Hanuman vs Radha Kishan

Chopra, J.—The only question involved in this second appeal is whether a suit by all the proprietors of a firm for the recovery of a debt due to the firm is hit by Section 69(2), Partnership Act and is, therefore, not competent if the firm was not duly registered under the Act. The Plaintiffs who are respondents in this appeal brought a suit for the recovery of Rs. 600/- on the basis of a bond alleging that they were members of a joint Hindu family and owners of the firm in whose favour Din Dayal father of the defendant-Appellants executed the bond. The defendants denied the execution of the bond and ''inter alia'' pleaded that since the firm was a partnership firm which had not been duly registered under the Partnership Act, the suit was not maintainable. The trial Sub-Judge as well as the District Judge found the execution of the bond to be proved, but they differed in their finding as regards the nature of the firm. The trial Court held that it was a partnership firm and since it had not been registered it dismissed the suit as barred by Section 69(2), Partnership Act. The District Judge on appeal found in favour of the Plaintiff that the firm was a joint Hindu family firm and consequently decreed the suit. The defendants came in second appeal to this Court and the appeal was originally heard in Single Bench by my learned brother Hon''ble the Chief Justice who on a consideration of the evidence on record arrived at the conclusion that the trial Sub-Judge was right in holding that the firm was a partnership firm.

But since he considered the further question of the applicability of Section 69(2) to a suit in the present form of some importance he referred the case to a Division Bench. Section 69(2), Partnership Act reads as follows:

No suit to enforce a right arising from a contract be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of . Firms as partners in the firm.

It is admitted that the Plaintiffs'' firm was never registered and it has also been finally held that it was a partnership firm which would be governed by the provisions of the Partnership Act. Such a firm has expressly been declared to be unable to enforce its claim against third parties in the Civil Court and the language of the section is imperative and absolutely debars a Court from entertaining a suit instituted by or on behalf of such firm. The contract that is sought to be enforced was admittedly with the firm and it has only to be seen if the suit was by or on behalf of the firm so as to bring it within the mischief of the sub-section. For this we have to revert to the frame of the suit and contents of the plaint. In the heading of the plaint the Plaintiffs were described as:

Radha Kishan son of Ganga Din, Shadi Ram son of Radha Kishan, Sheo Chand Rai, Ram Chand sons of Taini Mal, Dhanpat Rai son of Ram Chand and Munshi Lal son of Sheo Chand Rai Vaish Aggarwal residents of Mohindergarh now residing in New Mandi Narnaul Proprietors of the firm Radha Kishan Shadi Ram situate at Mandi Narnaul.

In Clause (1) of the plaint it was stated that the Plaintiffs were members of joint Hindu family firm and owners of the firm ''Radha Kishan Shadi Ram'' Clause (3) which narrated, the cause of action recited that the defendants on different occasions purchased cloth from ''the Plaintiff firm'' and on accounts having been taken Din Dayal on 29-5-1998 executed a bond for Rs. 600 in favour of ''the Plaintiff firm''. The plaint was signed and verified by Plaintiffs describing themselves as the proprietors of the firm Radha Kishan Shadi Ram. The contents of the plaint leave no doubt that the suit was brought in the interests and for the benefit of the firm to realise the debt which was due to the firm. As regards the form it is correct, that the suit was not in the name of the firm as provided by Order 30, Rule 1, Civil P.C. Under this rule two or more persons claiming as partners may sue in the name of the firm of which such persons were partners at the time of the accruing of the cause of action, but this is only an enabling provision and merely provides an alternative and abbreviated mode of describing the parties to a suit by the firm. This, however, is not the only form in which a suit on behalf of a firm can be brought. All the proprietors of a firm can institute a suit in their individual names to enforce a contract in favour of the firm. That may not strictly be a suit by the firm in the form provided by Order 30, Rule 1, Civil P.C. but it shall still undoubtedly be a suit for the benefit and interests of the firm and consequently a suit on behalf of the firm. The present suit falls under that category and is, therefore, hit by Sub-section (2) of Section 69, Partnership Act which not only applies to suits by a firm but also to those which are brought on behalf of a firm.

