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M. Ar. Rm. P.M. Chidambaram Chettiar Vs. the National City Bank of New York - Court Judgment

LegalCrystal Citation
SubjectCompany;Contract
CourtChennai
Decided On
Reported inAIR1936Mad707; (1936)71MLJ373
AppellantM. Ar. Rm. P.M. Chidambaram Chettiar
RespondentThe National City Bank of New York
Cases Referred and MaciIver v. G. and J. Burns
Excerpt:
- - the suit was then filed and attempts made to effect personal service of the summons on the agent having proved unsuccessful, an order for substituted service was obtained, copies of the summons were affixed and the decree as mentioned above was made. the language of section 30 is perfectly clear and it expressly enacts that even where some benefit is reserved to a minor, he is not a partner, the only partners composing the firm being the adult members. but we wish to make it perfectly plain, that nothing that we have said is to prejudice in any manner, the plaintiffs' right to apply to the rangoon high court, for the amendment of the plaint or of the decree, or to obtain any other similar relief......the order is a reproduction, almost verbatim, of the rules comprised in order 48(a) of the english rules. rule 10 of order 30, is modelled on order 48(a) rule 11, the corresponding english provision. that rule applies, it has been held in england, to a single individual who carries on business under an assumed or trading name. the annual practice (1936) page 891 st. gobain, chauny and cirey co. v. hoyermann's agency (1893) 2 q.b. 96 and maciiver v. g. and j. burns (1895) 2 ch. 630 rule 10 of order 30 stands in marked contrast with rule 1. the latter rule applies to 'any two or more persons', whereas rule 10 refers to 'any person carrying on business'. there is no reason to depart from the view taken in the english cases and we must hold that rule 10 is applicable only to the case of a.....
Judgment:

Venkatasubba Rao, J.

1. This appeal raises a question of some importance. The plaintiffs - The National City Bank of New York--obtained a decree on 19th June, 1934, in the High Court at Rangoon for about Rs. 25,000 against two defendants, with first of whom alone we are concerned. The first defendant is described in the plaint as 'R.M.P.M. Chettiar firm, carrying on business at No. 84, Mogul Street' Rangoon. ' In execution of the decree, the plaintiff bank attached certain properties, which on their own showing belong to the four minors (the appellants before us) constituting a joint undivided Hindu family. The subordinate Judge of Coimbatore, in whose Court the decree was being executed disallowed the objections preferred on behalf of the minors and made an order allowing execution. The objection, which is material for the present purpose, has been raised in the following form:

The suit and the proceedings that ended in the said ex parte decree and the proceedings m the execution taken out after the decree are wholly incompetent and the attachment effected of the properties...is wholly illegal.

2. Further on it is stated:

The firm has no legal entity and there can be no decree against a firm without any agent or partner being represented. Further all the propertors of said firm are minors and there is no adult proprietor and a decree obtained without any representation on behalf of the minor proprietors is wholly void and it is a nullity.

3. It will be seen, that it is here assumed, that the suit has been filed under the procedure applicable to suits against firms which under Order 30, Rules 1 to 9 may be instituted in the names of the firms. The plaintiff bank replied, that although the first defendant in the suit was described as a firm as already stated they (the bank) did not intend to adopt the procedure applicable to firms but the provision of law under which the suit was brought, was Order 30, Rule 10 applicable to actions against persons carrying on business in assumed names. In order to make the contentions of the parties clear, we may briefly set forth what appear to be undisputed facts. One Muthuveerappa Chetty, a member of the Nattukottai Chetty community was carrying on money-lending business under the name of 'R.M P.M. Chettiar Firm'. He died in 1931, leaving his undivided sons (the appellants) all four of whom were and have been minors. Their mother, one Meenakshi Achi continued the business on their behalf with the aid of an agent, by name Veerappa Chetty and the suit debt was incurred in December 1932, in the course of that business. The suit was then filed and attempts made to effect personal service of the summons on the agent having proved unsuccessful, an order for substituted service was obtained, copies of the summons were affixed and the decree as mentioned above was made.

