A partnership firm differs from a proprietary concern owned by an
individual. A partnership is governed by the provisions of the Indian Partnership
Act, 1932. Though a partnership is not a juristic person but Order XXX Rule 1
CPC enables the partners of a partnership firm to sue or to be sued in the
name of the firm. A proprietary concern is only the business name in which the
proprietor of the business carries on the business. A suit by or against a
proprietary concern is by or against the proprietor of the business. In the event
of the death of the proprietor of a proprietary concern, it is the legal
representatives of the proprietor who alone can sue or be sued in respect of the
dealings of the proprietary business. The provisions of Rule 10 of Order XXX
which make applicable the provisions of Order XXX to a proprietary concern,
enable the proprietor of a proprietary business to be sued in the business
names of his proprietary concern. The real party who is being sued is the
proprietor of the said business. The said provision does not have the effect of
converting the proprietary business into a partnership firm. The provisions of
Rule 4 of Order XXX have no application to such a suit as by virtue of Order
XXX Rule 10 the other provisions of Order XXX are applicable to a suit against
the proprietor of proprietary business "insofar as the nature of such case
permits". This means that only those provisions of Order XXX can be made
applicable to proprietary concern which can be so made applicable keeping in
view the nature of the case.”
(emphasis is ours)
Based on the observations recorded in the aforesaid judgment, the second contention
advanced by the learned counsel for the appellant was, that in sum and substance, a
sole proprietorship concern allows the fictional use of a trade name on behalf of an
individual. It was contended, that truthfully only one individual is the owner of a sole
proprietorship concern. As such, according to learned counsel, the name of the sole
proprietorship concern, can again be substituted with the name of the sole proprietor.
If that is allowed, the NSC purchased by the appellant would strictly conform to the
mandate of law. According to learned counsel, it makes no difference whether the
individual’s name, or the proprietorship’s name is recorded while purchasing an NSC.
It was pointed out, that if the respondent was not agreeable in accepting the trade
name, the respondent ought to have corrected the NSC by substituting the name of
M/s. Bhagwati Vanaspati Traders with that of its sole proprietor, namely, B.K. Garg.
We find merit in the second contention advanced at the hands of the learned
counsel for the appellant. It is indeed true, that the NSC was purchased in the name
of M/s. Bhagwati Vanaspati Traders.
It is also equally true, that M/s. Bhagwati
Vanaspati Traders is a sole proprietorship concern of B.K. Garg, and as such, the
irregularity committed while issuing the NSC in the name of M/s. Bhagwati Vanaspati
Traders, could have easily been corrected by substituting the name of M/s. Bhagwati
Vanaspati Traders with that of B.K. Garg. For, in a sole proprietorship concern an
individual uses a fictional trade name, in place of his own name. The rigidity adopted
by the authorities is clearly ununderstandable.
The postal authorities having
permitted M/s. Bhagwati Vanaspati Traders to purchase the NSC in the year 1995,
could not have legitimately raised a challenge of irregularity after the maturity thereof
in the year 2001, specially when the irregularity was curable.
“REPORTABLE”
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4854 OF 2009
M/s. Bhagwati Vanaspati Traders
.... Appellant
versus
Senior Superintendent of Post Offices, Meerut
Citation;AIR 2015SC 901
M/s. Bhagwati Vanaspati Traders, the appellant before us, is a proprietorship
concern. Mr. B.K. Garg is its sole proprietor. On 28.4.1995, M/s. Bhagwati Vanaspati
Traders purchased one, six years’ National Savings Certificate (hereinafter referred to
as, NSC) bearing number 6NS/06DD 387742, by investing a sum of Rs.5,000/-. The
above NSC was to mature on 28.4.2001. The maturity amount payable on 28.4.2001
was Rs.10,075/-.
2.
