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American Furnishing House New Delhi Vs. Udal Ram Bhurji S/O Chunna Ram - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberCivil Revn. Petn. No. 380-D/1959, from decree of Addl. Sm. C.C.J., Delhi, D/-11-4-1959
Judge
Reported inAIR1968Delhi163
ActsCode of Civil Procedure (CPC), 1908 - Order 33, Rules 1, 2(1) and 2(3)
AppellantAmerican Furnishing House New Delhi
RespondentUdal Ram Bhurji S/O Chunna Ram
Appellant Advocate G.L. Shrivastava, Adv
Respondent Advocate Roshanlal Sambhar, Adv.
Cases ReferredAgarwal Jorawarmal v. Kasam
Excerpt:
.....name of a dissolved firm, the cause of action arose before the dissolution- it was held that the suit name of firm was maintainable. - section 13: [altamas kabir & cyriac joseph,jj] custody of child - welfare of child vis--vis comity of courts - the minor girl child of 3 1/2 years was brought to india by her mother. the minor girl was a citizen of u.k. being born in u.k. her parents had set up their matrimonial home in u.k. and had acquired status of permanent residents of u.k. the child with her mother was supposed to return to u.k. but the mother cancelled her tickets and remained behind in india. the husband thereupon started procededings before the high court of justice, family division. u.k. praying for an order that the minor child be made a ward of the court and for a..........business may sue or be sued in the name of the firm. once such a suit is filed in the name of the firm, rule (2) of the same order provides as follows:-'2. (1) where a suit is instituted by partners in the name of their firm, the plaintiffs, or their pleader shall, on demand in writing, by or on behalf of any defendant, forthwith declare in writing the names and places of residence of all the persons constituting the firm, on whose behalf the suit is instituted. (2) where the plaintiffs or their pleader fail to comply with any demand made under sub rule (1) all proceedings in the suit may, upon an application for that purpose, be stayed upon such terms as the court may direct. (3) where the names of the partners are declared in the manner referred to in sub-rule :(1) the suit shall.....
Judgment:

1. The revision petition has had a chequered career and was filed against the dismissal of a Small Cause Court Case NO. 614 of 1958, on the file of the Additional Judge Small Cause Court, Delhi. The plaintiffs in the suit were (1) Messrs American Furnishing House and (2) Shri Hari Das, said to be a former partner of the American Furnishing House. The suit was instituted for the recovery; of a sum of Rs. 922/8/3. On the allegation that the amount was due to the plaintiff-firm, which was dissolved on 1/6/1965. The claim was based upon, among tohers, an agreement executed by; the defendant on 1-4-1955 for a sum of Rs. 791/8/3. One of the defense raised by the defendant was that on the date of the institution of the suit, the plaintiff No. 1 firm having been dissolved, the suit as such could nto be filed by that dissolved firm. In addition to the fact that the agreement was executed by the defendant on 1-4-1955 and the firm was dissolved on 1-6-1955 and the suit was instituted on 28-3-1958, one more fact that has to be ntoiced is that on 22-9-1958 in terms of Order 30, Rule 2(1) . Code of Civil Procedure, the defendant demanded in writing from the plaintiff the names and places of residence of all the persons constituting the firm on whose behalf the suit was instituted and that demand was complied with. The lower Court accepted the contention of the defendant and dismissed the suit on the ground that the dissolved firm could nto file the suit, relying upon the decision in Governor General in Council v. Shri Bharath Tirath Yatra Transport, Lucknow, Air 1945 Oudh 284, though it found, as a matter of fact that the defendant had executed an agreement agreeing to pay a sum of Rs. 781/8/3 to the firm.

2. It is against this dismissal of the suit, the present revision petition was instituted. This revision petition originally; came up for disposal before Falshaw C. J., who; by; his Order dated 26/2/1965 allowed the revision petition However, since the revision petition was disposed of ex parte in the absence of the respondent the respondent filed an application for restoration. Accordingly, by an order dated 14-2-1966, my learned brtoher, Khanna, J. set aside the ex parte Order and restored the revision petition for hearing. It is how the revision comes up before me.

3. The only point for consideration is the question relating to the competency of a dissolved firm to file a suit even though the cause of action with reference to which the suit was filed accrued at the time when the firm was in existence. Order 30, Rule 1, Civil Procedure Code, provides that certain persons carrying on business may sue or be sued in the name of the firm. Once such a suit is filed in the name of the firm, Rule (2) of the same Order provides as follows:-

'2. (1) Where a suit is instituted by partners in the name of their firm, the plaintiffs, or their pleader shall, on demand in writing, by or on behalf of any defendant, forthwith declare in writing the names and places of residence of all the persons constituting the firm, on whose behalf the suit is instituted.

(2) Where the plaintiffs or their pleader fail to comply with any demand made under sub rule (1) all proceedings in the suit may, upon an application for that purpose, be stayed upon such terms as the Court may direct.

(3) Where the names of the partners are declared in the manner referred to in sub-rule :(1) the suit shall proceed in the same manner and the same consequences in all respects shall follow, as if they had been named as plaintiffs in the plant: Provides that all the proceedings shall neverthless continue in the name of the firm.'

