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Rehmankhan Dawoodkhan and ors. Vs. Bombay Iron Syndicate - Court Judgment

LegalCrystal Citation
SubjectContract;Civil
CourtMumbai High Court
Decided On
Case NumberO.C.J. Suit No. 1206 of 1947
Judge
Reported inAIR1953Bom23; (1952)54BOMLR714
ActsCode of Civil Procedure (CPC), 1908 - Order 21, Rule 50 - Order 30, Rules 3, 5, 6 and 8 - Order 48A - Rule 7
AppellantRehmankhan Dawoodkhan and ors.
RespondentBombay Iron Syndicate
Appellant AdvocateS.T. Desai, Adv.
Respondent AdvocateM.V. Desai and ;M.R. Parpia, Advs.
Excerpt:
civil procedure code (act v of 1908), order xxx, rules 3, 6, 8 - appearance filed under protest by person served as partner of defendant firm, denying that he is partner--whether such person can move court to adjudicate upon his denial.;when an appearance is filed under protest under order xxx, rule 8, of the civil procedure code, 1908, by a person served with summons as a partner of the defendant firm, the option is entirely with the plaintiff either to serve the firm otherwise, reserving liberty to prove that the party appearing under protest was in fact a partner of the defendant firm in execution proceedings, or to take out a summons for adjudication of his claim that the person so served as a partner was really a partner of the defendant firm. if the plaintiff does not apply for a..........under protest that he is not a partner.[6] order 30, rule 6, civil p. c,, provides :'any person served with summons as a partner under rule 3 may appear under protest, denying that be is a partner, but such appearance stall not preclude the plaintiff from otherwise serving a summons on the firm and obtaining a decree against the firm in default of appearance where no partner has appeared.'therefore, when an appearance is filed under protest the plaintiff has either to disregard the appearance of the person appearing under protest and to effect a fresh service of summons upon other partners of the firm or the managers of the firm as provided under order 30, rule 3, clause (b), or he may insist that the person served as a partner of the defendant firm is a partner of the.....
Judgment:
ORDER

[1] These two chamber summonses are taken out by Messrs. Shah Traders, a firm doing business at North Brook Street in Bombay, and Messrs. Shriram Murlidhar, a firm carrying on business at Kalbadevi, Bombay, for a direction vacating the order passed by me on 13-4-1951, granting leave to servo a warrant issued by the Commissioner for. Taking Accounts and to serve notice under Order 30, Rule 5, Civil P. C., and for an order that the issue, whether the applicants are partners in the defendant firm, be directed to be tried, and that ail further proceedings before the Commissioner pending the hearing and final disposal of the issue be stayed.

[2] In order to understand the nature of the application it is necessary to notice a few facts. One Rehmankhan Dawoodkhan, who will hereafter be referred to as'the plaintiff, filed suit No. 1206 of 1947 in this Court against tne Bombay Iron Syndicate, a firm carrying on business at Vithalbhai Patel Road, Bombay, hereinafter referred to as the defendants, seeking to obtain a decree for Rs. 89,183-15-0 as damages for breach of contract by the defendants, and for Rs. 5,000 being an amount deposited with the defendants, with interest thereon at the rate of 6 per cent, per annum from 18-12-1946, till the date of the decree. The summons of the suit was served upon one Hiralal L. Sharma as partner of the firm with notice under Order 30, Rule 5, Civil P. C. The defendants appeared through Messrs. Mobile Parekh & Co. in the suit, and filed their written statement and counterclaim on 15-0-1947. The plaintiff filed his reply to the counterclaim denying his liability in the counterclaim. The attorneys for the defendants thereafter obtained their discharge on 17-3-1950. Thereafter Hiralal L. Sharma died in about the middle of October 1950, but no intimation was given to the Court about the death of Sharma. The suit then came on for hearing on 14-12-1950. The counterclaim being for an amount less than Rs. 25,000 was dismissed as not maintainable in this Court, and the suit was tried as an uncontested suit. A decree for return of the amount of deposit of Rs. 5,000 with interest was passed. The claim of the plaintiff for damages on the footing that there was a breach of contract on 17-2-1947, was referred to the Commissioner for Taking Accounts. On 23-1-1951, the reference was filed before the Commissioner for Taking Accounts.

