Skip to content


Adduru Dasaradarami Reddy Vs. Indian Bank, Madras-body Corporate and Others - Court Judgment

LegalCrystal Citation
SubjectLimitation;Banking
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal Nos. 105 of 1992 and 2740 of 1993
Judge
Reported in1999(6)ALD668; 1999(6)ALT103
ActsLimitation Act, 1963 - Schedule - Article 62; Code of Civil Procedure (CPC), 1908 - Sections 86, 87-B, 107, 220, 223, 230, 258 and 295 - Order 21, Rule 50 - Order 30, Rules 1 and 4; Usurious Loans Act, 1918; Banking Regulations Act, 1949 - Sections 21-A; Indian Partnership Act, 1932 - Sections 4; Indian Contract Act, 1872 - Sections 45
AppellantAdduru Dasaradarami Reddy
RespondentIndian Bank, Madras-body Corporate and Others
Advocates:Mr. M.S.R. Subrahmanyam, ;Mr. P. Suresh and ;Mr. V. Sudhakar Reddy, Advs.
Excerpt:
banking - suit for recovery - article 62 of limitation act, 1963 and order 30 rule 1 of code of civil procedure, 1908 - suit instituted for recovery of mortgage amount by bank - one defendant died during pendency of suit - two other defendants impleaded and added - validity of present suit due to death and addition of defendants questioned - suit not abated due to death of defendant but addition of two more defendants barred by limitation - held, no decree can be passed against personal assets of deceased. - - the defendants failed to pay the mount inspite of repeated demands. (3) whether the suit is bad for non-joinder of all the legal representatives of deceased adinarayana reddy? 7 and 8, sons of adinarayana reddy (deceased) contended that the suit is primarily filed for recovery.....orders.v. maruthi, j. 1. these two appeals are disposed of by a commonjudgment as they arise out of a common judgment and decree of the subordinate judge, srikalahasti, in os no.20 of 1987, dated 8-10-1991. in as no.105 of 1992, the 6th defendant is the appellant and in as no.2740 of 1993, the plaintiff-bank is the appellant.2. the plaintiff-bank viz., indian bank filed the suit for recovery of rs.10,94,047-55 ps. with costs against defendants 1 to 11. the 1st defendant is a partnership firm. defendants 2 to 5 and one late adinarayana reddy are the partners of defendant no.1 firm. defendant no.6 is the guarantor. defendants 7 to 11 are impleaded as legal representatives of the deceased adinarayana reddy subsequent to the filing of the suit, by orders dated 3-8-1988 and 30-6-1990 in ia.....
Judgment:
ORDER

S.V. Maruthi, J.

1. These two appeals are disposed of by a commonjudgment as they arise out of a common judgment and decree of the Subordinate Judge, Srikalahasti, in OS No.20 of 1987, dated 8-10-1991. In AS No.105 of 1992, the 6th defendant is the appellant and in AS No.2740 of 1993, the plaintiff-bank is the appellant.

2. The plaintiff-bank viz., Indian Bank filed the suit for recovery of Rs.10,94,047-55 ps. with costs against defendants 1 to 11. The 1st defendant is a partnership firm. Defendants 2 to 5 and one late Adinarayana Reddy are the partners of defendant No.1 firm. Defendant No.6 is the guarantor. Defendants 7 to 11 are impleaded as legal representatives of the deceased Adinarayana Reddy subsequent to the filing of the suit, by orders dated 3-8-1988 and 30-6-1990 in IA Nos.92 of 1998 and 237 of 1980 respectively. Defendant No.4 died on 23-11-1989 during the pendency of the suit and his LRs. were not brought on record.

