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1985 Supreme(Raj) 109
Rajasthan High Court
Dwarka Prasad & K.S. Lodha, JJ.
M/s. Sohanlal Basant Kumar - Appellant
Versus
Umrao Mal Chopra - Respondents
D.B. Civil Regular First Appeal No. 180 of 1972
Decided On : May 06, 1985
H.M. Parekh, for Appellants; N.C. Jain and S.C. Maloo, for Respondent.
Headnote:(a) Partnership Act—Sec. 69(2)—Interpretation of.(b) Partnership Act—Sec. 69(2)—Conditions to he fulfilled.(c) Partnership Act—Sec. 69(2)—Institution of suit—Essentials of.
A consideration of the aforesaid decisions of the various High Courts leads to the following conclusions. A firm is not a legal entity at all but is the collective term or an abbreviated name for all the persons who are partners thereof. All such persons who have entered into a partnership with one another are individually called partners and collectively they are called a firm and the name under which their business is carried on is called the firm name. Ordinarily, a suit may not be brought by a firm in its own name but a suit may be filed by all the partners acting together or by some of the partners only, but impleading the remaining partners also as parties to the suit. However, Order 30 Rule 1 of the Code of Civil Procedure prescribes a special procedure by which a suit may be brought in the name of the firm. Order 30 Rule 1 of the Code of Civil Procedure enables two or more persons, claiming or being liable as partners and carrying on business in partnership, to sue or be sued in the name of the firm, of which such persons are partners at the time of the accrual of the cause of action. Any party to a suit, in such a case, may apply to the court for a statement of the names and addresses of the persons who were at the time of the accrual of the cause of action partners in such firm. Where persons sue or are sued as partners in the name of the firm, it shall suffice if any of the partners may sign, verify or certify and pleadings or other documents required under the Code of Civil Procedure to be signed, verified or certified by the plaintiff or the defendant, as the case may be. If a demand is made as mentioned above, in the case of a suit instituted by the partners in the name of the firm, the plaintiffs shall forthwith declare in writing the names and places of residence of all partners constituting the firm on whose behalf the suit is instituted. Thus, there can be no doubt that a suit brought in the name of the firm is actually one by all the persons who were partners of the firm at the time of the institution of the suit. Thus although the firm is not a legal entity, yet the provisions of Order 30 Rules 1 and 2 C.P.C. enable several persons doing business as partners to sue or be sued in the name of the firm. The effect of a suit instituted in the name of the firm in the manner prescribed by Order 30 Rule 1 C.P.C. is as if the suit is filed by all the partners collectively. Whether the suit is filed by all the partners collectively or by some only of the partners impleading the rest as parties to the suit or whether it is filed in the name of the firm by one or more partners in the manner indicated by Order 0 Rule 1 C.P.C. , the conditions prescribed by Section 69(2) must be fulfilled. They are:—(1) that the firm must be registered: and (2) that the persons suing are or have been shown in the Register of Firms as partners in the Firm. The second condition requires that the names of the persons suing are presently shown or have been previously shown in the Register of Firms as partners in the firm. That appears to follow plainly from the provision of Sec. 69(2). (para 44)
The use of the conjunction and shows that both the aforesaid conditions must exist together on the date of the institution of the suit. As a matter of fact, these two requirements constitute the conditions precedent to the institution of the suit. It may be pointed out that merely filing a statement under Section 58(1) of the Act in the office of the Registrar of Firms in the prescribed form, giving the particulars of the partnership firm and its partners, together with the prescribed fee would not be enough for the fulfilment of the aforesaid conditions. A certificate of registration in the prescribed form should be made available to the partners of the firm and an entry of the statement filed under Section 58(1) should be recorded by the Registrar in the Register of Firms before the institution of the suit Similar is the position of a statement sent to the Registrar under Section 63 of the Act intimating the alterations or changes occurring in the constitution of the firm on account of addition, death or retirement of some of the partners. We may also observe that use of the expression "person suing" in Section 69(2) of the Act is significant. Ordinarily a singular use in an enactment includes a plural, but the use of the word persons in the aforesaid provision indicates that the legislature intended to refer to all those persons who are the partners of the firm at the time of the institution of the suit. The reason is simple, as all those persons who desire to obtain a decree in their favour in a suit must become plaintiffs in the suit and all those persons against whom a decree is to be passed must similarly be made defendants in the suit. When the suit is tiled by or on behalf of the partnership firm, either ail the partners of the firm should individually be named as plaintiffs in the suit or some of them may be named as plaintiffs, while the remaining partners may be named as proforma defendants in the plaint. Another alternative mode has been provided by Order 30 Rule 1 C.P.C. in such esses and the suit may be filed in the name of the firm, which name collectively represents all the partners of the firm at the time of institution of the suit. Such a suit filed in the name of the firm shall be deemed to be a suit on behalf of all the partners of the firm. The other limb of the requirement contained in sub-section(2) of Section 69 is that all such persons who are partners of the firm at the time of the institution of the suit roust be or have been shown in the Register of Firms as partners of the plaintiff firm. The expression "is or have been" referred to such persons whose names were entered in the Register of Firms as partners in the firm at the time of accrual of the cause of action and continues to remain so entered in the Register of Firms at the time of the institution of the suit. It has also been held in some of the cases cited above that all the persons whose names were entered in the Register of Firms on the date of the institution of the suit could file a suit notwithstanding the fact that the names of some other persons also find place in the Register of Firms as partners of the firm, who have either died or have since retired and thus ceased to be partners of the firm at the time of the institution of the suit. (para 45 & 46)
