Sapna Ganglani and Smt. Tamanna Moolchandani represented by their POA Smt. Geeta Gangalani vs R.S. Enterprises and Mr. N. Madhusudhan Reddy, Proprietor of Sapna Deepam Developers

Arali Nagaraj, J.—The petitioner Nos. 1 and 2 herein who are respectively defendant Nos. 1 and 2 in O.S. No. 25177/07 before the learned XXVIIIth Addl City Civil Judge, (CCH No. 29), Mayohall, Bangalore, (Hereinafter referred to as "The learned Judge") has challenged the legality and correctness of the order dated 21.11.2007 passed in the said case insofar as it relates to rejecting of the application filed under Order VII Rule 11(d) of CPC by these petitioner - defendants seeking rejection of the plaint in the said case.

Stated in brie� the facts leading to this revision petition are:

Respondent No. 1 herein viz., M/s. R.S. Enterprises, a registered partnership firm, filed the said suit against both the petitioners 1 and 2 and one Mr. N. Madhusudhan Reddy, respectively as defendant Nos. 1 to 3 seeking the relief of specific performance of contract dated 10.3.2006 entered into between the petitioner-defendants and the respondent-plaintiffs 1 and 2. After the petitioner-defendants appeared in the said suit they filed their application under Order VII Rule 11(d) of CPC seeking rejection of the plaint. The Learned Judge, by passing the impugned order, rejected the said application. The legality and correctness of the same is challenged in this revision petition.

Though this matter is listed today tor admission, it is taken up for final disposal by consent of the learned Counsel for both the parties and their arguments are heard. All the documents produced by the respective parties and the entire material available in the Lower Court records are perused.

Sri. Chandrashekar, learned Counsel for the petitioners, referring to the provisions of Section 69(2) of the Indian Partnership Act, 1932 (Hereinafter referred to as ''the Act'') and Order XXX Rule 1 of CPC, strongly contended that the person who has signed and verified the plaint in the said case as an authorized signatory is not a partner of the 1st respondent-firm nor is his name found in the registration certificate pertaining to the said firm and therefore the said suit is hit by Section 69(2) of the Act. He further submitted that if a suit to enforce contractual right against the third party has to be instituted by a firm, such firm must be a registered one and the persons suing are or have been shown in the register of firms as its partners and therefore, Sri. Jagadeeswaran, who has signed and verified the plaint in the said case was neither a partner of the first defendant firm nor has his name been shown in the register of firms. He also submitted that though the said Jagadeeswaran has signed and verified the plaint as ''authorized signatory'', there is no reference in the plaint as to any authorization given to him by the partners of the said firm. He further contended that even if the letter of authority'', produced by the respondent-plaintiffs is accepted as the authority, it cannot be taken as the valid authority inasmuch as it has not been signed by all the partners of the firm.

As against the above contentions of Sri. Chandrashekar, the learned Counsel for the petitioners, Sri. Thyal Chinnappa the learned Counsel for the 1st respondent - firm submitted that the said suit has been instituted by the firm in its name in strict compliance with the provisions of Section 69(1) and (2) of the Act and Order XXX Rule 1 of CPC and the name of the firm is properly and correctly described in the cause-title in conformity with the description of a firm as described at Appendix ''A'' appended to CPC and therefore, it cannot be said that the said suit is hit by Section 69(2) of the Act. He further contended that the letter of authority, by virtue of which, the said Sri. Jagadeeswaran has signed and verified the plaint has been duly signed by one of the partners of the firm and therefore, it cannot be held that he did not have any authority to sign, verify and present the plaint in the name and on behalf of the firm. He also contended that it is not the requirement of law that the firm should always be represented by either all or by any one of its partners; on the other hand, it can be represented by any person, such as Manager or the authorized signatory duly authorized by any one of the partners of the firm.

Having heard the above arguments of the learned Counsel for the parties on contentious issues, I feel it necessary to extract the provisions of Section 69(2) of the Act and Order XXX Rule 1 of CPC and they are as under:

Section 69(2): 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.

Order XXX Rule 1: Suing of partners in name of firm: (1) Any two or more persons claiming or being liable as partners and carrying on business in India may sue or be sued in the name of the firm (if any) of which such persons were partners at the time of the accruing of the cause of action, and any party to a suit may in such case apply to the Court for a statement of the names and addresses of the persons who were, at the time of the accruing of the cause of action, partners in such firm, to be furnished and verified in such manner as the Court may direct.

