V. TRIBHOVANDAS and COMPANY v. HASMUKHLAL JAYANTILAL
1966-12-01
N.G.SHELAT
body1966
DigiLaw.ai
N. G. SHELAT, J. ( 1 ) THE suit from which this revision application arises was instituted in the Court of Small Causes at Ahmedabad by the plaintiffrespondent firm for recovering a sum of Rs. 679/with future interest and costs of the suit against the defendant-petitioner inter alia alleging that the defendant-firm had purchased goods worth Rs. 1344-78 np. from the plaintiff-firm on or about 21st January 1959 and that after having appropriated the sum of Rs. 759/realised by sale of the goods sent by the defendant on 4th July 1959 towards its dues was obliged to file suit for the balance remaining due from the defendant-firm. In the plaint it was alleged that the amount for the cloth purchased by the defendant-firm was to be paid in Ahmedabad and the transaction was agreed to be subject to Ahmedabad jurisdiction. ( 2 ) THE defendant-firm resisted the suit as per the contentions raised in its written statement Ex. 17. While admitting to have purchased the cloth from the plaintiff-firm it has stated that the goods were sent to the plaintiff-firm in full satisfaction of the amount due and thus therefore the plaintiffs claim was duly satisfied. The defendant-firm further denied that the Ahmedabad Court had jurisdiction to hear the suit inasmuch as the transaction had not taken place in Ahmedabad and that there was no agreement to make the payment of the amount due from it at Ahmedabad. Besides the defendant-firm contended that the suit was not maintainable and that the plaintiff-firm had no right to sue against the defendant. ( 3 ) THE learned Judge of Small Causes Court found on a consideration of the evidence before him that the defendant has failed to prove that the goods were given to the plaintiff in full satisfaction of the plaintiffs dues; that after deducting the amount realised by sale of goods sent by defendant-firm Rs. 660/were in all due to the plaintiff; that the suit was maintainable in the name of the firm; that the Court has jurisdiction to try the suit as the payment was made in Ahmedabad; and in the result he passed a decree for the sum of Rs. 660/against the defendant together with interest on Rs. 600/at the rate of 4% from the date of the suit till payment and costs. The amount was made payable in monthly instalments of Rs.
660/against the defendant together with interest on Rs. 600/at the rate of 4% from the date of the suit till payment and costs. The amount was made payable in monthly instalments of Rs. 50/commencing from 10th March 1962 and in default of payment of any two instalments the plaintiff was entitled to recover the whole of the balance then due at once. Feeling dissatisfied with that judgment and decree passed on 2-2-1962 by Mr. A. M. T. Waqif Judge Small Causes Court at Ahmedabad the defendant-firm has come in revision. ( 4 ) MR. Shah the learned advocate for the petitioner raised two points before this Court. The first was that the trial Court was in error in holding that the suit filed in the name of the firm Ms. Hasmukhlal Jayantilal was maintainable inasmuch as it does not comply with provisions contained in O. 30 R. 1 of the Civil Procedure Code and that the Court had no jurisdiction to try the suit as mere sending of goods towards the satisfaction of its debt by the defendant-firm to the plaintiff-firm at Ahmedabad. cannot confer any jurisdiction in the Court at Ahmedabad as found by the learned Judge. ( 5 ) AS to the first contention it was urged by Mr. Shah that the firm is not a legal entity or a juristic person and therefore no suit in the name of a firm as such can lie. The suit must either be in the name of all partners of the firm and if provisions of O. 30 R. 1 of the Civil Procedure Code were to be availed of a least two or more of the partners of the firm must have been shown as representing the firm either at the top or in the body of the plaint. Since that has not been done and as only one out of eight partners has signed the plaint the suit as brought in the name of the firm itself would not be maintainable. The plaintiff-firm consists of eight partners and while suit is filed only in the name of the firm the plaint has been signed and verified by one of its partners only. The firm is a registered one but that does not make any difference.
