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Gajanand Vs. Sardarmal and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberCivil Ref. No. 18 of 1959 in Civil Revn. No. 154 of 1954
Judge
Reported inAIR1961Raj223
ActsCode of Civil Procedure (CPC) , 1908 - Order 22, Rule 2 - Order 30, Rule 4; Partnership Act- Sections 47
AppellantGajanand
RespondentSardarmal and anr.
Appellant Advocate H.C. Mathur, Adv.
Respondent Advocate N.M. Kasliwal, Adv.
DispositionApplication dismissed
Cases ReferredVenkatanarayana Pillai v. Subbammal
Excerpt:
.....indian contract act nave stated that the better opinion was that the representatives of a deceased partner were not necessary parties to a suit for tile recovery of that which accrued due to the partnership in the litetime of the deceased. the case is not literally covered by section 47 of the indian partnership act (formerly section 263 of the contract act), but it may be held that a contrary intention within the meaning of the present section sufficiently appears from the nature of the transaction when it is once ascertained to be a partnership transaction, regard being had to the uniform and well understood course of practice. their lordships examined the definition of the words 'legal representatives' in the civil procedure code and remarked that that definition was clearly open to..........to the suit. the use of word 'join' clearly implies that there is already somebody to continue the suit. rule 4 is to be read along with rules 1, 2 and 3 of order 30 and order 22 c. p. c. and as providingan exception to that order to the extent only that if there is any partner of the firm to continue the suit, the legal representatives of the deceased partner need not be brought on record.a survey of the authorities of the various high courts go to show that the majority is of the opinion that rule 4 is applicable only when the suit is brought in the name of the firm. i am inclined to take this view mainly on the ground that the heading of order 30 definitely says that that order is meant for application for suits by or against firms. i do not, however, share the view expressed by the.....
Judgment:

Bhandari, J.

1. This Revision Application has been referred bya Single Judge of this Court to a Division Bench for decision as in his opinion there were important points of law involved in this case.

2. Sardarmal, Maganlal and Rajmal, all residents of Agra filed a suit for the recovery otRs. 9,500/-/- against Gaja Nand alleging that the three plaintiffs carried on in partnership the businessof Hazarilal Ganeshilal. The defendant carried on business at Sambhar, which at the time of the tilingof the suit formed part of the States of Jaipur and Jodhpur. The plaintiffs claimed that a sum of Rs. 9,500/-/- was payable by the defendant to the plaintiffs in respect of the silver transactions detailed in the plaint. The suit was filed on the 23rd of August, 1948, and it may be mentioned that at that time the plaintiffs could not sue the defendant in the name of the Firm as the Firm was situated outside the Sambhar Shamlat Area where the provisions of the Indian Civil Procedure Code as such did not apply. One of the plaintiffs Magan Lal died on the 21st of December, 1951, but no application was made to bring his legal representatives on record. On the 21st of May, 1952, an application was made by the surviving plaintiff Sardarmal and Rajmal that as the right to sue survived to them alone, it was not necessary to bring the legal representatives of Magan Lal on record and his name should be struck off. Objection was taken on behalf of the defendant that the suit abated as a whole and the learned Judge of the trial court held that by virtue of Order 30 Rule 4 C. P. C., there was no abatement of the suit. The defendant has filed the present revision application against that order.

3. An objection was raised on behalf of the surviving plaintiffs that the revision application was not maintainable in view of the decision of Full Bench of this Court in Swamp Narain v. Gopi Nath,AIR, 1953 Raj 137. tt was held in that case that 'where it was open to a party to raise a ground of appeal under Section 105 C. P. C. from the final decree or order with respect to any order which has been passed during the pendency of the case, no revision application was maintainable under Section 115 C. P. C. challenging that order as an appeal in that case lay. to the High Court within the meaning of the term in which no appeal lies thereto'. It was contended on behalf of the defendant that he could not challenge that order in the appeal that might have to be filed against the final decree or judgment if passed against him by virtue of Section 99 C. P. C. as it did not affect the merits of the case.

On merits, it was contended before the learned Single Judge that Order 30, Rule 4 was applicable only when the suit was instituted in the name or the Firm and not otherwise, and as in this case, the suit was not instituted in the name of the Firm, the learned Judge of the trial court was wrong to apply the provisions of that order to the present case. The learned Single Judge referred to certain authorities in this connection and I shall take notice of them while deciding this point. The arguments addressed before the Single Judge are reiterated before us by the learned counsel for the defendant.

