1. This is an appeal against a judgment of Buckland J. in a suit to recover a sum of Rs. 22,023 odd alleged to be due upon an adjustment of accounts and in respect of subsequent dealings and transactions. There were two firms named respectively Rekhab-chand Ghisulal and Ganeshilal Lachminarain. The firm of Rekhabchand Ghisulal carried on business in Calcutta as commission agents and consisted of four partners, viz. Ghisulal Chabra, Keshirmull Chabra, Ghogalal Keshriwal and Sunderlal Chabra who was a minor. The firm of Ganeshilal Lachminarain carried on business at Dhullian and consisted of Lachminarain, Badulal and Begraj. The fact that Badulal and Begraj were partners was during the proceedings denied by them and has been to some extent in issue in this appeal. But I am satisfied at any rate, that Badulal was a partner. On 2nd March 1924, these two firms agreed to carry on business together as a firm in the name of Ghisulal Ganeshilal, that is to say, the new firm was to consist of the six or seven persons whom I have mentioned as being members of the other two firms. The agreement was in writing and was in the following terms:
The deep blessings of Ganesh Lall Lachmi Narayan to Bhai (brother) Rekhabehandji, Ghisu Lall, Chabra of Baloochar, which please accept. Further we have opened a shop in Duliyana wherein the shares (will be) as follows :-We shall give annas 7 (share) to you, Rekhabchand Ghisulal. Annas 9 (share) will belong to ourselves, Ganeshlal Lachminarayan. In words, annas seven will be yours, annas nine ours. Further, goods bought (for the shop) will be ordered from your gaddi in Calcutta.
The Calcutta expenses (will be) as follows :- Commission 0-8-0, brokerage 0-4-0, bale (baling?) expenses will be charged according to rule. And the 'muddat' (period) for cloth will be deducted on back of the consignment rate at 1-8-0 in words, one rupee and eight annas per cent. Further, deduction will be made at 2-13-0 in words, two rupees and thirteen annas, in respect of 'Ganzies' (under vests) and warm (woollen) cloth and all kinds of warm (woollen) goods ordered and interest on money will be charged at annas 10 in words, ten annas. And commission on silver and gold will be charged at annas 2 in words, two annas per cent. And if there be any hundi transactions, 'hundawan' (commission on hundi transactions) will be charged at 0-2-0 per cent. on hundis drawn by us from here.
As above. Further, the fooding charges of the person staying in the shop, as well as those of (his) women and children (family) will be entered in the (account of the) shop. And if the proprietor (any of the proprietors) stays in the shop, Rs. 401, in words, four hundred and one per year (will be entered) on his account. If Badu Lall or any other person stays (in the shop), then his expenses per year, as well as those of the women, will be entered in the (account of the) shop. All expenses in connexion with the shop, sundry expenses, shop expenses, the expenses for the journey to and from Calcutta, if it be necessary to go there for a marriage and the expenses of going there for the purpose of (performing) the 'Nukta' (Sradh and other funeral ceremonies), shall be entered in the (account of the) shop. Further, items entered in the Dharma account shall be entered in the (account of the) shop. 'Dharmada' will not be sent elsewhere out of the Duliyana shop. And (expenses in connexion with) marriages, etc. and 'Nukta' ceremonies shall be debited to the party concerned. And (the cost of) clothes, etc., ornaments and jewelleries that are made shall be debited to the party concerned. It shall be debited to the party that makes them. Further, out-standings and sums due to the shop shall remain (shall be divided) according to the respective shares. Further, the entire business shall remain in charge of the person who stays in the shop transactions with parties and all work shall remain in his charge. Further, outstandings shall remain outstanding according to the existing respective shares. The parties shall take (realize) the outstandings according to their respective shares. The shop shall bear the name of Ghisulal Ganeshi Lall and balance sheets will be struck year after year (every year). The 'murat' (auspicious day ceremony) will be, performed in the shop on Miti Chait Sudi 9, Sambat 1981.
Miti Fagoon Badi 12, Sunday of Sambat 1980.
Sig. of Ganesh Lall Lachmi Narayan Kala of Duliyana by the pen of Lachmi Narayan. Sig. of Badu Lall.