The plaintiff-firm consists of eight partners and while suit is filed only in the name of the firm the plaint has been signed and verified by one of its partners only. The firm is a registered one but that does not make any difference. Now it is true that the firm is neither a corporate body nor a legal entity which can file a suit in its name and if it were to be so filed in the name of a firm the provisions contained in O. 30 R. 1 of the Civil Procedure Code have to be fulfilled as they are in a way a departure from the normal rule of having to file a suit by all the joint promisees in respect of any claim against the defendant as contemplated under sec. 45 of the Indian Contract Act. The question then is whether those provisions are complied with. ( 6 ) O. 30 R. 1 sub-rules (1) and (2) run thus :1 (1) Any two or more persons claiming or being liable as partners and carrying on business in India may sue or be sued in the name of the firm (if any) of which such persons were partners at the time of the accruing of the cause of action and any party to a suit may in such case apply to the Court for a statement of the names and addresses of the persons who were at the time of the accruing of the cause of action partners in such firm to be furnished and varified in such manner as the Court may direct. (2) Where persons sue or are sued as partners in the name of their firm under sub-rule (1) it shall in the case of any pleading or other document required by or under this Code to be signed verified or certified by the plaintiff or the defendant. suffice if such pleading or document is signed verified or certified by any one of such persons. Then Rule 2 sub-rules (1) (2) and (3) provide as under :2 (1) Where a suit is instituted by partners in the name of their firm the plaintiffs or their pleader shall on demand in writing by or on behalf of any defendant forthwith declare in writing the names and places of residence of all the persons constituting the firm on whose behalf the suit is instituted.
(2) Where the plaintiffs or their pleader fail to comply with any demand made under sub-rule (1) all proceedings in the suit may upon an application for that purpose be stayed upon such terms as the Court may direct. (3) Where the names of the partners are declared in the manner referred to in sub-rule (1) the suit shall proceed in the same manner and the same consequences in all respects shall follow as if they had been named as plaintiffs in the plaint : provided that all the proceedings shall nevertheless continue in the name of the firm. ( 7 ) MR. Shahs reading of sub-rule (1) of Rule 1 of Order 30 was that the plaint should have been filed by two or more persons who are partners of the firm which brings the suit and since it makes no mention of this fact at the top of the plaint along with the name of the firm and it contains no such recitals disclosing the names of those two or more persons the plaint cannot be entertained as the suit is not properly filed in the name of the firm. On the other hand it was urged by Mr. Sheth that the provisions contained in O. 30 R. 1 do not say that two or more persons must join in filing the suit in the name of the firm. According to him these provisions are enabling ones and serve as exception to the rule in sec. 45 of the Indian Contract Act and that under a special procedure provided in the provisions contained in O. 30 of the Civil Procedure Code a suit in the name of a firm can be brought even by one of its partners and when the suit is brought in the name of the firm itself it has to be taken as one brought on behalf of all its partners. In support of this reliance was however placed by him on a case of Bhadreswar Coal Supply Co. v. Satis Chandra Nandi and Co. and others A. I. R. 1936 Calcutta 353.
In support of this reliance was however placed by him on a case of Bhadreswar Coal Supply Co. v. Satis Chandra Nandi and Co. and others A. I. R. 1936 Calcutta 353. ( 8 ) NOW apart from authority if we turn to rule 1 of Order 30 Civil Procedure Code it nowhere lays down that if the suit were to be brought in the name of the firm it has to show two or more of the partners of that firm joined as plaintiffs so as to justify the suit being brought in the name of the firm. The words any two or more persons claiming. . as partners and carrying on business in India may sue or be sued in the name of the firm (if any) of which such persons were partners at the time of the accruing of the cause of action contemplate the simple fact that a suit can be brought in the name of a firm provided that it has two or more persons as partners claiming as partners and carrying on business in India and that again at the time of the accruing of the cause of action. Sec. 4 defines partnership and as stated in part 2 thereof persons who have entered into partnership with one another are called individually partners and collectively a firm and the name under which their business is carried on is called the firm name. Now an individual may even carry on his business in the name of a firm. A partnership firm requires two or more persons and if those partners are more than twenty as contemplated under sec. 11 (2) of the Indian Companies Act it becomes a company requiring to be registered under the Indian Companies Act Thus if a suit is to be brought in the name of a firm it must be a firm having two or more partners i. e. less than twenty persons and secondly they must be carrying on business in India at the time when cause of action accrued against the person sued. It is not that two persons in the minimum must file the suit in the name of the firm. The words or more persons would become then meaningless. They are intended to relate to the kind of a firm viz.
