MATHURADAS CANJI MATANI Vs. EBRAHIM FAZALBHOY

JUDGEMENT

(1.) This appeal from the judgment of Mr. Justice Rangnekar raises an interesting point of partnership law, which has been excellently argued by counsel on both sides. The question is whether, when a plaintiff brings a suit for debt against a partnership firm as such, but the firm has been dissolved to the knowledge of the plaintiff prior to the suit, it is necessary to add the legal personal representatives of the deceased partner as parties, in order to enable execution to be levied against the estate of the deceased partner. It is conceded that the partnership assets may be taken in satisfaction of a decree in a suit so framed. But can the estate of the deceased partner be reached irrespective of his share in the partnership assets ? Mr. Justice Rangnekar held that in such a case it is necessary to add the legal personal representatives, and that as these representatives were not parties to the original suit but were added subsequently when the period of limitation had expired, the suit against them ought to be dismissed. The plaintiffs appeal. 2 The question arises in this way. The first defendant firm Fazalbhoy Joomabhoy & Co. are alleged to be indebted to a firm of Haji Esmail Gulmahomed & Son for a loan advanced on March 11, 1921. The plaintiffs and defendant No. 2 are the assignees of that alleged debt under a composition deed. They brought the present suit to recover this alleged debt on March 10, 1924, which was the last day for avoiding limitation. Prior to the date of this suit, Fazalbhoy Joomabhoy, a partner in the defendant firm, had died, viz., on July 15, 1922. It is common ground that the plaintiffs were aware of this fact prior to the suit. The writ in the suit was served on two surviving partners in the defendant firm. It was also served on defendants Nos. 3 and 4 as heirs of the deceased partner Fazalbhoy in reliance on the proviso to Order XXX, Rule 3, Civil Procedure Code. Those writs were returned. On June 30, 1924, there was a chamber order adding defendants Nos. 3, 4 and 5 to the record. It will be seen that defendant No. 5 is a minor, and that he appears by his guardian ad litem defendant No. 3, The plaint was accordingly amended on July 9, 1924. Subsequently when the case came on for hearing on August 9, 1926, the first issue raised was whether the suit is barred by the law of limitation. That was treated as a preliminary issue, and having been decided in favour of defendants Nos. 3, 4 and 5 the suit was dismissed as against them. 3. Our procedure in dealing with suits by or against partnerships in a firm name is regulated by Order XXX and by OrderXXI, Rules 49 and 50. These rules are taken from the English Rules of the Supreme Court, Order 48A. A comparison of the language will show that in many cases they are practically identical. But there is in our rules an important Rule 4 which does not exist in the English rules, and which has figured prominently in the arguments before us. Curiously enough it is not mentioned in the judgment of the learned trial Judge and counsel are not agreed as to whether any stress was laid on it in the arguments in the Court below. In a case, then, of this nature where India has borrowed directly from England certain rules of procedure, I think it is permissible to see in the first place what view is taken in the English Courts of the rules which originated there. So, too, as the Indian law of partnership, so far as it is embodied in Section 239 to 266 of the Indian Contract Act, is largely taken from the English law of partner. ship, it is permissible to see what the English law is. 4. Now as regards the Rules of the Supreme Court, Order 48A, the English procedure on the question above formulated is, in my judgment, quite clear, viz., that it would be necessary to add the legal personal representatives of the deceased partner, should it be desired to obtain a judgment against the estate of the deceased partner as opposed to a mere judgment against the partnership assets. The law is, I think, accurately stated in the notes to Order 48A, Rule 1, in the English Annual Practice, 1927 Edn., pp. 838 and 839 (1916 Edn., p. 834), viz. :- Deceased Partner.-Where a partner dies before action, and the action is brought against the firm alone in the firm name, the deceased partner is not a party to the action at all so far as his private estate is concerned. If in an action against a firm in the firm name a partner dies between service of the writ and judgment, the estate of the deceased partner is not bound. Unless his personal representative is a defendant, judgment is against the surviving partners and can only be enforced against them and the partnership assets : Ellis V/s. Wadeson [1899] 1 Q.B. 714 ... If one of several partners dies before action brought and the plaintiff seeks, in suing the firm, to make the deceased partner's private estate liable, he must add as a defendant the personal representative of such deceased partner. See Ellis V/s. Wadeson [1899] 1 Q.B. 714 and Phillips V/s. Homfray (1883) 24 Ch. D. 439; In re Shephard : Atkins V/s. Shephard (1889) 43 Ch. D. 131, 136. 5. In Ellis V/s. Wadeson [1899] 1 Q.B. 714 the exact point was whether, where a firm was sued as such, the surviving partner could put in a defence in his own name and not in that of the firm, It was held by the Court of Appeal in a considered judgment delivered by Lord Justice Romer, that such a defence was not permissible. But to arrive at this conclusion the Court considered the whole law and procedure on the point, and in so doing laid down emphatically what was in their judgment the true legal position. Romer L.J. said (p. 718):- 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 representatives 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, At common law, if a creditor sued joint debtors and one died,the survivors only could be sued. Since the Judicature Act, undoubtedly, in the case of a partnership liability, the creditor might now join in one action the surviving partners, and the legal personal representatives of the deceased partner, but the latter would have expressly to be added as defendants. If the legal personal representatives of a deceased partner are not added expressly as defendants, 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. I may mention that the reason why the partnership assets can be reached is because, notwithstanding the dissolution by death, the surviving partners for many purposes have authority continued to them to bind the dead man's interest in the partnership assets, for the authority of partnership extends to enable the surviving partners, in case of dissolution by death, to wind up the affairs of the partnership, to pay the partnership debts, to defend claims against the partnership, and so forth ... I have so far dealt with the case of the death of a partner before action. Now what happens if a partner dies between service of writ and the trial of the action and judgment ? In that case equally the dead man's estate is not bound. Judgment can only bo obtained against the surviving partners and enforced against them and against the partnership assets..,This is clear-that the partner who dies between writ and judgment is not before the Court, and therefore judgment could not be obtained against the deceased partner, or execution enforced against him or his assets. Supposing there were two partners, both living at the date of writ, and both were served, and both died before the action came on for trial, no judgment could be obtained. 6. It will be seen, therefore, that the ratio decidendi is that you cannot bring a suit against a dead man, and that to make his legal personal representatives liable in his place, you must make them parties to the suit. And although the partnership assets may be got at in the suit, this is only because the surviving partners for certain limited purposes, such as winding up, represent the estate of the deceased partner. 7. Now, I quite recognise that the exact point for decision by us in the present case did not arise in Ellis V/s. Wadeson, but, on the other hand, the judgment there given is of such a nature that it must prima facie be regarded as authoritative in England. The fact that it has not been challenged for some twenty-seven years, and that it is still regarded in the Annual Practice as representing the correct procedure up to date, all goes strongly to show that it represents what is now the settled law in England. 8. There is one other case, viz., Wigram V/s. Cox, Sons, Buckley & C. [1894] 1 Q.B. 792, which is a decision of Mr. Justice Cave and Mr. Justice Wright. In that case one of the partners had left the firm to the knowledge of the plaintiff prior to the suit. The plaintiff, however, omitted to serve him with & writ in accordance with the proviso corresponding to the proviso in our Order XXX, Rule 3. The Court there held that that proviso was imperative, and that as it was not complied with, the plaintiff could not, after judgment had been recovered, obtain any relief in execution against the partner in question, There the Court had to consider the separate effects of Rules 8 and 8 of Order 48A. Those rules correspond to our Rule 3 of Order XXX and Rule 50 of Order XXI. They held that Rule 3 overrode Rule 8, and that the latter rule only applied where there had been no dissolution or none to the knowledge of the plaintiff. 9. As regards the position in law of a partnership firm in England, it is clear that death dissolves a partnership, and that neither the dead man nor his representatives are any longer partners in the firm. It then becomes the right and the duty of the surviving partners to wind up the partnership business, and to distribute the assets in accordance with the rights of the surviving and the deceased partner. Partnership deeds may contain various special provisions dealing with the rights of a deceased partner. But the above is the legal position subject to any special provisions in a partnership deed. 10. Thus, in In re Bourne: Bourne V/s. Bourne [1906] 2 Ch. 427 Lord Justice Vaughan Williams says (p. 430):- It is conceded by both the appellants counsel that when there is a partnership between two partners and one of those two partners dies, unless there is something in the partnership articles to the Contrary, prima facio the surviving partner has not only the right, but the duty, to realize the partnership property, and for the purpose of that realization to carry on the business if it is necessary so to do....The real truth of the matter is that, leaving out all questions of legal estate, there is, as between the surviving partner and the representatives of the deceased partner, an overriding duty to wind up the partnership assets and to do such acts as are necessary for that purpose, and if it is necessary for that winding up either to continue the business or borrow money or to sell assets, whether those assets are real or personal, the right and the duty are co-extensive. 11. Section 38 of the Partnership Act, 1890, may also be referred to in this respect. 12. Turning next to the law of India, Secs.239 to 266 of the Indian Contract Act, 1872, deal with partnership. Section 253(10) provides that, in the absence of any contract to the contrary, partnerships are dissolved by death. Section 263 provides that- After a dissolution of partnership, the rights and obligations of the partners continue in all things necessary for winding-up the business of the partnership.