The plaintiff thereafter obtained an order for service of warrant, and accordingly a warrant-was served upon four persons; they wore (1) Satdev Saigal, (2) Messrs. Shriram Murlidhar, (3) Messrs. Shah Traders, and (4) Jagmohan Pranlal Bhuta, alleged to be four partners in the defendant firm. Thereafter Jagmohan Pranlal Bhuta appeared before the Commissioner for Taking Accounts and contended that ho was not a partner of the defendants. The plaintiff ultimately applied under Order 30, Rule 5, Civil P. C., to serve notice on all the four persons whose names I have mentioned earlier, as partners of the firm. On 18-4-1951, an application was made to me in Chambers for an order for serving a warrant under Order 30, Rule 5, Civil P. C. The applicants in the two chamber summonses were thereupon served with warrant as partners of the defendant firm. The applicants appeared before the Commissioner for Taking Accounts and denied that they were partners of the defendant firm as alleged by the plaintiff. The Commissioner thereupon adjourned the meeting to enable the alleged partners of the defendant firm to move the Court; and thereafter the present two chamber summonses have been taken out by two out of the four alleged partners of the defendants.

[3] It has been contended by Mr. Section T. Desai on behalf of the applicants that steps to serve them should have been taken at the time when the summons in the suit was served and not after a preliminary decree was passed in favour of the plaintiff; and Mr. Desai has contended that the issue, whether the applicants were partners of the defendant firm, should be decided by the Court, and for that purpose the proceeding before the Commissioner should be stayed.

[4] Mr. M. Y. Desai on behalf of the plaintiff has resisted the two summonses.

[5] Under Order 30, Rule 3, Civil P.C., the summons in a suit against persons sued as partners in the-name of their firm may be served either upon any one or more of the partners, or at the principal place at which the partnership business is carried on within the Union of India, upon any person having, at the time of service, the control or management of the partnership business as the Court may direct, and the service so effected shall be deemed to be good service upon the firm so sued, whether all or any of the partners are within or without the Union of India. It appears that the summons in suit was served upon Hiralal L. Sharma as directed by the Court, find the necessary notice under Order 30, Rule 5, Civil P. C., was also served upon him. Sharma appeared in the suit and filed his written statement. By reason of the order directing service of the summons in suit upon one of the partners the defendants should be deemed to have been duly served. Sharma did not contend that he was not a partner of the defendant firm, nor does it appear that he filed any appearance under protest. As the defendants were duly served, the decree passed is not a nullity, and it is not so contended on behalf of the applicants.; The plaintiff made an attempt to serve the warrant upon the four alleged partners when it was pointed out by the Commissioner that the only person who had been served as a partner had died and there was nothing to show that the partnership had any notice of the passing of the preliminary decree. In my view, when the warrant was sought to be served together with notice under Order 30, Rule 5, Civil P. C., upon the four alleged partners, whose names I have set out earlier, the same consequence would ensue as if a summons in a suit was sought to be served, and any person who contends that he is not a partner would be entitled to file his appearance under protest that he is not a partner.

[6] Order 30, Rule 6, Civil P. C,, provides :

'Any person served with summons as a partner under Rule 3 may appear under protest, denying that be is a partner, but such appearance stall not preclude the plaintiff from otherwise serving a summons on the firm and obtaining a decree against the firm in default of appearance where no partner has appeared.'

Therefore, when an appearance is filed under protest the plaintiff has either to disregard the appearance of the person appearing under protest and to effect a fresh service of summons upon other partners of the firm or the managers of the firm as provided under Order 30, Rule 3, Clause (b), or he may insist that the person served as a partner of the defendant firm is a partner of the defendant firm and may apply to have the appearance of the defendant filed under protest struck out or to have the denial of the partnership struck out from the appearance of the defendant. The option is entirely with the plaintiff either to serve the firm otherwise, reserving liberty to prove that the party appearing under protest was in fact a partner of the defendant firm in execution proceedings, or to take out a summons for adjudication of his claim that the person so served as a partner was really a partner of the defendant firm. If the plaintiff does not apply for a summons for adjudication upon the denial of the party served as a partner, the latter has no right to move the Court to adjudicate upon his denial, before proceeding to decide the merits of the claim of the plaintiff. If the party served with the summons denies that ho is a partner, he has no right to contend alternatively that the firm is not liable for the claim of the plaintiff ; he is only entitled to resist the plaintiff's claim against the firm, if he admits that he is a partner of the firm. This incongruous position is the consequence of Order 30, Rule 6, Civil P. C. That rule provides:

'Where persons are sued as partner in the name of their firm, they shall appear individually in their own names, bat all subsequent proceedings shall, nevertheless continue in the name of the firm.'