3. The brief averments in the plaint are as follows:

Defendants 2 to 5 and Adinarayana Reddy were carrying on business in partnership in production of hybrid seeds and marketing the same in India and abroad under the name and style of the firm Raja Superior Seeds (1st defendant). They have entered into a partnership under a registered partnership deed dated 20-5-1981. Defendant No.2 is the Managing Partner of the 1st defendant-firm. The defendants applied to the plaintiff bank for an Over-draft facility upto a limit of Rs.7-00 lakhs which was sanctioned. Defendants 1 to 5 and late Adinarayana Reddy executed a promissory note on 21-4-1984 for a sum of Rs.7-00lakhs promising to pay the same with interest at the rate of 4% p.a., over and above the official rate of the Reserve Bank of India subject to a minimum of 14% p.a. with quarterly rests. The defendants availed the said facility. Defendants 3 and 4 deposited their title deeds pertaining to their plaint A and B schedule immovable properties on 23-4-1984 with an intention to create a valid equitable mortgage over those properties. They executed a memorandum of deposit of title deeds on 24-4-1984 acknowledging their deposit of the title deeds by way of additional security of the sum outstanding under the said overdraft facility. The 6th defendant guaranteed due repayment of the outstanding amount from the defendants 1 to 5 by executing a Deed of Guarantee dated 21-4-1984. S. Adinarayana Reddy, partner in the 1st defendant firm died leaving behind him his estate and interest in the 1st defendant firm and also the defendants 2 and 7 to 11 as the legal representatives who succeeded to his estate and interest in the 1st defendant firm. The defendants failed to pay the mount inspite of repeated demands. Hence the suit.

4. The 1st defendant filed a writtenstatement admitting that defendants 2 to 5 were carrying on business in the name and style of the 1st defendant under a partnership deed dated 20-5-1981 and that they have secured an overdraft facility and their executing the suit promissory note on 21-4-1984. The 1st defendant, however, pleaded that the interest claimed is exorbitant, excessive, usurious and arbitrary, that the 1st defendant firm is an agricultural unit and they are agriculturists, and that they are attracted by Act IV of 1938 and also the Usurious Loans Act. They have admitted that they had created an equitable mortgage and that the 6th defendant is the guarantor for repayment of the sum outstanding by the firm. Defendants 2 and 5 filed a memo adopting the written statement filed by the 1st defendant.

5. Defendants 3 and 4 filed a separate written statement admitting the execution of the partnership deed, that the 2nd defendant is the Managing Partner of the firm, that they are only sleeping partners and that the 2nd defendant who is their close relative requested them to allow him to use their names for the purpose of taxation and other things and, therefore, they conceded their request. The partnership deed is a sham and nominal document and it is not binding on the other defendants and was never acted upon. They denied taking of loans from the bank and execution of pronote. The 2nd defendant obtained the signatures and thumb impressions of these defendants on several blank papers and they might have converted them into the suit documents. The legal representatives of the deceased Adinarayana Reddy are also to be impleaded as the proper and necessary parties as the transactions are prior to his death and the plaintiff is only entitled for simple interest. The suit is, therefore, liable to be dismissed.

6. The 6th defendant-guarantor also filed a written statement stating that he was not informed of all the correct facts and was persuaded to sign on some papers for presenting the same to the plaintiff-bank for securing a loan by them on the ground that he will be only a guarantor for defendants 1 to 5. Having regard to the close relationship with the 2nd defendant he signed the papers. The legal heirs of the deceased personally are liable to discharge the debt from out of the assets of the deceased in their hands. The omission on the part of the plaintiff to implead the legal heirs of the deceased partner amounts to discharge and revocation of the guarantee of this defendant. He has nothing to do with the business of defendants 1 to 5. The plaintiff bank has to first exhaust its remedy against the principal borrowers and their properties mortgaged so as to realise the suit amount and thereafter only it could proceed against the guarantor. The suit is, therefore, liable to be dismissed.

7. The 7th defendant filed a written statement stating that there was a partition between his father, himself and his brothers under a registered partition deed dated 2-3-1971, that they have been enjoying the properties separately, that after the death of his father on 5-5-1986 his properties devolved on his wife and not on his sons and therefore this defendant and other defendants could not be held liable for the suit amount. The suit was not filed in time and, therefore, barred by limitation. All the relatives of Adinarayana Reddy are liable to be brought on record. The suit is not maintainable against him and defendant No.8. Defendant No.8 filed a memo adopting the written statement filed by the 7th defendant. The 9th defendant died during the pendency of the suit and defendants 10 and 11 have not filed any written statement.

8. On the basis of the above pleadings, the trial Court has framed the following issues:

(1) Whether the partnership deed dated20-5-1981 is true, valid and binding on defendants 1 to 5?

(2) Whether the defendants 1 to 5 have executed the promissory note on21-4-1984 in favour of the plaintiff bank is true, valid and binding on them?

