Skip to content


In Re: Malabar Forests and Rubber Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Judge
Reported inAIR1932Bom334; (1932)34BOMLR617
AppellantIn Re: Malabar Forests and Rubber Co. Ltd.
Excerpt:
.....an alternative plea that none of the partners was authorised to enter into the transaction in dispute.;davis v. hyman and co. (1903) 1 k.b. 854. and weir and co. v. mc vicar and co. (1825) 2 k.b. 127, followed.;chhattoo lal misser and company v. naraindas baijnath prasad (1928) i.l.r. 56 cal. 704, distinguished. - - 4. the question i have to determine is whether it would be permissible in these execution proceedings to determine an issue of an alternative nature like issue no. cooper in ray judgment is in no better position in these execution proceedings than a partner who when originally served denied that he was a partner. but if that is the position in the case of an alleged partner who was not served with the writ, can the fact that the alleged partner was served pub him in any..........is seeking to enforce an order, made by this court under the indian companies act against the firm of cooper daveand co. who are respondents and contributory no. 74 herein, against one burjorji sorabji cooper on the ground that ha is a partner in the firm of cooper daveand co. the amount which has become payable under the order of this court is inrespect of call moneys due on certain shares which were allotted to the firm of cooper daveand co. the company has gone into liquidation and the official liquidator is the applicant. it is common ground that none of the notices under the indian companies act resulting in the order which is now sought to be executed against burjorji sorabji cooper was served upon him. the present summons is taken out under order xxi, rule 50(2), of the civil.....
Judgment:

Mirza, J.

1. This is a proceeding under Order XXI, Rule 50(2), of the Code of Civil Procedure, in which the applicant is seeking to enforce an order, made by this Court under the Indian Companies Act against the firm of Cooper Daveand Co. who are respondents and contributory No. 74 herein, against one Burjorji Sorabji Cooper on the ground that ha is a partner in the firm of Cooper Daveand Co. The amount which has become payable under the order of this Court is inrespect of call moneys due on certain shares which were allotted to the firm of Cooper Daveand Co. The company has gone into liquidation and the official liquidator is the applicant. It is common ground that none of the notices under the Indian Companies Act resulting in the order which is now sought to be executed against Burjorji Sorabji Cooper was served upon him. The present summons is taken out under Order XXI, Rule 50(2), of the Civil Procedure Code, and calls upon Burjorji Sorabji Cooper to show cause why the Judge's order dated December 5, 1927, should not be executed against him personally as one of the partners in the respondent firm of Cooper Daveand Co. Mr. Cooper has appeared and shown cause against the summons.

2. It was contended on behalf of Mr. Cooper that four issues should be determined by this Court in order to ascertain whether he was liable in execution. These issues were:-

(1) Whether any firm of the name of Cooper Dave and Co. existed

(2) Whether Burjorji Sorabji Cooper was a partner in the respondent firm of Cooper Daveand Co. being contributory No. 74 ?

(3) Whether any of the partners of the respondent firm had any authority express or implied to apply for and purchase 1000 or any shares of theabove named company as mentioned in paras 1 and 2 of the said affidavit ?

(4) Whether the said balance-sheet, the Judge's order dated December 5, 1927, and the proceedings previous thereto referred to in the affidavit ofNarayan Babaoharya Kale dated December 1, 1930, are binding on the said Burjorji Sorabji Cooper ?

3. Mr. Billimoria, the learned Counsel for Mr. Cooper, very properly abandoned the first issue. It would also appear that the fourth issue is unnecessary and does not arise in these proceedings. It is common ground that no notices previous to this summons were served upon Mr. Cooper personally. As regards issue No. 2 there is no controversy that it is a proper issue to be tried. Issue No. 3 is in the nature of an alternative to issue No. 2. It invites the Court to ascertain whether any of the partners of the respondent firm had authority express or implied to apply for and purchase 1000 or any shares of the company in the firm's name. If the second issue were answered in favour of Mr. Cooper's contention the third issue would not arise, for if it were held that Mr. Cooper was not a partner in the respondent firm he would not be concerned whether any of the partners in the firm had or had not authority express or implied to apply for and purchase 1000 shares on behalf of the firm. The third issue could only arise if on the second issue the Court were to hold that Mr. Cooper was a partner in the respondent firm.