2. The new firm, as is stated in the agreement, was to carry on business at Dhullian in a shop which the firm of Ganeshilal Lachminarain had already opened there. Goods for this shop were to be ordered from the gadi of Rekhabchand Ghisulal in Calcutta upon the terms stated in the agreement. Dealings upon the basis of this agreement continued until 19th February 1930, when according to the plaint, accounts were compared and a sum of Rupees 16,523 odd was said to be found due from the firm of Ghisulal Ganeshilal to the firm of Rekhabchand Ghisulal. This adjustment was denied by the defendants and in opening the case, counsel for the plaintiffs conceded that there had been no adjustment and that if the plaintiffs were entitled to relief, it would have to be upon the basis of an account to be taken.
3. In April 1930, Ghisulal Keshrimull and Chogalal Keshriwal were adjudicated insolvent. On 22nd December 1931, the Official Assignee assigned the right, title and interest of the insolvent firm of Rekhabchand Ghisulal in Calcutta in the outstandings due by the firm of Ghisulal Ganeshilal of Dhullian to the plaintiffs for Rs. 3500. On 1st September 1932, a suit was filed by the plaintiffs on that assignment, that being a suit founded on the same cause of action as that on which the present suit was founded. But that suit was dismissed on 16th May 1933, because leave had not been obtained under Clause 12, Letters Patent and consequently, this Court had no jurisdiction to entertain the suit. On 2nd August 1933, the present suit was filed. Various defences were raised : (1) that the suit was barred by limitation; (2) that the only right which Rekhabchand Ghisulal had was to sue for an indemnity and for accounts, that it was a right coupled with the liability of the agent and that a commission agent could not be regarded as the creditor of his principal. For these reasons, his right, whatever it was, could not be assigned; (3) that assuming that there was a debt, assignment must be of the whole debt, and as Sunderlal had an interest in the firm and his interest could not be assigned because he was a minor and had not been adjudged insolvent, therefore the assignment was not of the whole debt; (4) that even assuming that a part of the debt can be assigned in law, that part was left indefinite because Sunderlal's interest, whatever it might be, had never been ascertained; (5) that if accounts were necessary to be taken, the infant Sunderlal and the insolvents were necessary parties and they must render accounts before they could be entitled to indemnity; (6) that the suit was not competent, because it was a suit by some partners against other partners in the same firm and that the only way of adjusting the differences between them was by taking partnership accounts; and (7) that the suit was against the defendants in their firm name, and that they had ceased to carry on business prior to the issue of the writ. On the first point, viz. that of limitation, Section 14, Limitation Act provides that:
In computing the period of limitation prescribed for any suit, the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a Court of. first instance or in a Court of appeal, against the defendant, shall be excluded, where the proceeding is founded upon the same cause of action and is prosecuted in good faith in a Court which, from defect of jurisdiction, or other cause of a like nature, is unable to entertain it.
4. In Section 2, Sub-section (7) 'good faith' is defined as follows : 'Nothing shall be deemed to be done in good faith which is not done with due care and attention'. In Indian Publishers, Limited v. S.C. Aldridge (1908) 35 Cal 728, it was decided that Section 14, Lim. Act was not intended to apply to a case in which a first suit failed entirely through the negligence and laches of the plaintiff himself. In Cox v. Leech (1857) 1 CB (NS) 617, an attorney had received instructions to sue certain underwriters for loss on policies on goods which had been shipped to Calcutta and there sold. Being under the impression that the only defence to be set up was a supposed set-off against the broker in whose name the policies were effected, he sued out writs in the Lord Mayo's Court though he knew that that Court had no power to issue a commission for the examination of witnesses abroad. The actions being defended, and a commission being found necessary, the proceedings in the Lord Mayo's Court were abandoned. It was held that the attorney was guilty of crassa negligentia, and disentitled to sue his clients for the costs of such abortive proceedings. In William v. Gibbs (1836) 5 Ad & El 208, an action had been brought in an inferior Court which was without jurisdiction to try the particular claim involved. It was held that this was clearly a case of negligence. A number of cases showing how a solicitor may be negligent in contentious matters are set out in Vol. 26, Halsbury's Laws of England, para. 1253, p. 755, e. g. where he brings an action in the wrong Court and where he fails to prepare the case properly for trial. It is stated also that he is liable for the consequences of his ignorance or non-observance of the rules of practice, for his want of care in the preparation of the action for trial or his failure to attend thereon with his witnesses, and for the mis-management of so much of the conduct of an action as is usually allotted to his department of the profession. Thus, he is liable for negligence if he fails to make proper investigation into the cause of action, or, knowing that the client has done some act which will preclude him from recovering, neglects to point this out, and many other instances.
