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PETITIONER: HER HIGHNESS MAHARANI MANDALSA DEVI AND ORS.

       Vs.

RESPONDENT: M.   RAMNARAIN (P) LTD.  AND ORS.

DATE OF JUDGMENT: 19/03/1965

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. SUBBARAO, K. SHAH, J.C.

CITATION:  1965 AIR 1718            1965 SCR  (3) 421  CITATOR INFO :  R          1984 SC 790  (7)

ACT: Code of Civil Procedure, 1908 (Act 5 of 1908), ss. 87,  87-B Order 21, Rule 50(2) and Order 30-Execution against partners of  a  firm-Ruler  of Indian State  a  partner-Liability  of partners-Defences available-Protection to Ruler of a  State- If available to rest.

HEADNOTE: Under Order 30 of the Code of Civil Procedure the respondent No. 1 a firm sued another firm of which the appellants and a Ruler  of a former Indian State were partners.  The  consent of  the  Central Government to the institution of  the  suit under  s.  87-B  of  the Code of  Civil  Procedure  was  not obtained.   The  firm admitted the liability and  the  Court passed a decree and directed that the decretal amount  would be payable in certain instalments.  On the firm’s default in paying the instalments an application was filed under  Order 21  Rule 50(2) of the Code of Civil Procedure for  leave  to execute  the  decree against the appellants,  excepting  the Ruler  as  partners  of the firm.   The  Court  allowed  the application.   The appellants’ appeal was dismissed  by  the High Court.  On appeal by certificate; HELD:     (i)  The  suit so far as it was  one  against  the Ruler was incompetent and the decree against the firm so far as it was a decree against him personally was a nullity.  In the  absence  of  the  requisite  consent  of  the   Central Government a suit against the Ruler was barred by s. 87 read with s. 87-B. [425 F, G]. (ii) The application of respondent No. 1 under Order 21 Rule 50(2)  for  leave to execute the decree  against  the  other partners was maintainable. [427 G]. A  suit may be brought under the provisions of 0. 30 of  the Code  against  a firm of which a partner is not  capable  of being sued or being adjudged a debtor, and in such a suit  a decree  enforceable  against  the  other  partner  and   the partnership assets may be passed. [427 B]. Case law referred to. (iii)     In  an  application  under 0. 21  Rule  50(2)  the judgmentdebtor  could question the decree on the  ground  of

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collusion, fraud or the like but so as not to have the  suit tried over again or to raise issues between himself and  his other partners. [428 A]. The  Judgment-debtor  was also entitled to raise a  plea  of special protection under the law; and might also defend  the application  on  the  ground that the decree  sought  to  be executed against him is a nullity.  But in the instant  case none   of  the  appellants  was  entitled  to  any   special protection;  nor was it alleged that respondent No. 1 was  a party  to  any fraud or collusion or that  it  obtained  the decree by fraud or collusion. [428 B, C]. Gambhir  Mal  Pandiya v. J. K, Jute Mills Co.  Ltd.,  Kanpur [1963] 3 S. C. R. 190 relied upon. 422