4. An affidavit of Rajmal plaintiff has been filed before us that it was a term of the partnership that it would not be dissolved on the death of one of the partners. Learned counsel for the applicant has seriously contested the statement contained in this affidavit and has also urged that it was filed too late. As the affidavit has been filed at a very late stage, we think it proper that the revision application should be decided ignoring this affidavit.

5. First of all, I may mention that the learned trial Judge has treated the suit as one filed by a Firm on the ground that in Paragraph 1 of the plaint, the plaintiffs had alleged that they were partners of the Firm Hazarilal Ganeshilal which carried on business at Belanganj, Agra. In my opinion, the learned Civil Judge is wrong in taking this view. The whole tenor of the plaint including the title shows that the suit was filed by all the three partners Sardarmal, Maganlal and Rajmal, and not by a Firm, In fact, it could not be so filed.

It has been, however, argued before us that when Maganlal died, there had been a merger of the States of Jaipur and Jodhpur in the Union of India and the provisions of the Civil Procedure Code were made applicable to the Sambhar Shamlat Area and that at that time the suit could be filed by a Firm carrying on business at Agra and the suit should be treated as such. I do not think that it is possible to do so in the absence of an amendment of the plaint.

6. Then it is urged on behalf of the plaintiffs that Order 30, Rule 4 is applicable even in cases where the suit has not been filed in the name of the Firm and has been filed in the name of individual partners. Rule 4 of Order 30 runs as follows:

'4. (1) Notwithstanding anything contained in Section 45 of the Indian Contract Act, where two or more persons may sue or be sued in the name of a firm under the foregoing provisions and any o such persons dies, whether before the institution or during the pendency of any suit, it shall not be necessary to join the legal representative of the deceased as a party to the suit'.

There is a conflict of judicial opinion on the point whether Order 30, Rule 4 is applicable even to cases where a suit has not been brought in the name of a firm, Reference in this connection may be made to the decision of the Allahabad High Court in Shri Chand v. Bansidhar, 135 Ind Cas 245, where it has been held that Order 30, Rule 4 did not apply to a case in which the suit was not brought in the name of the firm. There is another Single Bench judgment of the same High Court in Firm Brij Kishore Ram Sarup v. Sheo Charan Lal, AIR 1938 All 69 taking a contrary view.

The Lahore High Court in Hari Singh v. Firm Karam Chand-Kanshi Ram, AIR 1927 Lah 115 took the view that Order 30, Rule 4 is confined in its application to suits brought in the name of the firm and that Section 45 of the Indian Contract Act was modified to that extent only. The Calcutta High Court in Monmohan Panday v. Bidhu Bhushan Ray Chowdhury, 48 Ind, Cas 309: (AIR 1918 Cal 160) has taken the view that Order 30, Rule 4, does not help the plaintiffs as that rule applied only to a case where the suit is brought in the name of the firm.

In Harekrishna Mallik v. Narsinghdas, AIR 1935 Pat 121, the Patna High Court held that where four ex-partners of a trading firm have separated amongst themselves and they sued in their individual names for the recovery of the loan advanced at the time when they were carrying on joint business, the death of one of them would have the effect of the abatement of the suit as a whole if his legal representatives are not brought on record.

It was observed that when the suit was brought in the name of the firm, the firm being no longer in existence, the suit could not have been brought in the name of the firm and in fact was not so brought and Order 30, Rule 4 did not apply. In Dost Mohomed v. Mohandas Lalchand, AIR 1926 Sind 81, it was held by the Sind High Court that Rule 4 forms part of Order 30 which relates to suits brought by or against firm and persons carrying on business in names other than their own and it cannot be interpreted in a manner that it may apply to a suit not instituted in the name of the firm.

There was another difficulty pointed out. It was observed that 'pushed to its logical conclusion, Rule 4, if interpreted in that manner would lead to an absurdity inasmuch as when a suit is instituted by a sole surviving partner of a firm in his own name, then on that interpretation, it would appear that on his death, the suit may be continued without bringing his legal representatives on the record, or as a matter of that, without having any person on record as plaintiff whether such person be his legal representative or not.'