It is not that two persons in the minimum must file the suit in the name of the firm. The words or more persons would become then meaningless. They are intended to relate to the kind of a firm viz. of having certain number of partners and thereby negativing a suit in the name of a firm by a single proprietor thereof. It is an enabling provision and it permits a suit being filed in the name of the firm as against even a firm in its name as defendant provided conditions referred to therein are fulfilled. Besides O. 30 R. I of the Civil Procedure Code says nowhere that any two or more persons must join as plaintiffs while filing a suit. If what Mr. Shah contended were to prevail then sub-rule (2) of Rule 1 of Order 30 would have been to the effect that those two or more persons filing a suit in the name of the firm should have signed verified or certified the pleadings in the plaint. All that it says however is that any one of such persons who happen to be the partners of that firm can sign verify or certify the pleadings. Then O. 30 R. 2 sub-rule (1) says that where a suit is instituted by partners in the name of their firm the plaintiffs or their pleader shall on demand in writing by or on behalf of any defendant forthwith declare in writing the names and places of residence of all the persons constituting the firm on whose behalf the suit is instituted. The defendant has been thus given a right to require the plaintiff to disclose the names of the partners as also the places of residence and till such time that they are supplied the suit is required to be stayed. It is only after such a declaration is made as required under sub-rule (1) of rule 2 of Order 30 that the suit shall proceed in the same manner and the same consequences in all respects shall follow as if they had been named as the plaintiffs in the plaint provided that all the proceedings shall nevertheless continue in the name of the firm. It is thus abundantly clear that if the partners of any firm contemplated under sec.
It is thus abundantly clear that if the partners of any firm contemplated under sec. 4 of the Indian Partner ship Act were to file a suit by following the provisions contained in O. 30 of the Civil Procedure Code it has to be filed in the name of the firm and it can then be said to be a suit on behalf of all the partners in the firm. It is by reason of these provisions that a legal fiction is created whereby they permit a firm to sue or be sued in the firm name as if it were a corporate body as observed in a case of Her Highness Maharani Mandalsa Devi v. M. Ramnarain Private Ltd. 68 Bom. L. R. 31 (S. C. ). ( 9 ) IT appears from the observations in the case of Bhadreswar Coal Supply Co. v. Satis Chandra Nandi and Co. and others A. I. R. 1936 Calcutta 353 that the provisions of O. 30 R. 1 have been taken from the provisions of O. 48-A of the Rules of the Supreme Court and a question of similar character came to be considered by the Court of appeal in England in (1908) 2 K. B. 57g (1 ). In that case two persons Seal and Edgelow constituted a firm of attorneys carrying on business under the name and style of Seal and Edgelow. Kingston was a client of theirs and the said firm had a claim against him. Edgelow did not desire that an action should be brought or proceeded with against Kingston but Seal contended that the firm had a good case and thought that they ought to sue Edgelow refused do join in the suit. On the Seal instituted the suit in the name of the firm viz. Seal and Edgelow. The defendant made an application which was granted by the Court by which he required the plaintiffs to make a further affidavit of documents in their possession within one month. Seal made the affidavit of documents and he served a copy of the order on Edgelow. Edgelow neglected to swear to an affidavit of documents whereupon Seal took out summons to commit Edgelow for contempt of Court in not obeying the order of the Court requiring a further affidavit of documents by the plaintiffs.
