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Nathmal Nenmal, a Firm Bombay Vs. Mangilal and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtRajasthan High Court
Decided On
Case NumberFrist Appeal No. 11 of 1956
Judge
Reported inAIR1962Raj144
ActsCode of Civil Procedure (CPC) , 1908 - Order 30, Rules 1, 2, 2(1) and 2(3)
AppellantNathmal Nenmal, a Firm Bombay
RespondentMangilal and ors.
Appellant Advocate Thanchand, Adv.
Respondent Advocate Hastimal and; Hukamchand, Advs.
DispositionAppeal allowed
Cases ReferredFirm Narain Das Mangal Sen v. Anand Behari Misra
Excerpt:
.....with the provisions of sub-rule (1) and the suit should not proceed further. sub-rule (2) deals with she consequences of failure to comply with any demand made under sub-rule (1) and sub-rule 3 explains the position after the demand has been complied with. then the certified copy of the entry in the register of firms was filed by one of the partners of the firm on the 7th of december 1954 but nobody took the trouble on behalf of the defendants to take up the objection that the suit was bad for non-joinder of parties at that stage. 15. it would have been better had the learned district judge dealt with all the points arising in the case......champagali, bombay against the judgment and .decree of the district judge, pali dismissing the suit filed by it against mangilal and milapchand minor sons of meghraj, and chhogalal for the recovery of rs. 16,515-15-0. 2. the case set out by the plaintiff is that it was a registered partnership firm carrying on business at bombay and the names of the partners of the plaintiff firm were mentioned in the register of firms, bombay. chhogalal defendant and meghraj father of the minor defendants mangilal and milap chand also carried on business at bombay under the name and style of h. chhogalal and brothers. there were dealings between these two firms and the defendant chhogalal had executed a khata on behalf of the firm in favour of the plaintiff firm for rs. 15,000/-/- on poh sudi poonam.....
Judgment:

Bhandari, J.

1. This is a Civil First Appeal on behalf of a firm Nathmal Nenmal carrying on business at 45-47, Champagali, Bombay against the judgment and .decree of the District Judge, Pali dismissing the suit filed by it against Mangilal and Milapchand minor sons of Meghraj, and Chhogalal for the recovery of Rs. 16,515-15-0.

2. The case set out by the plaintiff is that it was a registered partnership firm carrying on business at Bombay and the names of the partners of the plaintiff firm were mentioned in the Register of Firms, Bombay. Chhogalal defendant and Meghraj father of the minor defendants Mangilal and Milap Chand also carried on business at Bombay under the name and style of H. Chhogalal and Brothers. There were dealings between these two firms and the defendant Chhogalal had executed a khata on behalf of the firm in favour of the plaintiff firm for Rs. 15,000/-/- on Poh Sudi Poonam Sambat 2006, corresponding to the 4th of January 1950. After that date Rs. 1,000/-/' were paid by the defendants towards the khafta and the balance remained un-paid in spite of notices to the Firm H. Chhogalal and Brothers.

The plaintiff claimed a decree for Rs. 16,515-15-0 inclusive of interest and other expenses. The suit was filed on the 9th of December. 1952, in the court of the District Judge, Pali. The suit was contested on behalf of Mangilal and Milap Chand by their guardian Bhiki Bai, widow of Meghraj. The defence is denial of the case set up by the plaintiff. Chhogalal did not put in appearance and the case proceeded ex parte against him.

3. Along with the Plaint the plaintiff filed an uncertified copy of the entry in the Register of Firms which showed that at the time of the filing at the suit Hirachand, Meghaji Bhoormal Hira-chand, Kesharijnal Hirachand, Vanechand Meghaji and Shankerlal Vajangi were the partners of the firm. It may be mentioned that no endorsement of the filing of this document was made in the plaint. In the writen statement filed on behalf of the contesting defendants it was mentioned that the plaintiff had filed the suit on behalf of the firm National Nenmal and the names of the partners should be disclosed. A replication was filed on behalf of the plaintiff in Paragraph 12 of which the names of the four persons namely Hirachand, Kesharimal, Bhoormal and Chunnilal were disclosed as partners of the firm. It may be mentioned that according to the entry in the register of firms of these persons, Chunnilal had ceased to be a partner on the 21st of October 1949, and there were two other partners-Several issues were framed and the evidence of the parties was recorded. Bhoormal one of the Partners of the plaintiff firm, who had signed the plaint and presented it in the court, was examined as witness of the plaintiff on 7th December 1954. He produced a certified copy of the entry in the Register of Firms and it was marked Ex- P/35. In cross-examination he stalled that the plaintiff Firm carried on business even at the time of the filing of the written statement and Hirachand and Bhoormal were also partners in the firm. Thereafter the evidence on behalf of the defendants was recorded and closed.

