High Court · 2007

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 20-12-2007CORAM :THE HONOURABLE MR. JUSTICE A. KULASEKARANC.R.P. (PD) No. 1692 of 2006andM.P. No. 1 of 2006A. AnandhkumarPartner of A.S. DistributorsNo.34/52, Mariamman Kovil StreetUdayendram VillageMettupalayamVaniyambadi Taluk... Petitioner /I Defendant.Versus1. K.C. Annamalai Gounder2. A. Sakthi3. A.S. Distributors Partnership Firm rep. By its Partners A. Anandakumar & A. Sakthi No.34/52, Mariamman Kovil Street Udayendram Village Mettupalayam Vaniyambadi Taluk... Respondents/Plaintiff/Defendant No.2Revision under Article 227 of the Constitution of India againstthe Order dated 12.10.2006 made in I.A. No. 99 of 2005 in O.S. No.225 of 2004 on the file of District Judge, Vellore.For Petitioner :Mr. T.R. RajaramanFor Respondent :Mr. K.A. Muthukrishnan for R1No appearance for RR2 & 3ORDERThe first defendant in O.S. No. 255 of 2004 on the file ofDistrict Judge, Vellore is the revision petitioner herein. ThePlaintiff/first respondent herein has filed the said suit forrecovery of a sum of Rs.6,17,400/- together with future interest.Pending suit, the first respondent herein has taken out anapplication in I.A. No. 99 of 2005 to implead the third respondentherein, which was allowed on 12.10.2006. Challenging the said orderin I.A. No. 99 of 2005, the present revision petition has been filed.2.Mr. T.R. Rajaraman, learned counsel appearing for thepetitioner submitted that the Court below erred in allowing theimplead petition and the reasons assigned for the same are against https://hcservices.ecourts.gov.in/hcservices/ the settled provisions of law; that the court below failed to notethat the first respondent by filing implead petition has taken awaythe rights vested with the partnership firm by passage of time, whichis impermissible in law; that the court below failed to advert to theprovisions of limitation where the period of limitation in the suitfor recovery of money on promissory note is only three years from thedate of execution of the promissory note, hence, the claim as againstthe third respondent herein is barred since it was not arrayed as adefendant within the said period; that in any event, the court belowought not to have allowed the implead petition and prayed forallowing of this revision petition. In support of his contention,the learned counsel appearing for the petitioner relied on the belowmentioned decisions:-i)(Radhika Devi vs. Bajrangi Singh and others) (1996) 7Supreme Court Cases 486) wherein in Para Nos. 5 and 6, the HonourableSupreme Court held thus:-“5. We find no force in the contention of theappellant. No doubt, the amendment of the plaint isnormally granted and only in exceptional cases wherethe accrued rights are taken away by amendment of thepleading, the Court would refuse the amendment. ThisCourt in Laxmidas Dahyabhai Kabarwala vs. NanabhaiChunilal Kabarwala (SCR at p.582) held thus:-“It is, no doubt, true that, save inexceptional cases, leave to amend under Order 6,Rule 17 of the Code will ordinarily be refusedwhen the effect of the amendment would be to takeaway from a party a legal right which had accruedto him by lapse of time. But this rule can applyonly when either fresh allegations are added orfresh reliefs sought by way of amendment. Where,for instance, an amendment is sought which merelyclarifies an existing pleading and does not insubstance add to or alter it, it has never beenheld that the question of a bar of limitation isone of the questions to be considered in allowingsuch clarification of a matter already containedin the original pleading. The present is afortiorari so. The defendants here were notseeking to add any allegation nor to claim anyfresh relief which they had prayed for in thepleading already filed.”6.In that case, this Court considered the cross-objections to be treated as a cross-suit since noalteration was being made in the written statement totreat it as a plaint originally instituted. Theamendment which was sought to be made was treated to beclarificatory and, therefore, this Court had upheld theamendment of the written statement and treated it to bea cross-suit. The ratio therein squarely applies to afact situation where the party acquires right by bar oflimitation and if the same is sought to be taken awayby amendment of the pleading, amendment in such https://hcservices.ecourts.gov.in/hcservices/ circumstances would be refused. In the present case,the gift deed was executed and registered as early as28-7-1978 which is a notice to every one. Even afterfiling of the written statement, for 3 years no stepswere taken to file the application for amendment of theplaint. Thereby the accrued right in favour of therespondents would be defeated by permitting amendmentof the plaint. The High Court, therefore, was right inrefusing to grant permission to amend the plaint.”ii)(The Tiruchengode Taluk Co-operative Society Ltd vs. M.Kulasekaran and another) 2005-4-LW-178 wherein a learned single judgeof this Court held in Para