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2010 DIGILAW 572 (AP)

Srirama Warehouses, a registered Partnership Firm, rep. by its Partner v. Edulakanti Narasimha Reddy (died) per L. Rs.

2010-07-06

L.NARASIMHA REDDY

body2010
JUDGMENT A firm, by name, Srirama Warehouses, with Sri C.Manohar Reddy, P.Chengal Reddy and S.Narasimha Reddy, as partners, was constituted. It had transactions with one Sri E.Narasimha Reddy. Two loans are said to have been advanced to E.Narasimha Reddy for construction of go-down and purchase of tractor. 2. The firm, represented by its partner Sri S.Narasimha Reddy, filed O.S.No.778 of 1992 in the Court of IV Additional Judge, City Civil Court, Hyderabad, against E.Narasimha Reddy, for recovery of Rs.1,21,368/-. The suit was transferred to the Court of XI Additional Chief Judge, (Fast Track Court), City Civil Court, Hyderabad, and it was renumbered as O.S.No.295 of 2006. The sole defendant died and his legal representatives - respondents 2 to 4 herein were brought on record. During the pendency of that suit, the firm was dissolved and it is stated that the amount due from E.Narasimha Reddy under two transactions was assigned to the share of Sri C.Manohar Reddy (PW.1), one of the partners. He has independently filed O.S.No.101 of 2004 in the same Court against the legal representatives of E.Narasimha Reddy, for recovery of the amount said to have been advanced for construction of go-down. He has also prosecuted O.S.No.295 of 2006. 3. Respondents 2 to 4 herein contested the suits. Through its common judgment, dated 30.06.2009, the trial Court dismissed O.S.No.295 of 2006 and partly decreed O.S.No.101 of 2004. This appeal is filed against the judgment and decree in O.S.No.295 of 2006. 4. The appellant contends that the trial Court proceeded on a wrong notion that on dissolution of the firm, the suit cannot be continued, unless any procedural steps were taken. It is stated that the amount covered by the suit was assigned to the share of PW.1, and Section 47 of the Partnership Act (for short 'the Act') permits the proceedings to be continued, even after the firm is dissolved. 5. Smt. Manjiri S.Ganu, learned counsel for the appellant, submits that though the firm was dissolved during the pendency of the suit, Section 47 of the Act permits the partner, assigned with the rights, to continue the proceedings. She contends that a claim covered by a suit is a transaction, within the meaning of that term, used in Section 47 of the Act and that the view taken by the trial Court cannot be sustained. She contends that a claim covered by a suit is a transaction, within the meaning of that term, used in Section 47 of the Act and that the view taken by the trial Court cannot be sustained. She further submits that the suit claim was proved, on the basis of oral and documentary evidence and the 'trial Court ought to have decreed the suit. 6. Sri P.Pandu Ranga Rao, learned counsel for the respondents, on the other hand, submits that no steps were taken for amending the cause-title in the suit, after the firm was dissolved, and thereby, it became untenable even for a former partner of the firm, to continue the proceedings. He contends that DW.2, none other than the partner, who instituted the suit on behalf of the firm disowned the claim and the trial Court has arrived at just and proper conclusions. 7. The appellant, through a different partner, filed the suit for recovery of money against the deceased - 1st respondent. During the pendency of the suit, the 1st respondent died and his legal representatives were brought on record. Another development was that the firm was dissolved. The respondents opposed the suit claim. On the basis of the pleadings before it, the trial Court framed only one issue for its consideration, viz., "Whether the plaintiff is entitled for suit claim and interest as prayed for." 8. The suit was tried along with another suit being O.S.No.101 of 2004 and common evidence was recorded. On behalf of the appellant herein, PW.1 was examined and Exs.A.1 to A.23 were filed. On behalf of the respondents, DWs.1 and 2 were examined and Exs.B.1 and B.2 were filed. O.S.No.295 of 2006 was dismissed. Hence, this appeal. 9. In view of the submissions made by the learned counsel for the parties, the following points arise for consideration, viz., (a) "Whether it was competent for one of the partners of the firm to continue the suit filed by the firm, without taking any procedural steps? (b) Whether the suit claim was proved ?" 10. The suit was filed through one of its partner, by name Sri S.Narasimha Reddy at a time when the firm was in existence. During the pendency of the suit, the firm was dissolved and the suit claim is said to have been assigned to another partner, PW.1. (b) Whether the suit claim was proved ?" 