Skip to content


Mathuradas Canji Matani Vs. Ebrahim Fazalbhoy - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 85 of 1926 and Suit No. 872 of 1927
Judge
Reported inAIR1927Bom581; (1927)29BOMLR1296
AppellantMathuradas Canji Matani
RespondentEbrahim Fazalbhoy
DispositionAppeal dismissed
Excerpt:
civil procedure code (act of 1908), order xxx rules 3, 4; order xxi, rule 50-indian contract act {ix of 1872), sec, 45-partnership-death of partner-dissolution of partnership-knowledge of plaintiff-suit against firm-decree in suit operates against share of deceased partner in the firm-decree ineffectual against private estate of deceased unless his legal personal representatives are made parties to the suit.;where a plaintiff brings a suit to recover a debt from a partnership firm as such, but the firm has been dissolved by the death of a partner to the knowledge of the plaintiff prior to the suit, a decree passed in the suit binds only the deceased's interest in the partnership assets, if it is bought to fix liability on the private estate of the deceased partner, it is necessary to add.....amberson marten, kt., c.j.1. this appeal from the judgment of mr. justice rangnekar raises an interesting point of partnership law, which has been excellently argued by counsel on both sides. the question is whether, when a plaintiff brings a suit for debt against a partnership firm as such, but the firm has been dissolved to the knowledge of the plaintiff prior to the suit, it is necessary to add the legal personal representatives of the deceased partner as parties, in order to enable execution to be levied against the estate of the deceased partner. it is conceded that the partnership assets may be taken in satisfaction of a decree in a suit so framed. but can the estate of the deceased partner be reached irrespective of his share in the partnership assets mr. justice rangnekar held.....
Judgment:

Amberson Marten, Kt., C.J.

1. This appeal from the judgment of Mr. Justice Rangnekar raises an interesting point of partnership law, which has been excellently argued by counsel on both sides. The question is whether, when a plaintiff brings a suit for debt against a partnership firm as such, but the firm has been dissolved to the knowledge of the plaintiff prior to the suit, it is necessary to add the legal personal representatives of the deceased partner as parties, in order to enable execution to be levied against the estate of the deceased partner. It is conceded that the partnership assets may be taken in satisfaction of a decree in a suit so framed. But can the estate of the deceased partner be reached irrespective of his share in the partnership assets Mr. Justice Rangnekar held that in such a case it is necessary to add the legal personal representatives, and that as these representatives were not parties to the original suit but were added subsequently when the period of limitation had expired, the suit against them ought to be dismissed. The plaintiffs appeal.

2 The question arises in this way. The first defendant firm Fazalbhoy Joomabhoy & Co. are alleged to be indebted to a firm of Haji Esmail Gulmahomed & Son for a loan advanced on March 11, 1921. The plaintiffs and defendant No. 2 are the assignees of that alleged debt under a composition deed. They brought the present suit to recover this alleged debt on March 10, 1924, which was the last day for avoiding limitation. Prior to the date of this suit, Fazalbhoy Joomabhoy, a partner in the defendant firm, had died, viz., on July 15, 1922. It is common ground that the plaintiffs were aware of this fact prior to the suit. The writ in the suit was served on two surviving partners in the defendant firm. It was also served on defendants Nos. 3 and 4 as heirs of the deceased partner Fazalbhoy in reliance on the proviso to Order XXX, Rule 3, Civil Procedure Code. Those writs were returned. On June 30, 1924, there was a chamber order adding defendants Nos. 3, 4 and 5 to the record. It will be seen that defendant No. 5 is a minor, and that he appears by his guardian ad litem defendant No. 3, The plaint was accordingly amended on July 9, 1924. Subsequently when the case came on for hearing on August 9, 1926, the first issue raised was whether the suit is barred by the law of limitation. That was treated as a preliminary issue, and having been decided in favour of defendants Nos. 3, 4 and 5 the suit was dismissed as against them.

3. Our procedure in dealing with suits by or against partnerships in a firm name is regulated by Order XXX and by OrderXXI, Rules 49 and 50. These rules are taken from the English Rules of the Supreme Court, Order 48A. A comparison of the language will show that in many cases they are practically identical. But there is in our rules an important Rule 4 which does not exist in the English rules, and which has figured prominently in the arguments before us. Curiously enough it is not mentioned in the judgment of the learned trial Judge and counsel are not agreed as to whether any stress was laid on it in the arguments in the Court below. In a case, then, of this nature where India has borrowed directly from England certain rules of procedure, I think it is permissible to see in the first place what view is taken in the English Courts of the rules which originated there. So, too, as the Indian law of partnership, so far as it is embodied in Section 239 to 266 of the Indian Contract Act, is largely taken from the English law of partner* ship, it is permissible to see what the English law is.

4. Now as regards the Rules of the Supreme Court, Order 48A, the English procedure on the question above formulated is, in my judgment, quite clear, viz., that it would be necessary to add the legal personal representatives of the deceased partner, should it be desired to obtain a judgment against the estate of the deceased partner as opposed to a mere judgment against the partnership assets. The law is, I think, accurately stated in the notes to Order 48A, Rule 1, in the English Annual Practice, 1927 Edn., pp. 838 and 839 (1916 Edn., p. 834), viz. :-

Deceased Partner.-Where a partner dies before action, and the action is brought against the firm alone in the firm name, the deceased partner is not a party to the action at all so far as his private estate is concerned. If in an action against a firm in the firm name a partner dies between service of the writ and judgment, the estate of the deceased partner is not bound. Unless his personal representative is a defendant, judgment is against the surviving partners and can only be enforced against them and the partnership assets : Ellis v. Wadeson [1899] 1 Q.B. 714 ... If one of several partners dies before action brought and the plaintiff seeks, in suing the firm, to make the deceased partner's private estate liable, he must add as a defendant the personal representative of such deceased partner. See Ellis v. Wadeson [1899] 1 Q.B. 714 and Phillips v. Homfray (1883) 24 Ch. D. 439; In re Shephard : Atkins v. Shephard (1889) 43 Ch. D. 131.