(3) Whether the defendant No.6 has executed the deed of guarantee dated 21-4-1984 in favour of plaintiff Bank?

(4) Whether the defendants are not entitled to the benefit of AP Act IV of 1938 and AP Act VII of 1977 and Usurious Loans Act in view of the amendment made to Section 21-A of Banking Regulations Act, 1949?

(5) To what relief?

The following additional issues were framedon 9-2-1989:

(1) Whether the defendant Nos.7 and 8 arc not liable for the suit debt?

(2) Whether the suit against defendant Nos.7 and 8 is barred by limitation?

(3) Whether the suit is bad for non-joinder of all the legal representatives of deceased Adinarayana Reddy?

In support of the claim, the plaintiff bank examined PW1 and marked Exs.A1 to A14, while the defendants examined DW1 to DW4 and no document is marked on their behalf. On the basis of the evidence adduced, both documentary and oral, the Subordinate Judge decreed the suit with costs against defendant Nos. 1 to 3, 5 and 6 and dismissed the suit with costs against defendant Nos.4 and 9 as abated and also against defendant Nos.7, 8, and 11 as barred by time. Aggrieved by the decree, defendant No.6 filed AS No.105 of 1992 and aggrieved by the dismissal of the suit against defendants 4 and 9 as abated and against defendants 7, 8 and 11 as barred by time, the Indian Bank-plaintiff filed AS No.2740 of 1993.

9. The appellant in AS No.2740 of 1993 is referred to as appellant-bank, while the appellant in AS No.105 of 1992 is referred to as defendant No.6.

AS No.2740 of 1993:

The main argument of the learned Standing Counsel for the appellant-bank Shri P. Suresh is that the trial Court dismissed the suit against defendant 7, 8 and 11 as barred by limitation on the ground that the suit was filed on 15-4-1987 on the basis of a pronote dated 21-4-1984. Defendants 7 and 8 were added on 3-8-1988 by which time more than four years elapsed. The period of [imitation prescribed for recovery of amount in these type of matters is 3 years from the date of the suit transaction. Since the legal representatives of Sri Adinarayana Reddy viz., defendants 7 and 8 were addedafter a period of 3 years from 21-4-1984, the suit is barred by limitation as against defendant Nos.7 and 8. The Counsel submitted that the finding of the Subordinate Judge is contrary to law as the suit is filed not only for recovery of the amount due on the pronote, but also for enforcement of the equitable mortgage executed by defendants 3 and 4 and, therefore, the period of limitation is 12 years as contemplated under Article 62 of the Limitation Act. Therefore, the learned Judge ought to have decreed the suit as against defendants 7, 8 and 11 also. The Counsel also submitted that the learned Judge ought to have decreed the suit as against defendants 4 and 9 as Order XXX, Rule 1 of CPC enables the bank to file a suit against the firm without bringing the legal representatives of the deceased partner if the partner dies either before institution or during the pendency of the suit. Therefore, the trial Court ought to have decreed the suit as against defendant 4 also.

10. While the learned Counsel Shri Adinarayana Raju, appearing for respondent Nos.7 and 8, sons of Adinarayana Reddy (deceased) contended that the suit is primarily filed for recovery of money covered by a pronote and the relief claimed for enforcement of the mortgage is only in the event of the failure of the defendants to pay the due amount, cost and interest within such time as the Hon'ble Court may fix. In other words, the relief claimed in the suit is for payment of money. Therefore, it is not a suit on a mortgage, but a simple money suit and the period of limitation is 3 years and not 12 years.

AS No. 105 of 1992:

This appeal is filed by the 6th defendant challenging the decree in OS No.20 of 1987 decreeing the suit against him. The main argument of the learned Counsel for the defendant No.6 Shri M.S.R. Subrahmaniyam is that since defendant No.4 died and sincethe legal representatives of defendant No.4 were not brought on record, the suit in its entirety is abated. Therefore, the Subordinate Judge ought to have dismissed the suit as abated against all the defendants. The Counsel also submitted that the judgment of the Subordinate Judge resulted in two conflicting decrees; the suit having been dismissed against defendant No.4 and having been decreed against the other defendants viz., defendants 1, 3, 5 and 6. The liability of the partners is joint and several and not distinct. Therefore, the suit is liable to be dismissed in its entirety. The learned Counsel further contended that when the creditor by his negligence lost his remedy against the principal debtor by not bringing his legal representatives on record, the surety automatically gets discharged. At any rate the liability of the surety will be reduced to the extent of the liability of the 4th defendant. Therefore, the liability of the surety should be confined only to the extent of the liability of the defendants viz., defendant Nos.1, 2, 3, 4 and 5 only.