5. In this case, it is clear that both the plaintiff and his attorney knew that the cause of action was only partly within the jurisdiction of this Court and therefore the leave of the Court would be necessary in order that the Court might have jurisdiction to entertain the case. The attorney stated in evidence that he had applied for leave, that is to say he had applied to the Master, and that, according to the practice, his application ought to have been endorsed by the Master upon the plaint and presented by him to a Judge for signature. But he was forced to admit that he had failed altogether to ascertain or to attempt to ascertain whether leave had, in fact, been granted. At p. 19 of the paper book he says that he presented two plaints in respect of the same plaintiffs and asked for leave under Clause (12) in respect of both the plaints and was under the impression that leave had been granted in respect of both of them, but when the suit was heard, he came to learn that in respect of this suit, no leave was granted. I have examined the original plaint and I cannot accept the statement of the attorney that he made clear to the Master that he desired to ask for leave with regard to this case. Where such a request is made, the endorsement made upon the plaint is different from the endorsement where no such leave is required. In the latter case the endorsement begins with a statement that the plaint is admitted, giving the date with other particulars such as whether it is to be disposed of as a commercial cause or otherwise. On the other hand, when leave under Clause (12) is required, the endorsement begins with a statement that leave is granted under Clause (12) and the plaint is admitted, giving the date. I am satisfied that the attorney's recollection on this point is defective and that no such application was made to the Master.
6. But assuming that it was, the attorney's duty did not cease there. He must not take it for granted that leave is always given and that the granting of leave is a mere formality; it was his duty to ascertain whether such leave has been granted or not. But negligence did not cease there; because in the written statement of the defendant firm in the very forefront and in para. 1 thereof the plea was taken that this Court had no jurisdiction to try the suit. The plaintiffs and their attorney therefore were given notice in the clearest possible way that the defendants intended to show that the Court had no jurisdiction to try the suit. In spite of this, neither the plaintiffs nor their attorney took the slightest trouble to ascertain what was the meaning of this plea. The rules of procedure provide ample means for ascertaining, by a demand for particulars in what way the defendant suggested that the Court was without jurisdiction, and this negligence was not only the negligence of the attorney but that of the plaintiffs themselves because the attorney stated in his evidence that he-had informed the plaintiffs that this plea had been taken. The following answers given in the attorney's cross-examination are instructive upon this point; they appear at pp. 19-20 of the paper book:
Q. Did you take the trouble to find out what that plea meant?
Q. Did you take the trouble to find out what was. wrong about the jurisdiction?
Q. Did you inform your client that there was this plea of want of jurisdiction taken?
Q. Did you take the trouble to find out whether any leave was noted in the plaint?
A. No. I did not do anything until the hearing; came before his Lordship.
7. In my opinion therefore it is clear beyond doubt that the plaintiffs and their attorney were guilty of negligence, and that this Court was without jurisdiction to hear the case owing to that negligence and therefore it cannot be said that the plaintiffs were prosecuting that case in good faith within the definition given in Section 2, Lim. Act, and Section 14 is not intended to apply where the suit has failed owing to the negligence and laches of the plaintiffs. It appears that a contrary opinion was held in Venkiti Nayak v. Murugappa Chetti (1897) 20 Mad 48 (FB) in which it was held that though the plaintiff had failed to obtain leave under Section 44,, Civil P. C, he was entitled under the Limitation Act to have the time occupied in the previous proceedings deducted. That, case was decided solely upon the authority of a previous decision. On p. 51, the learned Judges say as follows:
Such a defect as absence of leave was held in a. recent case decided in this Court to bring the case, within the provisions of Section 14 and we think that case was rightly decided,
and they refer to the case in Subbaran Nayadu v. Yagana Pantulu (1896) 19 Mad 90. On examination of the issue raised in that case, I find that it was conceded that there' was no actual negligence or want of bona fides on the part of the plaintiff and it was upon that basis that the Court decided that he was entitled to deduct the period during which the former suit was being prosecuted. It is obvious therefore that neither of those cases are relevant where it is proved that there has been negligence on the part of the plaintiff. It follows therefore that the conclusion to which I have come on this point is sufficient by itself to dispose of this appeal.
