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Radhakaran Kabre Vs. Saifee Brothers - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai High Court
Decided On
Case NumberO.C.J. Award No. 61 of 1952
Judge
Reported inAIR1956Bom63; (1955)57BOMLR950
ActsCode of Civil Procedure (CPC), 1908 - Order 21, Rule 50 and 50(2) - Order 30, Rule 1 - Order 48-A, Rule 8; ;Partnership Act - Sections 28
AppellantRadhakaran Kabre
RespondentSaifee Brothers
Appellant AdvocateK.S. Shavaksha, Adv.
Respondent AdvocateN.A. Modi and ;K.K. Desai, Advs.
Excerpt:
.....order xxx, rule 1 - indian partnership act (ix of 1932), section 28--execution of decree against person as partner of defendant-firm against which decree obtained--plaintiff raising issue whether such person was or held himself (sic)oit to be partner of defendant-firm--triability of such issue in execution proceedings--doctrine of holding ou t-- construction. ;under order xxi, rule 50(2) of the civil procedure code, 1908, in determining the liability of a person against whom a decree is sought to be executed as being a partner in the firm against which the decree was obtained, the court, where such liability is disputed, can proceed with the matter as if it was trying and determining an issue in a suit filed against that person to hold him liable for the claim of the plaintiff against..........overlook that it has to be read along with order 30 of the code which deals with the mode of suing firms. rule 1 of that order provides that'any two or more persons .. being liable as partners -- may sue or be sued in-the name of the firm of which such persons were partners..' ordinarily a person becomes liable for the debts and obligations of a firm because he is a partner in that hrm. but a person who is not in fact a partner may become liable to another whom he has led to believe that he is a partner in that firm and to act on such belief. in such a case though not in point of fact a partner he is rendered liable to that other as a partner and 'ouod' that person regarded as one of the partners carrying on that business.section 28, partnership act reproduces this doctrine of 'holding.....
Judgment:

1. This is a chamber summons taken out by the plaintiffs for leave under Order 21. Rule 50, Civil P. C., to execute a decree on an award obtained by them in this Court against Akbar-ally Mulla Rasoolji, as a partner of the firm of Saifee Brothers, the defendants. The hearing of the summons was adjourned into Court. Mr. Shavaksha, learned counsel for the plaintiffs, has. asked me to raise an issue in the following form:

'Whether Akbarally Mulla Rasulji (The person sought to be held liable was, or held himself out to be, a partner in the defendant firm.'

2. Mr. Mody, learned counsel for Akbarally Mulla Rasoolji, has urged that such a wide issue cannot be raised in proceedings under Order 21, Rule 50, of the Code. It will be convenient to set out Sub-rule (2) Of Order 21, Rule 50 :

'Where the decree-holder claims to be entitled to cause the decree to be executed against any person other than such person as Is referred to in Sub-rule (1), Clauses (b) and (c), as being a partner in the firm, he may apply to the Court which passed the decree for leave, and where the liability is not, disputed, such Court may grant such leave, or, where such liability is disputed, may order that the liability of such person be tried and determined in any manner in which any issue in a suit may be tried and determined.'

3. It was argued that these are execution proceedings and this sub-rule empowers the Court only to decide the question whether the person against whom the decree is sought to be executed was a partner in the firm against' which the decree was obtained. Considerable stress was laid on the words 'as being a partner in the firm.' Now, there would have been some force in this argument if the words at the end of this sub-rule were not there.

The words 'where such liability is disputed, may order that the liability of such person be tried and determined in any manner in which any issue in a suit may be tried and determined' at the end of the sub-rule Indicate that what the Court has to determine in proceedings under Order 21, Rule 50, is the question of liability of such a person as a partner. Not only that taut these words at the end of the sub-rule clearly indicate that in determining the liability of any such person the Court will proceed with the matter as if it was trying and determining an issue in a suit filed against that person to hold him liable for the claim of the plaintiffs against the firm.