4. On the 24th of August 1955, an application was filed on behalf of the contesting defendants the purport of which is that the suit was filed on behalf of the partnership firm Nath Mal Nenmal but the names of the partners were not mentioned and they were also not made parties to the suit, and that on the 7th of December 1954, the plaintiff produced a certified copy of the entry in the Register of Firms the copy of which was obtained by the contesting defendants on the 9th of May 1955, and from that the contesting defendants came to know the names of all the partners of the firm. As the names of two partners of the firm Vanechand and Shankerlal were not disclosed by the plaintiff when demand to disclose the names of partners was made, the suit was liable to be dismissed.

To this a reply was submitted by the plaintiff that they had filed a copy of the entry in the register of firms with the plaint and that the names disclosed by the plaintiff firm were only of those partners who had interest in the recovery of the amount due from the defendants because they only were partners in Sambat 2004 and had the right to recover it. It was also stated in the reply that the objection was belated and frivolous. The learned District Judge, heard arguments: on the application of the contesting defendants and held that it was futile on the part of the Plaintiff to say that only four persons whose names were disclosed in the written statement were the partners of the firm in Sambat 2004 and that the suit in question related to the transaction which took place up to Sambat 2004. It was pointed out that the khata on the basis of which the suit was filed was executed in Sambat 2006 and the cause of action for the recovery of the amount as admitted in the plaint accrued to the plaintiff firm on the date of the execution of the khata when Vanechand and Shankerlal had become partners in the plaintiff firm.

The learned District Judge took the view that there was an incomplete disclosure of the names or partners under Order 30, Rule 2, C. P. C. and the subsequent disclosure of the names of the two persons namely Vanechand and Shankerlal, who were also partners of the firm at the time of the filing of the suit would have the effect of adding two more plaintiffs to the suit on the date of the filing of the certified copy of the entry in the register of firms, Ex. P/-35, by the plaintiff by which these two names may be taken to have been disclosed and the suit was, therefore, barred by limitation and in this view of the matter the suit should be dismissed. For this view the learned District Judge relied on Bhairobux Mangilal v. Deokaran, AIR 1934 Cal 253.

The learned District Judge also took the view that the contesting defendants were minors and they were not legally bound to look to the uncertified copy of the entry in the register of firms filed by the plaintiff along with the plaint and that the names of Vanechand and Shankerlal came to their knowledge for the first time On the 7th of December 1954, when Ex. P/35 was produced for the first time in the court With these findings he dismissed the suit of the plaintiff on tile 17th of October 1955.

5. In this appeal on behalf of the plaintiff, it has been contended that the names of the five partners of the firm appeared in the uncertified copy of the entry in the register of firm, filed along with the plaint and in the plaint it Was specifically mentioned that the names of the partners of the firm appeared in the register of the firms kept with the Registrar of Firms at Bombay and the contesting defendants, had they been vigilant, could have known that even Vanechand and Shankarlal were partners of the plaintiff firm at the time of the filing of the suit.

It is urged that in the replication the names of the four persons who according to the plaintiff had the sole right to recover the amount and who Were the only persons having interest in the amount sued upon were disclosed but this does not mean that the suit was not filed on behalf of the firm. It is also contended that Ex. P/35 was filed on the 7th of December 1954 but the defendants did not take any objection till the 24th of August 1955, and the lower court should not have permitted the contesting defendant to take that objection at that stage. It is also argued that the effect of incomplete disclosure of the names of the partners was only that the court should have ordered the stay of the suit under Order 30, Sub-rule (2) of, Rule 2 and it should not have dismissed the suit. It is also contended that the view taken by the Calcutta High Court that the effect of Sub-rule (3) is that only four persons disclosed by the plaintiff in the replication should have been taken to be the plaintiffs and not all the partners of the firm and that subsequent disclosure of the names of the other two partners would mean adding new parties, was not correct and was dissented from by the Madhya Pradesh High Court in Firm Narain Das Mangal Sen v. Anand Behari Misra, AIR 1958 Madh Pra 408, in which the view taken is that the disclosure of names is distinct from addition of names of parties. On behalf of the respondents, the view taken by the learned District Judge is supported.