Since M/s. Bhagwati Vanaspati Traders was not paid the amount due on
maturity, B.K. Garg made repeated visits to the office from where the NSC was
purchased. He was informed, that an NSC could only be issued in the name of an
individual, and that, the NSC taken in the name of M/s. Bhagwati Vanaspati Traders,
was not valid. He was also informed, that the matter had been referred for advice to
the Post Master General, Bareilly, and that, the question of payment of the maturity
amount would be considered only after the receipt of inputs from Bareilly. Having
Page 1
2
waited for a substantial length of time, and realizing that no further action had been
taken at the hands of the respondent, B.K. Garg visited the office of the Post Master
General, Bareilly. At Bareilly he was informed, that the matter had been referred to
the Director General (Post), Department of Posts, New Delhi, and that, he would have
to await the decision of the Director General (Post). Having waited long enough,
without any fruitful result, M/s. Bhagwati Vanaspati Traders preferred Complaint Case
no. 513 of 2004 before the District Consumer Disputes Redressal Forum, Meerut
(hereinafter referred to as, the District Forum). The District Forum, by its order dated
1.2.2007 accepted the claim of M/s. Bhagwati Vanaspati Traders, and accordingly,
directed the respondent to pay the maturity amount of Rs.10,075/- with 12% interest,
from the date of maturity till the date of payment. The respondent was additionally
directed to pay, a sum of Rs.5,000/- as compensation, and also cost of Rs.2,000/-, to
the appellant proprietorship concern.
3.
Dissatisfied with the order dated 1.2.2007, passed by the District Forum in
favour of the appellant, the respondent Senior Superintendent of Post Offices,
Meerut, preferred Appeal no. 460 of 2007 before the State Consumer Disputes
Redressal Commission, Lucknow. The aforestated appeal was allowed by the State
Commission vide its order dated 21.1.2008. The appellant concern then preferred
Revision Petition no. 1456 of 2008 before the National Consumer Disputes Redressal
Commission, New Delhi. The National Commission dismissed the revision petition,
vide the impugned order dated 4.9.2008. The special leave to appeal preferred by
the appellant, against the impugned order dated 4.9.2008, was granted by this Court
on 27.7.2009.
Page 2
3
4.
A perusal of the orders passed by the State Commission, as also, the National
Commission reveals, that the same were premised on the fact, that the NSC
purchased by M/s. Bhagwati Vanaspati Traders, had an irregularity, inasmuch as, an
NSC could only be purchased by an individual, and the same could not be issued in
the name of a concern, firm, institution, banking institution or company etc.
On
account of the aforesaid irregularity, the respondent placed reliance on rule 17 of the
Post Office Savings Bank General Rules, 1981. The above rule is being extracted
hereunder:-
“17. Account opened in contravention of rules:- Subject to the provision of rule
16, where an account is found to have been opened in contravention of any
relevant rule for the time being in force and applicable to the account kept in the
Post Office Savings Bank, the relevant Head Savings Bank may, at any time,
cause the account to be closed and the deposits made in the account refunded
to the depositor without interest.”
In addition to the above, the respondent had placed reliance on a decision rendered
by this Court in Post Master, Dargamitta HPO, Nellor v. Raja Prameeelamma, (1998)
9 SCC 706, wherein this Court had held as under:-
“But as this contract was contrary to the terms notified by the Government of
India and this was due to inadvertence of the staff. In my opinion it does not
become a contract binding the Government of India being unlawful and void.
As such this is not a case of deficiency in service either in terms of the law or in
terms of the contract as defined in Section 2(1)(g) of the Consumer Protection
Act, 1986.”
(emphasis is ours)
During the course of hearing, learned counsel for the respondent, in addition to the
judgment extracted hereinabove, placed reliance on a recent decision rendered by
this Court in Arulmighu Dhandayadhapaniswamy Thirukoil, Palani, Tamil Nadu v.
Director General of Post Offices, Department of Posts & Ors., (2011) 13 SCC 220,
and drew our attention to the following conclusions recorded therein;-
Page 3
4
“18. This Court in Raja Prameeelamma case, (1998) 9 SCC 706, held that
even though the certificates contained the terms of contract between the
Government of India and the holders of the National Savings Certificate, the
terms in the contract were contrary to the Notification and therefore the terms of
contract being unlawful and void were not binding on the Government of India
and as such the Government refusing to pay interest at the rate mentioned in
the Certificate is not a case of deficiency in service either in terms of law or in
terms of contract as defined under Section 2(1)(g) of the Consumer Protection
Act, 1986. The above said decision is squarely applicable to the case on hand.