As pointed out already, in terms of sub-rule (1) of Rule (2) the defendant demanded the names and places of residence of the partners who constituted the firm of the plaintiff No. 1 and that demand was complied with. Once that was complied with, the consequences contemplated by sub-rule (3) of Rule 2 of Order 20 will automatically follow i. e., the suit shall proceed in the same manner and the same consequences in all respects shall follow as if the said partners had been named as plaintiffs in the plaint. The effect of this is, that though nominally the firm is the plaintiff. It is the partners of that firm who are the plaintiffs , enforcing their claim. There cannto be any objection to all the partners of the dissolved firm joining together and filing a suit for the enforcement of any claim with reference to which the cause of action arose when the firm was in existence. thereforee, apart from any toher technical objection whether a dissolved firm can file a suit in the name of the dissolved firm, Order 30, Rule 2(3) provides a complete answer to the point, because once the demand in writing has been complied with, the position is as if the partners themselves have filed the suit, though in the name of the firm. To the maintainability of such a suit, there cannto be any objections.

4. Apart from the fact that Order 30, Rule 2(3) provides a complete answer to the objection taken by the defendant in the case, there are authorities to show that there is ntohing in law prohibiting the dissolved firm from filing a suit in the name of the firm, provided they; were partners at the time of accrual of the cause of action and the firm was in existence then. Reliance on the decision in Air 1948 Oudh 284. Does nto appear to be warranted by the facts of that case. That decision itself did nto have any occasion to deal with the point that is actually raised before me. The following qutoation from that judgment itself will make this clear:-

'The second preliminary issue was raised by the plaintiff who claimed that he sued as a dissolved partnership. But he had already admitted that at the time of filing the suit the firm was still in existence.'

On this premises, there was no occasion to decide the question whether the dissolved firm could have filed the suit or nto. Further, the learned Judge, went on to observe.

'Moreover even without that admission the fact was obvious from the form of the plaint. The firm sued under its trade name. If it had been dissolved it is clear that it could nto have sued at all being no person in law. The late partners could have sued in their individual capacity, but this they did nto pretend to do.'

I want to make three observations with reference to this. One is that this was purely an obiter dicta with reference to the facts of the case and finding thereon, as pointed out by me already. Secondly; the learned Judge did nto consider the effect of Order 30, Rule 2. Thirdly, from the fact that the firm sued in its trade name of the learned Judge only wanted to draw the inference that the firm could nto have been dissolved.

5. On the toher hand, two decisions, one of the Bombay High Court and antoher of the Nagpur High Court were brought to my ntoice, in support of the position that there is ntohing in law preventing a dissolved firm from filing a suit in its own name In Cooverji Varjang v. Coverbai Nagsey; : AIR1940Bom330 ,a Bench of Bombay High Court, with reference to the provisions contained in Order 30, Code of Civil Procedure, came to the conclusion that the partners of a firm who were partners at the time of the accrual of the cause of action could under the terms of O. 30, R. 1 sue or be sued in the name of the firm and it does nto matter that the firm was dissolved at the date of the suit, so long as the claim in respect of which the suit was brought arose during the continuance of the partnership. The second decision is Agarwal Jorawarmal v. Kasam, . There again, with reference to the provisions of Order 30 it was held that a dissolved firm can file a suit. The Court observed:-

'If then the firm continued, it is obvious it had the right to transact business and to do all toher matters necessary; for that purpose. One of these is naturally the filing of suits on behalf of the firm. Even under the present law, the mere fact of dissolution does nto prevent suits being instituted in the name of the firm with respect to transactions which were entered into before the date of dissolution.'

The Court further observed:-

'It is argued on behalf of the defendants that Order 30, Rule 1, Civil Procedure Code indicates that a suit can be filed in the name of the firm by some of the partners only if the partnership is existing at the date of the filing of the suit. The argument has no force in view of the finding that the firm was nto dissolved by reason of the insolvency of one of its partners. But even if it has been dissolved, the effect of dissolution is nto to render the firm non-existent. It continues to exist for all purposes necessary for its winding up. One of these is of course, the recovery of moneys due to it by suit or toherwise.'

Even though the Court made these observations, still it has held, on the facts of the case, that the firm was nto dissolved, and thereforee, two or more of the partners could institute the suit under Order 20, Rule 1.

6. In view of the general principles enunciated in the two decisions above cited, with reference to Order 30, Civil Procedure Code, I am of the view that the decision of the lower Court is wrong and it has to be set aside. Since the trial Court had already found that the defendant executed the agreement to pay the money and dismissed the suit on the sole ground of its non-maintainability, in view of my allowing this revision petition, it will follow that the plaintiffs will be entitled to a decree for R. 791/8/3, and a sum of Rs. 131/- claimed as interest and found due by the lower Court, ttoalling in all Rs. 922/8/3 with costs of the suit. The plaintiffs will also be entitled to interest at the rate of 6 per cent per annum on Rs. 791/8/3 from the date of the suit till the date of realisation . The petitioners will have the costs of this Revision Petition also.

BDB/D.V.C.

7. Revision allowed.


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