that promissory note dated 14-9-1988 was executed upon which the defendant No,3 (Appellant) affixed his signatures on behalf of the firm i.e respondent No,2 and stamp of the firm has also been affixed. This admission on behalf of respondent No,1 is sufficient to absolve the appellant from the alleged liability.
16. From the above said facts, it is established that appellant had not assumed any personal liability by executing the promissory note. In view of the above, both the courts below have failed to consider the evidence produced by the parties and decreed the suit against the appellant instead of the real recipient and beneficiary of loan i,e,, respondents Nos.1 and 2. The dismissal of suit against the defendants Nos.1 and 2 is against the facts and law and the decree passed against the appellant is alien to the facts and law and as such, the same are set aside and the suit is dismissed against the appellant with costs.