With respect, I may say that the absurdity so contemplated cannot arise even when Rule 4 is interpreted in the manner suggested as the rule provides that it shall not be necessary to join the legal representatives of the deceased as parties to the suit. The use of word 'join' clearly implies that there is already somebody to continue the suit. Rule 4 is to be read along with Rules 1, 2 and 3 of Order 30 and Order 22 C. P. C. and as providingan exception to that Order to the extent only that if there is any partner of the firm to continue the suit, the legal representatives of the deceased partner need not be brought on record.

A survey of the authorities of the various High Courts go to show that the majority is of the opinion that Rule 4 is applicable only when the suit is brought in the name of the firm. I am inclined to take this view mainly on the ground that the heading of Order 30 definitely says that that order is meant for application for suits by or against firms. I do not, however, share the view expressed by the Lahore High Court in AIR 1927 Lah 115 that looking to the history of the enactment of Rule 4, it was to be understood that Section 45 of the Indian Contract Act stood modified only to the extent that it was only in a suit instituted by a firm that the legal representatives of a deceased partner need not be brought on record.

Order 30 contains certain provisions granting certain facilities in the matter of institution of suits to trading concerns and the procedure to be followed thereafter. By virtue of Rule 4, Section 45 of the Indian Contract Act stood modified when the joint promisees were partners of a trading firm and the suit was instituted in the manner laid down in Order 30, Rule 1.

7. Rule 4 does not provide that if there is any other provision of law modifying Sec, 45 of the Contract Act, that law would not take effect unless the suit is brought in the name of the firm. I shall take up this subject for further discussion at a later stage. I may at this stage observe that so far as this case is concerned, it is not necessary to resolve this controversy as the very language of Rule 4 provides that it applies only where two or more persons may sue or be sued in the name of a firm under Order 30, Rule 1.

Now at the time when the suit was instituted according to the provisions of the Civil Procedure Code governing the Sambhar Shamlat Area, the three plaintiffs who were not carrying on any business in the Sambhar Shamlat Area could not file the suit in the name of the partnership firm. They were carrying on business in what was British India at that time. So far as the Sambhar Shamlat area is concerned the firm of Hazari Lal Ganeshilal under which name and style the plaintiffs carried on business at Agra was a foreign firm and it could not sue tinder the provisions of the Civil Procedure Code applicable to the Sambhar Shamlat Area at that time. The plaintiff opposite parties cannot succeed on the ground that under Order 30, Rule 4, the legal representatives of Magan Lal need not have been brought on record.

8. There is, however, another aspect of the question. Under Rule 2 of Order 22, where there are more plaintiffs than one and any one of them dies, and where the right to sue survives to the surviving plaintiff or plaintiffs alone, the suit is to proceed at the instance of the surviving plaintiff or plaintiffs. What is to be determined is whether the right to sue survived to the two plaintiffs Sardarmal and Rajmal alone in this case. In my opinion, the solution of this problem lies in the answer to the question whether the two plaintiffs are competent to carry on the suit instituted by them along with Magan Lal without joining his heirs either as plaintiffs or defendants. In Sankru Mahto v. Bhoju Mahato, AIR 1936 Pat 548, it has been observed that:

'The test whether a right to sue survives in the surviving plaintiffs or against the surviving defendants is whether the surviving plaintiffs can alone sue or the surviving defendants could alone be sued in the absence of the deceased plaintiff or defendant respectively.'

The question may be put in another form whether the remaining two plaintiffs are entitled to represent the deceased plaintiff for the purpose of prosecuting the case. In Abdul Samad v. Wasal, AIR 1957 Raj 302, I have taken the view that the words legal representatives' must be construed as including those who are in a position to carry on further proceedings in the suit. Now in finding an answer to these questions, I may refer to Section 47 of the Partnership Act. Section 47 lays down that

'after the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution, so tar as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution....''

This section runs on the same lines as Section 38 of the English Partnership Act. In this case when Magan Lal died partnership came to an end.

'When a partner dies and the partnership comes to an end, it is not only the right, but the duty, of the surviving partner to realize the assets for the purpose of winding up the partnership affairs, including the payment of partnership debts.'