8. But in view of the fact that lengthy arguments have been addressed upon the other points raised, I think it is my duty to deal with them. On the second point viz. that of indemnity, it is clear that the position of an agent is, that he is entitled to claim an indemnity from his principal after rendering an account. A mere right to sue obviously cannot be assigned [Section 6 (e), Transfer of Property Act]. It is a personal right. In commission agency, before an agent can claim an indemnity, he has a duty to account. If, as was pleaded, an account had been stated between the parties the position would have been different. Such an account stated would have been an actionable claim within the meaning of Section 3, Transfer of Property Act, that is to say, a debt or beneficial interest in immoveable property. This obligation on the agent's part to account to his principal cannot be assigned. The cases in Churamani Mondal v. Rajendra Kumar Singha (1918) 5 AIR Cal 445, Khetra Mohan Das v. Biswa Nath Bera : AIR1924Cal1047 and Rajeswar Saha v. Sheikh Yadali : AIR1933Cal461 are not in point. In all those cases, the plaintiff was the principal and he was claiming monies of his own which, he said, were in the hands of his agent. They were suits therefore in the nature of claims for money had and received. There was no obligation upon the plaintiff, the principal, to render any account to the defendant. Therefore no question arose about assigning an obligation to account. These were all actionable claims for the sum to be found due on taking an account. If therefore it is to be assumed that Rekhabchand Ghisulal were in the position of agents of Ghisulal Ganeshilal, I am satisfied that their claim was one which could not be assigned.
9. The third point was that the assignment must be of the whole debt. That is clear from the decision in Doraiswami Mudaliar v. Doraiswami Aiyengar : AIR1925Mad753 in which it was held that an assignment of a debt to be valid must be of the whole debt. It is clear also that Sunderlal's interest, whatever it was, has not been and could not be assigned. It is true that Sunderlal was not a partner in the real sense, because being a minor, he could not contract (Section 11, Contract Act). But he had a right to benefit in the partnership under Section 247. In Sanyasi Charan Mandal v. Krishnadhan Banarji (1922) 9 AIR PC 237 it was decided by the Privy Council that the minor's share in the property of the firm mentioned in Section 247 was merely his right to participate in the property of the firm after its obligations had been discharged. But in the circumstances which existed between the parties in this case, it was not possible to say whether there would be any such balance to which Sunderlal might have some right. Until the close of the insolvency proceedings it could not be stated definitely that Sunderlal had no share in the business, because it is conceivable that some surplus might remain after satisfying the creditors. His share whatever it might be, did not vest in the assignee, yet the assignee purported to assign the whole of the right, title and interest of the insolvent firm of Rekhabchand Ghisulal which, as stated, would include whatever right Sunderlal had. For these reasons, the assignment was invalid. Upon the next point, assuming that it is possible to assign a part of a debt, the assignment herein was of an indefinite part. No attempt was made to ascertain what part had been assigned, or what part was intended to be assigned and it is clearly impossible upon the reference ordered in this case to enter into the question of what was the amount or character of the interest of the infant in the assets of the partnership.