5. In Ellis v. Wadeson [1899] 1 Q.B. 714 the exact point was whether, where a firm was sued as such, the surviving partner could put in a defence in his own name and not in that of the firm, It was held by the Court of Appeal in a considered judgment delivered by Lord Justice Romer, that such a defence was not permissible. But to arrive at this conclusion the Court considered the whole law and procedure on the point, and in so doing laid down emphatically what was in their judgment the true legal position. Romer L.J. said (p. 718):-

Now consider the question of death. Suppose a partner dies before action brought, and an action is brought against the firm in the firm's name. The dead man is not a party to the action, so far as his private estate is concerned, for a dead man cannot be sued, though the legal personal representatives of a dead man can be sued in a proper case. In that case the action would be an action solely against the surviving partners, At common law, if a creditor sued joint debtors and one died,the survivors only could be sued. Since the Judicature Act, undoubtedly, in the case of a partnership liability, the creditor might now join in one action the surviving partners, and the legal personal representatives of the deceased partner, but the latter would have expressly to be added as defendants. If the legal personal representatives of a deceased partner are not added expressly as defendants, and the action is brought against the firm in the firm's name, then judgment can only be obtained as against the surviving partners and be enforced against them and against the partnership assets. I may mention that the reason why the partnership assets can be reached is because, notwithstanding the dissolution by death, the surviving partners for many purposes have authority continued to them to bind the dead man's interest in the partnership assets, for the authority of partnership extends to enable the surviving partners, in case of dissolution by death, to wind up the affairs of the partnership, to pay the partnership debts, to defend claims against the partnership, and so forth ...

I have so far dealt with the case of the death of a partner before action. Now what happens if a partner dies between service of writ and the trial of the action and judgment In that case equally the dead man's estate is not bound. Judgment can only bo obtained against the surviving partners and enforced against them and against the partnership assets..,This is clear-that the partner who dies between writ and judgment is not before the Court, and therefore judgment could not be obtained against the deceased partner, or execution enforced against him or his assets. Supposing there were two partners, both living at the date of writ, and both were served, and both died before the action came on for trial, no judgment could be obtained.

6. It will be seen, therefore, that the ratio decidendi is that you cannot bring a suit against a dead man, and that to make his legal personal representatives liable in his place, you must make them parties to the suit. And although the partnership assets may be got at in the suit, this is only because the surviving partners for certain limited purposes, such as winding up, represent the estate of the deceased partner.

7. Now, I quite recognise that the exact point for decision by us in the present case did not arise in Ellis v. Wadeson, but, on the other hand, the judgment there given is of such a nature that it must prima facie be regarded as authoritative in England. The fact that it has not been challenged for some twenty-seven years, and that it is still regarded in the Annual Practice as representing the correct procedure up to date, all goes strongly to show that it represents what is now the settled law in England.

8. There is one other case, viz., Wigram v. Cox, Sons, Buckley & C. [1894] 1 Q.B. 792, which is a decision of Mr. Justice Cave and Mr. Justice Wright. In that case one of the partners had left the firm to the knowledge of the plaintiff prior to the suit. The plaintiff, however, omitted to serve him with & writ in accordance with the proviso corresponding to the proviso in our Order XXX, Rule 3. The Court there held that that proviso was imperative, and that as it was not complied with, the plaintiff could not, after judgment had been recovered, obtain any relief in execution against the partner in question, There the Court had to consider the separate effects of Rules 8 and 8 of Order 48A. Those rules correspond to our Rule 3 of Order XXX and Rule 50 of Order XXI. They held that Rule 3 overrode Rule 8, and that the latter rule only applied where there had been no dissolution or none to the knowledge of the plaintiff.

9. As regards the position in law of a partnership firm in England, it is clear that death dissolves a partnership, and that neither the dead man nor his representatives are any longer partners in the firm. It then becomes the right and the duty of the surviving partners to wind up the partnership business, and to distribute the assets in accordance with the rights of the surviving and the deceased partner. Partnership deeds may contain various special provisions dealing with the rights of a deceased partner. But the above is the legal position subject to any special provisions in a partnership deed.

10. Thus, in In re Bourne: Bourne v. Bourne [1906] 2 Ch. 427 Lord Justice Vaughan Williams says (p. 430):-

It is conceded by both the appellants' counsel that when there is a partnership between two partners and one of those two partners dies, unless there is something in the partnership articles to the Contrary, prima facio the surviving partner has not only the right, but the duty, to realize the partnership property, and for the purpose of that realization to carry on the business if it is necessary so to do....The real truth of the matter is that, leaving out all questions of legal estate, there is, as between the surviving partner and the representatives of the deceased partner, an overriding duty to wind up the partnership assets and to do such acts as are necessary for that purpose, and if it is necessary for that winding up either to continue the business or borrow money or to sell assets, whether those assets are real or personal, the right and the duty are co-extensive.

11. Section 38 of the Partnership Act, 1890, may also be referred to in this respect.

12. Turning next to the law of India, Sections 239 to 266 of the Indian Contract Act, 1872, deal with partnership. Section 253(10) provides that, in the absence of any contract to the contrary, partnerships are dissolved by death. Section 263 provides that-

After a dissolution of partnership, the rights and obligations of the partners continue in all things necessary for winding-up the business of the partnership.

2. Speaking generally, this may be taken to correspond to the general powers given to a surviving partner by English law as stated in In re Bourne, and Section 38 of the Partnership Act, 1890. (See also Shidappa v. Shivalingappa (1899) 1 Bom. L.R. 42.

13. Then as regards the Civil Procedure Code, 1908, the terms of Order XXX are practically taken from the English Rules of MA the Supreme Court, Order 48A, apart from our Rule 4. This Order enables persons carrying on business in a firm name at the E date of the accrual of the cause of action to be sued in that firm name subject to certain conditions. It was argued by Mr. Munshi for the respondents that Rule 1 necessitates there being two or more persons alive at the date of the suit. But this is not, I think, the true construction of the rule. Two must be alive at the date of the accrual of the cause of action, but it would be sufficient if one was alive at the date of the suit. This is irrespective of the case provided for by Rule 10 where a single individual carries on business in a firm name. Sub-rule (3) of Rule 2 provides that 'where the names of the partners (in the plaintiff firm) are declared..., the suit shall proceed in the same manner, and the same consequences in all respects shall follow, as if they bad been named as plaintiffs in the plaint.' This, however, is hardly applicable to legal representatives. They are not partners, and the mere insertion of a dead man's name in the plaint would be of no avail. So, too, as regards defendants. It is said by Lindley L.J. in Western National Bank of City of New York v. Perez, Triana & Co. [1891] 1 Q.B. 304:-

When a firm's name is used, it is only a convenient method for denoting those persons who compose the firm at the time when that name is used, and a plaintiff who sues partners in the name of their firm in truth sues them individually, just as much as if he had set out all their names.