Seal made the affidavit of documents and he served a copy of the order on Edgelow. Edgelow neglected to swear to an affidavit of documents whereupon Seal took out summons to commit Edgelow for contempt of Court in not obeying the order of the Court requiring a further affidavit of documents by the plaintiffs. Ridley J. refused to make an order on this summons on the ground of want of jurisdiction whereupon Seal preferred an appeal to the Court of appeal. One of the questions raised in the Court of appeal was whether a suit could be instituted in the firms name under the provisions of O. 48-A of the Rules of the Supreme Court by one of the two partners the other partner refusing to sue. Sir Gorell Barnes decided that a suit could be instituted. At p. 582 of the report he makes the following observations :in my opinion the learned Judge had jurisdiction to make the order. It is clear upon the authority of 2 C and M 318 (2) that Seal had the right as one of the partners in the firm to use the name of the other partner for the purpose of bringing an action to recover a debt dun to the firm on giving his partner an indemnity against costs. As was said be Bayley B in the case referred to one of the several partners has a clear right to use the names of the other partners. If they object to their names being used they may apply for an indemnity against costs to which they might be subjected by the use of their names. In the present case an indemnity was given and Seal was taking the proper steps to carry on the action but Edgelow refused to assit him in the matter by making the further affidavit of documents which the plaintiff been ordered to make. Applying those observations the Calcutta High Court found that the suit which has been instituted by Manik Lal Roy in the name of the firm Bhadreswar Coal Supply Company is a good suit. To such a suit the other partners of Manik Lal Roy who have refused to join are not necessary parties in the sense that they ought to have been named in the cause title and served with summons of the suit.
To such a suit the other partners of Manik Lal Roy who have refused to join are not necessary parties in the sense that they ought to have been named in the cause title and served with summons of the suit. Thus the provisions of O. 30 which have their basis on O. 48-A of the Rule of the Supreme Court can well be understood to mean that a suit in the name of a firm can be maintained even by one of its partners. The suit can be said to be on behalf of all its partners though no doubt only one of them has signed verified or certified the pleadings in the plaint. ( 10 ) ANOTHER case relied upon by Mr. Sheth the learned advocate for the respondent was one of Messrs. Ram Kumar Ram Chandra v. The Dominion of India A. I. R. 1952 Allahabad 695 where it was held that even though a firm has got no legal entity and as a firm it is not entitled to institute a suit a suit can be filed by the firm in accordance with the provisions contained in O. 30 and when such a suit is instituted the firm is to be described as A. B. a firm carrying on business in partnership at a particular place. Such a suit is really a suit by the partners of the firm collectively. The next case relied upon by Mr. Sheth was one of Hari Singh v. Firm Karam Chand Kanshi Ram A. I. R. 1927 Lahore 115. In that case it was observed that sec. 45 of the Indian Contract Act which provides that one of two joint promisees cannot claim a right of performance of a contract without joining his co-promisee or upon the latters death his representative has been modified by the provisions of O. 30 of the Code of Civil Procedure (Act 5 of 1908 ). Then after referring to rule 1 of Order 30 which provides that partners may sue or be sued in the name of the firm of which they were partners at the time of the accruing of the action it refers to rule 4 of the same Order which provides that notwithstanding anything contained in sec.
