VIZZAPURUPU VENKATA RAMACHANDRA RAO Vs. VEERA VENKATESWARA RAO

JUDGEMENT

(1.) This Civil Revision Petition raises an interesting question of law. in order to appreciate it, it is necessary to set out a few relevant facts. The plaintiffs are the five partners carrying on business at Guntur in the name of Hanuman Fireworks. Each of the plaintiffs had a licence under the Indian Explosives Act of 1884 to possess and sell fireworks. They formed into a partnership to carry on the said business. The firm Hanuman Fireworks as such had no separate licence to possess and sell explosives. In the course of their business, the defendant owed them a sum of money on a katha. The suit was instituted to recover the sum due from the defendant. The defendant pleaded that he was not liable to pay the amount as the katha stood in his name only benami for the plaintiff-firm. He further pleaded that the firm had no licence to possess and sell fireworks, the suit was not maintainable under the terms of section 23 of the Indian Contract Act. The Court below found that the katha was true and not benami for the plaintiff-firm. The District Munsif held further that inasmuch as the partners had separate licences, the suit was maintainable. The defendant has consequently preferred the Civil Revision Petition to this Court.

(2.) As the Court below found on the evidence on record that the borrowing on katha by the defendant was true, I accept that finding. The main question that has to be considered in the Civil Revision Petition is whether the omission by the firm as such to take a licence affects the maintainability of the suit. It is clear law that "A firm is not an entity or 'person' in law but is merely an association of individuals who constitute the firm", vide Dullchand Laxminarayan v. C.I.T., Nagpur, (1956) 1 M.L.J. (S.C.) 164 : (1956) An. W.R. (S.G.) 164 : (1956) S.C.J. 317 (S.C.). Das, G.J., had reviewed in the above-mentioned case the entire law on the point and held that the principles of English Jurisprudence have been adopted by the Indian Legislature in enacting the Partnership Act and that for the purpose of determining the legal rights, "there is no such thing as a firm known to the law ;" vide Ex parte Corbet, In re Shan, L.R. (1880) 14 Ch. 122 at 126. Reference was then made to the decision of the Privy Council in Bhagwanji v. Alembic Chemical Works, (1948) 2 M.L.J. 237 : L.R. 75 I.A. 147 : A.I.R. 1948 P.C. 100 (P.C.). wherein it has been laid down that Indian Law has not given legal personality to a firm apart from the partners. In this connection it may be mentioned that according to section 4 (2) of the English Partnership Act of 1890, the law in Scotland is different and the firm is a legal person distinct from the partners. But so far as the Law of England and India is concerned the firm is not a legal entity.

(3.) As regards the position in English law is concerned, it is stated in very clear terms by the Lord Chancellor at page 132 in. Income-Tax Commissioners v. Gibbs, 10 I.T.R. (Supplement) 121. as follows :