IMPORTANT POINT
When a partnership firm gets dissolved due to death of one partner and converts into proprietorship firm of the sole surviving partner, such proprietorship firm would be competent to pursue suit filed by the partnership firm.

JUDGMENT

K.S. Radhakrishnan, J.

1. Leave granted.

2. OS No.39 of 2008 was a suit preferred on 1.1.2008 by M/s AVK Traders, a partnership firm, for realization of an amount of Rs.53,39,648/- against the Respondent Corporation for claims with regard to various supplies made to the Corporation during the year 2004-06. Respondent Corporation filed its written statement on 26.5.2008 denying the claim. M/s AVK Traders was a partnership firm with only two partners, the Appellant and his father. The partnership was later re-constituted. The re-constituted partnership under the Partnership Deed dated 4.11.2002 contained the following clause :-

“In the event of retirement of partner or refusal of the legal representative of the deceased partner to become the partner of the partnership as on the expiry of the period given to them to become partners or on the expiry of the period given to them to become partner, the other partner shall have the power to purchase his share by giving notice to retired partner or the legal representative of the deceased partner in writing to that effect within three calendar months or receipt of the notice by the retained partner or the legal representative of the deceased partner. If the surviving partner fail to purchase the share of the partnership or the legal representative fail to express their interest within the said period, the partnership shall dissolve as on the expiry of three months mentioned earlier……”

During the pendency of the suit on 2.2.2009, the father of the Appellant, who was a partner, expired. The Appellant and his sister were the only legal representatives of the deceased father. On the death of the father, the partnership stood dissolved w.e.f. 24.5.2009 since the sister was not interested in becoming a partner of the firm.

3. In view of the above-mentioned clause, though the firm stood dissolved on 24.5.2009, the sole surviving partner could continue the business of the firm as a proprietary concern. Consequently, all the interests of the firm stood devolved upon the Appellant and he filed I.A. No.817 of 2002 in O.S. No.39 of 2008 for leave to continue to prosecute the suit for and on behalf of M/s AVK Traders as a proprietary concern. The Appellant also preferred I.A. No.814 of 2012 seeking necessary amendment of the plaint. Appellant also filed I.A. No.815 of 2012 under Order XXIII Rule 17 read with Section 151 CPC praying for recalling and examining PW1. The Subordinate Court by a common order dated 8.2.2012 allowed all the aforementioned applications preferred by the Appellant. With regard to the prayer for continuing the suit, the Subordinate Court held as follows :- “In the instant case, out of two partners in the plaintiff firm, one partner died during the pendency of the suit and as such the partnership got dissolved. Therefore, I hold that the other partner viz. the 2nd petitioner is entitled to continue the suit. Hence, necessary amendment is also required to the plaint. Therefore, for a proper and effective adjudication of the real dispute between the parties the proposed amendment is also liable to be allowed……”

4. The Respondent Corporation preferred I.A. No.809 of 2012 under Order XIV Rule 5 CPC seeking framing of additional issues. The Subordinate Court vide order dated 8.2.2012 dismissed I.A. No.809 of 2012 filed by the Respondent Corporation.

5. Aggrieved by the above-mentioned orders, the Respondent Corporation preferred Original Petition (Civil) No.631 of 2012 before the High Court of Kerala seeking the following reliefs :-

“(a) To call for the records leading to Ext.P11, P11(a), P11(b) & P12 and set aside the same.

(b) To declare that the respondent/plaintiff is not entitled to continue the suit as a Proprietary concern.

(c) To direct the Court below to frame additional issues as prayed for in Ext.P-4.

(d) To issue any other appropriate order or direction as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case.”

The High Court did not all