6. We proceed straightway to examine the provisions of Order 30 in order to determine whether the view taken by the learned District Judge is correct. Under Order 30, Rule 1, C. P. C. any two or more persons claiming as partners and carrying on business in 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. Thus, this provision is meant to afford facility to the members of the mercantile community carrying on business in partnership by permitting them to bring a suit in the name of the firm. It is to be noted that it is Only in the case of a partnership business carried on in the name of a firm that this facility can be availed of. Under Section 4 of the Indian Partnership Act, partners who have entered into partnership with one another are called individually partners and collectively a firm and the name in, which the business is carried on is called the firm name.

It is true that a firm is not a legal entity but under Chapter V of the Indian Partnership Act, the rights and liabilities of the incoming and Outgoing partners of the firm are defined and in the treatment of this subject, firm has been given some degree of personality. However, for our purpose it is not necessary to enter into a detailed discussion on the point. It would suffice to take the definition of the firm in the Partnership Act a definition which has been borrowed from the old repealed Section 239 of the Indian Contract Act, and hold that Partners collectively constitute a firm. We will not be stretching the provisions of Order 30 if we read these definitions of 'firm' and 'firm name' in the provisions of that Order.

7. Thus, under Order 30, Rule 1, all the persons constituting the partners of a firm collectively may be taken to be the persons suing when the suit is brought in the name of the firm, provided that such persons are partners at the time of the accruing of the cause of action. This means that even the partners of a dissolved firm can bring a suit in the name of a firm. Sub-rule 2 of Rule 1 of Order 30 lays down that one of the partners may sign, verify or certify a plaint on behalf of all the partners. This has the effect that one of the partners of the firm can bring a suit in the name of the firm, even without consulting the other partners and still the suit shall be deemed to be on behalf of all the partners. The reason is that each party is treated in the matter of filing of a suit as an agent of the other partners.

8. Now under Sub-rule 1 of that rule any party to a suit may apply to the Court for a statement of the names and addresses of the persons who were at the tune of the accruing of the cause of action, partners in such firm to be furnished and verified in such manner as the Court may direct. This right of making application for the purpose of furnishing names of partners and their addresses is available to any party be he a defendant or a plaintiff. The defendant has been given a further right in Rule 2 of Order 30 to demand from the partners who are treated as plaintiffs under that rule or their pleader the names and addresses of all the persons constituting he firm on whose behalf the suit is instituted. The reason for repeating this in Rule 2 in the case when the names and addresses are demanded by the defendant appears to be that certain consequences as enumerated in Sub-rules (2) and (3) are to follow in case the demand is not complied or is complied with. Sub-rules (2) and (3) of Rule 2 of Order 30, run, as follows :

'(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 plaint :

Provided that all the proceedings shall nevertheless continue in the name of the firm'.

Under Sub-rule 2 if the plaintiffs fail to comply with the demand all the proceedings in the suit may be stayed. Under Sub-rule 3 if the demand is complied with, 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 plaint.

9. Now one way of looking at the problem is that it is the duty of the plaintiffs to give a complete disclosure of the names of the partners of the firm. In case there is an incomplete disclosure, the defendant by an application may ask for stay of proceedings and the court may stay the proceedings upon such terms as it may direct. In this view, the penalty for incomplete disclosure is only to retard the further progress of the suit which itself would work to the disadvantage of the plaintiff, but as soon as complete disclosure is made, the suit is allowed to proceed unless there are other terms imposed by the court to be complied with.

To support this view it is to be noted that under Sub-rule (1) the plaintiffs are bound to declare the names and places of residence of all the Persons constituting the firm and if the names of all the persons are not disclosed it may be taken that the plaintiffs have failed to comply with the demand made under Sub-rule (1) for which the penalty provided under that section may be imposed. Learned counsel for the contesting respondents has argued that even from an incomplete disclosure of the names of the partners by the plaintiff it must be taken that the provisions of Rule 2 have been complied with and the suit should proceed in the same manner and the same consequences in all respects shall follow as if the partners whose names have been disclosed had been named as plaintiffs in the plaint as provided under Sub-rule (3), and any subsequent disclosure of the names Of the other partners would only amount to an addition of the names of the plaintiffs to the suit. He has contended that the defendant may be ignorant of the names of the partners and their addresses and in normal circumstances he accepts the statement made by the plaintiff in this respect as prima facie true and the suit proceeds on that basis. If subsequently it turns out that the plaintiff has not given all the names of the partners and has omitted some of the names deliberately or inadvertently he is seeking by thus disclosing the other names later on to add them as plaintiffs.