10. But it seems to me that still greater difficulties lie in the way of the plaintiffs in prosecuting this suit, and these difficulties arise upon the 5th and 6th points which counsel for the appellant has taken before us. The learned Judge seems to have adopted the view which Indian commercial men habitually form about partnership. They always regard the firm as some sort of legal entity apart from the partners. This attitude has been recognised to some extent in the recent Partnership Act. But that Act does not apply to the circumstances of this case, which must be decided according to the principles of English law as contained and codified to some extent in the Indian Contract Act. According to those principles the firm as such has no existence in law, and the law regards only the individual partners. It only confuses the issues which we have to decide to say that the firm of Rekhabchand Ghisulal has contracted with the firm of Ghisulal Ganeshilal, and that the first firm are independent commission agents acting for their principals, the firm Ghisulal Ganeshilal. What in fact and in law took place was that the four individuals who were partners in the firm of Rekhabchand Ghisulal joined with the three individuals who were members of the firm of Ganeshilal Lachiminarain and carried on business together as partners in the firm of Ghisulal Ganeshilal and the partnership agreement between them provided that the four individuals, who were also members of the Rekhabchand Firm would purchase goods on behalf of the seven individuals forming the Ghisulal Ganeshilal Firm upon the terms set out in the agreement; that is to say, in purchasing these goods they were to be allowed certain expenses in the accounts to be taken between the parties to this partnership agreement. The position with regard to partners is clearly and concisely stated in Halsbury's Laws of England, Vol. 22 at p. 75 as follows:
Partners are not, as regards partnership dealings, considered as debtor and creditor inter so until the concern is wound up or until there is a binding settlement of the accounts. It follows that one partner has no right of action against another for the balance owing to him until after final settlement of the accounts; but a partner may have a right of action against another for a debt which is independent of the partnership accounts.
11. It is clear that the claim of Rekhabchand Ghisulal in this case was not one which was independent of the partnership account: on the contrary, it arose out of the very terms of the partnership agreement between the parties. In Lindley on Partnership, Edn. 9, p. 4, it is stated that one feature peculiar to the English law of partnership and distinguishing it from the laws of other European countries and of Scotland, was the persistency with which the firm as distinguished from the partners composing it, was ignored both at law and in equity. As no one can owe money to himself, it was held that no debt could exist between any member of a firm and the firm itself; and although Courts of equity, in winding up the concerns of a firm, treated the firm as the debtor or creditor of its members, as the case might be, yet this was only for purposes of bookkeeping and in order to arrive at the net balance to be paid to or by each of the partners on the ultimate settlement of their accounts. This non-recognition of the firm was a defect in the law of partnership; and it is to be regretted that the Partnership Act did not go further than it did in the direction of assimilating the English law to the Scotch.
12. That defect, as I have said, has been recognized in this country in the recent Partnership Act. But it has no application to the facts of this case. It is obvious therefore that the only suit possible between these parties is one for partnership accounts. Thus in Lakshmanan Chetty v. Nagappa Chetty (1918) 5 AIR Mad 167 which was a suit for recovery of money advanced by one partner against himself and another constituting a firm, it was held that the suit was not maintainable, because the plaintiff was suing himself and his partner and he had not asked for accounts, i.e. partnership accounts. Meyer & Co. v. Faber (1923) 2 Ch 421 was an action between partners and it was held that according to the settled principles of the law of partnership, an action could not be brought in the firm name against a partner in the firm inasmuch as that name being merely a collective description of all the partners, the partner against whom it was brought would be both plaintiff and defendant. In Public Trustee v. Elder (1926) 1 Ch 776 at p. 787, Warrington L. J. said:
The relation of partners to each other is a complicated one; it is not one in which a partner is merely entitled to certain rights as against his copartner, he is also under certain correlative obligations, one of which is to account to them in respect of his dealings with the partnership affairs. This obligation is not one which can be affected by an assignment of his share in the partnership. The obligation does not pass to the assignee.
13. In Rustomji v. Seth Purshottamdas (1901) 25 Bom 606 it was held that where an individual is a common partner in two houses of trade, no action can be brought by one house against the other house upon any transaction between them while such individual is a common partner. This doctrine is founded on the rule that the same individual even in two capacities, cannot be both a plaintiff and defendant in one and the same action. One partner cannot sue for money lent by him to a firm of which he is a member. The advance is but an item in the partnership account. And in Kashinath Kedari v. Ganesh (1902) 26 Bom 739, it was held that the suit as framed was not maintainable. The money claimed was only one item in the 'partnership account between the plaintiffs and the defendants. Without taking a general partnership account it was impossible to say whether there was anything due by the defendants to the plaintiffs.