10. The suit was filed through one of its partner, by name Sri S.Narasimha Reddy at a time when the firm was in existence. During the pendency of the suit, the firm was dissolved and the suit claim is said to have been assigned to another partner, PW.1. No steps were taken either for amendment of the cause-title or for bringing on record, factum of assignment of the suit claim in favour of PW.1. The trial Court took note of this and observed that the suit was not prosecuted by the person, who filed it. 11. In this regard, it becomes necessary to refer to certain provisions of C.P.C., which deals with the "parties to suit". Order I deals with the 'parties to suit' and Order XXII deals with the changes that take place as to the nature and composition of the parties, during the pendency of the suits. Rule 10(1) of Order I empowers the Court to substitute or add as plaintiff, any person, if it is found that the suit has been instituted in the name of a wrong person. Order XXII provides for contingencies, that ensue in the event of death, marriage, insolvency etc., of parties. 12. It is true that a partnership firm is not an independent personality and any partner can represent the interests of the firm in a Court. Where however, the firm is dissolved, the assets and interests, which were hitherto were held in common, get divided or allocated among the partners. With the dissolution of the firm, a partner can no longer represent the common interests of the firm. When a suit is instituted in the name of a firm, and if the firm is dissolved during the pendency of the suit, a situation akin to the one covered by Rule 3 of Order XXII C.P.C., gets attracted and it becomes necessary to take steps. The suit as such may not abate, but it cannot be proceeded with, unless the steps consequential to the dissolution of the firm are taken. Rule 10 of Order XXII' applies to cases where the suit claim is assigned during its pendency. The suit as such may not abate, but it cannot be proceeded with, unless the steps consequential to the dissolution of the firm are taken. Rule 10 of Order XXII' applies to cases where the suit claim is assigned during its pendency. It reads as under: "Procedure in case of assignment before final order in suit - (1) In other cases of an assignment, creation or devolution of any interest during the pendency of a suit, the suit may, by leave of the Court, be continued by or against the person to or upon whom such interest has come or devolved. (2) The attachment of a decree pending an appeal therefrom shall be deemed to be an interest entitling the person who procured such attachment to the benefit of sub-rule (1)." 13. Assuming that the suit claim came to be assigned in favour of PW.1, it became necessary for him to get necessary amendments to the claim, including the cause-title by invoking Rule 10(1) of Order I or Rule 10 of Order XXII. Admittedly, no such steps were taken. 14. Section 47 of the Act permits the suit filed by a firm to be continued, even after dissolution, subject to certain conditions. The provision reads as under: "Continuing authority of partners for purposes of winding up - After the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but the unfinished at the time of the dissolution, but not otherwise: Provided that the firm is in no case bound by the acts of a partner who has been adjudicated insolvent; but this proviso does not affect the liability of any person who has after the adjudication represented himself or knowingly permitted himself to be represented as a partner of the insolvent." 15. In Saligram v. Rajnath (1) AIR 1974 SC 1094 , the Hon'ble Supreme Court held that a claim in a suit filed by the firm pending at the time of its dissolution is a transaction within the meaning of Section 47 of the Act. Similar view was taken, by the High Court of Rangoon in Muthu K.M.Mayappa Chettyar v. Periah and others (2) AIR 1931 Rangoon 74. 16. Similar view was taken, by the High Court of Rangoon in Muthu K.M.Mayappa Chettyar v. Periah and others (2) AIR 1931 Rangoon 74. 16. Section 47 of the Act no doubt permitted PW.1 to continue the suit. However, he was under obligation to bring the necessary facts on record, namely, the assignment of the suit claim in his favour. He was also under obligation to seek amendment of the cause-title. It is not as if the suit claim was assigned in favour of the same partner, who instituted the suit. The suit was instituted by DW.2, whereas the suit claim is said to have been assigned in favour of PW.1. Therefore, it was not competent for PW.1 to continue the suit, without taking any steps consequent on the dissolution of the firm. 17. The second point touches the merits of the suit claim. Assuming that the assignment in favour of PW.1 was properly brought on record, it needs to be seen as to whether he proved the suit claim. His was the only oral evidence in the suit. That would have been sufficient, had the respondents admitted the claim. Whenever there was a strong denial of the suit claim, burden rested upon him to adduce further evidence to corroborate his version. No independent witness was examined either to prove the documents said to have been executed by late E. Narasimha Reddy or to speak about the said transaction. 18. An important aspect of the matter is that the suit was filed by one of the partners, viz., S.Narasimha Reddy and in the natural course of things, one expects him to support the suit claim, even, after assignment. Curiously in this case, he deposed as DW.2, and opposed the claim of PW.1. The trial Court appreciated the oral and documentary evidence and held that the claim is not proved. There are no convincing reasons to take a different view. 19. The appeal is accordingly dismissed. There shall be no order as to costs.