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Gordhandas Kalyanji Bhat Vs. Gautamchand Rupchand - Court Judgment

LegalCrystal Citation
SubjectContract;Civil
CourtMumbai
Decided On
Case Number O.C.J. Suit No. 2107 of 1924
Judge
Reported inAIR1925Bom331; (1925)27BOMLR541; 87Ind.Cas.1051
AppellantGordhandas Kalyanji Bhat
RespondentGautamchand Rupchand
Excerpt:
civil procedure code (act v of 1903), order xxx, rule 3 - suit against firm-service of tummons-dissolution of partnership-decree against firm- liability of partners not personally served with summonses.;where a suit is, under order xxx, rule 1, of the civil procedure code, properly filed against a partnership firm in the firm's name, service on any one or more of the partners or on the manager shall be deemed good service upon the firm there is no difference as to the mode of effecting the service whether the firm in going on or has been dissolved at the date of the institution of the suit. if the service is effected as provided by rule 3, the suit can be proceeded with against the firm and the plaintiff is entitled to obtain a decree against the firm. in the case of partnerships, which..........ex parte.2. the defendant firm, according to the said gautamchand rupchand, consisted of two partners, gautamchand rupchand and dwarkadas premji. the plaintiff is the tenant of a shop in the mulji jetha market. he sub-let a portion of the shop to the defendant firm and filed this suit to recover from the defendant firm the arrears of rent for the said portion of the shop. the summons was served upon the said dwarkadas premji. he appeared at the hearing and admitted the plaintiff's claim. a decree was thereupon passed in favour of the plaintiff.3. in his affidavit in support of the rule the said gautamchand rupchand alleges that the partnership was dissolved in november 1923, and further that the plaintiff was aware of the said dissolution and with the knowledge of such dissolution.....
Judgment:

Taraporewala, J.

1. This is a rule taken out by one Gautamchand Rupchand, a partner in the defendant firm, calling upon the plaintiff to show cause why the decree passed in this suit on August 19, 1924, should not be set aside. The rule is taken out on the basis that the said decree was obtained ex parte.

2. The defendant firm, according to the said Gautamchand Rupchand, consisted of two partners, Gautamchand Rupchand and Dwarkadas Premji. The plaintiff is the tenant of a shop in the Mulji Jetha Market. He sub-let a portion of the shop to the defendant firm and filed this suit to recover from the defendant firm the arrears of rent for the said portion of the shop. The summons was served upon the said Dwarkadas Premji. He appeared at the hearing and admitted the plaintiff's claim. A decree was thereupon passed in favour of the plaintiff.

3. In his affidavit in support of the rule the said Gautamchand Rupchand alleges that the partnership was dissolved in November 1923, and further that the plaintiff was aware of the said dissolution and with the knowledge of such dissolution he served the summons on the said Dwarkadas Premji, that the said Dwarkadas Premji in collusion with the plaintiff did not inform the said Gautamchand of the filing of the suit and allowed the decree to be passed ex parte; and that the said Gautamchand did not come to know of the decree till after the same was passed.

4. The question as to whether the said Gautamchand is entitled to have the decree set aside turns upon the fact whether there was proper service of the summons on the defendant firm. If there was, then the decree was not passed ex parte as Dwarkadas Premji, an admitted partner of the firm, appeared at the hearing and admitted the plaintiff's claim. If the service of the summons was not proper, then the said Gautamchand would be entitled to have the decree set aside,

5. Mr. Jinnah, who appeared for the said Gautamchand, argued that under Order XXX, Rule 3, in the case of a partnership, which has been dissolved to the knowledge of the plaintiff before the institution of the suit, the service, of the summons must be effected upon all the partners in the firm who are resident within British India. Order XXX, Rule 3, provides for the service of the summons in cases where suit is filed against a partnership firm in the firm's name. The service may be effected upon any one or more of the partners, or 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; and it is provided that such service should be deemed good service upon the firm so sued, whether all or any of the partners are within or without British India. Then, there is a proviso 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 be made liable. The said rule, to my mind, is quite clear and capable of only one construction, namely, that where a suit is under Order XXX, Rule 1, properly filed against a partnership firm in the firm's name, service on any one or more of the partners or on the manager shall be deemed good service upon the firm There is no difference at all as to the mode of effecting service whether the firm is going on or has been dissolved at the date of the service of the summons. If the service is effected as provided by rule 3, the suit can be proceeded with against the firm and the plaintiff is entitled to obtain a decree against the firm. In the case of partnerships, which are going concerns at the date of the institution of the suit, the decree which is obtained against the firm is binding on all the partners in the firm, whether they have been served individually or not. In the case of a firm, which has been dissolved to the knowledge of the plaintiff before the institution of the suit, an exception is made as to the liability of the partners in the firm under the decree passed against a firm by the proviso to Order XXX, Rule 3, and it is this, that in case of such a firm the plaintiff must serve each and every person whom he wants to hold liable personally in respect of the decree passed against the firm, and if he has not done as he cannot execute the decree against the partner whom he has not served personally. The right to execute the decree against the firm is in no way affected by the proviso.

6. Mr. Jinnah, argued that it would mean great hardship where a partner in a dissolved firm colluded with the plaintiff' and allowed the decree to be passed against the firm in case the firm had assets which would be liable under the decree, as the share of the partner, who has not been served, in such assets would be liable for the payment of the decree and would thus be lost to such partner.

7. In the present case Gautamchand had alleged that he was the financing partner, that Dwarkadas Premji was only a working partner, that all the assets of the partnership belonged to him, Gautamchand, and if the decree was executed against the parnetship assets it; meant that he, Gautamchand, would be the sufferer and not Dwarkadas Premji. No doubt in cases like the present one, assuming that the allegations of the said Gautamchand are correct, there would be hardship; but in such a case the partner in the position of Gautamchand has a remedy by filing Section substantive suit for setting aside the decree on the ground of fraud and collusion between the plaintiff and the partner who accepted service and submitted to the decree. If there is no such collusion, no doubt the capitalist partner would have to bear the whole loss; but that is the necessary consequence of the provisions allowing suits to be filed against partners in firm's name even after the dissolution of partnership provided that the cause of action accrued when the partnership was carried on. The construction which Mr. Jinnah asks me to put upon Order XXX, Rule 8, would make the provisions of the whole Order nugatory with regard to a firm which has been dissolved to the knowledge of the plaintiff. To my mind, if the object of the legislature was to omit dissolved firms from the operation of the Order, the rulea under the Order would have been differently worded. If further the legislature intended that in the Case of dissolved firms the service should be different from the service in the case of a firm which is being carried on at the date of the institution of the suit, the legislature could have very well made a clear provision for such different service. The fact that there is only one provision for service in the case of a suit filed against a partnership firm shows that the indention of the legislature was that in the case of such suits the service should be in the same way whether the partnership was dissolved or not dissolved at the date of the institution of the suit.

8. Admittedly here the summons was served on Dwarkadas Premji. Therefore, in my opinion, there was good service against the defendant firm under Order XXX, Rule 3.

9. Then Dwarkadas Premji appeared at the hearing, as he was entitled to do, as a partner in the defendant firm, The decree, therefore, passed in the suit was not ex parte.

10. That-being the case the said Gautamchand is not entitled to the relief prayed for by him under this rule. The rule must, therefore, be discharged with costs


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