(Per Homer, L. 'J. in 'Bourne v. Bourne, 1906-2 Ch 427). This statement of law was quoted with approval by their Lordships of the Privy Council in Babu v. Official Assignee of Madras, 38 Cal WN 1018: (AIR 1934 PC 138). In that case, their Lordships were considering Section 263 of the Contract Act, which has now been replaced with some modifications, which are inconsequential in its nature for the purpose of this case, by Section 47 of the Partnership Act. The repealed Section 263 of the Contract Act and Section 47 of the Indian Partnership Act give effect to the principle of the English law that after the dissolution of the firm, the authority of each partner continues so far as it is necessary to wind up the affairs of the firm. The Allahabad High Court recognised this in Gobind Prasad v. Chandar Sekhar, ILR 9 All 486 at p. 490. In spite of the provisions of Section 45 of the Contract Act, Edge, C. J. observed, as follows :

'The General rule of English Law, which is to be found in Williams On Executors, 8th Edn., at p. 850 that, in trading partnerships, 'although the right of the deceased partner devolves on his executor, it is now fully settled that the remedy survives to his co-partner, who alone must enforce the right by action, and will be liable on recovery to account to the executors or administrators for the share of the deceased,' is, I think, based on a principle of sound common sense. This rule of taw is referred to by Lord Justice Mellish in McClean v. Kennard, (1874) 9 Ch. A 336 at pp. 346 and 347. It is obvious to my mind that it wouldlead in many cases to difficulties and confusion in the getting in of the assets of a firm on the death of a partner, if it were held that a surviving partner could not sue for such assets unless he joined in the action the representatives of the deceased partner. It might be difficult, if not impossible, for the surviving partner to ascertain who was the legal representative of the deceased partner. The period of limitation for the bringing of the action might almost have run, and by the time the surviving partner had ascertained who the representatives were, the action might be barred by limitation. Again, if it were necessary to make the representative a party, the defendant, who might be clearly liable, would be entitled to defend the action, and possibly successfully in that event, on the ground that the person that was added as representative was not the legal representative of the deceased partner. Now, as I have said, the principle of English law is based on common sense, and it is a rule which, in my opinion, we should apply here unless there is statutory provision or authority to prevent us.'

The Allahabad High Court in Debi Das v. Nirpat, ILR 20 All 365 and Ugar Sen v. Lakhmi Chand, ILR 32 All 638 has followed this case. The Bombay High Court in Motilal v. Ghellabhai, ILR 17, Bom 6 and the Madras High Court in Vaidyanatha v. Chinnasawmi, ILR 17 Mad 108 also took the same view. However, the Calcutta High Court in Ram Narain v. Ram Chunder, ILR 18 Cal 86 has taken a different view. A Division Bench ot the Lahore High Court in Mool Chand v. Mul Chand, AIR 1923 Lah 197 has enunciated the proposition that the rule of law now seems to be firmly established that debts due to the trading partnership stand on a different looting from debts due under ordinary contracts and when one o the partners dies, the surviving partners can sue for the recovery of the debts due to the firm without making the legal representatives of the deceased partners party to the suit.

9. Section 47 of the Partnership Act recognises that after the dissolution of the firm by the death of a partner, the remaining partners can give a valid discharge for the purpose of winding up the business and the legal representatives of the deceased partner cannot dispute it, unless they have acted mala fide. In this connection I may refer to the following observations in Motiram Chimanram v. Sarup Chand Prithiraj, AIR 1937 Bom 81 at p. 83:

'It is therefore clear that though the dissolution of a firm causes a dissolution of the partnership between the partners, the partnership still subsists, but merely for the purpose of winding up its business and adjusting the rights of the partners inter se, and for this purpose the authority of the partners to bind the film, and all their other mutual rights and obligations, continue notwithstanding the dissolution. The power of each partner however extends only so far as it is necessary to wind up the affairs of the firm and to complete transactions already begun. It has been held that if a debt is owing to a firm, payment by the debtor to any one of the partners extinguishes the claim of all the partners and discharges the debtor, even though a particular partner or a third person is appointed to collect the debts owing to the firm, and whe-ther the debtor is aware of such appointment or not. Any partner of a dissolved firm can therefore recover payment of a debt due to the firm. He can effectually release the debtor and also give a valid receipt for the debt......'