(2) Where persons sue or are sued as partners in the name of their firm under sub-rule (1), it shall, in the case of any pleading or other document required by or under this Code to be signed, verified or certified by the plaintiff or the defendant suffice if such pleading or other document is signed verified or certified by any of such persons.

Further, Order VI Rule 14 of CPC reads thus

Every pleading shall be signed by the party and his pleader (if any):

Provided that where a party pleading is, by reason of absence or for other good cause unable to sign the pleading, it may be signed by any person duly authorized by him to sign the same or to sue or defend on his behalf.

From a combined reading of the above provisions of Section 69(2) of the Act Order XXX Rule 1 and Order VI Rule 14, it is clear that if a suit to enforce contractual right against third persons has to be instituted by a firm, such firm must be, (i) a Registered Firm (ii) persons suing are its partners; and (iii) they have been shown in the Register of Firms as partners of it.

Learned Counsel for the respondents has relied upon the decision of Allahabad High Court in Ram Kumar Ram Chandra Vs. The Dominion of India, . Their Lordships have observed in the said decision at paragraph Nos. 7 & 8 of their judgment as under:

Order XXX prescribes the procedure in suits by or against Firms and persons carrying on business in names other than their own, and Rule 1 of the said Order, which has been quoted above, permits any two or more persons claiming or being liable as partners and carrying on business to sue and be sued in the name of the firm. The procedure laid down in Rule 1 is obviously intended to avoid a long array of the plaintiffs or defendants and it prescribes a convenient mode of institution of suits by or against the partners collectively in the names of the partners who carry on business under a particular name. Such a suit is, no doubt, a suit by the partners collectively in the name of the firm; but when we consider the partners collectively as a firm it will, in effect, be a suit by a firm. As Order 30 prescribes the procedure for a suit by or against a firm a suit instituted in the manner laid down in Rule 1 of Order 30 will be a suit by the firm. Appendix A to the CPC which refers to pleadings gives some model titles of suits of different kinds and the title of a suit by a firm is given as "A. B., a firm carrying on business in partnership at....

In the present case the firm was so described in the plaint but the words "through Ram Kumar Adult son of Sarjoo Prasad caste Vaish residing at Naya Ganj, Kanpur, partner of the firm" were added. In law this addition was unnecessary and as such it can be treated as redundant and ignored. The above addition does not and cannot alter the fact that the firm is in fact the plaintiff. As the firm had no legal status as such, the suit has been instituted by the firm as representing all the partners. Here we may notice the definition of the term "firm" in the Partnership Act. It has been defined in the said Act in this way:

persons who have entered into partnership with one another are called individually "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm name".

It would thus appear that where a suit is instituted in the name of a firm under Rule 1 of Order 30, Civil P.C, it is really a suit by the partners of the firm collectively. The present suit was, therefore, a suit by the firm and the addition of the words through so and so was redundant and of no consequence.

Learned Counsel for the respondents has also relied upon the decision of High Court of Travancore, Cochin, in the case of Mohammadali v. Abraham George reported in AIR 1953 TC 209 wherein, the above decision of the High Court of Allahabad has been followed. Their Lordships of the High Court of Travancore have observed at paragraph No. 7 in the said judgment as under:

The result of the appeal would depend on the question whether the non-observance of the direction in Order 30, Rule 3 C.P.C., would result only in an irregularity which can be cured by Section 99, C.P.C., or whether it is an illegality affecting the jurisdiction of the Court. Order XXX of the CPC lays down the rules for suits by or against firms and persons carrying on business in names other than their own. Obviously, as pointed out in Ram Kumar Ram Chandra Vs. The Dominion of India, , this is intended to avoid a long array of the plaintiffs or defendants and it prescribes a convenient mode of institution of suits by or against the partners collectively in the names of the partners who carry on business under a particular name. The firm as such need alone be described as the plaintiff or the defendant, and the addition of the words "represented by A, a partner or by B, the Manager" does not after the character of the suit as one by or against the firm, in describing the cause title of such suit the name of the plaintiff or the defendant should be the name of the firm only without addition of the name of the partner or Manager suing although addition of such name does not matter in the least. Such description can only be treated as mere surplusage.

