# ·J96t Gomiltir Mall Pondi,12 v. J, IC Jui - **Citation:** [1963] 2 S.C.R. 190 - **Court:** Supreme Court of India - **Decided:** 1963 - **Case number:** Civil ReviEion No. 815 of 1955 - **Bench:** $. K. Das, M. HmAYATULLAH, J. C. Shah - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/j96t-gomiltir-mall-pondi-12-v-j-ic-jui-2670 - **Pages:** 19 ## Headnote Par1ntr•hi1>-Duru again.t Jlrm-E:ueution againn p1rl1Ur not aum"'°"'ami v. Polite Picturu, I.L.R. [ 1955] Mad. ll06, approved. Bhagvan v. B iraji, A. 1.\.t. 1932 Born. 516, Oeoverji Varjang v. Oooverbai NagBey, A.LR. 1940 Bom. 330 and In re Polaram Nathmull l.L.R. [1939] 2 Cal. 312, disapproved. M un•ter v. Ooz, ( 188.5) 10 App Gas-680 Da"iB v. H 11.l.an & Oo [1903] l:K.B .. 854 and'Weir & Oo. v. Mo Vioar & Oo. [1925) 2 K:B. 117, relied. on. CIVIL APPELLATE JURISDidTION: Civil Appeal No. 19 of 60. Appeal from the judgment and decree dated September 25, 1957, of the Allahabad High Court, in Civil ReviEion No. 815 of 1955. M. O. Setalvad, Atwrney-Ge:neraJ, for ln1Ua and B. P .. Maheshwari, for the appellants. S. M. Sik1i, Advocate-General for the State of .Punjab and K. P. Gupta, for respondent No. l. 1962. April 17. The Judgment of the Court •·vas deliv.ered by HIDAYATULLAH, J.-This is an .appeal on a certificate granted by the High Court of Allahabad against an order dated September 25,. 1957, dismissing a revision petition filed by the present appellant. The facts of the case are very simple. Messrs. J. K. Jute Mille Co. Ltd. (the answering respon- ,f dents), entered into a contract with a firm, Messrs. Birdhi Chand Sumer Mal, for the supply of certain articles. The contract was entered intq ~y 0ne Seth Tikam Chand; a partner in the firm. One of the terms of the contriiot.was that in a case of ii dispute between the parties, itwouid be referred tc the Merchants Chamber of Commerce, Kanpur, , for arbitration. It appears that a dispute arose, ' --; which was referred to the Chamber of Commerce, 19~1 GambhlrMa/ P.ndi.Ja v. J.E. Jule Mills Co. Lid. Eanpur Hidayatulla \ J. ·J96t Gomiltir Mall Pondi,12 v. J, IC Jui. Mills Co. Ltd. Kanpur HidG.]Gfsdlah J. 192 SUPREME OOURT REPORTS [1963] and an award in favour of the Mills was given on January 8, 1947. Two years later, the ## Text llllt 190 SUPREME OOURT REPORTS [1963) GAMBfilR MAL PANDIYA 11. J. K. Jc;TE MILLS 00., LTD., KANPUR AND ANOTHER ($. K. DAS, M. HmAYATULLAH and J. C. SHAH, JJ,) Par1ntr•hi1>-Duru again.t Jlrm-E:ueution againn p1rl1Ur not aum"'°"'ami v. Polite Picturu, I.L.R. [ 1955] Mad. ll06, approved. Bhagvan v. B iraji, A. 1.\.t. 1932 Born. 516, Oeoverji Varjang v. Oooverbai NagBey, A.LR. 1940 Bom. 330 and In re Polaram Nathmull l.L.R. [1939] 2 Cal. 312, disapproved. M un•ter v. Ooz, ( 188.5) 10 App Gas-680 Da"iB v. H 11.l.an & Oo [1903] l:K.B .. 854 and'Weir & Oo. v. Mo Vioar & Oo. [1925) 2 K:B. 117, relied. on. CIVIL APPELLATE JURISDidTION: Civil Appeal No. 19 of 60. Appeal from the judgment and decree dated September 25, 1957, of the Allahabad High Court, in Civil ReviEion No. 815 of 1955. M. O. Setalvad, Atwrney-Ge:neraJ, for ln1Ua and B. P .. Maheshwari, for the appellants. S. M. Sik1i, Advocate-General for the State of .Punjab and K. P. Gupta, for respondent No. l. 1962. April 17. The Judgment of the Court •·vas deliv.ered by HIDAYATULLAH, J.-This is an .appeal on a certificate granted by the High Court of Allahabad against an order dated September 25,. 1957, dismissing a revision petition filed by the present appellant. The facts of the case are very simple. Messrs. J. K. Jute Mille Co. Ltd. (the answering respon- ,f dents), entered into a contract with a firm, Messrs. Birdhi Chand Sumer Mal, for the supply of certain articles. The contract was entered intq ~y 0ne Seth Tikam Chand; a partner in the firm. One of the terms of the contriiot.was that in a case of ii dispute between the parties, itwouid be referred tc the Merchants Chamber of Commerce, Kanpur, , for arbitration. It appears that a dispute arose, ' --; which was referred to the Chamber of Commerce, 19~1 GambhlrMa/ P.ndi.Ja v. J.E. Jule Mills Co. Lid. Eanpur Hidayatulla \ J. ·J96t Gomiltir Mall Pondi,12 v. J, IC Jui. Mills Co. Ltd. Kanpur HidG.]Gfsdlah J. 192 SUPREME OOURT REPORTS [1963] and an award in favour of the Mills was given on January 8, 1947. Two years later, the award was made into a rule of the Court, and a decree followed in favour of the Mills. The firm of Birdhi Chand