19. It is true that when the Appellant deposited a huge amount with the third
Respondent from 5.5.1995 to 16.8.1995 under the Scheme for a period of five
years, it was but proper on the part of the Post Master to have taken a note of
the correct Scheme applicable to the deposit. It was also possible for the
Postmaster to have ascertained from the records, could have applied the
correct Scheme and if the Appellant, being an institution, was not eligible to
avail the Scheme and advised them properly. Though Mr. S. Aravindh, learned
Counsel for the Appellant requested this Court to direct the third Respondent to
pay some reasonable amount for his lapse, inasmuch as such direction would
go contrary to the Rules and payment of interest is prohibited for such Scheme
in terms of Rule 17, we are not inclined to accept the same.”
(emphasis is ours)
Based on the decision of this Court relied upon by the State Commission, as also, the
National Commission in the impugned orders dated 21.1.2008 and 4.9.2008
respectively, as also, the latest judgment rendered by this Court in Arulmighu
Dhandayadhapaniswamy Thirukoil case (supra), it was the emphatic contention of the
learned counsel for the respondent, that there was no question of release of the
maturity amount to the appellant.
5.
It was also the contention of the learned counsel for the respondent, that the
mistake at the hands of the postal authorities was innocent. After the appellant’s
claim was examined, a preliminary enquiry disclosed, that the NSC was issued to
M/s. Bhagwati Vanaspati Traders by Ved Bahadur Singh (an employee of the postal
department). A departmental proceeding was held against the above employee, and
he was duly punished. Accordingly it was sought to be asserted, that it was not as if,
the postal authorities were intentionally depriving the appellant of the benefits of the
Page 4
5
NSC purchased by him on 28.4.1995. The deprivation of the appellant, according to
learned counsel, was based on a pure determination of the legal rights of the
appellant.
6.
The first contention advanced at the hands of the learned counsel for the
appellant was based on the decision rendered by this Court in Tata Iron & Steel Co.
Ltd. v. Union of India & Ors., (2001) 2 SCC 41, wherefrom learned counsel invited our
attention to the following observations:-
“20. Estoppel by conduct in modern times stands elucidated with the
decisions of the English Courts in Pickard v. Sears, 1837 6 Ad. & El. 469, and
its gradual elaboration until placement of its true principles by the Privy Council
in the case of Sarat Chunder Dey v. Gopal Chunder Laha, (1891-92) 19 IA
203, whereas earlier Lord Esher in the case of Seton Laing Co. v. Lafone, 1887
19 Q.B.D. 68, evolved three basic elements of the doctrine of Estoppel to wit:
“Firstly, where a man makes a fraudulent misrepresentation and another
man acts upon it to its true detriment: Secondly, another may be where a
man makes a false statement negligently though without fraud and
another person acts upon it: And thirdly, there may be circumstances
under which, where a misrepresentation is made without fraud and
without negligence, there may be an Estoppel.”
Lord Shand, however, was pleased to add one further element to the effect that
there may be statements made, which have induced other party to do that from
which otherwise he would have abstained and which cannot properly be
characterized as misrepresentation. In this context, reference may be made to
the decisions of the High Court of Australia in the case of Craine v. Colonial
Mutual Fire Insurance Co. Ltd., 1920 28 C.L.R. 305. Dixon, J. in his judgment in
Grundt v. The Great Boulder Pty. Gold Mines Pty. Ltd., 1938 59 C.L.R.
641, stated that:
"In measuring the detriment, or demonstrating its existence, one does not
compare the position of the representee, before and after acting upon the
representation, upon the assumption that the representation is to be
regarded as true, the question of estoppel does not arise. It is only when
the representor wished to disavow the assumption contained in his
representation that an estoppel arises, and the question of detriment is
considered, accordingly, in the light of the position which the representee
would be in if the representor were allowed to disavow the truth of the
representation."
(In this context see Spencer Bower and Turner: Estoppel by Representation,
3rd Ed.). Lord Denning also in the case of Central Newbury Car Auctions Ltd. v.
Unity Finance Ltd., 1956 (3) All ER 905, appears to have subscribed to the view
of Lord Dixon, J. pertaining to the test of 'detriment' to the effect as to whether it
Page 5
6
appears unjust or unequitable that the representator should now be allowed to
resile from his representation, having regard to what the representee has done
or refrained from doing in reliance on the representation, in short, the party
asserting the estoppel must have been induced to act to his detriment. So long
as the assumption is adhered to, the party who altered the situation upon the
faith of it cannot complain. His complaint is that when afterwards the other party
makes a different state of affairs, the basis of an assertion of right against him
then, if it is allowed, his own original change of position will operate as a
detriment, (vide Grundts: High Court of Australia (supra)).
21. Phipson on Evidence (Fourteenth Edn.) has the following to state as
regards estoppels by conduct.
“Estoppels by conduct, or, as they are still sometimes called, estoppels
by matter in pais, were anciently acts of notoriety not less solemn and
formal than the execution of a deed, such as livery of seisin, entry,
acceptance of an estate and the like, and whether a party had or had not
concurred in an act of this sort was deemed a matter which there could
be no difficulty in ascertaining, and then the legal consequences followed
(Lyon v. Reed, (1844) 13 M & W 285 (at p. 309). The doctrine has,
however, in modern times, been extended so as to embrace practically
any act or statement by a party which it would be unconscionable to
permit him to deny. The rule has been authoritatively stated as follows:
‘Where one by his words or conduct willfully causes another to believe
the existence of a certain state of things and induces him to act on that
belief so as to alter this own previous position, the former is concluded
from averring against the latter a different state of things as existing at
the same time.’ (Pickard v. Sears (supra)). And whatever a man's real
intention may be, he is deemed to act willfully ‘if he so conducts himself
that a reasonable man would take the representation to be true and
believe that it was meant that he should act upon it.’ (Freeman v.
Cooke, 1848 (2) Exch. 654: at p. 663).
Where the conduct is negligent or consists wholly of omission,
there must be a duty to the person misled (Mercantile Bank v. Central
Bank, 1938 AC 287 at p. 304, and National Westminster Bank v.
Barclays Bank International, 1975 Q.B. 654). This principle sits oddly
with the rest of the law of estoppel, but it appears to have been
reaffirmed, at least by implication, by the House of Lords comparatively
recently (Moorgate Mercantile Co. Ltd. v. Twitchings, (1977) AC 890).
The explanation is no doubt that this aspect of estoppel is properly to be
considered a part of the law relating to negligent representations, rather
than estoppel properly so-called. If two people with the same source of
information assert the same truth or agree to assert the same falsehood
at the same time, neither can be estopped as against the other from
asserting differently at another time (Square v. Square, 1935 P. 120).”
22. A bare perusal of the same would go to show that the issue of an
estoppel by conduct can only be said to be available in the event of there being
a precise and unambiguous representation and on that score a further question
arises as to whether there was any unequivocal assurance prompting the
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7
assured to alter his position or status. The contextual facts however, depict
otherwise. Annexure 2 to the application form for benefit of price protection
contains an undertaking to the following effect:-
“We hereby undertake to refund to EEPC Rs... the amount paid to us in
full or part thereof against our application for price protection. In terms of
our application dated against exports made during... In case any
particular declaration/certificate furnished by us against our above
referred to claims are found to be incorrect or any excess payment is
determine to have been made due to oversight/wrong calculation etc. at
any time. We also undertake to refund the amount within 10 days of
receipt of the notice asking for the refund, failing which the amount
erroneously paid or paid in excess shall be recovered from or adjusted
against any other claim for export benefits by EEPC or by the licensing
authorities of CCI & C.”
and it is on this score it may be noted that in the event of there being a specific
undertaking to refund for any amount erroneously paid or paid in
excess (emphasis supplied), question of there being any estoppel in our view
would not arise. In this context correspondence exchanged between the parties
are rather significant. In particular letter dated 30.11.1990 from the Assistant
Development Commissioner for Iron & Steel and the reply thereto dated
8.3.1991 which unmistakably record the factum of non-payment of JPC price.”
(emphasis is ours)
Based on the aforesaid observations it was the emphatic contention of the learned
counsel for the appellant, that the rule of estoppel would come to the aid of the
appellant, inasmuch as, the appellant having been consciously permitted to purchase
the NSC, could not be denied the benefit of the maturity amount by asserting, that
there was some irregularity in the purchase of the NSC.
7.
It is not possible for us to accept the applicability of the principle of estoppel in
the facts and circumstances of this case. No representation is ever shown to have
been made to the appellant. It was the appellant’s individual decision to purchase the
NSC. It is not shown, that a fraudulent representation was made to the appellant. It
is also not shown, that a false statement was negligently made to the appellant. The
rule of estoppel, in the present case, could have only been premised on some
conduct of the respondent, which had willfully induced the appellant to invest in the
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8
NSC. Unfortunately, for the appellant, no such willful conduct has been brought to
our notice. Having given our thoughtful consideration to the instant aspect of the
matter, we feel that this case would be governed by the proposition evolved in
Moorgate Mercantile Co. Ltd. v. Twitchings, (1977) AC 890, namely, where two
people with the same source of information assert the same truth or agree to assert
the same falsehood at the same time, neither can be estopped against the other.
Therefore, whilst it cannot be disputed, that the authorities issuing the NSC were
required to ensure, that the same was issued to only such persons who were eligible
in law to purchase the same, yet in terms of the mandate of rule 17 extracted
hereinabove, the vires whereof is not subject matter of challenge, it is not possible for
us to accept, that the rule of estoppel could be relied upon at the behest of the
appellant, for any fruitful benefit.
8.
To overcome the mandate of rule 17 extracted hereinabove, as also, the
decision rendered by this Court in Raja Prameeelamma case (supra), and the
proposition of law declared in Arulmighu Dhandayadhapaniswamy Thirukoil case
(supra), learned counsel for the appellant placed emphatic reliance on the decision of
this Court in Ashok Transport Agency v. Awadhesh Kumar & another., (1998) 5 SCC
567. He invited our attention to the following observations recorded therein:-
“6.
A partnership firm differs from a proprietary concern owned by an
individual. A partnership is governed by the provisions of the Indian Partnership
Act, 1932. Though a partnership is not a juristic person but Order XXX Rule 1
CPC enables the partners of a partnership firm to sue or to be sued in the
name of the firm. A proprietary concern is only the business name in which the
proprietor of the business carries on the business. A suit by or against a
proprietary concern is by or against the proprietor of the business. In the event
of the death of the proprietor of a proprietary concern, it is the legal
representatives of the proprietor who alone can sue or be sued in respect of the
dealings of the proprietary business. The provisions of Rule 10 of Order XXX
which make applicable the provisions of Order XXX to a proprietary concern,
Page 8
9
enable the proprietor of a proprietary business to be sued in the business
names of his proprietary concern. The real party who is being sued is the
proprietor of the said business. The said provision does not have the effect of
converting the proprietary business into a partnership firm. The provisions of
Rule 4 of Order XXX have no application to such a suit as by virtue of Order
XXX Rule 10 the other provisions of Order XXX are applicable to a suit against
the proprietor of proprietary business "insofar as the nature of such case
permits". This means that only those provisions of Order XXX can be made
applicable to proprietary concern which can be so made applicable keeping in
view the nature of the case.”
(emphasis is ours)
Based on the observations recorded in the aforesaid judgment, the second contention
advanced by the learned counsel for the appellant was, that in sum and substance, a
sole proprietorship concern allows the fictional use of a trade name on behalf of an
individual. It was contended, that truthfully only one individual is the owner of a sole
proprietorship concern. As such, according to learned counsel, the name of the sole
proprietorship concern, can again be substituted with the name of the sole proprietor.
If that is allowed, the NSC purchased by the appellant would strictly conform to the
mandate of law. According to learned counsel, it makes no difference whether the
individual’s name, or the proprietorship’s name is recorded while purchasing an NSC.
It was pointed out, that if the respondent was not agreeable in accepting the trade
name, the respondent ought to have corrected the NSC by substituting the name of
M/s. Bhagwati Vanaspati Traders with that of its sole proprietor, namely, B.K. Garg.
9.
We find merit in the second contention advanced at the hands of the learned
counsel for the appellant. It is indeed true, that the NSC was purchased in the name
of M/s. Bhagwati Vanaspati Traders.
It is also equally true, that M/s. Bhagwati
Vanaspati Traders is a sole proprietorship concern of B.K. Garg, and as such, the
irregularity committed while issuing the NSC in the name of M/s. Bhagwati Vanaspati
Traders, could have easily been corrected by substituting the name of M/s. Bhagwati
Page 9
1
Vanaspati Traders with that of B.K. Garg. For, in a sole proprietorship concern an
individual uses a fictional trade name, in place of his own name. The rigidity adopted
by the authorities is clearly ununderstandable.
The postal authorities having
permitted M/s. Bhagwati Vanaspati Traders to purchase the NSC in the year 1995,
could not have legitimately raised a challenge of irregularity after the maturity thereof
in the year 2001, specially when the irregularity was curable. Legally, rule 17 of the
Post Office Savings Bank General Rules, 1981, would apply only when an applicant is
irreregularly allowed something more, than what is contemplated under a scheme. As
for instance, if the scheme contemplates an interest of Y% and the certificate issued
records the interest of Y+2% as payable on maturity, the certificate holder cannot be
deprived of the interest as a whole, on account of the above irregularity. He can only
be deprived of 2%, i.e., the excess amount, beyond the permissible interest,
contemplated under the scheme. A certificate holder, would have an absolute right, in
the above illustration, to claim interest at Y%, i.e., in consonance with the scheme,
despite rule 17. Ordinarily, when the authorities have issued a certificate which they
could not have issued, they cannot be allowed to enrich themselves, by retaining the
deposit made. This may well be possible if the transaction is a sham or wholly illegal.
Not so, if the irregularity is curable. In such circumstances, the postal authorities
should devise means to regularize the irregularity, if possible.
10.
It is not possible for us to deny relief to the appellant, based on the judgments
rendered by this Court in Raja Prameeelamma case (supra) and Arulmighu
Dhandayadhapaniswamy Thirukoil case (supra), in view of the fact that, the matter
was never examined in the perspective determined by us hereinabove. In neither of
the two judgments, the amendment of the NSC was sought. The instant proposition
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1
of law, was also not projected on behalf of the certificate holders, in the manner
expressed above.
11.
There was seriously no difficulty at all in the facts and circumstances of the
present case, to regularize the defect pointed out, because M/s. Bhagwati Vanaspati
Traders, is admittedly the sole proprietorship concern of B.K. Garg.
The postal
authorities should have solicited the change of the name in the NSC, through a
representation by B.K. Garg himself. On receipt of such a representation, the alleged
irregularity would have been cured, and the beneficiary of the deposit, would have
legitimately reaped the fruits thereof. Rather than adopting the above simple course,
the postal authorities chose to strictly and rigidly interpret the terms of the scheme.
This resulted in the denial of the legitimate claims of the sole proprietor of the
appellant concern, i.e., B.K. Garg, of the investment made by him. In the above view
of the matter, we consider it just and appropriate, in exercise of our jurisdiction under
Article 142 of the Constitution of India, to direct the Senior Superintendent of Post
Offices, Meerut, to correct the NSC issued in the name of M/s. Bhagwati Vanaspati
Traders, by substituting the appellant’s name, with that of B.K. Garg.
12.
The irregularity having been cured, we hope that B.K. Garg will now be
released all the payments due to him, in terms of the order passed by the District
Forum. The respondent is accordingly directed to pay to B.K. Garg, the maturity
amount of Rs.10,075/- with 12% interest, from the date of maturity, till the date of
payment. He would be entitled to Rs.5,000/- towards compensation, as was awarded
to him by the District Forum. In addition, we consider it just and appropriate to award
him litigation costs of Rs.10,000/-. The entire amount aforementioned, should be
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released to B.K. Garg, the sole proprietor of M/s. Bhagwati Vanaspati Traders, within
one month from the date of receipt of a certified copy of this judgment.
13.
The instant appeal is allowed in the aforesaid terms.
..................................J.
(Jagdish Singh Khehar)
..................................J.
(C. Nagappan)
New Delhi;
October 10, 2014.
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