The crux of the matter is that the names of all these persons, who continued to held together as partners of the firm at the time of the institution of the suit, must be shown to be entered in the Register of Firms on the date of the institution of the suit. If the relevant entry in the Register of Firms containing some other names of persons who have either died or have retired from the partnership, the name would not affect the maintainability of the suit, inasmuch as the suit in the name of the firm could be filed only by or on behalf of the surviving partners of the firm. But if the name of one or more of the existing partners of the firm at the time of institution of the suit does not find place in the Register of Firms on that date, then the suit by or on behalf of the partnership firm is not maintainable. It is also clear that no oral evidence can be taken for the purpose of deciding as to who were the partners of the plaintiff firm at the time of the institution of the suit and the names of the persons suing must be shown in the Register of firms as partners of the plaintiff firm at the time of the institution of the suit, as the suit in the name of the firm is virtually a suit by all the partners of the firm and in order to prove the fact as to who were the partners of the plaintiff firm at the time of the institution of the suit, the only evidence admissible is a certified copy of the relevant entry in the Register of Firms. Thus the only possible interpretation to be placed on the expression are or have been shown in the Register of Firms could be the persons suing must either be presently shown in the Register of Firms as partners of the firm at the time of the institution of the suit or they must have been earlier shown in the said Register of Firm, as partners of the firm, no other interpretation is possible so as to give a rational meaning to the provision. (para 46)
2. The only question argued before us in this appeal related to the Maintainability of the suit by a partnership firm and it was submitted by the learned counsel for plaintiff-appellant that the suit was maintainable as the petitioner firm was a registered partnership firm within the meaning of Section 69(2) of the Act; while according to the learned counsel for the defendant-respondent, the suit by the plaintiff firm was not maintainable. The facts which have a bearing on the aforesaid question raised in this appeal lie in a very narrow compass. Umraomal defendant is alleged to have taken a loan of Rs. 11,000/- from the plaintiff firm on June 27, 1968 with the stipulation to repay the same together with interest @Rs. 12% per annum and he executed a promissory note and a receipt for the said amount in favour of the plaintiff, firm, by way of collateral security for the repayment of the amount of Rs. 11,000/- borrowed from the plaintiff-firm. As the defendant failed to make payment of the loan inspite of repeated demands, the plaintiff firm filed a suit against the defendant-respondent on March 26, 1971 in the court of District Judge, Jodhpur for the recovery of the sum of Rs. 11,000/- as principal and Rs. 3,500/- by way of interest, in all a sum of Rs 14,550/-. The plaintiff in the said suit was referred to as M/s Sohanlal Basant Kumar, a registered partnership firm of Jodhpur. It was stated in the plaint that the plaintiff was a registered partnership firm duly registered under the provisions of the Act and that there were three partners of the plaintiff firm, namely, Sohanlal, Gumanmal and Mangilal. The plaint was signed on behalf of the partnership firm by Sohanlal, one of the partners of the plaintiff firm.
3. The defendant contested the suit on the ground inter-alia that neither Sohanlal. Gumanmal and Mangi Lal were partners of the plaintiff firm, nor the plaintiff firm was duly registered. The receipt of the loan was also denied by the defendant. One of the issues framed in the suit was, "whether the firm (plaintiff) is a registered partnership firm?" The said issue was considered to be preliminary issue and with the consent of the parties arguments were heard in respect of the said issue. The learned District Judge, Jodhpur, following the decisions of this Court in Kesrimal vs. Dalichand (1) held that the requirements laid down in Section 69(2) of the Act was not complied with, inasmuch as the name of Mangilal was not shown in the Register of Firms as a partner of the plaintiff firm on the date of the institution of the suit and so the suit could not be held to be maintainable. The learned District Judge, therefore, dismissed the plaintiffs suit by his judgment and decree dated March 7, 1972.
4. When the first appeal filed by the plaintiff was argued before the learned single Judge, he was of the view that even though the names of some of the partners suing have not been shown in the Register of Firms on the date of the institution of the suit, yet if it is proved that such persons were infact partners of the plaintiff firm on the date of the suit, they could institute the suit without committing any breach of the provisions of Section 69(2) of the Act. Learned single Judge was of the view that there decisions given by a Single of this Court in Kesrimals case (1) and Firm Alwar Iron Syndicate vs. Union of India (2) and M/s Chandrabhan Bansilal vs. Municipal Council, Bikaner (3) required reconsideration in the light of the interpretation of the provisions of Section 69(2) which appealed to him. The learned single Judge (S.N. Modi J.) also observed that one of the decisions referred to above, in the case of M