3. If then that was done here, it would only result in a dead man's name being inserted as a defendant. It would not result in the names of his legal representatives being added. They were not partners at the material date.

14. Similarly, Rule 3 provides for service upon a partner or a manager of the business. The legal representatives would be neither the one nor the other. The proviso to that rule enacts:-

That, in the case of a partnership which has been dissolved to the knowledge of the plaintiff before the institution of the suit, the summons shall be served upon every person within British India whom it is sought to make liable.

4. Great stress was laid by counsel for the appellants upon the language of this proviso, and it was argued that the reference being to every 'person', not to 'every partner', the language used applies to the liability now sought against the personal representives in the present case. But the reason for the proviso is clear. Prima facie death dissolves a partnership, and consequently the implied agency of one partner to act for another is then confined to the more limited right stated in In re Bourne and in Section 263 of winding up the partnership assets. It is only fair, therefore, that in such a case all the former partners should be served; and that is, I think, the real object of the proviso. The use of the word 'person' may be to catch anybody who has held himself out and is liable as a partner, though not one in fact. Thus Order XXX, Rule 1, refers to 'any two or more persons claiming or being liable as partners...'

15. Then, again, Rule 5 provides that every person served under Rule 3 should be informed whether he is served as a partner or as a manager, and in default he should be deemed to be served as a partner. That rule is not worded so as to apply to legal personal representatives, for they are neither partners nor managers. Apart, then, from Rule 4, it would seem reasonably clear that the legal personal representatives are not parties to a suit against the partnership in the firm name unless they are expressly joined, and that accordingly only the partnership assets can be reached in a suit so constituted.

16. I now come to the crux of the case, viz., Rule 4, This provides:-

(1) Notwithstanding anything contained in Section 45 of the Indian Contract Act, 1872, where two or more persona may sue or be sued in the name of a firm under the foregoing provisions and any of such persons 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.

(2) Nothing in Sub-rule (1) shall limit or otherwise affect any right which the legal representative of the deceased may have-

(a) to apply to be made a party to the suit, or

(b) to enforce any claim against the survivor or survivors.

5. Now, no doubt at first sight it would seem that a rule providing that it is unnecessary to join the legal representatives of a deceased as a party would exactly meet the difficulty in the present case. But on closer investigation the question bears a different aspect. In the first place the rule implies that the legal representatives are not already parties to the suit by the mere use of the firm name. In the second place it will be noted that the rule begins by a reference to Section 45 of the Indian Contract Act, and it is this reference, I think, which affords the clue to the real meaning of Rule 4. That section provides that-

When a person has made a promise to two or more persons jointly, then, unless a contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any of them, with the representative of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all jointly.

17. It will, accordingly, be seen that this section differs from the corresponding English law, for the general rule of English law is that joint contracts are enforceable by the survivor or survivors alone. There is an exception as regards debts due to partners, but even there the remedy by suit survives to the surviving co-partner. (See Williams on Executors, 11th Ed., Vol. I, p. 638). So, too, in India before the Indian Contract Act the practice seems to have been that the surviving partner alone should sue, (See Motilal Bechardass v. Ghellabhai Hariram I.L.R. (1892) 17 Bom. 6. But when Section 45 of the Indian Contract Act was enacted, not unnaturally difficulties arose in India as to whether in suing for a partnership debt it had become necessary to add the representatives of a deceased partner. The Calcutta High Court took the view that the legal representatives were necessary parties. (See Ram Narain Nursing Boss v. Ram Chunder Jankee Loll I.L.R. (1890) 18 Cal. 86. The other High Courts took a different view, and in our High Court Mr. Justice Farran, in Motilal Bechardass v. Ghellabhai Hariram, held that a surviving partner alone could sue. His judgment, however, shows the difficulty which he felt in arriving at that conclusion,

18. That being go, one can well understand that when the Code of 1908 came to be framed, containing as it did these new rules for suits in a firm name; it became necessary to provide for this conflict of opinion between the several High Courts. Accordingly, Rule 4 made it clear that the Calcutta view was not to prevail. That, however, only applied to the power to bring a suit at all, for, if the Calcutta view had prevailed, then no relief could have been obtained even against the partnership assets and the whole suit would have been dismissed in the absence of the legal representatives. The result then of adopting the Bombay view was that the suit would lie and that a judgment could be obtained against the partnership assets. But the new rule did not go on to say that judgment could also be obtained against the private estate of a deceased partner. Are we then to imply that such a judgment ought to be obtained ?

19. It was pointed out forcibly by counsel for the appellants that Rule 4 is not confined to plaintiffs, but that it also extends to defendants, and that defendants are governed not by Section 45 but by Sections 42 and 43 of the Indian Contract Act. Section 42 provides for the representatives of a deceased promisor being made liable jointly with the, surviving promisor, but, on the other hand, Section 43 provides that a promisee in the absence of express agreement to the contrary may compel 'any one or more' of the joint promisors to perform the promise. Consequently, it would be open to sue the surviving partners of a firm without any need for Rule 4. That appears to be so. But I think one answer is that the Legislature may have thought that there was a risk of misunderstanding unless Rule 4 referred both to plaintiffs and defendants. Then, as regards Sub-rule (2) (a) of Rule 4, I think it is intended to safeguard the rights of the legal representatives in case, for instance, there should be any collusion between debtors to the estate and the surviving partners. Similarly, Sub-rule (2) (b) may enable them to claim contribution from the surviving partners under Section 43 of the Indian Contract Act in the event of there being a partnership liability.