14. The result is that this suit is not maintainable and that the only remedy of the persons who constituted the firm of Rekhabchand Ghisulal against the two or three persons in the Ganeshilal Lachminarain Firm for the expenses to which they alleged they were entitled under this agreement, was in a partnership suit against the firm of Ghisulal Ganeshilal for accounts. Until such accounts have been taken it is impossible to ascertain whether anything is due to the Rekhabchand Ghisulal Firm. For all we know, the Rekhabchand partners may owe the firm of Ghisulal Ganeshilal considerable sums on one account or another or they may have overdrawn their account. In such a suit the infant Sunderlal and the insolvents Ghisulal Keshrilal Choglal and the Official Assignee would be necessary parties. This or any other obligation to account cannot be assigned. This ground also is enough to dispose of the suit. The seventh point taken was that the defendant firm had ceased to carry on business at the time of the accrual of the cause of action, namely the date of the assignment, and therefore Order 31, Rule 1, was not applicable because that Rule refers to a firm carrying on business. There is not sufficient evidence on this point to enable me to deal with it. There does not seem to have been any dissolution of the firm until the death of Ganeshilal in August 1934, and there is no clear evidence to show whether business was being carried on or not at the time when the assignment was made.
15. The last point taken arose during the hearing of the appeal. It appears that Ganeshilal died in August 1934. Mr. Page on behalf of the plaintiffs argued that the only warrant of attorney given to Messrs Khaitan & Co. to defend the suit was given by Ganeshilal on his own behalf only and therefore when he died the only warrant of attorney ceased to be effective. When a firm is sued, the partners appear individually in their own names according to the provisions of Order 30, Rule 6 of the Code. The warrant of attorney given in this case by Ganeshilal was to enter appearance for Ganeshilal, a member of the firm of Ghisulal Ganeshilal, 'in my name'. Mr. Page has argued that only one partner appeared in the suit and when he died, the warrant of attorney was at an end.
16. Under the provisions of Order 30, Rule 6, after appearance all steps in the suit must be in the name of the firm. Moreover, it is clear that though the appearance in such circumstances is individual by each partner, that appearance is an appearance on behalf of the firm. That I think follows from the provisions of Order 30, Rule 1 (2), Civil P.C. But if there were any doubt upon this point, I think it has been concluded by the decision in Lysaght Ltd. v. Clark & Co. (1891) 1 QB 552. Cave J. therein stated at p. 556 that the appearance, under the Order XIV proceedings of the rules of the Supreme Court in England (which are practically the same as the rules with which we have to deal in this case), of one partner is the appearance of the firm. Moreover in the present case, all the partners were served. Leave for this purpose was obtained under Order 30, Rule 3 by the plaintiffs. The effect of the provisions of Order 21, Rule 50, is that these partners after service and failure to appear are precluded from denying that they are partners. On the point raised that Badulal who was not a partner I am satisfied that he was. In fact, the agreement was signed by him as a partner. It is true that he and Begraj had at one stage specifically denied that they were partners: but this I am satisfied was for the purpose of trying to escape from liability.
17. In view of the fact that the appearance entered for Ganeshilal by Messrs. Khaitan & Co. was in law the appearance of the firm, I am satisfied that Ganeshilal intended the warrant of attorney to be, and that it was, a warrant of attorney to act for the firm. It is true that it was not strictly in proper form. But I am satisfied that Ganeshilal meant Messrs. Khaitan & Co. to act throughout for the firm and that at all material times the defendants recognized Messrs. Khaitan & Co. as having authority to act for the firm. It must be remembered in this connection that as I have already stated, Indian commercial men hold a very different view about a partnership firm from that which is held by English lawyers and I am sure that it never entered the head of Ganeshilal or his partners to think that when instructing Messrs. Khaitan & 'Co. they were being instructed solely on behalf of Ganeshilal and not on behalf of the firm which was being sued. The result is that for the several reasons which I have given this appeal is allowed, the order of reference is set aside and the suit dismissed with costs both here and below.
18. I agree.