No.12, thus:-“12.The suit had been filed for permanentinjunction restraining the defendant frompreventing theplaintiff from using North-Southroad on the western side of his property.Subsequently, the suit is sought tobe amended formandatory injunction directing the defendantsociety to remove the existing stone pillars andbarbed wires. It has been alleged that on17.12.1992, the Defendant Society had erectedstone pillars and fences around the suitproperty. In Para-8 of the counter statementfiled by the proposed party, it is alleged thatthere was a barbed wire fencing and Banyan treeand telegraphic post and also municipal ditchesand culvert are situated. If the proposed partyis to be impleaded as per Order 1, Rule 10 (5)CPC, the proceedings against that person added asa Defendant shall be deemed to have been takenonly on the service of summons. Under Section 21of the Limitation Act, addition of the defendant,the suit as regards him, shall be deemed to havebeen instituted when he was so made as a party.It is relevant to note that when the proposedparty/Taluk Society has purchased the northernportion on 26.10.1990, it would not be proper orlegal to implead the proposed party Taluk Societyas a defendant in the suit in 2002 since theclaim as already become barred by limitation.The trial court has also not considered theapplication for impleading in the light ofSection 21 of the Limitation Act and Order 1 Rule10 (5) C.P.C.”3.Mr. K.R.A. Muthukrishnan, learned counsel appearing for thefirst respondent submitted that the petitioner and the secondrespondent herein are defendants in the suit; that they have beencarrying on business as Partners of the third respondent herein andexecuted promissory note; that in the said suit, they have taken aplea that the suit promissory note was executed for the partnershipfirm and the partnership firm ought to have been impleaded as aparty, but not impleaded; that in view of the above stand taken bythe petitioner and the second respondent herein, to avoid https://hcservices.ecourts.gov.in/hcservices/ complications, it has become necessary to implead the thirdrespondent firm; that the bar of limitation cannot be made applicablein so far as the said dispute is concerned; that the court belowrightly allowed the application to implead the third respondentherein and prayed for dismissal of the revision petition. In supportof his contention, the learned counsel for the first respondentrelied on the decision of the Honourable Supreme Court reported in(Dena Bank vs. Bhikhabhai Prabhudas Parkesh and Co. and others) 2000(IV) CTC 170 wherein in Para No.18, it was held thus:-“18.The High Court has relied on Section 25of the Partnership Act, 1932 for the purpose ofholding the partners as individuals liable tomeet the tax liability of the firm. Section 25provides that every partner is liable, jointlywith all the other partners and also severallyfor all acts of the firm done while he is apartner. A firm isnot a legal entity. It isonly a collective or compendious name for all thepartners. In other words, a firm does not haveany existence away from its partners. A decreein favour of or against a firm in the name of thefirm has the same effect as a decree in favour ofor against the partners. While the firm isincurring a liability it can be assumed that allthe partners were incurring that liability and sothe partners remain liable jointly and severallyfor all the acts of the firm. This principlecannot be stretched and extended to suchsituations in which the firm is deemed to be aperson and hence, a legal entity for a certainpurpose. The Karnataka Sales Tax Act, with whichwe are concerned, also gives the firm a legalstatus by treating it as a dealer and hence aperson for the limited purpose of assessing underthe Sales Tax Act. It was, therefore, held by athree-Judge Bench in CST v. Radhakrishnan, AIR1979 SC 1588: (SCC p.253, Para7) “(A) firm in a partnership and a Hinduundivided family are recognised as legalentities and as such proceedings can only betaken against the firm or undivided familyas the case may be. Neither the partners ofthe firm nor the members of the Hinduundivided family will be liable for the taxassessed against the firm or the undividedHindu family.” 4.This Court carefully considered the argument of the counselfor both sides. The Partnership Act, 1932 defines Partnership as therelation, which subsists between persons who have agreed to share theprofits of a business carried on by all or any of them acting forall. Similarly, firm is also defined in the said Act as persons whohave entered into partnership with one another are calledcollectively a firm. The firm is not a legal entity, separate ordistinct from the partners. A firm means only a compendiousdescription of the individuals, who composed the firm. A firm as https://hcservices.ecourts.gov.in/hcservices/ such is not entitled to enter into partnership with another firm orindividuals. As a firm is not a legal entity, there cannot be apartnership of firms but when two firms combine, the legal effect isthat individuals in the two firms become partners. For the purposeof Income Tax, a firm can be assessed as a entity, distinct andseparate from its members notwithstanding the fact a firm like anassociation of persons is for the purpose of assessment treated as aseparate entity, which is not a legal person having a corporatecharacter distinct from that of its members. 