20. On the other hand, if in the course of a suit an injunction is asked against the legal representatives, ought that to be done unless they are made expressly parties to the suit Similarly, if an order was asked for. the administration of the estate of a deceased partner in ease assets to answer the debt sued on were not admitted, then surely it would be only right that the legal representatives should be added expressly. Relief of that nature is not asked for in the present case, but it has some bearing on the general question of principle.

21. I will next turn to certain authorities which were cited to us. In Jivraj v. Bhagvandas : AIR1923Bom66 Sir Lallubhai Shah and Mr. Justice Crump had to consider a case where they held that the plaintiff had no knowledge of the dissolution of the partnership, and where consequently the proviso to Rule 3 did not apply. They, accordingly, held that execution could be levied under Order XXI, Rule 50, against the estate of the deceased partner. The case, therefore, they had to consider was a different one from that which we have here, although the learned Judges seem to have thought that the wording of Sub-rule (2) of Rule 50 was wide enough to cover the case of a deceased partner.

22. So, too, as regards Motilal v. Chandmal : AIR1924Bom155 , decided by the same Bench, that was a case where the sole proprietor of the firm had died before the date of the suit. The learned Judges there held that notwithstanding this, the suit had been properly filed against the firm.

23. It does not, however, appear from the reports that in either of these cases was the attention of the Court drawn to the authorities I have already cited. There are no authorities referred to in the judgments, Nor in the second case does it appear whether at the date of the suit the plaintiff knew that the sole proprietor was dead.

24. On the other hand, in Rampratab v. Gavrishankar (1922) 25 Bom, L.R. 7 where a firm was sued with leave under Clause 12 of the Letters Patent notwithstanding that the sole proprietor had died before suit to the knowledge of the plaintiff, and where the legal representatives were only added after suit and without leave under Clause 12, Mr. Justice Mulla, after reviewing the authorities, held that the suit as originally framed was bad, and that fresh leave under Clause 12 was necessary in order to sue the added legal representatives, and that in the absence of such leave the Court had no jurisdiction. The suit was consequently dismissed. At p. 10 the learned Judge said :-

If a partner dies before suit, and the suit is against the firm in the firm's name, the suit is one solely against the surviving partners and judgment can only be obtained as against the surviving partners and be enforced against them and against the partnership assets. The judgment cannot be enforced against the private estate of the doceased partner unless his legal representative is added expressly as a defendant, for a dead man cannot be sued though his legal representative can be sued in a proper case.

Then at p. 11 in dealing with Order XXX, Rule 10, he says :-.one man cannot constitute a firm. When a suit is brought against such person in the name in which he carries on business, the suit is essentially one against him and he is the sole defendant in the suit. If he dies before suit, and a suit is brought against him in the name in which he carried on business, the suit is against a dead man and it is a nullity from its inception. The suit being a nullity, the writ of summons issued in the suit, by whomsoever accepted, is also a nullity. Similarly, any order made in the suit allowing amendment of the plaint by substituting the legal representative of the deceased as defendant and allowing the suit to proceed against him is also a nullity. It is immaterial that the suit was brought bona fide and in ignorance of the death of such person.

That decision, it will be seen, in effect follows Ellis v. Wadeson, and is perhaps the nearest to the present case, but no Indian authority precisely on all fours has been cited to us.

25. There is another line of authority to the effect that if you have on the record one representative of a deceased person, you may add others without necessarily being exposed to the plea of limitation under Section 22 of the Indian Limitation Act, or Civil Procedure Code, Order I, Rule 10(5). Thus, in Jehrabi v. Bismillabi : AIR1924Bom420 the head-note runs :-

It is sufficient for the plaintiff in a suit, if a defendant dies, to put one of the heirs on the record as his legal representative, who will then represent the estate of the deceased for the purpose of the suit. It is for those who claim to be heirs to come in if they wish to be represented in the suit.

26. It was, accordingly, argued here that if the adult defendants were properly served with the writ of summons, then limitation would be saved as regards them, and service on the minor could properly be effected at a later date. But the difficulty in the way of the plaintiffs is that defendants Nos. 1 and 2 were not properly served in the first instance, unless they could be brought within Order XXX, Rule 3. That is because Order V, Rule 1, requires service on parties to the suit; and does not enable writs to be served on non-parties. And defendants Nos. 1 and 2 cannot be brought within Order XXX, Rule 3, unless that proviso applies to the representatives of a deceased partner, which I do not think it does.

27. In the result, after giving my best consideration to Rule 4 and the other provisions of Order XXX, and, after weighing the possibility that the Legislature thereby deliberately intended to alter the previous Indian and English practice as regards the procedure necessary to make the private estate of a deceased partner liable, I would hold that Rule 4 must not be carried any further than what it expressly states, and that if it is sought to fix liability on the private estate of a deceased partner, apart from his interest in the partnership assets then the legal representatives must be added. So, too, in my judgment, Order XXI, Rule 50(2), would not enable the plaintiffs to levy execution against the private estate of the deceased partner in the events which have happened. I have had the advantage of reading the judgment of my brother Blackwell, and I do not think it necessary to add anything to what he has said on this point.

28. I am, therefore, of opinion that the learned trial Judge was correct in deciding the point of limitation in favour of defendants Nos. 3, 4 and 5; and in dismissing the suit as against them. It follows, therefore, that in my judgment this appeal should be dismissed with costs.

Blackwell, J.

29. The facts in this case are not in dispute. One Abdul Kadar Haji Esmail Gulmahomed carried on business in the name of Haji Esmail Gulmahomed and Son. On March 11, 1921, the firm of Haji Esmail Gulmahomed and Son advanced to the first defendant firm of Fazalbhoy Joomabhoy & Co. a sum of Rs. 15,000. In May and November 1921 demands were made for repayment, but the loan was not repaid. On April 4, 1922, a deed of composition was entered into between the said Abdul Kadar Esmail Gulmahomed (who was the sole owner of the firm of Haji Esmail Gulmahomed & Son) and several trustees and creditors. The plaintiffs and defendant No. 2 in this suit were trustees under that deed of composition In 1922 Fazalbhoy Joomabhoy Lalji, a partner in the first defendant firm, died. That fact was known to the plaintiffs before the institution of the suit. The suit was filed on March 10, 1924, for recovery of Rs. 15,000 with interest. At the time of the institution of the suit defendant No. 2 was out of Bombay, and he being one of the trustees was formally joined as a defendant. The suit as originally filed was against Fazalbhoy Joomabhoy & Co., as a firm, and against the said trustee. The writ was served on two partners in the defendant firm. In addition it was served upon defendants Nos. 3 and 4, The notices served with the writ upon defendants Nos. 3 and 4 contained in each case the following statement:-

Please note that you are served with the summons herein as an heir of the deceased Fazalbhoy Joomabhoy a partner in Messrs. Fazalbhoy Joomabhoy & Co.