(2.) Speaking generally, this may be taken to correspond to the general powers given to a surviving partner by English law as stated in In re Bourne, and Section 38 of the Partnership Act, 1890. (See also Shidappa V/s. Shivalingappa (1899) 1 Bom. L.R. 42. 13. Then as regards the Civil Procedure Code, 1908, the terms of Order XXX are practically taken from the English Rules of MA the Supreme Court, Order 48A, apart from our Rule 4. This Order enables persons carrying on business in a firm name at the E date of the accrual of the cause of action to be sued in that firm name subject to certain conditions. It was argued by Mr. Munshi for the respondents that Rule 1 necessitates there being two or more persons alive at the date of the suit. But this is not, I think, the true construction of the rule. Two must be alive at the date of the accrual of the cause of action, but it would be sufficient if one was alive at the date of the suit. This is irrespective of the case provided for by Rule 10 where a single individual carries on business in a firm name. Sub-rule (3) of Rule 2 provides that "where the names of the partners (in the plaintiff firm) are declared..., the suit shall proceed in the same manner, and the same consequences in all respects shall follow, as if they bad been named as plaintiffs in the plaint." This, however, is hardly applicable to legal representatives. They are not partners, and the mere insertion of a dead man's name in the plaint would be of no avail. So, too, as regards defendants. It is said by Lindley L.J. in Western National Bank of City of New York V/s. Perez, Triana & Co. [1891] 1 Q.B. 304 (p. 314):- When a firm's name is used, it is only a convenient method for 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 as much as if he had set out all their names.

(3.) If then that was done here, it would only result in a dead man's name being inserted as a defendant. It would not result in the names of his legal representatives being added. They were not partners at the material date. 14. Similarly, Rule 3 provides for service upon a partner or a manager of the business. The legal representatives would be neither the one nor the other. The proviso to that rule enacts:- That, in the case of a partnership which has been dissolved to the knowledge of the plaintiff before the institution of the suit, the summons shall be served upon every person within British India whom it is sought to make liable.