Further, the High Court of Orissa in Prag Oil Mills Depot Vs. Transport Corporation of India and Another, which is also relied upon by the learned Counsel for the respondent firm, it is observed at paragraph No. 7 of the judgment as under:

...7 The plaintiff, no doubt is a partnership firm. Therefore, under Order 30, Rule 1, C.P.C., the plaint should have been signed and verified by all or any one of the partners of the said firm. As per Rule 14 of Order 6, C.P.C., if a party pleading is, by reason of absence and for other good causes, unable to sign the pleadings as per the rule to that effect, then the pleadings in his behalf may be signed by any other person duly authorized by him to sign the same or to sue or defend on behalf of the former. As per Rule 1 of Order 30, the plaint in this case should have been signed by one of the partners. So under Rule 14 of Order 6 any person duly authorized by one such partner of the firm can sign the plaint or can also sue on behalf of the firm. If because of the word "shall", in Sub-rule (2) of Rule 1 of Order 30 it is said that the provision thereof is mandatory, as urged by Mr. Patra, then the provisions of Rule 14 and 15 of Order 6 will become inapplicable to suits filed in the names of firms, for which proposition there is no sanction in the Code. That apart, Mr. Patra''s proposition would lead to hard and unnecessarily inconvenient consequences for suits by or against such firms.

In this case the plaint has been signed and verified by Tarachand Agarwal who was the manager and power of attorney holder of the plaintiff at the relevant time. That being so, the non-signing of the plaint by one of the partners of the firm is not such a detect as to entail the dismissal of the suit on that ground....

Sri. Chandrashekar, learned Counsel for the petitioners has relied upon the decision of Gujarat High Court in Bharat Sarvodaya Mills Co. Ltd. Vs. Mohatta Brothers, wherein their Lordships have observed as under:

Where a suit is filed in the name of a firm it is still a suit by all the partners of the firm unless it is proved that all the partners have not authorized the suit. A firm is not a legal entity in the sence of a company. The provisions of Order 30 Rule 1 and 2 are enabling provisions to permit several persons who are doing business as partners to sue or be sued in the name of the firm. A suit by or in the name of a firm is thus really a suit by or in the name of all its partners. So also a suit against the firm is really a suit against all the partners of the firm. The decree passed in the suit though in form against the firm is in effect a decree against all the partners. Court must treat such a suit by a firm as really a suit by the partners at the time of the accrual of the cause of action, in order to consider whether the bar of Section 69(2) of the Partnership Act was attracted or not. it cannot be said that Order 30 Rule 2(3) provides only a fiction and that fiction must be limited only in so far as it enables a suit being brought in the name of the firm, line fiction only permits a convenient procedure to be adopted but for all intents and purposes the suit remains a suit by all the partners or against all the partners and on that footing alone the bar to such suit has to be considered.

It is further observed in the said decision as under:

Section 69(2) bars a suit against a third party if it is for enforcing a right arising from a contract. The bar equally applies both to suits by the firm as well as on behalf of the firm. Two mandatory requirements which must be fulfilled before such a suit can be filed to enforce contractual right by the firm or on behalf of the firm are (i) that the firm must be a registered firm and (ii) the persons suing are or have been shown in the Register of Firms as persons of the firm.

In a decision of this Court in M.A. Hussain and Anr. v. Panchamal Vasudev Ganapath Kamath and Bros. and Anr. reported in AIR 1970 Mys 299 which is relied upon by the learned Counsel for the petitioners, following above judgment of Gujarat High Court it is observed at Paragraph No. 10 as under:

This provision specifically bars the institution of a suit by or on behalf of a firm of enforce a right arising from a contract makes (unless) the conditions specified in Section 69(2) are satisfied. The use of the expression "No suit...shall be instituted in any court..." clearly indicates the intention of the Legislature to make this provision mandatory. The two requirements which must be fulfilled before a suit can be instituted to enforce a contractual right by the firm or on behalf of the firm are: (1) that the firm is a registered one and (2) that the persons suing are or have been shown in the register of firms as partners of the firm. As these are the conditions for the institution of the suit, the relevant date with respect to which these conditions must be satisfied is the date of the institution of the suit. On the date of the institution of the suit, the firm must be a registered one and the persons suing must either be partners or persons whose names are shown in the register of firms as partners. Both the conditions are mandatory and must be fulfilled. The suit would be wholly incompetent if either of these conditions is not fulfilled. The learned Counsel for the petitioner invited my attention to a decision of the Gujarat High Court reported in Bharat Sarvodaya Mills Co. Ltd. Vs. Mohatta Brothers, . The view taken by their Lordships of the Gujarat High Court in this behalf accords with the view I have taken above. I therefore respectfully agree with the said decision.