Under that rule, a person served as a partner is entitled to appear individually in hia own name, but ail subsequent proceedings, including the written statement, must be in the name of the firm. Such a person cannot defend the suit, otherwise than on behalf of the firm, unless ho is sued individually also. In the absence of a provision enabling the person served to raise a contention as to his own liability as a partner while denying the liability under Rule 6, he has at the time of filing a written statement to make up his mind to adopt one of two alternative contentions.

[7] In Vithaldas v. Hansraj, 23 Bom. L. R. 1249 Macleod C. J,, regarded this situation as inequitable. His. Lordship observed (p. 1250) :

'. . . Order 30, Rule 8, is silent on the question whether a person appearing under protest has a right to have that question decided by the Court, or whether, if the plaintiff does not ask the Court by summons to have that question decided, he is bound to wait until the plaintiff having got a decree issues execution against him under Order 21, Rule 50. It seems to me that it is' contrary to the principles of equity that any person should be liable to have a claim of this kind hanging over him without being able to ask the Court to decide one way or the other whether or not he is liable to the claim.'

The learned Chief Justice was of the view that if the plaintiff does not take out a summons, and chooses to wait till he obtains a decree, before asking the Court to adjudicate upon the denial of the person sued, the person served has a right to have the question decided whether or not he is a partner of the defendant firm.

[8] With very great respect, it must be observed that the learned Chief Justice did not refer to the provisions of Order 30, Rule 6, Civil P. C., which compel the person served to make up his mind at the time of filing the written statement.

[9] Order 30, Rule 8, corresponded to Order 48A, Rule 7 Supreme Court Rules, before it was amended in 1929.

[10] In Weir & Co. v. McVicar & Co., (1925) 2 K. B. 127 it was held by the Court :

'In an action against a firm a person who, being served as a partner, enters an appearance under protest denying that he is a, partner in accordance with the provisions of Order 48A, Rule 7, is not entitled to dispute the liability of the firm, and consequently cannot obtain an order for as issue to try the question of his partnership before the other issues in the action.

Quare : whether a person served as a partner who appears unconditionally is entitled to dispute the fact of his partnership as well as the liability of the firm ?'

[11] In Nandlal Tribhovandas v. Baker Jafer & Co., 42 Bom. L. R. 935 Blackwell J. held :

'Under Order 30, Rule 8, Civil P. C., 1903, it is not competent to a person, who is served with a writ of summons as a partner and who has appeared under protest denying that he is a partner, to ask for the trial of an issue whether he was a partner, before the trial of other issues in the action.'

The learned Judge followed the decision in Weir & Co. v. McVicar & Co., (1925) 2 K. B. 127. The learned Judge considered the earlier decision of this Court in Vithaldas v. Hansraj, 23 Bom. L. R. 1249 and the judgment of the Court of appeal in Weir & Co. v. McVicar & Co., and pointed out that Sir Norman Macleod, who delivered the judgment in Vithaldas v. Hansraj, had taken a contrary view when sitting in appeal in a later case reported in Ramanujachary v. Pohooma Bros. 28 Bom. L. R. 1275 as is evident from the following passage (p. 1280):

'In any event the defendant entering an appearance under protest could not be entitled to ask for the trial of an issue whether he was a partner.'

[12] In Ajitsing v. Grunning & Co., 27 Bom. L. R. 993 Sir Norman Macleod himself pointed out the procedure to be followed when appearance was made by a partner where the defendants were sued as a firm. He stated :

'Under 0. 30, Rule 6, Civil P. C., when persons are sued as partners in the name of the firm, each partner has to appear individually and can put in a separate written statement, but each such written statement is the written statement of the firm.'

'When, however, a person is sued personally along wish the firm, it is open to him to put in a personal defence.' In that case Sir Norman Macleod characterized the provision of Order 30, Rule 6 as 'somewhat incongruous.'