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 130 of 1964. Appeal  from the judgment and order dated November 21,  1958 of the Bombay High Court in Appeal No. 31 of 1958. D.   N. Mukherjee, for the appellants. G.   S. Pathak, S. N. Andley and Rameshwar Nath, for respon- dent No. 1 The Judgment of the Court was delivered by Bachawat, J. Maharaja Sir Rajendra Prakash Bahadur  Maharaja of Sirmur, Maharani Mandalsa Kumari Debi Rajmata of  Sirmur, Maharani  Premlata  Debi of Chhota  Udaipur,  Maiyan  Sahiba Sheba  Kumari  Debi of Jharipani, Major  Rao  Raja  Sirendra Singh, Jagat Pershad, Shib Chander Kumar, Praduman Kumar and Dayawati  Rani carried on business in  co-partnership  under the firm name and style of Messrs.  Jagatsons  International Corporation  (hereinafter  referred to as the firm)  at  New Delhi.    Respondent   No.  1,  Ramnarain   (Private)   Ltd. instituted  Summary  Suit No. 162 of  1957  against  Messrs. Jagatsons  International Corporation on the Orginal Side  of the  Bombay  High  Court claiming a  money  decree  for  Rs. 1,96,831-58  N.P. The suit was instituted on the  allegation that  respondent  No.  1 and the firm had  entered  into  an agreement  in  writing  dated September  26,  1956,  whereby respondent No. 1 agreed to provide finance to the firm, as a result  of  the dealings under the agreement a  sum  of  Rs. 1,96,831.58 N.P. was due to respondent No. 1 from the  firm, and  in view of the breaches of the agreement by  the  firm, the  agreement  has stood terminated.  The  consent  of  the Central  Government to the institution of the suit  was  not obtained,  though the Maharaja of Sirmur is a Ruler  of  the former Indian State within the meaning of s. 87B of the Code of Civil Procedure.  The summons of the suit was served  oil Shib Chander Kumar as a partner of the firm and as a  person having   the  control  or  management  of  the   partnership business.   On July 15, 1957, at the hearing of the  summons for  judgment  taken  out  by respondent  No.  1,  the  firm admitted its liability as claimed in the plaint and  applied for  installments,  and the Court passed a  decree  for  Rs. 1.89,643.98 N.P. and further interest, and directed that the decretal  amount  would be payable in  certain  instalments. The  firm committed defaults in payment of  the  instalments payable under the decree.  On December 13, 1957.  respondent No. 1 filed an application under 0. 21 r. 50(2) of the  Code of  Civil Procedure for leave to execute the decree  against (1)  Maharani  Mandalsa Kumari Debi, (2)  Maharani  Premlata Debi,  (3)  Maiyan Sahiba Sheba Kumari Debi, (4)  Major  Rao Raja  Sirendra Singh, (5) Jagat Pershad. (6) Praduman  Kumar and  (7) Dayawati Rani claiming that respondent No.   1  was

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entitled to cause the decree to be executed against them 423 as being partners in the firm.  The opposite parties to  the application  filed an affidavit alleging (1) that  the  suit and all proceedings therein were incompetent in the  absence of the requisite consent of the Central Government under  s. 86  of  the Code of Civil Procedure; (2) Jagat  Pershad  and Shib   Chander  Kumar  entered  into  the  agreement   dated September 26, 1956 and utilised the moneys received under it in fraud of the other partners and without their  authority, Shib  Chander Kumar dishonestly and  fraudulently  concealed from  the other partners the fact of the institution of  the suit  and without the authority and knowledge of  the  other partners submitted to a consent decree in the suit., By an order dated March 18, 1958, a learned single Judge  of the   High  Court  rejected  all  the  contentions  in   the affidavit, and allowed the application under 0. 21, r. 50(2) of  the Code of Civil Procedure.  The learned  single  Judge held  that  (1) the defect of the absence of  the  requisite consent  under  s. 86 read with s. 87-B did not  render  the decree  a nullity, and the objection could not be  taken  in execution proceedings; (2) the other defences to the  merits of   the  claim  in  the suit could not  be  agitated  in  a proceeding under 0. 21,  r.  50(2)  of  the  Code  of  Civil Procedure.  An appeal preferred by appellants,      Maharani Mandalsa Kumari Debi, Maharani Premlata Debi, Major Rao Raja Sirendra  Singh  and  Maiyan Sahiba Sheba  Kumari  Debi  was dismissed  by  a Bench,of the High  Court  on  November  21, 1958.   The appellate Court held that (1) though the  decree against  the  firm  was a decree against  all  its  partners including  the  Maharaja of Sirmur, and  though  the  decree against  the  Maharaja  of Sirmur might be  a  nullity,  the decree against the other partners of the firm was valid, and (2) the appellants were not entitled to raise other defences to the merits of the claim on an application under 0. 21, r. 50(2)  of the Code of Civil Procedure.  The  appellants  now appeal to this Court under a certificate granted by the High Court. On  behalf of the appellants Mr. D. N.  Mukherjee  contended that   (1)   the  suit  against  the   firm   of   Jagatsons International  Corporation  was  a  suit  against  all   its partners  and in the absence of the requisite consent  under s. 86 read with s. 87-B of the Code of Civil Procedure,  the suit  was not competent against the Maharaja of Sirmur,  and the decree against him was null and void; (2)  consequently, the  suit against the firm under the provisions of 0. 30  of the Code of Civil Procedure was not competent and the decree passed  in the suit was wholly void, the decree not being  a decree against the firm could not be executed by recourse to the machinery of 0. 21, r. 50, Code of Civil Procedure,  and the  application  against  the appellants under  0.  21,  r. 50(2), Code of Civil Procedure was not maintainable; and (3) the  appellants were entitled to dispute their liability  in an  application under 0. 21, r. 50(2) of the Code  of  Civil Procedure on all the grounds raised in the affidavit field 424 on  their  behalf  and the court ought  to  have  tried  and decided all those questions. In  answer to the first contention of Mr. D.  N.  Mukherjee, Mr.  Andley argued that for the purposes of a suit under  0. 30,   Code  of  Civil  Procedure,  the  firm  of   Jagatsons International  Corporation  is a legal entity  separate  and distinct from its partners, and no question of obtaining the consent of the Central Government to sue one of its partners under s. 86 read with s. 87-B of the Code of Civil Procedure