Our High Court in the case of Gurushiddayya Kalkayya Selimath and Ors. v. Shah Hirachand Vanechand and Co. and Ors. reported in AIR 1972 Mys 209 which is relied upon by the learned Counsel for both the sides, has observed at paragraphs 11 and 13 as under:

The question is, who are the ''persons suing'' in a suit which is instituted by or on behalf of a firm against any third party. For answering the said question, we have to turn to the provisions of Section 4 of the Act, Section 45 of the Contract Act and Order 30, Rule 1 of the Code of Civil Procedure. Persons who have entered into partnership with one another are called individually partners and collectively a firm and the name under which their business is carried on is called the ''firm name''. (vide Section 4 of the Act.) Order 30, Rule 1 of the CPC enables two or more persons claiming or being liable as partners and carrying on business in India to sue or be sued in the name of the firm of which they were partners at the time of the accrual of the cause of action. Rule 1 shows that the individual partners sue or are sued in their collective firm name. Rule 2 provides that on disclosure of the names of the partners of the plaintiff firm, the suit proceeds as if they are named as plaintiffs in the plaint. A suit by or in the name of a firm is thus really a suit by or in the name of all its partners.

A suit to enforce a right under a contract can be brought only by the party to the contract a stranger to the contract cannot sue on the contract. Where a mortgage is executed in favour of a firm, all the partners then constituting the firm become the mortgages. If the suit on the mortgage were to be instituted in the individual names of the partners, the persons competent to bring suit are all the partners constituting the firm on the date of the mortgage. If there is alteration in the constitution of the firm and a new partner is introduced subsequent to the date of the mortgage, such a partner is introduced subsequent to the date of the mortgage, such a partner not being a party to the mortgage is not entitled to sue on the mortgage. The partners entitled to sue on a contract are the partners constituting the firm at the time of the accrual of the cause of action for the suit.

The following propositions are settled by the decisions of the Supreme Court:

(1) A suit by or in the name of a firm is really a suit by or in the name of all its partners. So also a suit against the firm is really a suit against all the partners of the firm.

(2) A suit by the firm is really a suit by all the partners who were its partners at the time of the accrual of the cause of action.

In the case of Shankar Housing Corporation v. Smt. Mohan Devi and Ors. reported in AIR 1978 Delhi 225, the High Court of Delhi has observed at Paragraph 23 as:

The expression ''persons suing'' in Section 69(2) of the Act means all the Partners of the Firm who are its partners at the time of institution of the suit.

If the facts of the present case are analysed in the light of principles laid down in all the above said decisions which are referred to by the respective parties herein it could be seen that the cause-title of the plaint discloses that the plaintiff has been described as "M/s. R.S. Enterprises - a partnership firm having its place of business at Nehru Colony No. 583 represented by authorized signatory Mr. L. Jagadeeswaran S/o Loganathan, aged about 43 years residing at Bangalore." From this description of the plaintiff firm, it is clear that this description is in conformity with the description of the firm shown at Appendix A, 2, appended to the CPC which reads as: "A, B...a firm carrying business in partnership at...." Therefore, in view of the decision of the Hon''ble High Court of Allahabad in Ram Kumar Ram Chandra Vs. The Dominion of India, referred to supra, the addition of the words "represented by authorized signatory Mr. L. Jagadeeshwaran" in the cause-title of the present suit is unnecessary and the addition of these words does not alter the nature of the plaint of the firm which is a registered one. Therefore, the submission of the learned Counsel for the petitioner-defendants that the firm ought to have been represented only by all or any of its partners, but not by the said L. Jagadeeswaran as ''authorised signatory'' cannot be sustained.

Further, the plaint in this case has been signed and verified by the said L. Jagadeeshwaran. The respondent-plaintiffs have produced, along with the plaint, the letter of authority dated 17.1.2007 duly signed by one Shri. Rahul N. Baldota, who, undisputedly, has been one of the two partners of the said firm. On perusal of this letter of authority, it is seen that the said L. Jagadeeswaran has been authorised to represent the firm M/s. K.S. Enterprises, to engage advocates to sign the vakalathnama, affidavits, applications, petitions in any Civil and or Criminal proceedings; to give evidence by deposing on behalf of the firm, in any Court, Tribunal, etc. This being so, it cannot be said, as contended by the learned Counsel for the petitioner-defendants, that the said Jagadeeswaran signed the said plaint in the name and on behalf of the firm without any authority.