Learned counsel has tried to reinforce this part of the argument by pointing that after all the provisions of Order 30 grant indulgence to a body of persons to sue without being named as plaintiffs and it is the duty of the person who has filed the suit on their behalf to disclose the names of all the persons on whose behalf he has brought the suit as soon as he has been asked to do so and if he gives a wrong list or an incomplete list the case may be deemed to be at par with the cases in which some of the persons have been omitted to be brought on record as plaintiffs deliberately or inadvertently.

10. In our opinion, the latitude granted to the partners of the firm to sue in the name of the firm has the effect that all the parsers of the firm are collectively taken to be the plaintiffs when the suit is filed in the name of the firm. The provisions of Rule 9 which deals with suits between a firm and one or more of the partners and to suits between firms having one or more partners in common show that a suit can be filed between a partner of the firm in the name of the firm in spite of the opposition of some other partner or in spite of the fact that some other partner has been made a defendant in the case. Thus, it will be only in consonance with the spirit of Rules 1 and 2 of Order 30 to hold that the partner who is acting in the matter of signing, verifying the plaint on behalf of the firm is doing so on behalf of all the partners of the firm and is filing the suit On behalf of all of them even though he may be ignorant of the names of all the partners or may be under a misconception that a particular person is a partner of the firm or not. It cannot be sai3 that in such a case all the partners are not plaintiffs. If at the time of making disclosure in compliance with the demand made under Sub-rule (1) of Rule 2, he has committed some error or omission or has even deliberately failed to mention the names of some of the partners it must be taken that he has failed to comply with the provisions of Sub-rule (1) and the suit should not proceed further. The defendant may object to the further progress of the suit as and when he is informed that the disclosure made by the plaintiffs in compliance with Sub-rule (1) is not true or is in some respects incomplete. The court may impose such other terms as it may think proper having regard to the exigencies of the situation to remedy the injury caused to the defendant by such wrong disclosure. Sub-rule 3 does not in any way affect the question that all the partners in law should be deemed to have filed the suit but only says that after disclosure of the names of all the partners the suit should be taken to proceed in the same manner and the same consequences in all respects are to follow as if all the partners of the firm are named as plaintiffs in the plaint. The proviso further says that all the proceedings in the suit shall continue in the name of the firm. Sub-rule 3 nowhere says that the firm i.e., all the Partners collectively, ceases to i.e., the plaintiff in the case. This appears to us to be the true construction of Rule 2 of Order 30.

11. Now let us take the construction adopted by the Calcutta High Court in AIR 1934 Cal 253 of the relevant provisions of Rule 2. Ameer Ali J. observed that the matter depends upon the effect of Order 30, Rule 2 and Section 22 Limitation Act. After quoting Sub-rule 3, his Lordship further observed it that the important words in it were

'the same consequences in all respects shall follow, as if they had been named as plaintifs', and proceeded Jo consider the consequences by taking an example and observed, as follows :-

'If A, B and C are named as plaintiffs in aplaint they and no other person are the parties tothe suit. If it is found that D should also have beenmade party P may be added or if there has beena mistake D may be substituted in the place of C.This is done under the ordinary rules relating toamendment. By Section 22, Limitation Act, however, no new party may be added after the periodof limitation has elapsed.* * * *

I feel bound to hold that once partners havebeen declared the persons whose names have beendeclared are to the regarded as parties to the suit.Any fresh declaration will be equivalent to theaddition of a party. * * * *

It appeals to me however that there is nothing to prevent a party making a further declaration the effect of which might afterwards all to be considered by the Court. If made after the period of limitation had elapsed, it would in my opinion be of no effect. The Court would regard the suit as being one by the parties whose names were originally declared'.

12. We may with respect point out that to spite of the fact that the learned Judge was intending to give effect to the language of the rule be did not give sufficient importance to the provision in Sub-rule (1) that the plaintiffs were bound to declare the names and place of residence of all the persons constituting the firm. Sub-rule (2) deals with She consequences of failure to comply with any demand made under Sub-rule (1) and Sub-rule 3 explains the position after the demand has been complied with. We are humbly of the opinion that the Legislature has conceded the right to a number of persons to bring a suit to the name of a firm through anyone of them and it will be too much to hold that the suit is deemed to have been filed by only some of them because the man who has filed the suit or some other partner of the firm may have made a declaration which may be incomplete or otherwise defective.