30. The writs were returned by defendants Nos. 3 and 4 with an intimation that they were not concerned with the matter. On June 30, 1924, an order was obtained in chambers to bring defendants Nos. 3, 4 and 5 on the record as defendants, and the plaint was amended pursuant to that order accordingly on July 9, 1924. By their written statement, defendants Nos. 3, 4 and 5 alleged that the suit against them was barred by the law of limitation. This question was tried as a preliminary issue.

31. The relevant section of the Indian Limitation Act, 1908, is Section 22(1), which is in the following terms :-

Where, after the institution of a suit, a new plaintiff or defendant is substituted or added, the suit shall, as regards him, be deemed to have been instituted when he was so made a party.

32. The original loan having been made on March 11, 1921, the period of limitation for instituting the suit expired on March 10, 1924.

33. The actual question for decision in this case is, therefore, whether the suit is time-barred as against defendants Nos. 3, 4 and 5. Two further questions have, however, been discussed, namely, (1) whether, if a suit is brought against a firm in the firm name, and the firm has been dissolved to the knowledge of the plaintiff before the institution of the suit by reason of the death of a partner, the suit as so framed includes the legal representatives of a deceased partner; and (2) whether in such a case, if the legal representatives of a deceased partner are served with the summons, though not added as parties, leave can be obtained to issue execution against them under Older XXI, Rule 50(2). In my judgment both of these latter questions must bo answered in the negative for reasons hereinafter appearing.

34. Before the introduction of Order XXX. into the Civil Procedure Code, although by virtue of Section 43 of the Indian Contract Act, referred to later, the suit might, in the absence of express agreement to the contrary, be brought against any one or more of the partners, it was nevertheless necessary to sue all the partners sought to be made liable. If one of them was dead, it was equally necessary to sue his legal representatives, if it was sought to make the estate of the deceased partner liable.

35. Order XXX provided for the first time for the institution of suits by or against firms and persons carrying on business in names other than their own. But it must be borne in mind that when a firm is sued, in effect the suit is against all the partners who constituted the firm when the cause of action arose, just as much as if they had all been sued individually. See the remarks of Lindley L.J. in Western National Bank of City of New York v. Perez, Triana & Co. [1891] 1 Q.B. 304 A dead man cannot be sued. If, therefore, one of the partners is dead, a suit against the firm in the firm name is not a suit against him. If it is desired to reach the dead partner's separate estate, his legal representatives must be sued. But if they are sued, they will not be sued as partners, but as representing the dead man's estate. This is clearly the law in England, as I will presently show. I think it is equally clearly the law in India.

36. In my judgment the whole scheme of Order XXX is against the theory that a suit against a firm is a suit against the legal representatives of a deceased partner. Rule 1 provides that

Any two or more persons claiming or being liable as partners and carrying on business in British India may sue or be sued in the name of the firm... of which such persons were partners at the time of the accruing of the cause of action...

37. In face of this rule a suit against a firm cannot include the legal representatives of a deceased partner, for they were not partners at the time of the accruing of the cause of action, or at any time. Rule 2 provides for a declaration in writing by the 'plaintiffs of the names and place of residence of all persons constituting the firm on whose behalf the suit is instituted. If the firm name includes the legal representatives of a deceased partner, they would be some of the plaintiffs, and it would be necessary to include their names in the declaration. But they are clearly not persons constituting the firm on whose behalf the suit is instituted, inasmuch as they were not partners at the time of the accruing of the cause of action, or at any time. Rule 3 (excluding the proviso for the moment) provides that:-

Where persona are sued as partners in the name of their firm, the summons shall be served either-

(a) upon any one or more of the partners, or

(b) at the principal place at which the partnership business is carried on within British India upon any person having, at the time of service, the control or management of the partnership business there,

as the Court may direct; and such service shall be deemed good service upon the firm so sued, whether all or any of the partners are within or without British India.

38. If the firm name includes the legal representatives of a deceased partner, the summons could not be served upon any of the legal representatives, because they were not partners at the time of the accruing of the cause of action. Moreover, it is to be observed that the mode of service authorized by the rule is service upon any one or more of the partners, or service at the principal place of business of the partnership within British India upon the manager of the business. If the summons is not served in either of these ways, it has been held upon the corresponding English rule that the service is irregular: see Worcester City and County Banking Go. v. Firbank, pauling & Co. [1894] 1 Q.B. 784 Further, it has been held in Harjibandas Gordhandas v. Bhagwandas Pursram I.L.R. (1921) 49 Cal. 394 that when a firm has been dissolved, the only method of service is on a partner. In that case Rankin J. said (p. 397):-

If the partnership business no longer exists and the firm has been dissolved, it is obvious that the only method under Rule 3 which is open, is to serve upon a partner, that is to say, upon one of the individuals whom you are charging as liable as principals.

39. The proviso to Rule 3 is in the following terms:-

Provided that, in the case of a partnership which has been dissolved to the knowledge of the plaintiff before the institution of the suit, the summons shall be served upon every person within British India whom it is sought to make liable.

40. It is contended that 'person' here includes legal representatives of a deceased partner. But that would be placing an interpretation upon the word different from that which it bears in Rule 1, which provides for a suit by or against 'persons claiming or being liable as partners' in the name of the firm of which such persons were partners at the time of the accruing of the cause of action', and different from that which it bears in Rule 3 in which the words used are 'where persons are sued as partners in the name of their firm', and which provides for the service of the summons either' (a) upon any, one or more of the partners', or (6) upon the manager. It seems clear, therefore, that the word 'person' in the proviso cannot mean any person, but must mean any person sought to be made liable as a partner.