5.Order 30 of Code of Civil Procedure permits suit to bebrought against firms, the summons may be issued against the firm orpersons, who are alleged to be partners individually and the suitfurther proceeds only against the firm when a decree is passedagainst the firm, which is capable of being executed against theproperty of partnership and also against partners. 6.In the case on hand, the first respondent herein has filedthe suit against the petitioner and the second respondent herein onthe ground that the suit promissory note has been executed by them aspartners of the firm namely A.S. Distributors. The petitioner hereinalone filed his written statement contending that he and the secondrespondent herein were carrying on business in the name and style ofA.S. Distributors; that the execution of the suit pronote in favourof the first respondent is denied; that the suit pronote was cookedup for the purpose of filing the suit; that the plaintiff/firstrespondent herein is the son of the second respondent and that thesuit was filed collusively; that assuming the pronote was executedfor partnership firm, then the firm is a necessary party and for non-joinder of the firm, the suit is liable to be dismissed. In view ofthe said plea taken by the petitioner herein in his writtenstatement, the plaintiff/first respondent herein has filed anapplication to implead the firm as a party stating that the omissionto include the firm is due to mistake made in good faith and the firmshall be deemed to have been impleaded from the date of institutionof the suit and bar of limitation cannot be made applicable. Thesaid application was opposed by the revision petitioner herein,however, the court below allowed it. Aggrieved by the said order ofthe trial court, the first defendant alone filed the present revisionpetition. 7.Now we look into Section 21 of Limitation Act as well asOrder 1 Rule 10 (5) CPC, which runs as follows:-Section 21 of Limitatin Act is as follows:-“21.Effect of substituting or adding newplaintiff or defendant.- (1) Where after theinstitution of a suit, a new plaintiff or,defendant is substituted or added, the suitshall, as regards him, be deemed to have beeninstituted when he was so made a party.Provided that where the Court is satisfiedthat the omission to include a new plaintiff or https://hcservices.ecourts.gov.in/hcservices/ defendant was due to a mistake made in good faithit may direct that the suit as regards suchplaintiff or defendant shall be deemed to havebeen instituted on any earlier date.(2) Nothing in sub-section (1) shall applyto a case where a party is added or substitutedowing to assignment or devolution of any interestduring the pendency of a suit or where aplaintiff is made a defendant or a defendant ismade a plaintiff.Order 1 Rule 10 (5) CPC is as follows:-10 (5) Subject to the provisions of theIndian Limitation Act, 1877, Section 22, theproceedings as against any person added asdefendant shall be deemed to have begun only onthe service of the summons.” 8. Section 21 of Limitation Act says the suit as regards thenewly added plaintiff or defendant shall be deemed to have beeninstituted when he was so made a party. Rule 10 (5) of Order I CPCsays subject to the provisions of the Indian Limitation Act, Section22, the proceedings as against any person added as defendant shall bedeemed to have begun only on the service of summons. Proviso toSection 21 of Limitation Act confers inherent power to the Court andit calls for the satisfaction of the Court that the omission toimplead a new plaintiff or defendant was bonafide or due to a mistakemade in good faith. No finding by the court below about the bonafideor due to a mistake made in good faith but it found the firm/thirdrespondent is a necessary party. In other words, no indication in theimpugned order it exercised inherent power as contemplated in theproviso to Section 21 of Limitation Act to say that the firm bedeemed to have been impleaded on any earlier date or from the date offiling of the suit. Hence, it should be concluded that the suit asregards the firm/third respondent, be deemed to have begun only onthe service of the summons. The order of the trial court allowingthe implead petition is modified to the extent indicated above. 9.The Civil Revision petition is partly allowed in the aboveterms. No costs. Consequently, connected miscellaneous petition isclosed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.rsh https://hcservices.ecourts.gov.in/hcservices/ ToThe District JudgeDistrict Court Vellore + 1 CC To Mr. T.R.Rajaraman, Advocate SR NO.75593CRP (PD) No. 1692 of 2006kg[co]gp/4.1.