It is not possible, therefore, to acquiesce in the argument that the only material words to be considered are 'as being a partner in the firm' and on which learned counsel has strongly leaned. The liability of a person would arise not only on the ground that he was in fact a partner in the defendant firm against which the decree was obtained but liability may be foisted on him also on the ground of his having held himself out as a partner in that firm.

The argument had inevitably to go to the length of suggesting that if a plaintiff obtained a decree in a suit against a firm and wanted to execute that decree under Order 21, Rule 50, he could execute that decree only against persons who were In fact partners in the firm and not against any person who had held himself out as a partner in that firm.

If the plaintiff desired to recover the amount of his claim in any such suit against a person on the ground of holding out, it was incumbent on, him to join such person as a party defendant to the suit and plead that he was liable if not as a partner in any event on the ground of holding himself out as a partner. Or else, so the argument proceeded, he would have to file another suit against that person asking for a declaration that he had held himself out as a partner.

4. In construing this sub-rule one must not overlook that it has to be read along with Order 30 of the Code which deals with the mode of suing firms. Rule 1 of that Order provides that

'Any two or more persons .. being liable as partners -- may sue or be sued in-the name of the firm of which such persons were partners..' Ordinarily a person becomes liable for the debts and obligations of a firm because he is a partner In that hrm. But a person who is not in fact a partner may become liable to another whom he has led to believe that he is a partner in that firm and to act on such belief. In such a case though not in point of fact a partner he Is rendered liable to that other as a partner and 'ouod' that person regarded as one of the partners carrying on that business.

Section 28, Partnership Act reproduces this doctrine of 'holding out' which is a part of thelaw of estoppel. Therefore, there is some support to be derived from the language of Order. 30, Rule 1 of the Code, and Section 28, Partnership Act for giving full meaning and effect to the words at the end of the sub-rule under consideration.

The words 'liable as partners' and 'liable as a partner' used in those two provisions' accentuate the ambit of the issue to be tried under Order 21, Rule 50 of the Code. It appears to me to be contrary to the law in principle to compel multiplicity of suits in a case of like nature because by suing a firm one sues all persons who were liable as partners-

To my mind a not uncritical reading of Sub-rule (2) of Order 21, Rule 50, shows that the intention of the Legislature was to obviate the necessity of

any fresh suit when question arises whether a person is to be held liable for the claim of the plaintiff against a firm and the claim has been merged in the decree obtained by the plaintiff against the firm.

The very purpose of the words at the end of this sub-rule seems clearly to be that there is no necessity in such a case of a second suit being filed. The Issue is to be tried in execution proceedings. I am not aware of any principle or any authority In support of the contention raised by Mr. Mody.

5. I have so far considered the question apart from authority. My attention has not been drawn by learned counsel on either side to any decision under the Code where this question arose for the determination of any Court in India. Reliance was, however, placed by Mr. Shavaksha on a decision of the Court of Appeal in England, -- 'Davis v. Hyman and Co.' (1903) 1 KB 854 (A), where this very question about the appropriate issue to be raised in such proceedings in execution came up for consideration.

No doubt that question arose in a proceeding under Order 48-A Rule 8, Rules of the Supreme Court in England, but a perusal of that rule shows that that rule is in 'part materia' with Order 21, Rule 50, Civil P- C., except that the words there used are 'as being a member of the firm'. In that case the facts were similar to the facts in the case before me. The question came up, before the Master and he directed the following issue to be tried.

'The question to be tried shall be whether the said X. Y. Z. was, or had held himself out as, a partner in the defendant firm.'

On appeal the learned Judge who tried, the matter reversed the order and directed that the issue to be tried shall be:

'Whether the said X, Y, Z, was at the date ..... a member of the defendant firm.....'

On a further appeal the order made by the learned Judge was reversed and the order of the Master was restored. All the three learned Lord Justices who decided the appeal agreed in the view that the Issue should include the question of the trial of the liability of the person sought to be held liable also on the ground of holding out. I am in respectful agreement with the view taken by the learned Lord Justices. The following issue will, therefore, be raised:

'Whether Akberally Mulla Rasulji was, or held/ himself out as a partner In the defendant firm of Salfee Brothers.'

V.S.B.

6. Issue raised.


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