41. Rule 5 provides that when a summons is served in the manner provided by Rule 3,

Every person upon whom it is served shall be informed by notice in writing given at the time of such service, whether he is served as a partner or as a person having the control or management of the partnership business, or in both characters, and, in default of such notice, the person served shall be deemed to be served as a partner.

42. If the firm name includes the legal representatives of a deceased partner, and they are served with the summons, it will be impossible to comply with this rule. That is in fact what happened in the present case. It is, therefore, plain in my judgment from a consideration of these rules that the firm name does not include the legal representatives of a deceased partner.

43. Apart from Rule 4, Order XXX has been taken almost word for word from Order 48-A of the English Annual Practice. It is clear that under English law the firm name does not include the legal representatives of a deceased partner. In the notes in the English Annual Practice [] 927] to Order 48-A, Rule 1, it is stated (p. 839): 'If one of several partners dies before action brought and the plaintiff seeks, in suing the firm, to make the deceased partner's private estate liable, he must add as a defendant the personal representative of such deceased partner. See Ellis v. Wadeson [1899] 1 Q.B. 714 '. In that case Earner L.J. said (p. 718):-

Now consider the question of death. Suppose a partner dies before action brought, and an action is brought against the firm in the firm's name. The dead man is not a party to the action, so far as his private estate is concerned, for a dead man cannot be sued, though the legal personal representatives of a dead man can be sued in a proper case. In that case the action would be an action solely against the surviving partners. At common law, if a creditor sued joint debtors and one died, the survivors only could be sued. Since the Judicature Act, undoubtedly, in the case of a partnership liability, the creditor might now join in one action the surviving partners, and the legal personal representatives of the deceased partner, but the latter would have expressly to be added as defendants. If the legal personal representatives of a deceased partner are not added expressly as defendants, and the action is brought against the firm in the firm's name, then judgment can only be obtained as against the surviving partners and be enforced against them and against the partnership assets, I may mention that the reason why the partnership assets can be reached is because, notwithstanding the dissolution by death, the surviving partners for many purposes have authority continued to them to bind the dead man's interest in the partnership assets, for the authority of partnership extends to enable the surviving partners, in case of dissolution by death, to wind up the affairs of the partnership, to pay the partnership debts, to defend claims against the partnership, and so forth : see Lindley on Partnership, 5th ed., pp. 217, 218, and 587.

44. In this connection it is to be observed that Section 263 of the Indian Contract Act, 1872, provides that:-

After a dissolution of partnership, the rights and obligations of the partners continue in all things necessary for winding-up the business of the partnership.

45. But it has been held that the executors of a deceased partner are not entitled on dissolution of the partnership to join the surviving partners in the winding up, though they have the right to inspect and challenge the accounts (Shidhappa v. Shivalingappa (1899) 1 Bom. L.R. 42 In my judgment the position is the same in India as in England, and if it is desired to reach the separate estate of a deceased partner, his legal representatives must be added expressly as defendants.

46. It was contended by Mr. Kania that Rule 4 of Order XXX has made a difference between the law applicable in England under Order 48-A and the law applicable in India. I do not agree for reasons which I will presently state. In my opinion a very definite reason can be assigned to the adoption of Rule 4. That rule is in the following terms:-

(1) Notwithstanding anything contained in Section 45 of the Indian Contract Act, 1872, where two or more persons may sue or be sued in the name of a firm under the foregoing provisions and any of such persons 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.

(2) Nothing in Sub-rule (1) shall limit or otherwise affect any right which the legal representative of the deceased may have-

(a) to apply to be made a party to the suit, or

(b) to enforce any claim against the survivor or survivors.

47. Before considering the effect of this rule, it is necessary to refer to Sections 42, 43 and 45 of the Indian Contract Act of 1872. Section 42 is as follows:-

When two or more persons have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives, and after the death of any of them, his representative jointly with the survivor or survivors, and after the death of the last survivor, the representatives of all jointly, must fulfil the promise.

48. Section 43 provides, inter alia, that-

When two or more persons make a joint promise, the promisee may, in the absence of express agreement to the contrary, compel any one or more of such joint promisors to perform the whole of the promise.

49. Section 45 provides that-

When a person has made a promise to two or more persons jointly, then, unless a contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any of them, with the representative of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all jointly.

50. It is to be observed that these sections materially vary the rules of the English common law, as to the devolution of the benefit and the liability of joint contracts. In England upon the iS death of one of several joint contractors, the liability under the contract devolved upon the survivors, and the representatives of the deceased could not be sued at law either alone or jointly with 'the survivors. The liability ultimately devolved on the last surviving contractor and after his death upon his representatives, An exception was introduced in the case of a deceased partner, his estate being made liable subject to the prior payment of his separate debts for the unsatisfied debts of the firm : see Section 9 of the English Partnership Act of 1890. Section 43 of the Indian Contract Act, however, appears to make all joint contracts joint and several : see Motilal Bechardass v. Ghellabhai Hariram I.L.R. (1892) 17 Bom. 6, where Farran J. pointed out (p. 11) that Sections 42, 43 and 45 relate to partners as well as to other co-contractors. See also Lukmidas Khimji v. Purshotam Haridas, Oodhowji Wallji and Goculdas Jewraz I.L.R. (1882) 6 Bom. 700, where it was held that in a suit brought upon a contract made by a firm the plaintiff may select as defendants those partners of the firm against whom he wishes to proceed, allowing his right of suit against those whom he does not make defendants to be barred.

51. Section 45 of the Indian Contract Act is a clear departure from the general rule of English law that joint contracts are enforceable by the survivor or survivors alone. There was an exception in English law founded on mercantile custom as to debts due to partners. But even in that case, as pointed out in Williams on Executors, Vol. I, 11th ed., at p. 638:-

Although the right of the deceased partner devolves on his executor, it is now fully settled that the remedy survives to his companion,' (sic.) 'who alone must enforce the right by action, and will be liable, on recovery, to account to the executor or administrator for the share of the deceased.