Sumer Mal consisted of two partners; the other partner was one Mr. Pandiya, the predecessor-in-interest of Seth Gambir Mal Pandiya, the appellant. In execution of the decree passed against the firm, the Mills wished to proceed against the personal property of Mr. Pan.Jiya, and filed an application for the leave of the Court under O. 21, r. 50(2), of the Code of Civil Procedure. In answer to the notice which was issued, the appellant, Seth Gambir Mal Pandiya, appeared and raised objections. He contended that he had not been served in the proceedings relating to the arbitration; nor of the making and the filing of the award in Court. He also contendf'ld that Seth Tikam Chand, who had signed the contract containing the arbitration clause with the Milla, had no authority to enter into an agreement containing such a clause or to refer the diapure to arbitration on behalf of the other partners. He, therefore, maintained that the award was not binding on him. The connections of the appellant were not accepted by the First Civil Judge, Kanpur, who allowed the application of the Mills and granted them leave under the rule. The appellant then • 1 ( filed an application for revision in the High Court ~. of Allahabad, which was heard by C. B. Agarwala and Beg, JJ., Agarwnla, J., held that although the decree passed against the firm was t" be deemed "to have been passed against all the individual partners thereof, it was binding proprio vigore only against the partnership property and personally against thoie persons, who are mentioned in cla.(b) and (c) ofr. 5P(l), 0. 21, and that the decree • was not binding against the appellant, who had '-'·· • ~.I 2 S.C.R. SUPREME OOURT REPORTS 193 not been served in the suit and would be binding only when a summons was served upon him to appear under sub-r. (2) and his liability was determined. The reason given by the learned Judge was that a person who was not served in the suit could question his personal liability under the decree, even though he admitted himself to be a partner, upon any ground which was open to him if he had been served in the suit, and that such a person could raise the objection that as the decree was the result of an · reward which was based upon an agreement of reference to arbitration to which he was not a party, he was not personally liable under the decree, Beg, J., on the other hand, held that inasmuch as the appellant admitted that he was a partner in the firm of Birdhi Chand Sumer Mal, he was not entitled to raise any objection either to the contract or the reference to arbitration or the award. The learned Judge having disagreed about the intl)rpretation to be placed on sub·r. (2) of r. 50, the case was laid before Mukher· ji, J. He agreed with the conclusion of Beg, J., and in accordance with his opinion, the application for revision was dismissed., The Divisional Bench, however, certified the case as fit for appeal to this Court, and the present appeal has been .filed. Order 21, r. 50, of the Code of Civil Procedure reads as follows:- "50. ( 1) Where a decree has been passed against a firm, execution may be granted- ( a) against any property of the partnership; · (b) against any person who has appearer] in his own name under rule 6 or rule 7 of Order XXX or who . has admitted on the pleadings that he is, or who has been adjudged to be, a partner; 1962 Gambhi,. M 11l Pandiya v. J. K. Jute Mills Co., Ltd. Kanpllt J911 G..MAis do not concern us in this case. :A . •• l•'rom the above analysis, it is clear that a plaintiff need sue only the firm, but if he wants to bind the partners individually he must serve them personally, for which purpoae he can get a discovery of the names of partners of the firm. Persons ser· ved individually may appear and file written statements, but the proceedings go on against the firm only. They may, however, appear and plead that they are not partners or were not partners when the ca.use of action arose. Rut even if no other pa.rt ner appears, there may be a decree against the firm if the firm has been served with the summons. The gist of 0. 30 thus is that the action proceeds against the firm, and tho defence to the action by persons admit ting that they a.re partners is on be· ha.If of the firm. Persona sued as partners may, however, appear and seek to establish that they a.re not partners or were not partners whtn th1> ca.use of action a.rose; but if they raise this special plea, they cannot def<.nd the firm. This was laid down in connection with the analogous provisionsof the English rule in lt~ir & Co. v. Mc Vicar & Co.