11. While the Counsel for the bank Shri Suresh submitted that the right to sue survives to the other partners and there can be a decree against the share of the deceased partner in the assets of the firm. The Counsel also submitted that in view of Order XXX, Rules 1 and 4, in the absence of the deceased partner, the suit can be proceeded with and decree can be granted against the partners and the share of the deceased partner in there assets of the firm and other properties of deceased 4th defendant.

12. On the basis of the above contentions, the following issues arise for consideration:

(1) Whether the suit against defendants 7 and 8 is barred by limitation?

(2) Whether the suit is abated in its entirety on account of not bringing onrecord the legal representatives of defendant No.4?

(3) Whether the appellant in AS No.105 of 1992 is entitled to restrict his liability to the extent of the share of defendants 2, 3 and 5 alone?

Issue No. 1:

The undisputed facts are that Adinarayana Reddy - one of the partners of the 1st defendant firm died leaving behind him his estate and his interest in the 1st defendant firm and defendant Nos.2 and 7 to 11 are his legal heirs. Defendant Nos.7 to 11 are respondents in AS No.105 of 1992 and respondent Nos.7 to 11 in AS No.2740 of 1993. The date of death of Adinarayana Reddy is on 5-6-1986 and it is an admitted fact that he died prior to the filing of the suit. The appellant-bank filed the suit on 15-4-1987 basing on a pronote dated 21-4-1984. The defendants were added on 3-8-1988. According to the learned trial Judge, since defendants 7 and 8 were added after a lapse of 3 years, the suit is barred by limitation against them.

13. If the suit is filed for recovery of money, the learned trial Judge is right in his view that the suit is barred by limitation. In this context, it is necessary to refer to the relief claimed in the plaint. The relief claimed in the plaint is as follows:

'(a) directing the defendants 1 to 6 jointly and severally and defendants 2, 7 to 11 from and out of the estate of deceased partner of 1st defendant's firm S. Adinarayana Reddy and his interest in the 1st defendant firm that are in the hands of the defendants 2, 7, 8, 9, 10 and 11 to pay to the plaintiff bank the sum of Rs. 10,94,047-55 sued for together with subsequent interest at contractual rate with 1/2 yearly rests;

(b) enabling the plaintiff in the event of failure of defendants to pay the sum of Rs. 10,94,047-55 and costs and interest within such time as the Hon'ble Court may fix in this regard to realise the same with further interest at contract rate with 1/2 yearly rests and costs by sale of the plaint A and B schedule mentioned property of defendants 3 and 4 respectively;'

14. From the relief claimed in the plaint, it is clear that the appellant-bank is seeking the relief of direction to the respondents to pay an amount of Rs.10,94,047-55 ps., with costs. In other words, the primary relief asked is for payment of money. It is no doubt true that the bank has also asked for the sale of plaint A and B schedule properties of defendants 3 and 4. However, the relief for the sale of plaint A and B schedule properties of defendants 3 and 4, which is a secondary relief, will come into picture only in the event of failure on the part of the defendants to pay the money due. In other words, if the defendants fail to pay the decretal amount, then the appellant should be allowed to realise the amount by sale of mortgaged properties. In our view, the decree is only a money decree. In this context, the judgment of a full bench of the Madras High Court in Vaidhinadasamy Ayyar v. Somasundaram Pillai, ILR 28 Madras 473 (FB), is relevant wherein it was held that:

'A decree directing the sale of mortgaged properties in default of payment of money is a decree for money, whether there is a direction to pay personally or not and whether the remedy against the property is exhausted or not. Such decrees will be money decrees under Sections 230, 258 and 295 of the Code of Civil Procedure, although they will not be so under Sections 220 and 223 of the Code.'

