As far as authority of Mr.Shiv Prasad Shukla to file the suit is concerned, the Plaintiff has placed reliance upon the Authority Letter dated 5th May, 2010 which is signed by all the partners of the Plaintiff. The said authority has been verified in original by the Notary Public and an endorsement has been made by the Notary Public in this behalf in the plaint as well as affidavit while attesting the signature of Mr.Shiv Prasad Shukla. In my view, there is no substance in the plea raised by the Defendant that the plaint has not been filed by the authorised person. The Letter of Authority which has been filed alongwith the plaint indicates that all the partners of the Plaintiff have authorised Mr.Shiv Prasad Shukla to engage, to appoint an advocate, to sign vakalatnama, plaint, reply, rejoinder, sur-rejoinder, Summons for Judgment etc.
Bombay High Court
M/S. Bombay Trading Co. vs M/S. Jai Santoshi Maa Enterprises on 31 August, 2012
Bench: R.D. Dhanuka
2. The suit is based on an invoice dated 26th January, 2008. The Plaintiff is registered partnership firm and carries on business of manufacturing of Ayurvedic products under the head of "Noorani Tel (Oil)". It is the case of the Plaintiff that vide invoice dated 26th January, 2008, the Plaintiff supplied a bulk of quantity of Noorani Tel (Oil), an Ayurvedic product to the Defendant for a sum of Rs. 6,99,117/-. The said goods were delivered to the Defendant. The Defendant received the invoice. There is no dispute that in respect of the earlier transaction held between the Plaintiff and the Defendant, payment has been already made by the Defendant to the Plaintiff.
3. It is the case of the Plaintiff that since Defendant did not make payment in respect of invoice dated 26th January, 2008, the Plaintiff through his advocate's notice dated 16th July, 2008 called upon the Defendant to pay a sum of Rs. 7,74,966/- with interest at the rate of 24% per annum. The Defendant received that notice but did not give any reply nor made payment to the Plaintiff. The Defendant contacted a partner of the Plaintiff and requested for some discount and for some time for making the payment. The Plaintiff therefore filed this suit for recovery of Rs.11,32,569.54 with further interest at the rate of 24% per annum and cost.
4. The Defendant filed affidavit in reply.
5. The Defendant through the Learned Counsel made the following submissions :-
Kvm 3 SJ86_11 (a) The suit has been filed by Mr.Shiv Prasad Shukla claiming to be an authorised signatory of the Plaintiff without any authority of law. The partners of the firm are not joined as co-plaintiffs alongwith firm and thus suit is not maintainable.
(b) The suit is barred by limitation and is without any cause of action.
(c) The suit has been filed for recovery of price for the goods alleged to have been sold to the Defendant which were given by way of replacement in lieu of some of the goods sold between 23rd May, 2005 to 1st May, 2007 which were without requisite statutory disclosures and under the sales promotion incentive schemes. No payment was thus due and payable by the Defendant to the Plaintiff.
(d) Though both the parties carry on business in Mumbai and the alleged goods were sold in Mumbai, notice dated 16th July, 2008 issued by advocate Mr.V.K.Jaiswal practicing at Allahabad is issued with malafide intention. It is submitted that large number of competent advocates in Mumbai are available for legal advice and thus notice should not have been issued Kvm 4 SJ86_11 through an advocate practicing at Allahabad. Suit is not maintainable on this ground alone.
(e) The alleged authorised representative of the Plaintiff who has filed suit was earlier working with the Defendant and has joined hands with the Plaintiff for filing the suit.
6. The Learned Counsel appearing on behalf of the Plaintiff on the other hand submits as under :-
(a) The suit is validly filed by the authorised signatory of the Plaintiff. All the partners had authorised Mr.Shiv Prasad Shukla who is working with the Plaintiff and is conversant with the facts. Such authority letter dated 5th May, 2010 has been filed alongwith the plaint and the original whereof was verified by the Notary Public who had attested his signature on the plaint and affidavit in support. (b) It is not necessary to make all the partners as Co- Plaintiffs in the suit with the firm under Order XXX Rule (1) read with Rule (2) of Code of Civil Procedure, 1908.
Kvm 5 SJ86_11 (c) The suit is filed for recovery of price for goods supplied vide invoice dated 26th January, 2008. The suit is lodged on 8th September, 2010. The suit is thus within time and not barred by law of limitation. (d) The suit has been filed on the basis of invoice issued in respect of the goods sold and delivered and is accepted by the Defendant, cause of action thus arose on the Defendant's refusal to pay the Plaintiff in respect of such transaction between the parties. There is no substance in the plea that no cause of action had arisen in favour of the Plaintiff.
(e) The Defendant never raised any issue in respect of the quality of the goods or of any other nature, supplied by the Plaintiff at any point of time in past. There is no material on record placed by the Defendant in these regard. Even tax invoice relied upon by the Defendant in respect of the earlier transaction clearly provides that goods once sold would not be taken back and no claim of shortage and damage would be
entertained after goods leave from the premise of the Plaintiff. Goods were not delivered under any incentive scheme.
Kvm 6 SJ86_11 (f) The Plaintiff is entitled to take assistance of any advocate in India. Such notice was not issued with any malafide intention but was for demanding legitimate dues of the Plaintiff.
7. As far as issue raised by the Defendant that the suit is not maintainable on the ground that the partners of the Plaintiff firm are not joined as co-plaintiffs is concerned, the Supreme Court after considering the provisions of Order XXX of the Code of Civil Procedure, 1908 and Section 4 of the Indian Partnership Act, 1932 in the case of Purushottam Umedbhai & Co. vs. Manilal & Sons1 has dealt with similar issue. Relevant part of the said Judgments are setout herein :-
10. Before the introduction of O. XXX in the Code of Civil Procedure apparently suits were instituted, particularly in the Mofussil courts, in the name of a firm or were instituted against a firm in the firm name and no objection was generally taken. Presumably this practice was largely based on the assumption that the suit concerned was either by all the partners of the firm or against all partners of the firm. If, however an objection were to be taken that a suit in the name of a firm was not maintainable because it had no legal entity, the courts would have to decide whether the suit had been instituted by non-existent persons. If so, the suit was not maintainable. In the case of Kasturchand Bahiravdas v. Sagarmal Shriram , which was before the introduction of O. XXX in the Code, the suit had been brought in the name of the firm Kondanmal Sagarmal by its manager Sagarmal Shriram. The defendants objected that one Malamchand was also a partner in the firm and should be made a party. He was accordingly added as a plaintiff on the 27th of January, 1898. The defendant than contended that the suit was barred under s. 22, 1 AIR 1961 SC 325
Kvm 7 SJ86_11 Limitation Act. It was held by that Bombay High Court that it was a case of misdescription and not of non- joinder for the action was brought in the name of the firm by its manager. The introduction of O. XXX into the Code prevents such an objection being taken because it permits two or more persons carrying on business of the firm to sue or be sued in the name of the firm but the firm must be carrying on business in India. The introduction of this provision in the Code was an enabling one which permitted partners constituting a firm to sue or be used in the name of the firm. .......
11. Section 4 of the Indian Partnership Act, 1932, hereinafter referred to as the Act, states that : " "Partnership" is the relation between
persons who have agreed to share the profits
of business carried on by all or any of them
acting for all.
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"."
12.It is clear from this provision of the Act that the word "firm" or the "firm name" is merely a
compendious description of all the partners collectively. It follows, therefore, that 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 had not authorized the suit. A firm may not be a legal entity in the sense of a corporation or a company incorporated under the Indian Companies Act it is still an existing concern where business is done by a number of persons in partnership. When a suit is filed in the name of a firm it is in reality a suit by all the partners of the firm. If O. XXX had not been introduced into the Code and a suit had been filed in the name of a firm it would not be a case of a suit filed by a nonexistent person. It would still be a suit by the partners of a firm, the defect being that they were described as a firm. In order to clarify matters a court would permit an amendment by striking out the name of the firm and replacing it with the name Kvm 8 SJ86_11 of the persons forming the partnership. ........
15. ............ in the case of suit instituted by the partners in the name of the firm, on demand in writing by or on behalf of any defendant, to declare in writing the names and places of residence of all the persons constituting the firm on whose behalf the suit is instituted. If the plaintiffs fail to comply with the demand made under sub-r. (1) of this rule, all the proceedings in the suit may be stayed on such terms as the court may direct. Under sub-r.(3) if the names of the partners are declared in the manner referred to in sub-r.(1) the suit shall proceed in the same manner and the same consequences in all respects shall follow as if they had been named in the plaint, provided that all the proceedings shall nevertheless be continued in the name of the firm. Rule 1 of O. XXX is a general provision. Rule 2, however, is confined to a suit instituted by partners in the name of the firm. It is clear from this rule that although the suit is filed in the name of the firm a disclosure has to be made, on demand in writing by or on behalf of any defendant, of names and places of residence of all the persons constituting the firm on whose behalf the suit is instituted. The provisions of r. 2 would indicate that although the suit is filed in the name of a firm, it is nonetheless a suit by all the partners of the firm because if a disclosure of the names of the partners is asked for by any defendant, on such disclosure, the suit shall proceed as if the partners had been named as plaintiffs in the suit, even though the proceedings shall
nevertheless be continued in the name of the firm. It is clear, therefore, that the provisions of O. XXX, r.1 and r.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. Rule 2 would not have been in the form it is if the suit instituted in the name of the firm was not regarded as, in fact, a suit by the partners of the firm. The provisions of these rules of O. XXX, being enabling provisions, do not prevent the partners of a firm from suing or being sued in their individual names. These rules also do not prohibit the partners of a firm suing in India in their names individually although they may be doing business outside India. Indeed, this was not disputed on behalf of the appellant. Since, however, Kvm 9 SJ86_11 a firm is not a legal entity the privilege of suing in the name of a firm is permissible only to those persons who, as partners, are doing business in India. Such privilege is not extended to persons who are doing business as partners outside India. In their case they still have to sue in their individual names. ........
8. It is not disputed that the partners of the Plaintiff firm are doing business in India. In my view although suit is filed in the name of the firm, it is nonetheless by all the partners of the firm. If the Defendant desires, he can demand in writing from the Plaintiff to declare the names and places of residence of all the partners constituting the firm on whose behalf the suit is instituted. If the Plaintiff fails to comply with the demand made under Sub Rule (1) of Order XXX Rule (2), all the proceedings in the suit may be stayed on such terms and conditions as this Court may direct.
9. Sub Rule (3) of Order XXX Rule (2) provides that where the names of the partners are declared in the manner referred to in sub-rule (1), the suit shall proceed in the same manner, and the same consequences in all respect shall follow, as if they had been named as Plaintiffs in the plaint. The earlier proviso to Sub- Rule (3) is substituted by the Code of Civil Procedure (Amendment) Act, 1976 w.e.f. 1st February, 1977 which provides that all the proceedings shall nevertheless continue in the name of the firm, but the name of the partners disclosed in the manner specified in sub-rule (1) shall be entered in the decree. In my view, the present suit filed by the Plaintiff only in the name of the firm is not nullity and is maintainable. There is no substance in the defence raised by the Defendant that the suit is not maintainable for non-joinder of the partners as co-plaintiffs in the suit.
10. As far as authority of Mr.Shiv Prasad Shukla to file the suit is concerned, the Plaintiff has placed reliance upon the Authority Letter dated 5th May, 2010 which is signed by all the partners of the Plaintiff. The said authority has been verified in original by the Notary Public and an endorsement has been made by the Notary Public in this behalf in the plaint as well as affidavit while attesting the signature of Mr.Shiv Prasad Shukla. In my view, there is no substance in the plea raised by the Defendant that the plaint has not been filed by the authorised person. The Letter of Authority which has been filed alongwith the plaint indicates that all the partners of the Plaintiff have authorised Mr.Shiv Prasad Shukla to engage, to appoint an advocate, to sign vakalatnama, plaint, reply, rejoinder, sur-rejoinder, Summons for Judgment etc.
11. The suit is for recovery of goods sold and delivered vide invoice dated 26th January, 2008. The suit has been lodged on 8th September, 2010. In my view, the suit is filed within time and is not barred by law of limitation.
12. As the suit has been filed on the basis of the invoice issued in respect of the goods sold and delivered, I don't find any substance in the plea raised by the Defendant that the suit is without any cause of action against the Defendant.
13. As far as the allegations of the Defendant that the alleged authorised representative of the Plaintiff who has filed the suit was earlier working with the Defendant and has joined hands with the Plaintiff is concerned, it is the case of the Plaintiff that the notice of demand was issued by the Plaintiff even prior to the date of the said Mr.Shiv Prasad Shukla joining the Plaintiff's firm as an employee. It is the case of the Plaintiff that after leaving the job of the Defendant, the said Mr.Shiv Prasad Shukla had joined another concerned, not connected with the Plaintiff. In my view, there is no substance in this plea raised by the Defendant that there was any collusion between the Plaintiff and Mr. Shukla in filing this proceedings.
14. The Tax invoices produced by the Defendant as well as the Plaintiff in their respective pleadings clearly indicate that goods once sold, would not be taken back and no claim for shortage and damage would be entertained after goods leave the premises of the Plaintiff. The Defendant has not disputed the factum of receipt of invoice dated 26th January, 2008. The Defendant has also not disputed the factum of the receipt of the goods mentioned in the said invoice. The only plea raised by the Defendant for denying the claim of the Plaintiff is that the said goods were by way of replacement of those goods which were supplied vide 15 invoices during the period between 23rd May, 2005 to 1st May, 2007 and were also towards sales promotion incentive schemes. There is no correspondence produced by the Defendant to demonstrate that any grievances in respect of any goods having supplied by the Plaintiff without requisite statutory disclosure, or that goods under sales promotion incentive scheme was not delivered to the Defendant. On the contrary, in para (12) of the affidavit in reply filed by the Defendant, it is pleaded that the defendant had made bill to bill payment by cheques to the Plaintiff as per details setout therein after making good the short supply, replacement of the damaged goods and the goods which were without requisite disclosures like expiry date, name of the manufacturer etc. and the supply of goods under the sales promotion incentive schemes and the payment became due.
15. The table relied upon by the Defendant in para (12) indicates that out of 15 payment made by the Defendant to the Plaintiff during the period between 23rd May, 2005 to 1st May, 2007, the first 13 payments were made from time to time and not later than 27th June, 2007. If the Defendant had any grievance in respect of the goods allegedly not having been supplied with the requisite statutory disclosure or were not delivered under sales promotion incentive schemes during the period between 23rd May, 2005 and 3rd February, 2007, the Defendant would not have released the payment to the Plaintiff. During the course of argument, the Learned Counsel appearing for the Defendant could not co-relate the goods supplied by the Plaintiff under invoice in question with goods supplied under 15 invoices referred in para (12) of the reply. The Learned Counsel conceded that it was not possible to point out that the goods covered by the invoice in question were in replacement of goods covered by any of the 15 invoices referred to in para (12) of the reply. In my view, there is no substance in the plea of the Defendant that goods covered by the suit invoice were by way of replacement or under sale promotion incentive scheme.
16. In my view there is no substance in the plea raised by the Defendant that though the assistance of large number of advocates is available in Mumbai and since both the parties are carrying on business in Mumbai, appointment of an advocate from Allahabad for issuing notice of demand could be with any malafide intention or that the suit is not maintainable. A litigant can avail of legal assistance from any advocate in any part of the country.
17. In my view each of the defence raised by the Defendant is frivolous, moon shine and is not substantial.
18. I, therefore, pass the following order :- (a) Defendants is granted conditional leave to defend the suit on depositing a sum of Rs.ten lacs in this Court within a period of eight weeks from the date of this Order.
(b) If the Defendant deposits the said amount in this Court as directed, the Prothonotary & Senior Master is directed to invest the same in a Fixed Deposit in a nationalised bank initially for a period of two years and thereafter for a like period after obtaining further order from this Court.
(c) The Defendant is directed to file Written Statement within a period of four weeks from the date of deposit of the amount as directed aforesaid. (d) In the event of the Defendant committing default in depositing the amount, the Plaintiff would be at liberty to apply for further orders.
(e) Suit is transferred to the list of commercial causes.
(f) Office is directed to place the matter for framing issues after two weeks of completion of pleadings.
(g) Summons for Judgment is disposed of in
aforesaid terms.
(h) There shall be no order as to cost.
[R.D. DHANUKA, J.]
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