('). Partners appearing a.nd admitting their positions as partners can only defend the firm, b~causo the si;it continues in the firm's name. The law is thus not concerned with a fight between tho p11rtners inter se, and an action between the partners is not to be tried within tho action between the firm and the plaintiff. Of course, the partners who admit that they are partners need not raise a. common defence. They m.i.y raise inconsistent defences, but a.It such defences must be directed to defcud the firm and the plaintiff must surmount all suoh defences. Seo Ellis v. Wade.son ('). Tho .,.. purport of the rules 'l.8 well as the two English oa.Ees (I) (1925) i K. B. 127. (2) (1889) IQ 8. D. 711. 2 s.c.R. SUPREME COURT REPORTS 199 which have correctly analysed the rules on the subject (the English and the Indian rules · being alike) is that the partnership is sued as a partner· ship, and though the partners may put in separate defences, those defences must be on behalf of the firm. If some of the partners do not appear, those that do, must defend the firm; but if no proper defence is raieed by them, the plaintiff cannot be deprived of a judgment. The judgment and decree thus obtained are executable against the partnership assets. This brings in the provisions of O. 21, r. 50, of the Code. That rule enables a decree obtained against a partnership firm to be executed against the property of the partnership. Next, it enables the decree to be executed individually against a person who appeared in his own name under r. 6 or r. 7 of O. 30 or who admitted on the record or was adjudged to be a partner. Next, the decree can be ex.ecuted against any person who is served individually as a partner but has failed to appear. Next, it permits the decree to be executed with the leave of the Court against persons belonging to the category of the pi>rsons above mentioned, provided that they are summoned and either admit their liability or after !an issue is tried, their liability is determined. A large number of oases decided in India and England have laid down the kind of iBBue which may be tried under 0. 21. r. 50 (2), of the Code and the cognate provisions of the English rules. Since the English oases are first in point of time, we shall begin with them. It must be remembered in this connection that the English rules prescribe forms for recording appearance by persons summoned in actions against firms. These are to be found in the Annual Practice, Vol. 1 (1962), at p. 1160 and are six in number: & Co. (1) A. B. a partner in the firm of Brown 1962 Gambhir Mal Pandiya Y; J. K. Jut1 Mill• Co. Ltd, Krnpur B idoyatu/lt1h J. GJJmbhi.- i\1al Pmd1yo J. K '11re Mills Cc. ltd., 1-taripur H it!oy ~tuft ah J. 200 SUPR&'1E COURT REPORTS [1963] (2) A.B. a. pa.rtner in the firm of Brown, ETans & Co. sued as Brown & Co. (3) A.B. a partner in th1J firm of Brown & Co. at the time the a.lleged cause of action a.rose. ( 4) A.B. served as a. partner but who denies that he w&e a partner in the abovenamed firm at any time. (5) A.B. served as a pa.rtner in the firm but who denies that he was a partner at the time of the accuring of the alleged cause of action. (6) A person a.ppears subsequently and desires to appear a.a a pa.rtner. These forms are a.ppropriate to an action, but they are also used for persons summoned under 0. XLVIII. a, r. 8, corresponding to our 0. 21, r. 50(2). In Jack.~on v. Litchfield (1), which was decided prior to the rules of 1891 the writ wns issued against a firm in the firm n~me. It was held that the judgment must be entned against the firm, but it could not be entered separately against an individual member of the firm who ma.de default in appearing in the action. The del'ision thus was that if the action was against the firm, the judgment should be against the firm. In J.fuMler v. Cox ('), the writ was against H & Co. The appearance was "R trading as R and Co." Judgment was by consent. Later, th:i judgment WM sought to be executed against one Cox who was not summoned, and for this purpose, applica.tion was made for striking out the words "R sued as" from the appearance recorded. This was disallowed. On appeal, Selborne, L. C., dealing with the former •' (I) (1882) 8 Q.B.D. 474. (2) (1885) 10 App. Cas. 680. ;:- 2 s.c.R. SUPREME COURT REPORTS 201 O.XL1I, r. 8 (corresponding to O. 21. r. 50(2), observed as follows : "If execution was sought against any ot.her person a~ being a memb9r of the firm, the:· the Court was to exercise its discretion as to whether it would allow execution to issue or not, and upon what terms, and, as justice seemed to require, might let in the party sought to be trying the action over again, but by giving him. as against the application to make him answerable, the benefit of any defence which he might have had if he had been made a party on the record or had had notice the proceeding, so as to relieve him from the risk of suffering by the collusion or the improper defence of his co-partner." This would show that the defences which the per· son summoned to answer an .execution application can raise. are the defences opeil to him iC he had been summoned. in the suit. If he denies that he is or waa a partner when the cause of action arose, the issue to be tried would be only that. If he admits that heis or was a partner at the material time he can defend on the ground that the decree was the result of collusion, fraud or the like. In ElliB v. Wadeson (1), an action was brought against a firm in the firm name. There were two partners, one of whom died after the writ and appearance. The surviving partner put in a defence not on behalf of the firm but a personal defence to the acti9n, but this was disallowed. It was pointed out that if a partner is not served and is ignorant of the action, execution cannot be levied against him unless he is given an opportunity and the plaintiff must establish his liability as a partner of the firm, but the plaintiff (I) (1889) I Q.B.D. 714. 1962 0alfth1'ir Mal PndiJ>• .. .T. K. J~ Milh j -· •• Lei., ~ anJJ"" Gambl ir Mal Ptnd(1• •• J. K. Jue Mill• Co. Ltd .• Kt npur 202 SVPREME COURT REPORTS [1963) is not required to meet a defence of a personal chari.cter. Again, in Davis v. Hyman & Co. (1), in an action ai;ainst a firm, only one person entered apjJeara.nce, and judgment was entered against the firm. When tbti plaintiff applied for a. summons against another person under O. XLVHL a, r. 8 [O. 21, r. 50(2)), the issue to be framed by the master waa: ~ ··Whether the said IS. M. H. was or ha~ :'"'- held himself out as a partner in the defendant firm." Phillimore, J ., modified the issue to read : "Whether S. M. H. was 11,t tho date the bill of exchange sued on was given or at the date. when the goods were supplied, a member of the defendant firm of Hyman & Co." The Court of Appen.I vacated the order of Phillimore, J. Stirling, L.J. observed:- "Here we have a person who is alleged to be liable as a member of the defendant firm, and the only question which requires solution is whether his liability a.rises from bis being a member of the firm or from his having held himself out as a partner ........... . It is suggested that, if this form of order is adopt.ed, the defendant in the issue might be deprived of some defence that he might have had if he had been served with the writ and had an opportunity of appearing in tho action. As to this I would say that under the rule the question to be determined is the general one of the liability, as a member of the firm, of the person sought to be charged, and it seems to me that an iBBue could, in a v' proper case, be so framed as to include any (I) [1903] I K.B. 8S4. 2 S.C.R. SUPREME COURT REPORTS7 203 proper defence. No such defence is suggested in the present caae." . In Weir&: Go. Mc Vicar & Co. (1), the action was against a firm. A person who was served as a partner entered appearaμce under protest denying that he was a partner. It was held that he could not at the same time raise the defence of the firm, nor could he insist that the issue regarding his being a partner be tried first. Scrntton, L:J ., referred to the provisions of 0. XLVIII. a, r. 8 [O. 21, r. 50,2)], to compare the position in the trial of the suit and that in execution, and made the following remarks : " ... Order XLVIII. a, r. 8 provides that an issμe may be directed to try the question whether the alleged partner or not. But it seems clear that in that issue he cannot raise the question of the liability of the firm, for if he could you might have two separate judgm~nts on the same cause of action, the one already obtained for a specified amount in the action against the firm, and the other, for possibly a reduced