10. The eminent commentators Pollock and Mulla in their commentary of the Indian Contract Act nave stated that the better opinion was that the representatives of a deceased partner were not necessary parties to a suit for tile recovery of that which accrued due to the partnership in the litetime of the deceased. They have further observed that:

'The case is not literally covered by Section 47 of the Indian Partnership Act (formerly Section 263 of the Contract Act), but it may be held that a contrary intention within the meaning of the present section sufficiently appears from the nature of the transaction when it is once ascertained to be a partnership transaction, regard being had to the uniform and well understood course of practice.'

(Page 320, Indian Contract and Specific Relief Acts by Pollock and Mulla, (1957) 8th Edition). In my humble opinion, this much can be deduced from Section 47 that after the dissolution of a firm, the remaining partners may represent the dissolved firm including the interest of the deceased partner to recover any debt due to the firm. This being the position, they may be taken to represent the deceased partner in a suit for the recovery of any amount due to the firm.

11. This being the position, can it be said that when the remaining partners seek to realise the debt owing to the partnership for the purpose of winding up the partnership by instituting a suit in a court of law, they must invariably bring the suit in the name of the firm? As already mentioned, the provisions of Order 30 are enabling provisions and they do not make it compulsory for the partners to sue in the name of the firm.

A right to sue is conferred by substantive law and if that right to sue is conferred by law on the remaining members of the partnership, it is not necessary that they should assert this right before a court of law in the only manner provided by Order 30 by bringing a suit in the name of the firm and not in their individual names. Nor can it be laid down that Section 45 of the Contract Act is modified only to the extent provided under Order 30, Rule 4 and that it is not modified by Section 47 of the Partnership Act.

Of course if the suit is not filed in the form provided in the name of the firm, all the remaining partners must join in filing the suit. If some one of such partners is not willing to be made a plaintiff, he may be made a defendant. Taking this view of the matter, I am of opinion that when Magan Lal died before the institution of the suit, the two remaining partners could bring a suit for the enforcement of their claim against the deiendant in their individual names and it does not make any difference in this case if Maganlal died during the pendency of the case.

Order 22, Rule 2 purposely says that the right to sue should survive to the surviving plaintiff or plaintiffs alone. The word 'alone' signifies only that the right to sue should survive to the surviving plaintiff or plaintiffs without joining any other partner. It does not say that no one else should be entitled to the estate of the deceased. Cases are not rare when the estate of the deceased devolves on one person while the right to sue devolves en another. This often happens in representative suits.

Take for example the case of their Lordships of the Privy Council in Venkatanarayana Pillai v. Subbammal, ILR 38 Mad 406: (AIR 1915 PC 124). In that case, the appellant who was the reversioner before the Privy Council brought a suit for a declaration that the adoption of the second defendant by the first defendant was invalid and did not affect his reversionary interest. The presumptive reversioner died during the pendency of the appeal in the Privy Council. An application was made by the next presumptive heir to be brought on record.

This application was opposed by the respondents. Their Lordships examined the definition of the words 'legal representatives' in the Civil Procedure Code and remarked that that definition was clearly open to the contention that the suit was brought by the deceased plaintiff as representing in his reversionary right the estate of the last male owner, and that on his death such right devolved on the petitioner.

Their Lordships, however, decided the case on the ground that if the contingent reversioner may be joined as plaintiff in the presumptive rever-sioner's suit, it also follows that on his death the next reversioner is entitled to continue the suit begun by him and in the case before their Lord-ships, it was held that the right to sue survived and the petitioner was entitled to the order asked for,

12. In this view of the matter, I am of opinion that the two plaintiffs Sardarmal and Magan Lal can continue the suit and there is no necessity of the legal representatives of Maganlal to be brought on record.

13. Now I take up the question whether a revision lies or not. I have already observed that in view of the Full Bench decision of this Court in AIR 1953 Raj 137, a revision application, in order to be maintainable in this Court, must fulfil the condition that the order which is sought to be revised could not have been made a ground of attack in an appeal (whether first or second does not matter) which could lie to this Court against the judgment and decree deciding the case finally. I nave dealt with this revision application on merits and have come to the conclusion that it should be dismissed and I need not, therefore, consider it necessary to go into this question.

14. The Revision application is therefore, dismissed with cost.

15 MODI, J.; I generally agree.


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