15. The Full Bench referred to the observations in Hari Tara PrasannaMukherji, ILR 11 Cal. 718, that every decree by virtue of which money is payable is to that extent a decree for money. Therefore, in view of the primary relief claimed by the appellant-bank seeking a direction to defendants 1 to 6 to pay the amount, the decree is a money decree. It is only in the alternative viz., in the event of failure on the part of the respondents to pay the amount, the appellant bank sought for the relief of sale of the mortgaged property. Therefore, the relief for the sale of property is secondary. In the event of payment of money by the respondents, the question of bringing the properties to sale for the realisation of the decretal amount does not arise. Further, the very fact that the plaintiff-bank filed the suit for recovery of money due on the pronote within a period of 3 years from 1984 substantiate our view that the suit is filed on the basis of a pronote and the decree is a money decree. If it is really a suit for enforcement of a mortgage, then the appellant bank would have waited till completion of 12 years and there is no need for the bank to rush to the Court and file a suit. Primarily the suit is for recovery of money on the basis of a pronote dated 21-4-1984. Plaint B schedule properties are mortgaged by defendants 3 and 4 as a collateral security. The appellant bank would be entitled to enforce the plaint A and B Schedule properties mortgaged as a collateral security only in the event of respondents not paying the money. Therefore, Article 62 of the Limitation Act is not applicable as it is essentially a suit for recovery of money and the period of limitation is three years. It is evident that the suit was filed on 15-4-1987 on the basis of the pronote dated 21-4-1984 and defendants 7 and 8 were added on 3-8-1988, evidently beyond the period of limitation. Therefore, the suit is barred by limitation as against defendants 7 and 8. The judgment of the learned Subordinate Judge is confirmed as regards defendants 7 to 10.

Issue No. 2:

The next issue is whether the suit is abated on account of the failure on the part of the appellant-bank to bring on record the legal representatives of defendant No.4. The undisputed fact is that defendant No.4 died during the pendency of the suit and his legal representatives were not brought on record. Order XXX, Rule 1 CPC enables several persons who are doing business as partners to sue or to be sued in the name of the firm, a suit by or in the name of a firm is really a suit by or in the name of a firm or its partners. Similarly, a suit against the firm is merely a suit against tall the partners. It is a privilege given to the persons who constitute firm. Therefore, under Order XXX, Rule 1 CPC a suit can be instituted in the name of the firm either impleading alt the partners or otherwise. Order XXX, Rule 1 CPC also enables institution of the suit in the name of a firm without disclosing the names of its partners. Similarly Order XXX, Rule 4 CPC is an enabling provision and if a suit is brought in the name of all the partners of a firm and in the event any one of them dies, the surviving partners can competently continue the suit without bringing on record the legal representatives of the deceased partner.

16. In this context, a reference may be made to the judgment of the Supreme Court in Mandalsa Devi v. M. Ramnarain Private Limited, : [1965]3SCR421 . The facts in brief of this case are that several persons including Maharaja Sir Rajendra Prakash Bahadur, Maharaja of Sirmur carried on business in co-partnership under the firm name and style of Messrs. Jagatsons International Corporation, at New Delhi (for short 'the firm'). M/s. Ramnarain (Pvt.) Limited-respondent instituted a summary suit against the firm claiming a money decree for Rs.1,96,831-58 ps. The consent of the Central Government to the institution of the suit was not obtained though the Maharajaof Sirmur is a Ruler of the former Indian State within the meaning of Section 87-B of CPC. In the suit, the firm admitted its liability as claimed in the plaint and applied for instalments and the Court passed a decree for Rs. 1,89,643.98 ps. payable in instalments. The firm committed default in payment of instalments. The decree holder filed an application under Order XXI, Rule 50(2) CPC for leave to execute the decree against the partners of the firm. The judgment debtors raised an objection contending that the suit and all proceedings therein were incompetent in the absence of the requisite consent of the Central Government under Section 86 of the CPC. The said contention was rejected and the application filed by the decree holder under Order XXI, Rule 50(2) CPC was allowed. On appeal to the High Court the judgment debtors were not successful. The High Court held that though the decree against the firm was a decree against all its partners including the Maharaja of Sirmur and though the decree against the Maharaja of Sirmur might be a nullity, the decree against the other partners of the firm is valid. The matter went upto the Supreme Court. The arguments that were advanced were that the suit against the firm was a suit against all its partners and in the absence of requisite consent under Section 86 read with Section 87-B of CPC, the suit was not competent against Maharaja of Sirmur and the decree against him was null and void and that consequently the suit against the firm under the provisions of Order XXX CPC was not competent and the decree passed in the suit was wholly void. In answer to the said arguments, the respondents contended that for the purposes of a suit under Order XXX CPC, the firm is a legal entity separate and distinct from its partners, and no question of obtaining the consent of the Central Government to sue one of its partners under Section 86 read with Section 86-B of CPC to the institution of such a suit arises. It was held by the Supreme Court that:

'.....The persons who are individuallycalled partners are collectively a firm, and the name under which their business is carried on is called the firm name, see Section 4 of Indian Partnership Act, 1932.'

'.....In the absence of the requisiteconsent of the Central Government, a suit, which is in reality, though not in form, a suit against the Maharaja of Sirmur, is barred by Section 86 read with Section 87-B, .....Consequently,the suit so far as it was one against the Maharaja of Sirmur was incompetent and the decree against the firm so far as it is a decree against him was a nullity.

The Supreme Court further held that:

'.....But we think that the secondcontention of Mr. Mukherjee should be rejected. Beyond doubt, in a normal case where all the partners of a firm are capable of being sued and of being adjudged judgment debtors, a suit may be filed and a decree may be obtained against a firm under Order 30 of the Code of Civil Procedure, and such a decree may be executed against the property of the partnership and against all the partners by following the procedure of Order 21, Rule 50 of the Code of Civil Procedure. But there may be abnormal cases where a suit is filed against a firm under the provisions of Order 30 of the Code of Civil Procedure, and it is found that one of its partners cannot be sued or cannot be adjudged a judgment debtor'

'.....But the case shows that a creditorof a firm of which one of the partners cannot be adjudged to be a debtor, may institute a suit against a firm in the firm name under Order 30 of the Code of Civil Procedure, and may in such a suit obtain a decree against the firm other than the partner who cannot be adjudgeda debtor. Again, take a case where the creditor of a firm institutes a suit against a firm and one of its partners at the time of the accrual of the cause of action is dead at the time of the institution of the suit. The suit against the firm is really a suit against all the partners who were its partners at the time of the accrual of the cause of action, including the dead partner. Order 30, Rule 4 of the Code of Civil Procedure enables the creditor to institute the suit against the firm in the firm name without joining the legal representative of the deceased partner. The suit is, therefore, competent, but no suit can be instituted nor can a decree be obtained against a dead person. The decree passed in such a suit will, therefore, bind the partnership and all the surviving partners, but will not affect the separate property of the deceased partner. In Ellis v. Wadeson, (1989) 1 QB 714 At P.718, Romer LJ, observed:

'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 representative 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....Ifthe 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.' The above illustrations show that a suit may be brought under the provisions of Order 30 of the Code of Civil Procedure against a firm of which a partner is not capable of being sued or being adjudgeda debtor, and in such a suit a decree enforceable against the other partners and the partnership assets may be passed. Now, in the instant case, respondent No. 1 sued the firm of Jagatsons International Corporation under the provisions of Order 30 of the Code of Civil Procedure. The assets of the firm as also all its partners jointly and severally are liable to satisfy the debts of the firm.'

17. It is clear from the above judgment that a suit by or in the name of a firm is really a suit by or in the name of all its partners. The firm's name is used for a convenient method of denoting those persons who compose the firm and the suit in truth is actually against the individuals. The decree passed though in form against the firm is in effect a decree against all the partners. A suit may be filed and a decree may be obtained against a firm and such decree may be executed against the properties of the partnership firm and against all the partners by following the procedure under Order XXI, Rule 50 CPC. In cases where one of the partners cannot be sued or cannot be adjudged a judgment debtor, for instance, in a case where the creditor of the firm institutes a suit against a firm and one of its partners is dead at the time of the accrual of the cause of action or at the time of the institution of the suit, under Order XXX, Rule 4 CPC, the creditor is entitled for a decree against the firm in the firm name without joining the legal representatives of the deceased partner, such suit is competent by virtue of Order XXX, Rule 1 read with Rule 4 CPC. However, since no suit can be instituted nor can a decree be obtained against a dead partner, the decree passed in such a suit will, therefore, bind the partnership firm and all the surviving partners, but will not affect the separate property of the deceased partner. Under Order XXX, Rule 1 read with Rule 4 CPC, a decree enforceable against the partnership and the surviving partners can be passed in the event of the death of a partner beforefiling of the suit or during the pendency of the suit without impleading the legal representatives of the dead partner -Order XXX, Rule 4 CPC being an enabling provision.