It is permissible, as provided under proviso to Rule 14 of Order VI of CPC, that a person duly authorized by the plaintiff or defendant, may sign and verify the pleadings (i.e., plaint or written statement) on behalf of the plaintiff or the defendant therefore, it cannot be said that the said plaint is liable to be rejected on the ground that the same has not been signed and verified by all or any one of the partners of the said firm, but it is signed by the said Jagadeeswaran as the ''authorised signatory'' of the said firm.

As held by this Court in Gurushiddayya Kalkayya Selimath and Ors. v. Shah Hirachand Vanechand and Co., and Ors. reported in AIR 1972 Mys 209 and also by High Court of Delhi in Shankar Housing Corporation v. Smt. Mohan Devi and Ors. reported in AIR 1978 Delhi 225, referred to supra, the expression "persons suing" in Section 69(2) of the said Act means all the Partners of the Firm who were its partners at the time of accrual of the cause of action. It is not the case of the petitioner-defendants that the persons whose names appear in the register of firms were not its partners at the time of accrual of the cause of action to the respondent - firm against the petitioners. Since it is not the requirement of law that all the partners of the firm should be shown in the cause-title and all of them shall have to sign the plaint the contention of the learned Counsel for the petitioners that the said suit of the plaintiffs is hit by Section 69(2) of the said Act for the reason that the plaint is not signed by both or either of the partners of the first defendant firm cannot be accepted.

Learned Counsel for the petitioners has also relied upon the decision of the Madras High Court in the case of T. Savariraj Pillai Vs. M/s. R.S.S. vastrad and Company, . In the said case the name of the partner of the firm had been registered after cross-examination of the plaintiff therein and therefore it was held that there was no compliance with the requirement of Section 69 of the said Act and as such the suit therein was not maintainable. Therefore, the said decision would be of no help to the petitioners in this case.

Sri. Chandrashekar, learned Counsel tor the petitioners has also relied upon the decision of Hon''ble Apex Court in Shreeram Finance Corporation Vs. Yasin Khan and Others, . The said decision is also of no help to the petitioners herein, inasmuch as the suit in the said case was filed by the firm after change in its constitution, but before the change was notified to the Registrar, and therefore, it was held that the said suit was not maintainable as the current partners, as on the date of the suit were not shown in the register of firms. He has also relied upon the decision of Hon''ble Apex Court in the case of Devji @ Deviji Shivji Vs. Maganlal R. Athrana and Others, and also another decision of Apex Court in Janaki Vashdeo Bhojwani and Anr. v. Indusind Bank Ltd. and Ors. reported in ILR 2005 Kar 729. Suffice to say that the principles laid down by the Hon''ble Apex Court in the said cases cannot be applied to the facts of the present case inasmuch as in the former case, one of the partners of the firm had taken sub-lease of the property not in the name of the firm but in his own name and therefore, it was held that the said transaction was not binding on the firm and, the latter case pertains to the competency of the Power of Attorney holder to give evidence on behalf of his principal.

Sri. Chandrashekhar, learned Counsel for the petitioner-defendants submitted that by virtue of the provisions of Information Technology Act, 2000, a contract in respect of an immovable property cannot be validly entered into through E-mail and therefore, the contract in question which is said to have been entered into between the plaintiff and the defendants in respect of immovable property through E-mail cannot be enforced in law. As against this, the learned Counsel for the 1st respondent - firm submitted that this contention is a mixed question of fact and law, which has to be decided by the trial Court after full-fledged trial and therefore, this contention has no bearing upon the present revision petition. This submission of the learned Counsel for the 1st respondent-firm deserves acceptance. However, the petitioner-defendants are at liberty to take up the same contention in the said suit.

The result of my foregoing discussion is that the respondent firm, being a registered firm, has properly instituted the said suit through its authorized signatory, who has been authorised by one of the partners to sign and verify the plaint and also to represent the firm in any Court of law. Therefore, I am of the considered opinion that the impugned order rejecting the application of the petitioner-defendants filed under Order VII Rules 11(d) CPC seeking rejection of the plaint in the said suit does not call for any interference in this revision petition. Hence the revision petition deserves to be dismissed as being devoid of merits and accordingly the same is dismissed.

No order as to costs. LCR be returned to the Court concerned forth-with along with a copy of this order.