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to the institution of such a suit arises.  Mr. Andley relied upon the observations of Das, J. in Dulichand Lakshminarayan v.  The Commissioner of Income-tax, Nagpur(1) that  for  the sake  of convenience, 0. 30 of the Code of Civil  Proce(lure permits a firm to sue or be sued in the firm name "as if  it were  a  corporate  body".   Consistently  with  this  legal fiction, R. 3 permits service of the summons on a partner or a  person  having control or management of  the  partnership business,  R. 4 permits the institution and  continuance  of the suit in the firm name in spite of the death of a partner before  the institution or during the pendency of  the  suit without  joining the legal representatives of  the  deceased partner  as  a party to the suit, and R. 9  permits  a  suit between  a firm and one or more of its partners and  between firms  having  one or more common partners.  But  the  legal fiction must Pot be carried too far.  For some purposes  the law  has  extended  a limited personality  to  a  firm,  see Bhagangi  Morarji Goculdas v. Alembic Chemicals Works  Co.(2 ),  but  the  firm is not a legal  entity,  see  Purushottam Umedbhai  &,  Co.  v. M/s.  Manilal &  Sons(3),  Lindley  on Partnership,  12th  Edn., pp. 27-28.  The  persons  who  arc individually called partners arc collectively called a firm, and  the  name under which their business is carried  on  is called  the firm name: see s. 4 of’ the  Indian  partnership Act,  1932.  Order 30, R. 1 of the Code of  Civil  Procedure 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. Rule 6 provides that the persons sued in the firm name  must appear individually in their own names.  A suit by or in the name  of a firm is thus really a suit by or in the  name  of all  its  partners, see Rodriguez v.  Speyer  Brothers  (4), Purushottam  Umedbai & Co. V. M/s Manilal &Sons (3)  at  pp. 991, 993, 995.  So also a suit against the firm is really (1) [1956] S.C.R. 156,162. (2)  [1948] L.R. 75 I.A. 147. (3)  [1961] 1 S.C.R. 982,994. (4)  [1919] A.C. 59. 425 a  suit  against all the partners of the firm.   In  Western National  Bank of City  of New York v. Perez, Triana  &  Co. (1), Lindley, L.J. said:               "When  a  firm’s name is used, it  is  only  a               convenient  method of denoting  those  persons               who  compose the, firm at the time  when  that               name  is  used,  and  a  plaintiff  who   sues               partners  in the name of their firm  in  truth               sues them individually, just is much as if  he               had set out all their names".               The decree passed in the suit. though in  form               against  the  firm,  is  in  effect  a  decree               against   all  the  partners.   In  Lovell   &               Christmas  v. Beauchamp(2) Lord Herschell,  L.               C. said:               "Although  the  judgment  may  be   pronounced               against the firm in the firm’s name, it is  in               reality a judgment against all the persons who               are  in  fact members of the firm; and  it  is               because such a judgment exists that the  right               of execution follows".