4. The question I have to determine is whether it would be permissible in these execution proceedings to determine an issue of an alternative nature like issue No. 3. It is not alleged on behalf of Mr. Cooper that the order already obtained against the respondent firm is not binding on the firm, nor is it alleged that the admitted partners in the firm acted fraudulently or in collusion with each other against Mr. Cooper in purchasing these shares in the name of the firm. It is contended on behalf of Mr. Cooper that this is the first opportunity he has had to be heard, and is therefore in the position of a newly added defendant who isentitled to raise all possible defences, whether consistent with each other or not. No doubt if Mr. Cooper had been originally served with the notices which have led to the passing of the order against the respondent firm, it would have been open to him, if so advised, to have appeared and raised both these inconsistent defences. But as the proceedings were against the respondent firm it would have been equally competent to the applicant under the provisions of Order XXX, on Mr. Cooper having denied that he was a partner in the respondent firm, to treat the service of the notice on Mr. Cooper as not being binding upon the firm and to serve an admitted partner of the firm instead. In that event Mr. Cooper would have had to stand aside and could raise contentions only after the order came to be made against the firm. If there was no admitted partner or manager who could be properly served the applicant could have proceeded against Mr. Cooper and obtained a finding whether he was or was not a partner in the respondent firm, Mr. Cooper could then have contended that if it was found that he was a partner the transaction was one which was not authorised and was not within the scope of the partnership business, That being not the case now thepresent proceedings, in my opinion, are analogous to the proceedings where a partner, who is served as a partner, denies that he was a partner and thereupon the validity of the service of the notice or summons on him is abandoned and fresh service is effected upon an admitted partner or manager and a decree or order is obtained against the firm, Mr. Cooper in ray judgment is in no better position in these execution proceedings than a partner who when originally served denied that he was a partner.

5. Order XXI, Rule 50(2), provides that where the liability is disputed by the alleged partner, the Court may order that the liability of such partner be tried and determined in any manner in which any issue in a suit may be tried and determined, It is sought on behalf of Mr. Cooper to give a wide interpretation to the language of this rule. It is contended that it is open to Mr. Cooper to raise every kind of defence in these execution proceedings. Order XXI, Rule 50, should, in my opinion, be read subject to the provisions of Order XXX which deals with suits by or against firms. Order XXX, Rule 8, provides that any person served with summons as a partner under Rule 3 may appear under protest, denying that he is a partner, but such appearance shall 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. The provisions of Order XXX and Order XXI, Rule 50, of our Code are analogous to those of Order XLVIII of the Supreme Court Rules in England, In Davis v. Hymanand Ca (1903)1 K. B. 854 the Court of Appeal held that an order for an issue whether the parson sought to be made liable ' was or had held himself out as a partner in the defendant firm' was a proper one. Stirling,L.J. in his judgment observes (p. 856):-

As to this I would say that under the rule (Order 48a, Rule 8) the question to be determined is the general one of the liability, as a member of the firm, of the person sought to be charged, and it seems to me that an issue could, in a proper case, be so framed as to include any proper defence. No such defence is suggested in the present case.

6. A similar case came up before the Court of Appeal in Weir and Co. v. McVicar and Co. (1925) 2 K.B. 127 Scrutton L.J. observes (p. 133) :-