4. The first question is, does the procedure prescribed by Order 30 in regard to suits against firms in the firm name apply? In the first place, it is impossible to regard the minors as constituting a partnership firm. In the Indian Partnership Act 1932, 'partnership' is described as the relation between persons who have agreed to share the profits of a business (Section 4). The next section goes on to say that the relation of partnership arises from contract and not from status. It follows that a minor, who is incapable of contracting, cannot be a partner. Further, it is incomprehensible that four persons, who were all minors, can agree with each other to form a partnership. Then, turning to Section 30, it enacts that a minor can never be a partner, although 'he may be admitted to the benefits of partnership'. Under the section, the adult partners, by a contract between themselves, can agree to confer this benefit upon a minor: in other words, the relation of partnership is the result of contract; and where any benefit is reserved to a minor, that arises not from a contract with the minor but between the adult partners. From this the necessary inference is, that there must be at least two adult partners who are capable of contracting, before a minor is entitled to the benefits of partnership. The language of Section 30 is perfectly clear and it expressly enacts that even where some benefit is reserved to a minor, he is not a partner, the only partners composing the firm being the adult members. If therefore a suit is brought, under the procedure Laid down in Order 30, against a partnership firm where a minor has been admitted to some kind of benefit, to such a suit the minor can in no sense be regarded as a party. Order 21, Rule 50, Civil Procedure Code, provides that where a decree has been passed against a firm, execution may be granted against any property of the partnership : the reason for making the partnership property liable is not, that the minor has been sued, but that under the law, the partnership property is liable for the debts of the firm. As Lord Herschell, L.C. observes in Lovell & Christmas v. Beauchamp (1894) A.C. 607 .

The adult partner is, however, entitled to insist that the partnership assets shall be applied in payment of the liabilities of the partnership, and that until these are provided for, no part of them shall be received by the infant partner.

5. In English Law, there is nothing to prevent an infant becoming a partner, but even there, it has been held in the case just cited, that when a suit is brought against a firm under Order 48(a) (corresponding to Order 30 of our Code), the judgment to be passed should be against the firm other than the minor partner: but that cannot affect execution against the partnership property see also Harris v. Beauchamp Brothers (1893) 2 Q.B. 534. For the position, that under the Indian Law, a decree, against a partnership firm, cannot be regarded as a decree against the minor who has been admitted to some benefit, it is unnecessary to rely upon the decision, already mentioned, of the House of Lords: for Section 30 of the Indian Partnership Act places the matter beyond doubt. We may in this connection also mention, that under the Code, as under the English Law, when a decree has been obtained against a firm in the firm name, execution may be levied against the partnership property, notwithstanding the fact that a minor possesses some interest. It is unnecessary to pursue this matter, as Mr. Rajah Iyer, the respondents' learned counsel, urges that the suit should be regarded as in effect having been brought under Rule 10 of Order 30. The whole of the order is a reproduction, almost verbatim, of the rules comprised in Order 48(a) of the English Rules. Rule 10 of Order 30, is modelled on Order 48(a) Rule 11, the corresponding English provision. That rule applies, it has been held in England, to a single individual who carries on business under an assumed or trading name. The annual Practice (1936) Page 891 St. Gobain, Chauny and Cirey Co. v. Hoyermann's Agency (1893) 2 Q.B. 96 and MaciIver v. G. and J. Burns (1895) 2 Ch. 630 Rule 10 of Order 30 stands in marked contrast with Rule 1. The latter rule applies to 'any two or more persons', whereas Rule 10 refers to 'any person carrying on business'. There is no reason to depart from the view taken in the English Cases and we must hold that Rule 10 is applicable only to the case of a single individual. In this case, the so-called assumed name is said to be the name of the business owned by the four minors and the rule is, in our opinion, utterly inapplicable. It is further open to doubt, whether the rule can apply to a minor at all, when what is alleged is, that the business is carried on, on his behalf by a guardian. The rule contemplates 'any person carrying on business', and as we have said, it is doubtful, whether a minor alleged to be trading through his guardian answers this description.

6. We must therefore hold that there was no decree passed against the minors in question, in other words, the minors were not parties to the decree. The same idea may be expressed, by stating that by the description adopted in the plaint, the minors were not brought before the Court at all. The question as to what might have been the effect of their not having been represented by a guardian-ad-litem, does not arise; the defect is something more fundamental, namely, that they were not even parties to the suit or to the decree that was passed. The decree is therefore incapable of being executed against them or their property and we must accordingly allow the appeal with costs.

7. Mr. Rajah Ayyar says that the minors have been wrongly described and the case is one of mis-description. That is not a matter with which we are concerned in execution: it is enough for our purpose to say that the decree on its face is not against the minors and cannot be executed against them. But we wish to make it perfectly plain, that nothing that we have said is to prejudice in any manner, the plaintiffs' right to apply to the Rangoon High Court, for the amendment of the plaint or of the decree, or to obtain any other similar relief.

8. No order is necessary in the Civil Revision Petition.


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