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The firm name of Jagatsons International Corporation applies as much to the Maharaja of Sirmur as to the other  partners. When   respondent   No.  1  sued  the  firm   of   Jagatsons International  Corporation, it sued the Maharaja of  Sirmnur and  all  the other partners as if the plaint  had  set  out their names, and the decree passed in the suit is in reality a decree against all the partners of the firm including  the Maharaja  of  Sirmur.  Now, the Maharaja of  Sirmur  is  the Ruler of a former Indian State, and s. 86 read with s.  87-B of  the Code of Civil Procedure barred the institution of  a suit  against  him except with the consent  of  the  Central Government.   No such consent was given for the  institution of the suit against the Mabaraja of Sirmur.  In the  absence of the requisite consent of the Central Government, a  suit, which is in reality, though not in form, a suit against  the Maharaja  of Sirmur, is barred by s. 86 read with  s.  87-B. See  Gaekwar Baroda State Railway v. Hafiz  Habib-Ul_Haq(3). Consequently,  the  suit so far as it was  one  against  the Maharaja  of Sirmur was incompetent and the  decree  against the firm so far as it is a decree against him personally was a  nullity.   The  first contention  of  Mr.  Mukherjee  is. therefore, sound and should be accepted. But  we  think that the second contention of  Mr.  Mukherjee should  be rejected.  Beyond doubt, in a normal  case  where all the partners of a firm are capable of being sued and  of being  adjudged judgment-debtors. a suit may be filed and  a decree  may  be obtained against a firm under 0. 30  of  the Code  of Civil Procedure. and such a decree may be  executed against the property of the partnership and. against all the partners by following the procedure of 0. 21, r., 50. of the Code of Civil Procedure, (1)  [1891] 1 Q.B. 304. (2)  [1894] A.C. 607. (3)  [1938] L.R. 65 T. A. 182, 196. 426 But  there  may  be abnormal cases where  a  suit  is  filed against a firm under the provisions of 0. 30, of the Code of Civil  Procedure, and it is found that one of  its  partners cannot  be  sued or cannot be  adjudged  a  judgment-debtor. Thus, take the case of an infant who under the English  law, can  be a partner in a firm, but, though a  partner,  cannot contract  debts  by trading and cannot be adjudged to  be  a debtor  in respect of such debts.  In Lovell & Christmas  v. Beauchamp(1),  the House of Lords held that a creditor of  a firm  of  which an infant was a partner could issue  a  writ against  the  firm in the firm’s name, and in  such  a  suit judgment could be recovered against the defendant firm other than  the  infant  partner,  and  if  a  judgment  had  been improperly  signed against the firm simply, such a  judgment could  be  suitably  amended so as to  make  it  a  judgment against the firm other than the infant partner.  The precise point  decided  in this case cannot arise in  this  country, because  under  our law, a minor may not be a partner  in  a firm,  though  he  may be admitted to the  benefits  of  the partnership.   But the case shows that a creditor of a  firm of  which  one of the partner’s cannot be adjudged to  be  a debtor, may institute a suit against a firm in the firm name under 0. 30 of the Code of Civil Procedure, and may in  such a  suit  obtain  a decree against the firm  other  than  the partner who cannot be adjudged a debtor.  Again, take a case where  the  creditor of a firm institutes a suit  against  a firm  and one of its partners at the time of the accrual  of the  cause of action is dead at the time of the  institution of  the  suit.  The suit against the firm is really  a  suit against  all the partners who were its partners at the  time

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of  the accrual of the cause of action. including  the  dead partner.   Order  30,  R. 4 of a  Code  of  Civil  Procedure enables the creditor to institute the suit against the  firm in the firm name without joining the legal representative of the  deceased partner.  The suit is,  therefore,  competent, but  no suit can be instituted nor can a decree be  obtained against  a  dead person.  The decree passed in such  a  suit will, therefore, bind the partnership and all the  surviving partner s, but will not affect the separate property of  the deceased  partner.   In Ellis v. Wadeson(2),  Romer,  L.  J. observed:               "Now consider the question of death.   Suppose               a  partner dies before action brought, and  an               action  is  brought against the  firm  in  the               firm’s  name.  The dead man is not a party  to               the  action, so, far as his private estate  is               concerned,  for  a dead man  cannot  be  sued,               though the legal personal representative of  a               dead  man  can be sued in a proper  case.   In               that case the action would be an action solely               against  the. surviving partners...... If  the               legal  personal representatives of a  deceased               partner are not added expressly as defendants.               (1)  [1894] A.C. 607. (2) [1899]1 Q.B. 714  at               718.               427               and the action is brought against the firm  in               the  firm’s  name, then judgment can  only  be               obtained as against the surviving partners and               be  enforced  against  them  and  against  the               partnership assets". The  above  illustrations show that a suit  may  be  brought under the provisions of 0. 30 of the Code of Civil Procedure against  a firm of which a partner is not capable  of  being sued or being adjudged a debtor, and in such a suit a decree enforceable  against the other partners and the  partnership assets may be passed.  Now, in the instant case,  respondent No.  1 sued the firm of Jagatsons International  Corporation under  the  provisions  of  0.  30  of  the  Code  of  Civil Procedure.  The assets of the firm as also all its  partners jointly and severally are liable to satisfy the debts of the firm.  Even the Maharaja of Sirmur is jointly and  severally liable for the debts of the firm; only the institution of  a suit  against  him  without  the  consent  of  the   Central Government is barred by s. 86 read with s. 87-B of the  Code of Civil Procedure.  As the suit was instituted without  the requisite consent of the Central Government, no decree could be  passed in the suit against the Maharaja of Sirmur.   But the suit against the firm other than the Maharaja of  Sirmur was competent, and a decree could be passed against the firm other  than the Maharaja of Sirmur, and such a decree  could be executed against the partnership property and against the other partners by following the procedure of 0. 21, r. 50 of the Code of Civil Procedure.  It is true that respondent No. 1   obtained  a  decree  against  the  firm   of   Jagatsons International  Corporation simply, but the decree should  be suitably amended so as to make it a decree against the  firm of  Jagatsons  International  Corporation  other  than   the Maharaja of Sirmur, and the decree so read is a valid decree which  may be executed against the partnership property  and the other partners of the firm by recourse to the  machinery of  0.  21,  r.  50 of the Code  of  Civil  Procedure.   The application  of respondent No. 1 under 0. 21, r.  50(2)  for leave  to execute the decree against the other partners  is, therefore  maintainable.   The  second  contention  of   Mr.