18. It is no doubt true in the said judgment they were dealing with a case of maintainability of a suit against the Maharaja of Sirmur without obtaining the consent of the Central Government. However, the learned Judges gave an illustration of death of a partner prior to the institution of the suit and observed that by virtue of Order XXX, Rule 4 of CPC, without impleading the legal representatives of the deceased partner, a suit can be filed against the firm and its surviving partners and decree can be obtained against the surviving partners and the assets of the firm, but not the private asset of the deceased partner, in view of the above, though the 4th defendant died during the pendency of the suit and though the legal representatives of the 4th defendant were not brought on record, by virtue of Order XXX, Rule 4 of CPC. the suit filed against the firm and its surviving partners does not abate by virtue of Order XXX, Rule 1 CPC read with Rule 4 and there can be a decree against the assets of the partnership firm and the surviving partners though the decree holder cannot obtain a decree against the personal assets of the deceased partner viz., the 4th defendant.

19. We may also refer the judgment ofthe Supreme Court in Sohan Lal v. Amin Chand and Sons, : [1974]1SCR453 , wherein the facts in brief are that during the pendency of the appeal in the Supreme Court one of the appellants died. It was contended that the appeal has abated, in this context, it was held as follows:

'3. So, the first question for consideration is whether the appeal has abated. The plaint shows that three persons were sued in the names of the firms under whichthey were carrying on business. The injunction order was issued against these persons in the names of the firms. The injunction order operated against these persons as carrying on business in the names of the firms.

4. Order 30, Rule 4 of the Civil Procedure Code provides that notwithstanding anything contained in Section 45 of the Indian Contract Act, 1872, two or more persons may sue or be sued in the name of a firm under the foregoing provisions and if any of such person die, whether before the institution or during the pendency of any suit, it shall not be necessary to join the legal representative of the deceased in the names of the firms and that it operated as against them. The partners filed the appeal in the names of the firms against the order and when one of the partners died, the failure to implead his legal representatives would not cause the appeal to abate. Under Section 107 of the CPC the provisions of Rule 4 of Order XXX will apply to appeals also'.

20. A reading of the above makes it clear that the suit does not abate in view of special provision under Order XXX, Rule 1 read with Rule 4 of CPC, inspite of not bringing on record the legal representatives of the 4th defendant who died during the pendency of the suit.

21. The learned Counsel for the 6th defendant in AS No.105 of 1992 Shri M.S.R. Subrahmaniyam contended that if it is held that the appeal is not abated, then it would result in conflicting decrees. In other words the suit gets dismissed as against defendant No.4 while there is a decree against other partners and the 1st defendant firm and relied on the following judgments:

(i) Srichand v. Jagdish Pershad, AIR 1966 SC 1427

(ii) Upper India Cable Company v. Balkishan, AIR 1999 SC 1977, and

(iii) Badni v. Sri Chand, AIR 1984 SC 1381.

22. In Srichand's case (supra), it was held that where the decree in favour of the respondents is joint and indivisible, the appeal against the respondents other than the deceased respondent cannot be proceeded with if the appeal against the deceased respondent has abated. The learned Judges have referred with approval the principle laid down in Nathu Ram's case, : [1962]2SCR636 , wherein they have laid down the principle as to when an appeal abates. They have held that the appeal abates - (a) the success of the appeal may lead to the Court's coming to a decision which will be in conflict with the decision between the appellant and the deceased respondent and therefore which would lead to the Court's passing a decree which will be contradictory to the decree which had become final with respect to the same subject matter between the appellant and the deceased respondent; (b) when the appellant could not have brought the action for the necessary relief against those respondents alone who are still before the Court; and (c) when the decree against the surviving respondents, if the appeal succeeds, be ineffective that is to say it could not be successfully executed.