[12a] Whatever may be the position, and whatever may be the inequity of requiring a person served as a partner of the defendant firm to make up his mind at the time when ho makes his defence, the effect of Rules 3, 6 and 8 of Order 30, Civil P. C., is that a person served as a partner of the defendant firm must either file an appearance under protest contending that he is not a partner of the defendant firm or he must appear as a partner of the firm and take proceedings in the suit as a partner and raise such contentions as would be open to a partner of the defendant firm. In that view of the case, I must hold that the applicants in these two summonses are not entitled to have the issue, whether they are partners of the defendant -firm, tried before a final decree is passed.

[13] It must, however, be observed that even though the Civil Procedure Code recognises a general right of making alternative or even inconsistent defences, as a result of Rules 3, 6 and 8 of Order 30, a person served as a partner of the defendant firm must, at the initial stage, when he is required to make a defence, either admit that ho is a partner or allow the decree to go against the firm on the merits, if the plaintiff chooses not to have the issue, whether the party denying that he was a partner of the defendant firm, decided in the suit. The plaintiff has an option of ignoring the protest of the person served as a partner and to have the summons served otherwise, and has a light to reserve his right to proceed against that party in execution or to have an issue raised by the party denying that he is a partner tried forthwith. Read ill conjunction with Rule 8 the provision of RULE 6 of Order 30 appears to be 'incongruous' as characterized by Sir Norman Macleod. It is difficult to see either justice or logic in allowing the plaintiff to postpone making up his final decision till the stage of execution, while at the same time denying a similar opportunity to the defendant. In conceivable cases the person served may genuinely be in doubt as to whether he is or was at the relevant date a partner of the firm which is sued as defendant and may seek an adjudication upon his contention. The provisions of Order 30, Rules 6 and 8, lay upon him a burden, which would certainly be regarded as unfair. He has either to admit that he is a partner and defend the suit as a partner, or to deny his alleged partnership in the defendant firm and to allow the claim to be decreed against the partnership without availing himself of any opportunity of defending the claim. Therefore, on general principles there is considerable force in the observations made by Sir Norman Macleod in Vithaldas v. Hansraj, 23 Bom. L.R. 1249.

[14] In England Rule 7 of Order 48a, Supreme Court Rules was amended in the year 1929; and it now stands as follows :

'Any person served as a partner under Rule (3) of this Order, Cut who denies that he was a partner or liable as such at any material time, may enter an appearance stating therein that he does so as 'a person served as a partner in the defendant firm, but who denied that he was partner at any material time.' Such appearance as long as it stands shall be treated as an appearance for the firm. If an appearance is so entered (A) the plaintiff may apply to set it aside on the ground that the person entering it was a partner or liable as such, or may leave that question to be determined at a later stage of the proceedings ; or (B) the person entering the appearance may apply to Bet aside the service on him on the ground that he was not a partner or liable as such ; or he may at the proper time deliver a defence denying either or both (1) his liability as & partner, (2) the liability of the defendant firm in respect of the plaintiff's claim. An order may on the application of either party at any time be made that the questions as to the liability of the person served and the liability of the defendant firm may be tried in such manner and at such time or times as the Court or Judge may think fit,' And in the commentary in the Annual Practice, 1349, vol. I. P. 914, it is stated under the heading B as follows :

'It will be observed that the person catering the appearance may adopt one of two courses. He may, in the first place, apply by summons to set aside service on the ground that he was not a partner or liable as such. On the return to the summons there may be a serious conflict of testimony. In that case the Court, exercising the power conferred by the last paragraph of the rule, may order an issue, but it is conceived that the issue would then have to be limited to the question whether 'he was a partner or liable as such.' In the second place, the person entering appearance may allow the action to proceed, and deliver a defence denying liability as a partner and/or the liability of the defendant firm. This defence having been delivered, plaintiff or defendant may apply for a special order pursuant to the last paragraph of the rule.'

In my view in order to avoid unnecessary hardship and in certain cases injustice which is likely to result to persons served as partners of a firm of which they are denying their partnership or liability, it is proper that Rule 8 of Order 30, Civil P. C., should be so amended as to enable the person served as a partner to have the issue tried at the trial. But so long as Rule 8 of Order 30 is not amended find a person served as a partner is required to make a defence in the name of the firm and he is not entitled to make any personal defence in addition to the defence on the merits of the claim, the present summonses must fail.

[15] Both the summonses are, therefore, dismissed. As regards costs, the normal rule, that costs follow the event, should be followed in this case also. The applicants in both the chamber summonses will pay the plaintiff's costs.

[16] Applications dismissed.


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