52. Although Section 45 applies in terms to all cases of joint contracts, there was in India, prior to the enactment of Rule 4, Order XXX, a difference of opinion as to whether the representatives of the deceased partner were or were not necessary parties to a suit for the recovery of a debt which accrued due to the partnership in the life-time of the deceased. The High Courts of Allahabad, Bombay and Madras decided that they were not necessary parties: see Gobind Prasad v. Chandar Sekhar I.L.R. (1887) All 486; Vaidyanatha Ayyar v. Chinnasami Naik I.L.R. (1893) Mad 108; Debi Das v. Nirpat I.L.R. (1898) All. 365; Ugar Sen v. Lakhmi Chand I.L.R. (1910) All 638 and Motilal Bechardass v. Ghellabhai Hariram. In the latter case, Farran J. considered the difficulty occasioned by the words 'as between him and them' and said (p. 14):-

It is difficult to give these words their full effect if the surviving contractors in the case of partners are allowed to sue alone. The right to performance of the contract, as far as the other contracting party is concerned, rests just as much with the representative of the deceased partner as with the surviving partner Can the latter, then, sue without joining the former as a party to the suit Logical consistency points to an answer in the negative. The case of partners is, however, as we have shown, anomalous, and we think that as the Legislature has not enacted that the representatives of a deceased partner must join in suing in a partnership contract jointly with the surviving partners, we are not wrong in holding that, notwithstanding the provisions of the Contract Act, the old practice of the Small Cause Court need not be changed.

53. On the other hand, the contrary view was maintained by the Calcutta High Court: see Ram Narain Nursing Doss v. Ram Chunder Jankee Loll I.L.R. (1890) Cal. 86. There being this difference of opinion upon Section 45, Rule 4 of Order XXX was enacted when it was decided to introduce into India the English practice in regard to suits by and against firms.

54. What then was the object of the section It seems to me clear that it was intended to set at rest the doubt that existed in connection with Section 45, and to provide that where two or more persons may sue in the name of the firm and any of such persons dies, it shall not be necessary to join the legal representatives of the deceased person. I think that that was the only object of the section, and that it was not intended that a suit in a firm name should be deemed to include the personal representatives of the deceased partner. Indeed the fact that it is specially provided that it shall not be necessary to join the legal representatives of the deceased seems to me to imply that they are not to be deemed to be included in the suit in the firm name. It is to be observed that Sub-rule (2) of the rule preserves any right which the legal representatives of the deceased may have (a) to apply to be made a party to the suit, or (b) to enforce any claim against the survivor or survivors.

55. Before passing from Rule 4 of Order XXX, it is necessary to draw attention to the fact that it contains the words 'or be sued'. Having regard to Section 43 of the Indian Contract Act, it seems to me that the insertion of those words was unnecessary, because by virtue of that section the promisee may, in the absence of express agreement to the contrary, compel any one or more of the joint promisors to perform the promise. The words 'or be sued' seem therefore to have been inserted in Rule 4 either by accident or per majorem cautelam.

56. I now consider the question whether, if the legal representatives of a deceased partner are served with the summons, though not added as parties, leave can be obtained to issue execution against them under Order XXI, Rule 50(2), the suit having been brought against the firm in the firm name, and the firm having been dissolved to the knowledge of the plaintiff before the institution of the salt by reason of the death of a partner. Order XXI, Rule 50, is in the following terms:--

(1) Where a decree has been passed against a firm, execution may bo granted-

(a) against any property of the partnership :

(b) against any person who has appeared in his own name under Rule 6 or Rule 7 of Order XXX or who has admitted on the pleadings that he is, or who has been adjudged to be, a partner;

(c) against any person who has been individually served as a partner with a. summons and has failed to appear :

Provided that nothing in this sub-rule shall be deemod to limit or otherwise affect the provisions of Section 247 of the Indian Contract Act, 1872.(2) Where the decree-holder claims to be entitled to cause the decree to be executed against any person other than such a 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) Where the liability of any person has been tried and determined under Sub-rule (2), the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.

(4) Save as against any property of the partnership, a decree against a firm shall not release, render liable or otherwise affect any partner therein unless he has been served with a summons to appear and answer.

57. This rule corresponds in substance with Rule 8 of Order 48A of the English rules.

58. It is necessary to consider this rule in connection with Rule 3 of Order XXX. It is to be observed that if service is effected in the first mode prescribed by Rule 3, that is, if the service is upon a partner, it is good service upon the firm as well as upon that partner personally, but it is not service upon any other member of the firm so as to make such member a person who has been individually served as a partner within the meaning of Order XXI, Rule 50(1)(c). Similarly, if service is effected in the second mode prescribed by the rule, that is, upon the manager at the place of partnership business and the manager is not a partner, the service is a good service upon the firm, but it is not service upon any member of the firm so as to make such member 'a person who has been individually served as a partner' within the meaning of Order XXI, Rule 50(1)(c). This distinction is important for purposes of execution, for where a decree has been passed against the firm, execution can, under Order XXI, Rule 50, at once issue without leave against the property of the firm, and also against the separate property of any individual partner served with the writ. But execution cannot be issued without leave against the separate property of any partner who was not served with the writ and did not appear. By reason of the proviso to Rule 3, where there has been a dissolution of the firm, to the knowledge of the plaintiff before the institution of the suit, he cannot make an outgoing partner liable unless he has served a writ of summons upon him. Further, it has been held in England that in such circumstances the plaintiff cannot apply under Rule 8 of Order 48A, (which corresponds with Order XXI, Rule 50, Sub-rule (2)), for leave to execute the decree against the personal property of the outgoing partner, the reason given being that the proviso to Rule 3 overrides Rule 8 of Order 48A, and the latter rule only applies where there has been no dissolution to the knowledge of the plaintiff: see Wigram v. Cox, Sons, Buckley & Co. [1894] 1 Q.B. 792 In that case Cave J. said (p. 795):-