Then after referring to rule 1 of Order 30 which provides that partners may sue or be sued in the name of the firm of which they were partners at the time of the accruing of the action it refers to rule 4 of the same Order which provides that notwithstanding anything contained in sec. 45 of the Indian Contract Act where two or more persons may sue or be sued in the name of a firm and any of such person dies whether before the institution or during the pendency of any suit it shall not be necessary to join the legal representative of the deceased as a party to the suit. Then it is said that Order 30 of the Civil Procedure Code enables a firms name to be used instead of the names of the partners composing that firm as a convenient method for denoting the persons who constitute the firm at the time when the name is used and therefore when a suit is brought in the name of a firm it is precisely as though it were brought in the name of all the partners. By using the name of the firm the effect is to bring all the partners before the Court and Order 30 rule 4 permits a partner to sue in his character though some of his co-partners may have died before the suit was instituted and if the suit has been instituted permits it to be continued without the joinder of the legal representatives of a partner who may have died during its pendency. But these rules only apply when suits are brought in a firms name. ( 11 ) IN a case of Maharani Mandalsa Kumar Devi and others v. M. Ramnarain Private Ltd. and others A. I. R. 1959 Bombay 529 it was held that when a suit is filed in the name of a firm the true position is that for all purposes barring certain exceptions the suit must be treated as operating as a suit and effective as a suit filed against all the partners in their individual names. A firm is not a legal entity or a person. A firm name is merely a label given for convenience to describe and refer to persons who have agreed to carry on business in partnership.
A firm is not a legal entity or a person. A firm name is merely a label given for convenience to describe and refer to persons who have agreed to carry on business in partnership. It is not a juristic person and when reference is made to a firm it is really to the individual partners who constitute that firm. The latter observations of this case completely give a reply to the argument advanced by Mr. Shah that since firm is not a legal entity or that it is not a juristic person and that therefore it cannot sue would be clearly wrong. But more than that we find the observations of the Supreme Court when that case went in appeal before the Supreme Court reported in 68 Bom. L R. 31 (S. C. ). They are that the legal fiction contained in O. XXX of the Civil Procedure Code 1908 permits a firm to sue or be sued in the firm name as if it were a corporate body. But the legal fiction must not be carried too far. For son purposes the law has extended a limited personality to a firm but the firm is not a legal entity. Then they have said that the persons who are individually called partners are collectively called a firm and the name under which their business is carried on is called the firm name. A suit by or in the name of a firm is thus really a suit by or in the name of all its partners. So also a suit against the firm is really a suit against all the partners of the firm. Then that have held that the decree passed in the suit though in form against the firm is in effect against all the partners. Thus the principle laid down in this case goes far further in saying that a legal fiction is created by reason of the provisions contained in O. 30 of the Civil Procedure Code where much though a firm is not a legal entity or not a juristic person it permits a firm to sue or be sued in the firm name as it it were a corporate body. These observations at rest the contention sought to be raised by Mr.
These observations at rest the contention sought to be raised by Mr. Shah that a suit in the name of a firm is not maintainable and that it cannot be said to be a suit on behalf of all its partners. I was lastly pointed out the unreported decision of the Division Bench of this Court where similar argument was advanced in First Appeal No. 192 of 1960 The judgment thereof came to be delivered on 1st August 1961. The contention was that the suit is filed in the name of firm and the plaint has been signed by one partner only. According to Mr. Oza who appeared for the appellant the plaint should have been filed by two or more persons who are partners of the firm which brings a suit and as the plaint does not mention that fact nor does it mention the names of two or more persons who bring the suit the plaint cannot be entertained and therefore the suit must fail. That contention was on the basis of the same reading as Mr. Shah tried to read Rule 1 of Order 30 of the Civil Procedure Code. The Division Bench herd that there was no substance in that contention as O. 30 R. 1 of the Civil Procedure Code enables any two or more persons to sue in the name of a firm and thus provided as if it were an exception under sec. 45 of the Indian Contract Act. In other words the reference to any two or more persons is indicative of the partners who form the firm and any of those partners who may be two or more in the case of a firm can sue in the name of a firm so as to be a suit on behalf of all its partners. In that event it is not necessary to name those partners either in the heading of the plaint or even in the body of the plaint for the simple reason that rule 2 of Order 30 amply provides a safeguard whereby on a demand made by the defendant the plaintiff is bound to supply the names and places of residence of all the partners of that firm and unless that is supplied the suit does not proceed so as to be finally effective and binding on all the partners of the firm. The contention of Mr.
The contention of Mr. Shah therefore cannot stand and that the suit as it stands is perfectly in order. [the rest of the judgment is not material for the reports] application dismissed. .