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Mukherjee must, therefore, be rejected. The third contention of Mr. Mukherjee raises the question as to what defences may be raised by a respondent to an  appli- cation under 0. 21, r. 50(2) of the Code of Civil Procedure. The  law on this point is now well-settled.  In Gambhir  Mal Pandiya   v.  J.  K.   Jute  Mills  Co.   Ltd.,   Kanpur(1), Hidayatullah, J. speaking on behalf of the Court observed:               "....  primarily the question to try would  be               whether the person against whom the decree  is               sought  to  be executed was a partner  of  the               firm, when the cause of action accrued. but he               may question the decree on the               (1)   [1963] 2 S.C.R. 190.               428               ground of collusion, fraud or the like but  so               as not to have the suit tried over again or to               raise  issues  between himself and  his  other               partners". The  respondent to an application under 0. 21, r.  50(2)  of the Code of Civil Procedure is also entitled to raise a plea of special protection under the law, and on this ground, the learned judge at pp. 205-206 of the Report distinguished the case  of  Chhattoo Lal Misser & Co.  v.  Naraindas  Baijnath Prasad(1).   We may add that the respondent may also  defend the  application on the ground that the decree sought to  be executed against him is a nullity. Now, in the instant case, none of the appellant is entitled to any special  protection from  the institution of the suit under  s. 86 read with  s. 87-B,  Code of Civil Procedure.  The Maharaja of Sirmur  was entitled to this special protection, but he was not a  party to  the  application under 0. 21, r. 50(2) of  the  Code  of Civil  Procedure.  Nor is the decree against the firm  other than the Maharaja of Sirmur a nullity.  The affidavit  filed on  behalf of the appellants does not sufficiently  raise  a plea that the decree was the result of any collusion,  fraud or  the  like.  The affidavit incorrectly assumes  that  the decree  passed on admission of the appearing partner, was  a consent  decree.  Allegations of dishonesty  and  fraudulent concealment  of the fact of the institution of the suit  are made against Shib Chander Kumar, one of the partners of  the firm,  but  no  allegation of fraud  or  collusion  is  made against respondent No. 1. It was not alleged that respondent No.  1  was  a party to any fraud or collusion  or  that  it obtained  the decree by fraud or collusion.  The  appellants alleged that their partners, Jagat Pershad and Shib  Chander Kumar,  had entered into the agreement dated  September  26, 1956, and had utilised the moneys received under it in fraud of  the  appellants  and without their  authority,  but  the appellants  are  not entitled to raise these  pleas  in  the application  under  0.  21 r. 50(2) of  the  Code  of  Civil Procedure.   The appellants were admittedly partners of  the firm of Jagatsons International Corporation at the time when the  cause  of action accrued.  In the absence of  any  plea questioning the decree on the ground of collusion, fraud  or the like, respondent No. 1 is entitled to an order under  0. 21, r. 50(2) of the Code of Civil Procedure giving it  leave to execute the decree against the appellants as partners  in the  firm.   The  third contention of  Mr.  Mukherjee  must, therefore, be rejected. In the result, the appeal is dismissed with costs. Appeal dismissed. (1) [1928] I.L.R. 56 Cal, 704. L/B(N)3SCI-2,500-22-3-66--GIPS 429

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