Order XLVIII.A deals with the mode of suing firms. Rule 1 provides that two or more persons being liable as co-partners may be sued in the firm name. Then comes the question whether, when a firm, say of three members, is altered by one of the members going out, and the two remaining members continue to carry on business in the same firm name, service, under Rule 3, upon one of the remaining members or upon the manager of the firm at their place of business, is to be deemed service upon the member who has gone out. The proviso to Rule 3 says it is not to be deemed service upon him, if the plaintiff knows of the dissolution before the commencement of the action. In that case the plaintiff must serve the member who has gone out, if he wishes to fix him with liability. There is nothing contrary to justice in that. Before the legislation permitting actions against a firm in the name of the firm, the plaintiff must have served every person against whom he issued his writ. If he did not, any judgment recovered against a person not served would have been null and void, Rule 8 goes on to provide how execution may be issued where judgment has been signed against a firm. By that rule you may issue execution against any person who has appeared in his own name under Rule (5) or (6), or who has admitted on the pleadings that he is, or who has been adjudged to be, a partner, or against any person who has been individually served, as a partner, with the writ of summons, and has failed to appear. None of these cases apply to the appellant; but it is contended for the respondent that he was entitled to apply for and obtain an order under the latter part of that section for the trial of an issue as to the liability of the appellant. I am, however, of opinion that Rule 3 overrides Rule 8, and that the latter rule only applies where there has been no dissolution, or none to the knowledge of the plaintiff. Where there has been a dissolution to the knowledge of the plaintiff, ho cannot make an outgoing partner liable, unless he serves the writ of summons upon him.

59. In my opinion the law is the same in India, and Rule 3 of Order XXX overrides Order XXI, Rule 50, which only applies where there has been no dissolution to the knowledge of the plaintiff. Where there has been a dissolution to the knowledge of the plaintiff by the death of a partner, the legal representatives must in my judgment be added as defendants, if the separate estate of the deceased partner is sought to be made liable.

60. In support of his contention that the service of the summons on defendants Nos 3 and 4 was a good service under the proviso to Rule 3, Mr. Kania relied upon a passage in the judgment of Shah Ag. C.J. in the case of Jivraj v. Bhagvandas : AIR1923Bom66 , in which at p 1039 that learned Judge said :--

It seems to mo inconceivable that if Keshavji knew that Raghunathdas Premji, who apparently was a well-to-do merchant, was a partner and that he was dead, he would not take care to serve the summons on his legal representative.

61. That case, however, was decided on the footing that the original plaintiff' had no knowledge of the dissolution of the partnership and the words relied on by Mr. Kania, as indicating that the summons might in such a case be served on the legal representative of a deceased partner, were merely obiter. With very great respect to that learned Judge, I am unable to agree with the implication involved in that passage in his judgment.

62. Mr. Kania drew our attention to some cases in which it' has been laid down that it is enough for the plaintiff in a suit, if a defendant dies, to bring one of the heirs on the record as his legal representative: see Jehrabi v. Bismillabi : AIR1924Bom420 and Kadir Mohideen Marakkayar v. Muthukrishna Ayyar I.L.R. (1902) Mad, 231 He argued from the analogy of these cases that although the writs were served only upon defendants Nos. 3 and 4, and not upon defendant No. 5, such service would be enough to bind the estate of the deceased partner. He contended that if such service were held to be good service, defendants Nos. 3 and 4, as representing the estate of the deceased partner, were already before the Court before they were added with defendant No. 5 as parties, and upon this footing the plaintiff's would bo in a position to apply for execution against the separate estate of the deceased partner under Order XXI, Rule 50(2), and the subsequent addition of defendants Nos. 3, 4 and 5 as parties to the suit could be disregarded. Upon the execution point he relied upon the case in Jivraj v. Bhagvandas, above referred to, where it was held that the wording of Sub-rule (2), Order XXI, Rule 50, was wide enough to cover the case of a deceased partner. That case was decided by an Appeal Bench, and it is therefore not open to me to express my own opinion upon this point. The case was, however, decided upon the basis that the plaintiff when he brought his suit had no knowledge that one of the partners in the defendant firm was dead,-it does not apply to a case in which the plaintiff has such knowledge; in such a case, as I have already pointed out, the proviso to Rule 3 is imperative and overrides Sub-rule (2) of Order XXI, Rule 50. Moreover, for reasons which I have already given, the service of the writs on defendants Nos. 3 and 4 was not in my judgment good service.

63. Mr. Kania further contended that if parties who are not necessary parties to a suit, or parties who are already covered by a general description, such as a firm-name, are added as parties, that does not affect the position as it was at the date of the institution of the suit, so far as limitation is concerned, and the addition may be regarded as mere surplusage. In support of this contention he relied upon Motilal v. Chandmal : AIR1924Bom155 .

64. As in my judgment defendants Nos. 3, 4 and 5 as representing the estate of the deceased partner were not covered by the firm name, and are necessary parties, if it is sought to render liable the estate of the deceased partner, I do not think it necessary to examine this contention further. I refer to it only in order that it may not be supposed that I have overlooked it.

65. Summing the matter up, the proviso to Rule 3 in my judgment contemplates service only upon a living person who is sued as a partner in the name of his firm, and does not apply to the case of a partner who is dead to the knowledge of the plaintiff at the time of the institution of the suit. In the case of a living partner, by reason of Section 43 of the Indian Contract Act, it is not incumbent upon the plaintiff, where the firm has been dissolved to his knowledge, to serve a particular partner, when the plaintiff can otherwise effect service upon the firm, unless he seeks to render that particular partner liable. But when a partner is dead, to the plaintiff's knowledge at the date of the institution of the suit, although again by virtue of Section 43 of the Indian Contract Act, and by Rule 4 of Order XXX, it is not necessary for the plaintiff to join his legal representatives, and the suit is not improperly framed if they arc not joined; yet if the plaintiff seeks to render liable the estate of the deceased partner, he must join the legal representatives as parties. Unless they are joined as parties, the plaintiff will in my judgment be unable to roach, the estate of the deceased partner, either upon the theory that the deceased partner is included in the firm name, and that service upon his personal representatives brings them before the Court, so that they are bound by a decree against the firm, or by execution under Order XXI, Rule 50. I think that Rule 4 was introduced into Order XXX to set at rest the doubts which had been felt in regard to Section 45 of the Indian Contract Act, in relation to suits by firms, and for no other purpose. In this view of the matter, the reasoning of Romer L.J., above referred to, in Ellis v. Wadeson, is as applicable in my opinion to suits against a firm in India as it is in England. Accordingly, defendants Nos. 3, 4 and 5 were necessary parties if the separate estate of the deceased partner was sought to be made liable, but at the date at which they were brought on the record, the suit as against them was time-barred, In my judgment, therefore, the learned trial Judge was right, and this appeal must be dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //