AIR1995Ker86, 1994CivilCC614, ILR1995(1)Kerala87, 1994(2)KLJ669
IN THE HIGH COURT OF KERALA
Decided On: 27.09.1994
Appellants: Grand Buoy Enterprises
Vs.
Respondent: National Insurance Company Limited and Anr.
Vs.
Respondent: National Insurance Company Limited and Anr.
Hon'ble Judges/Coram:
K.T. Thomas and B.N. Patnaik , JJ.
A partnership firm sought for leave to sue as an indigent person for realisation of rupees four lakhs. It has been alleged that the firm-has no assets of its own at present and that the firm is not able to pay the court fee. The trial court dismissed the application mainly on the ground that the partners of the firm have failed to show that they are not possessed of sufficient means to pay the court fee. Time was granted to pay the court fee. The order is under challenge in the appeal. Setting aside the Judgment and remanding the case to the trial court;
Held: Order 33 permits only "a person" to file the suit in forma pauperis. No doubt, a human being as well as a juristic person would fall within the ambit of "person" envisaged in order 33. But the question is whether a firm is such "a person". Under Section 4 of the Indian Partnership Act, 1932 "persons who have entered into partnership with one another are called individually and partners and collectively a firm". Partnership is "the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all". Partnership Act does not cloth a firm with the mental of a juristic person. A firm thus remains a collection or association of persons. When a firm figures as the Plaintiff in a suit, the real persons behind are the partners of the firm and the firm name is only a facade. A firm as such cannot, therefore, claim to be an indigent person under order 33 of the Code.
In order to enable the Appellant to show that the remaining partner is also an indigent person we set aside the impugned order and remand the case to the lower court for continuing with the enquiry as to whether permission can be granted under order 33 of the Code to file the suit without payment of the court fee.
Excerpt:
But the application was dismissed by the lower court mainly on the ground that the partners of the firm have failed to show that they are not possessed of sufficient means to pay the court fees. No doubt, a human being, as well as a juristic person would fall within the ambit of 'person' envisaged in Order 33. But the question is whether a firm is such 'a person'.Under Section 4 of the Indian Partnership Act, 1932 'persons who have entered into partnership with one another are called individually partners and collectively a firm'.Partnership is 'the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all'.Partnership Act does not cloth a firm with the mantle of a juristic person. , AIR 1955 SC 74). The position now stands well settled that a firm is not a legal entity but is only an association of persons (vide Purushottam & Co.
But the application was dismissed by the lower court mainly on the ground that the partners of the firm have failed to show that they are not possessed of sufficient means to pay the court fees. No doubt, a human being, as well as a juristic person would fall within the ambit of 'person' envisaged in Order 33. But the question is whether a firm is such 'a person'.Under Section 4 of the Indian Partnership Act, 1932 'persons who have entered into partnership with one another are called individually partners and collectively a firm'.Partnership is 'the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all'.Partnership Act does not cloth a firm with the mantle of a juristic person. , AIR 1955 SC 74). The position now stands well settled that a firm is not a legal entity but is only an association of persons (vide Purushottam & Co.
Judgment:
Thomas, J.
1. A partnership firm sought for leave to sue as an indigent person for realisation of more than rupees four lakhs. The court fee payable would coma to about thirty thousand. It was on the premise that the firm has no assets of its own at present that the plaintiff has filed the application for leave to sue as an indigent person. But the application was dismissed by the lower court mainly on the ground that the partners of the firm have failed to show that they are not possessed of sufficient means to pay the court fees. However, time was granted to the applicant to pay the court fees for getting the suit registered as a regular suit. It is the said order which the firm has challenged before us.
2. According to the appellant, the firm consists of two partners only. The Managing Partner of the firm was examined as P.W. 1 and he deposed that he has no means to pay the required court fee. The other partner was not examined, nor was it shown that the other partner has no means to pay the court fee.
3. Order 33, Rule 1 of the Code of Civil Procedure, 1908 (for short 'the Code') provides for institution of a suit by anindigent person. Explanation 1 to Rule 1 defines indigent person. As per the definition 'a person is an indigent person if he is not possessed of sufficient means (other than property exempt from attachment in execution of a decree and the subject matter of the suit) to enable him to pay the fee prescribed by law for the plaint in such suit.' Rule 1A says that an inquiry shall be made into the question whether or not a person is an indigent person. Rule 2 stipulates that every application for permission to sue as an indigent person shall contain the particulars required. Rule 3 enjoins that the application shall be presented by the applicant in person and Rule 4 obliges the court to examine the applicant, regarding the merits of the claim and the property of the applicant.
4. In all the above cases the suit can be instituted by an indigent person. There is no other provision by which a suit can be filed without remittance of the court fee payable.
5. Order 33 permits only 'a person' to file the suit in forma pauperis. No doubt, a human being, as well as a juristic person would fall within the ambit of 'person' envisaged in Order 33. But the question is whether a firm is such 'a person'. Under Section 4 of the Indian Partnership Act, 1932 'persons who have entered into partnership with one another are called individually partners and collectively a firm'. Partnership is 'the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all'. Partnership Act does not cloth a firm with the mantle of a juristic person. A firm thus remains a collection or association of persons,
6. Legal position in English Law was also that a firm is not a legal entity. Farewell L.J., in Sadler v. Whiteman (1910) 1 KB 868 has stated that 'in English law a firm as such has no legal existence, partners carry on business both as principals and as agents for each other within the scope of the partnership business, the firm name is a mere expression, not a legal entity, although for convenience ....... it maybe used for the sake of suing and being sued', In India there was some conflict of opinions on this point earlier. However, the conflictwas set at rest by the Supreme Court (vide Bacha Guzdar v. Commr. of I.-T., AIR 1955 SC 74). The position now stands well settled that a firm is not a legal entity but is only an association of persons (vide Purushottam & Co. v. Manilal & Sons, AIR 1961 SC 325 also).
7. What Order 30, Rule 1 of the Code enables is that partners in a firm can sue in the name of the firm. They can also be sued against in the name of the firm. None of the provisions in Order 30 would equip a firm to be a legal entity, but a litigative convenience is provided to the partners of the firm for instituting the action in a civil court. So when a firm figures as the plaintiff in a suit, the real persons behind are the partners of the firm and the firm name is only a facade. A firm as such cannot therefore, claim to be an indigent person under Order 33, of the Code.
8. When a firm is the plaintiff and a request for permission under Order 33 is made the requirement is that the partners of the firm should be shown as indigent persons. We do not find anything in Order 33 which enables the firm to sue as an indigent person by merely showing that the firm as such is not possessed of sufficient assets to raise the court fee.
9. Learned counsel for the appellant referred us to the decision of a single Judge in Nandkishore Mohanlal v. Jhunjhunwalal and Co., AIR 1990 Madh Pra 331) in which it was held that a firm is a person within the meaning of Order 33, Rule 1 of the Code and is entitled to sue as an indigent person. With great respect we find it difficult to follow the same, particularly in the light of the decision of the Supreme Court in Purshottam & Co. v. Manilal & Sons, AIR 1961 SC 325 wherein Imam, J. has observed that it is clear from from Section 4 of the Indian Partnership Act that the word 'firm' or the 'firm name' is merely a compendious description of all the partners collectively. It was further observed 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 authorised the suit'. When a suit is filed in the name of a firm, it isin reality a suit by all the partners of the firm, according to their Lordships.
10. In this case, one of the partners, of course, made a bid to show that he is not possessed of sufficient means to pay the court fee prescribed. Learned sub Judge was, therefore, right in holding that the permission cannot be granted for filing the suit in form a pauperis.
11. However, learned counsel for the appellant made an alternative plea for affording an opportunity to show that the other partner is also not possessed of sufficient means to pay the court fee. In view of the legal position adumbrated above, we fee that it is only just and proper that such an opportunity is afforded.
In order to enable the appellant to show that the remaining partner is also an indigent person, we set aside the impugned order and remand the case to the lower court for continuing with the enquiry as to whether permission can be granted under Order 33 of the Code to fife the suit without payment of the court fee.
Appeal is disposed of in the above terms.
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