amount or for nothing at all, on the trial of the issue under r. 8. The only question that can be raised on the trial of that issue is whether the person against whom execution is sought was a partner at the , material time or not." h was also observed in that case : "Order XLVIII. a, r. 8, assumes that judgment bas already been obtained against the firm by proper service, and then proceeds to point out who are the persons against · whom it is to be enforced." The English cases thus establish that even in 1.,, an action the defences may be of two kinds-(1) a (I) [1925] 2 K.B. 127, 1962 02'n61air M Z l'ondi1• •• J K ,fut1 M/111 Co. Ltd • Kanpur 1962 Golftb ii' Mal Pat1rliJd .. ·'. K. Jult Mi1l' Oo. Ltd., Kanp~r H U/o>·•eu1lala J. 204 SUPREME COURT HEPORTS [1003J personal defence that a person summoned as a partner is not a partnn and was not a partner at. the time the cause of action accrued (2) defence of the firm on the 1<:round of collusion, fraud or the like but not a personal defence. A person who raise the first defence is precluded from raising the second, and a person who admit~ that ho is a partner can only defend the firm but not himself. These two rules apply to persons summoned as partners. Persons not summoned as partners need not appear. But their liability by that reason alone is neither enlarged nor discharged. Indeed, in our Code also, u. 21, r. 50(4), lays down: '•Save as against any property of thfl partnnship, a decree again•t a firm shall not res.lase, render liable or otherwise affect anv partner therein unless he has been served with a summons to appear and answer." Where the person is sought to be made liable in execution, the defrnces he can raise, according to tho English rulings above examined, are: (i) he can establish that he is not a partner or that he was not a partner when the cause of action a.rose, and the plaintiff can prove t,hat ho held himself out as such; (ii) he can relieve himself against collusion and fraud of his partner. He cannot, however, raiRe a defence to have the action tried over again and he cannot raise a defence personal to himself as against his partner or partners. We Rhall now consider the decisions of the High Courts in India. It will be found that, with the exception of one or two rulings, the same views have been e:i-preesed in India also. In .IO{Ju.t Chandra Bhattrichurjcc v. Gunny Hajee Ahmed ('). a summons was served upon the firm but not upon one K. A decree was obtained against the firm and the decree-holder applied to execute it (l) (1926) I. L.R. l3 Gal. 214. • ..... .....,. ... I • ....... ' \ \ i -,. 2 S.C.R. SUPREME COURT REPORTS 205 against the legal representatives of K by attaching property forming the estate of K. It was admitted that K was a partner. It was held that the assets of . A were 1liable. Sanderson, C. J., held that if in an in· quiry under 0. 2 l, r. 50(2 ), it were decided that a person summoned as a partner was, in faot, a partner, his liability is established. The intention of the rule is to give an opportunity to such a person to dispute his liability. Bucklund, J., held that if after appearance the liability is admitted the Court may grant leave fourthwith, and that it is not open to the person summoned to challenge the decree. In In re Malabar Forests &i Rubber Oo.(1), Mirza, J., held that where a decree _has once been passed against a firm, an individual partner who was not su'llmoned persona.Uy, may be summoned in the execution proceedings, and can contend that he wail not a partner but cannot be allowed to challenge the authority of the other partner or partners t.o enter the transaction in dispute. In Bhagwan v. Hiraji('), !'atkar and Murphy, JJ., took a different view. In that case; a plea that the partners were not authorised tO refer a dispute to arbitration was allowed to be raised. Reliance was placed upon the fourth sub-rule of O. 21, r. 50. In Of the Cakutta High Court in C. M. Shahani v. llarero T1·ading Co. I'). in which Da•, J. (as he then w~s), and on appeal, McXair and Gentle, JJ., had taken the same view and hnd dissented from the <'arlicr Calcutta view. Ilana llarikislvrnda.~·s case(') was followed by another Division Bench of the B:>mbay High Court. in Maharan,,_e Manrlai~a Kumari Devi v. M. Ram11arain l'n'v11tc Ltd. ('). A similar view was earlier oxpre~sPrl by the Madras High Court in K uppu.mmni v. Polite Pictures('). Jn our judgment, the view expreese