Take a case in which amongst the partners there might be one favourably disposed to the defendant and under Sub-rule (2), the defendant may call any of the plaintiffs (partners) to give the declaration contemplated under Sub-rule (1). Such a partner may give a false declaration or incomplete declaration. Would it mean, that if the real situation is brought to the notice of the court by any other partner by giving a full and complete disclosure he will be faced with a situation that the correct disclosure so given would be taken to mean an addition of new parties and his disclosure will be examined in the light of Section 22 of the Limitation Act? Would it not be more reasonable to take the view that the Legislature contemplated, that further proceedings in the suit should be stayed if there is any defect brought to the notice of She court in the disclosure made by any one of the plaintiffs? We feel that after considering all aspects of the matter the view taken by us is more in consonance with, the plain language of sub-rule (2) and the spirit behind Order 30. It is true that we are in lonely company in taking this view. 13. Learned counsel for the respondents has criticised the judgment of the Madhya Pradesh High Court in AIR 1958 Madh Pra 408 by arguing that the view in that case proceeds on the ground that Section 22 of the Limitation Act will not apply to a case of disclosure of parties and that the view taken by the Calcutta High Court that Section 22 of the Limitation Act does not apply to first declaration of the names of parties but it applies to the subsequent declaration is not consistent. With great respect to the learned Judges, there is no inconsistency in the argument of Ameer Ali J. when he treats the case of the first declaration as if those persons whose names have been so declared have been named as plaintiffs in the plaint and the case of the subsequent declaration would be the case of the addition of names. Ameer Ali J. laid emphasis on the words, the suit shall proceed in the same manner and the same consequences shall follow as if they had been named as plaintiffs' in the plaint occurring in Sub-rule 3. We, however, humbly dissent from the view taken in the Calcutta case On the ground that sub-rule 3 applies only after the names of all the partners have been declared. If the defendant has any objection to the declaration made by the plaintiff, he can get it rectified by asking for the stay of the suit. It is here that we differ from the view taken by Ameer Ali J.

14. NOW, coming to the facts of the case before us, we find that in the plaint it is mentioned in the very opening paragraph that the plaintiff was a registered firm carrying on business at Bombay and was registered with the Registrar of Firms at Bombay and that in the Register of Firms the names of all partners were disclosed. Thus had the defendants taken pains, they could not but have come to know as to who were the partners of the firm. Though we concede that the defendants were not bound to go through the uncertified copy of the entry in the Register of Firms filed with the plaint, yet the opening paragraph had given out that they could seek correct information from the Registrar of Firms at Bombay.

Then the certified copy of the entry in the Register of Firms was filed by one of the partners of the firm on the 7th of December 1954 but nobody took the trouble on behalf of the defendants to take up the objection that the suit was bad for non-joinder of parties at that stage. It was only after the close of the evidence of the parties when the case was ripe for hearing that an application was filed by the contesting defendants on the 24th of August 1955 taking up this objection. This objection is an objection relating to non-joinder of the parties and the trial court should not have permitted such an objection at that stage. The plaintiffs have furnished an explanation as to why they mentioned the names of Hirachand, Keshrimal, Bhoor Mal and Chunnilal as partners of the firm as Bhoormal took the view that though the khata was executed on the 4th of January 1950 in favour of the plaintiff firm, yet the consideration thereof flowed from these four persons and they were entitled to receive the amount. Learned counsel has rightly argued that in case the trial court was of the opinion that the suit should be dismissed because the plaintiff wanted to add Vanechand and Shankerlal as plaintiffs after the limitation, the plaintiff should have been given an opportunity to show cause that it could maintain the suit in the names of these four persons. However, we are of the opinion that the trial court was wrong in holding that under the provisions of Order 30 Rule 2, C. P. C. the plaintiffs' suit should be dismissed as the names of Vanechand and Shanker Lal were mot disclosed by Bhoormal in the replication filed by him. We are of the opinion that in spite of the wrong disclosure Vanechand and Shankerlal were plaintiffs and remained plaintiffs all through as the suit was brought in the name of the firm on behalf of all the partners. We are therefore of the opinion that the view taken by the learned District Judge was erroneous in law. 15. It would have been better had the learned District Judge dealt with all the points arising in the case. This would have made the remand of the case unnecessary. . However, as in stands the case shall have to go back for decision on merits.

16. We, therefore, allow the appeal and set aside the judgment and decree of the learned District Judge dated the 17th of October 1955 and remand the case to the trial court for deciding it in accordance with law. Costs of this appeal shall abide the result of the suit.


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