A writ was issued against a firm of McVicar and Co. and served upon a Mr. Manasseh with notice that he was served as a partner in the firm. He desired to say, first, that he was not a partner, and secondly, that, if he was mistaken in that contention, the firm was not liable. The question is whether he can take up that position. What is to happen if a person alleged to be a partner, but who is not served with the writ, disputes the fact of hispartnership. If the writ has been served onother members of the firm and judgment has been recovered against the firm, OrderXLVIIIa, Rule 8, provides that an issue may be directed to try the question whether the alleged partner is in fact a partner or not. But it seems clear that in that issue he cannot raise the question of the liability ofthe firm, for if he could you might have two separate judgments on the same cause of action, the one already obtained for a specified amount in the action against the firm, and the other, for possibly a reduced amount or for nothing at all, on the trial of the issue under Rule 8. The only question that can be raised onthe trial of that issue is whether the parson against whom execution is sought was a partner at the material time or not. But if that is the position in the case of an alleged partner who was not served with the writ, can the fact that the alleged partner was served pub him in any better position The rules provide that a person who is served as a partner may do one of two things-he may appear as a partner and defend on behalf of the firm, or ha mayappear under protest saying that he is not a partner, in which case the service on him cannot be utilized for the purpose of getting a judgment against the firm. Such judgment can only be got by service on the firm in another way. To my mind that involves the proposition that aperson who has been served as a partner cannot' both deny the partnership and at the same time claim to defend the action on behalf of the firm...In the present case the appellant desires tointroduce a procedure for which I can find no trace of justification in the rules. Order XLVIIIa, Rule 8, assumes that judgment has already been obtained against the firm by proper 88rvio9, and then proceeds to point out who arethe persons against whom it is to beenforced. The appellant desires to invert the procedure, and to suspend the obtaining of judgment against the firm until after it has been ascertained who are the parsons against whom the judgment when obtained willbeen forceable. There is nothing in the rates which allows of such a proceeding..,' BankesL.J. remarks (p, 133):-

A member of a partnership on becoming a partner takes upon himself the responsibility for everything that his partners may do in the conduct of the partnership, whether it be in the ordering of goods, or failing to defend an action, or admitting, however wrongly, the liability of the firm.

7. It is clear from the judgment of the Court of Appeal in Weir and Co. V. McVicar and Co. that if the analogy of that case is applicable to the present case, it is not open to Mr. Cooper to rely upon the alternative defence raised in issue No. 3.The result of allowing such a procedure might lead to an absurdity. The order already made is binding on the firm and may be executed against its assets. If the finding on issue No. 3 were to be in favour of Mr. Cooper, the result would be that the order already made would not oparate on the assets of the firm. The defence foreshadowed in issue No. 3 is a common defence which all or any of the admitted partners of the firm could properly urge in favour of the firm. It cannot be said that issue No. 3 raises a defence which is peculiar to Mr. Cooper only. If he is apartner andbe must be presumed to know whether he was or was not a partner 'the acts of his partner or partners in entering into this transaction on behalf of the firm would, in the absence of fraud or collusion proved against them, be consideredbinding upon him. If he had no knowledge that such a transaction had been effected in the name of the firm he could in the present proceedings have challenged the transaction as fraudulent. He doss not choose to do that. He is sitting on the fence. He denies in the first instance that he is a partner. He then says if the Court holds that I am a partner I say my partners had no authority to purchase these shares. In my opinion such an alternative defence cannot be permitted in these execution proceedings having regard to the provisions of Order XXX and Order XXI, Rule 50.

8. Reliance is placed on behalf of Mr. Cooper on the case of Chhattoo Lal Misserand Company v. Naraindas Baijnath Prasad I.L.R. (1928) Ca1. 704 In that case Mr. Justice Remfry permitted in execution proceedings an alleged partner against whom a decree was sought to be executed to rely upon two defences, viz., (1) that he was not a partner in the firm, and (2) that he was a ward under the United Provinces Court of Wards Act and that hence the decree could not be executed against him personally. Remfry J. in the course of his judgment remarks (p. 706):-

It has long since ceased to be the province of procedure to exclude defences, and it is to be presumed that no defence is excluded unless that it is the only possible construction of a rule. The common sense of the matter is that the party sought to be charged can raise any personal defence and is generally precluded from challenging the decree, though, if that were obtained by collusion and fraud, that would not bind him, for he can only be bound, if found to be a partner, by admissions made by his partners and their conduct within the scope of their authority as such.

9. It is clear from the judgment in Chhatoo Lal Misser and Co. v. Naraindas Baijnath Prasad that the alternative defence under the United Provinces Court of Wards Act was permitted to the alleged partner in the firm only on the ground that it was a personal defence. What is sought in the present case to do is to challenge the decree passed against the firm on general grounds. In my judgment this cannot be permitted. Issue 3 is, therefore, disallowed.

10. The result is that there will be a trial only on the issue 'whether Burjorji Sorabji Cooper was a partner in the respondent firm of Cooper Daveand Co. being contributory No. 74 ?'


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