Sub-section (3) of Section 69 lends support to the interpretation that I place on its Sub-section (2). Clause (a) of Sub-section (3) operates as an exception to Sub-section (2) and amongst a number of other things allows a suit to be brought by the partners of a dissolved firm to realise the property of the firm even though it was never registered. The exception was hardly necessary if such a suit was not to be regarded as one by or on behalf of the firm. Shri Ram Niwas, the learned Counsel for the respondents, has not been able to refute the contention of the Appellants and has frankly conceded that the suit was covered by the provisions of Section 69(2), Partnership Act.

In the result this appeal is accepted, the decree of the District Judge set aside and that of the trial Court dismissing the suit restored. It is, however, directed that the parties shall bear their own costs throughout.

Teja Singh, C.J.: The only question that falls for determination in this appeal now is whether the suit is hit by Sub-section (2) of Section 69, Partnership Act, which lays down that no suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the register of firms as partners in the firm. Both sides are agreed that this is a suit not by the firm and the Plaintiffs are Radha Kishan and others who described themselves as proprietors of the firm Radha Kishan Shadi Ram. The defendants'' position was that it was a suit on behalf of the firm. Had the matter been ''res integra'' I would have hesitated to uphold this objection, because in spite of the fact that the Plaintiffs described themselves as proprietors of the firm, they never stated that they were suing on behalf or even for the benefit of the firm and as I read the plaint I take it that they sued in their own name and for their benefit. Evidently it is a suit under Order 1, Rule 1. Order 1 Rule 8 relates to suits on behalf of other persons and as far as I have been able to find this is the only rule in which the phrase on behalf of is mentioned. The words of Sub-rule are

Where there are numerous persons having the same interest in one suit, one or more of such persons may, with the permission of the Court, sue or be sued, or may defend, in such suit, on behalf of or for the benefit of all person so interested.

From the very words of the rule it is clear that its applicability is attracted only in those cases where the number of Plaintiffs or defendants is fairly large.

In this case this condition was not satisfied and accordingly the suit could not come under Order 1, Rule 8. I may also mention here that when a suit is brought by one or more persons on behalf of others this fact must be clearly stated in the plaint and the title of the suit whether (where?) the Plaintiff sues in representative-character should be as follows:

A.B. on behalf of himself and others, Plain-tiffs v. C & D Defendants or A.B. Plaintiff v. CD. on behalf of himself and others defendants.

See in this connection the form of pleadings given in Appendix A to the C.P.C., and C.P.C. by Mulla, 11th Edition, 1941, page 510. It was, urged before us that this suit was on behalf of the partnership, because it was for its benefit. I cannot understand why should this be so necessarily. As the plaint stands each one of the Plaintiffs came in his individual rights. No doubt that right was the right of his being one of the proprietors of the firm but all the same'' it was a separate right which vested in him alone. To make my meaning further clear I would point out that if one of the Plaintiffs died, his interest in the suit property would devolve upon his heirs and not upon the other proprietors of the firm and it is they who will have to be brought on the record as legal representatives rather than the other partners of the firm.

It was because of this difficulty that I experienced when I heard the case sitting in a single Bench that I referred it to the Division Bench. Before the Bench Mr. Ram Niwas counsel for the respondents not only expressed his inability to quote any authority in support of the position taken up by his clients in the Courts below that the suit was maintainable, but he even went to the length of saying that the objection taken by the Defendant regarding the maintainability of the suit was not well-founded.,-On the other hand Mr. Gurbachan Singh counsel for the Appellants cited before us a decision , of the Court of the Judicial Commissioner, Ajmer-Merwara, - ''Moti Lal v. Lachhmi Narain'' 1937 MLJ. 86 in which it was held that a suit filed by individual partners of a firm to recover a debt due to the firm was a suit on behalf of a firm and as such was barr-ed by Section 69, Partnership Act. No doubt the learned Judge did not give any reasons in support of his dictum nor there was any discussion of the point involved, but the ruling applies to the facts of the present case.

In addition I agree with my learned, brother that the words of Sub-section (3) of Section 69 which apply to a case of dissolved firm do sup-port the suggestion that the intention of the framers of the Act was that when a partner ship is not registered no suit whatever to recover its property should be brought and a debt alleged to be due to the partnership can not but be regarded as its property.

For all these reasons I agree that the appeal be allowed and the Plaintiffs'' suit be dismissed but the parties be left to bear their own costs throughout.