23. The main thrust of the argument of Sri M.S.R. Subrahmaniyam is that in the absence of the legal representatives of the 4th defendant, the suit cannot be decreed as it would result in conflicting decrees. It is difficult to accept the said contention. The undisputed fact is that the 4th defendant has a share in the assets of the partnership firm. Since a decree could be passed against the partnership firm, all the assets of the partnership firm including the share of the 4th defendant is liable for the discharge of the decree debt. Further the Court can passa decree against the share of the surviving partners in the partnership assets and the share of the deceased 4th defendant as the decree will be against the entire assets of the partnership firm which includes the share of the 4th defendant. There will be no conflicting decrees as the suit against defendant No.4 is not dismissed. On the other hand, there will be a decree against the share of defendant No.4 in the assets of the partnership firm. In other words, there will be a decree against the assets of the firm. In addition, there can be a decree against the personal property of the surviving partners, but there cannot be a decree against the separate property of the 4th defendant. Therefore, the question of passing of conflicting decrees does not arise. The only difference between a surviving partner and the deceased partner is that in the case of surviving partner there can be a decree not only against his share in the partnership, but also his separate property; whereas in the case of deceased partner, there can be a decree against his share in the partnership, but not against his separate property in the absence of his legal representatives being added as parties. Therefore, the question of passing conflicting decrees does not arise and the principle laid down in Srichand's case (supra) is not applicable to a suit filed against the firm and its partners.

24. Upper India Cable Company (supra) is a case where a suit for eviction was filed against the firm and during the pendency of the 2nd appeal two partners died. The question that arose for consideration is whether the suit has abated. The learned Judges held that in view of Order XXX, Rule 4 CPC, the suit does not abate. It was also held that death of a proper party would have no impact on the suit, more so, where on death of a partner the partnership may stand dissolved or heirs do not desire to join the firm. This judgment is in conformity with the principle in Mandalsa Devi's case (supra).

25. Badni 's case (supra) is a case where eight suits were filed. Out of the said 8 suits, 2 suits were decreed and 6 suits were dismissed. Against the dismissal of 6 suits, 6 appeals were filed which were allowed. Against the judgment of the District Judge allowing the appeals, Second Appeals were filed and during the pendency of the Second Appeals, one of the appellants died. In that context, it was held that under Order XXX, Rule 4 the appeal has abated. While holding as above, they relied on the judgment in Srichand's case (supra). The issue in the suits was whether the claim of the plaintiff for possession of the suit land on the basis of adoption was sustainable. It was really a case where had the appeal not been abated it would have resulted in two conflicting decrees. As pointed out in the earlier paragraph, a suit against the firm stands on a different footing from other suits by virtue of special provision under Order XXX, Rules 1 and 4 CPC enabling the suit being filed against the firm without impleading the legal representatives.

26. It follows from the above that the suit does not abate and there can be a decree against the assets of the defendant No.1 firm including the share of the deceased 4th defendant and against the surviving partners and the separate property of the surviving partners and not against the separate property of the 4th defendant.

27. The next contention of Shri M.S.R. Subrahmaniyam is that by virtue of negligence on the part of the respondent-bank in AS No. 105 of 1992 by not impleading the legal representatives of the 4th defendant in the suit, the suits gets discharged and in support of his contention, he relied on the judgment of the Supreme Cuurt in State Bank of Saurashtra v. Chitranjan Ranganath, : [1980]3SCR915 . In our view the judgment in this case is not relevant as it is a case where the goods pledged to the Bank were in the custody of the bank and they were lost due to thenegligence of the bank. In that context it was held that the surety gets discharged. On the facts of the present case, even without impleading the legal representatives of the 4th defendant the bank is entitled for a decree against his share in the partnership assets and the bank cannot proceed against the separate property of the 4th defendant only. Therefore, the question of negligence of the bank and loosing the security does not arise,

28. We, therefore, hold that the suit is barred by limitation against defendants 7 to 10 and the appeal filed by appellant bank viz., AS No.2740 of 1993 is dismissed with costs. The appeal filed by the 6th defendant viz., AS No.105 of 1992 is also dismissed with costs as the suit is not abated in its entirety and there shall be a decree against the partnership firm and the separate property of the surviving partners.


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