Final Order 1

Order Details: Notice of Motion
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IN THE BOMBAY CITY CIVIL COURT AT BOMBAY
NOTICE OF MOTION NO.405 OF 2019
(CNR NO.MHCC010072902021)
IN
S.C. SUIT NO. 496 OF 2018
Shri Jayesh Ratilal Gada ].. Plaintiff.
V/s.
M/s. Chandan Stores (D.D.) ]
and others ]..Defendants.
Advocate Mr. Mahesh Jagani for the plaintiff.
Advocate Mr. Paras Vira for the defendants.
CORAM : HIS HONOUR JUDGE
SHRI VIDYADHAR B. KAKATKAR
(C.R.No.15).
DATE : 8th NOVEMBER 2021
ORDER
The Notice of Motion is taken out by the defendant Nos. 2
to 4 for rejection of plaint on the ground that there is no cause of action
against its defendants.
2. It is the case of defendant Nos. 2 to 4 that plaintiff appears
to have advanced the loan amount to defendant No. 1 partnership firm.
These defendants have further stated that the company or a partnership
firm is a separate juristic entity. There is no privity of contract between
plaintiff and defendant Nos. 2 to 4. The plaintiff has not made out any
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case regarding lifting of corporate veil. Plaintiff has not made out any
circumstance which will make him entitled to pray for lifting the
corporate veil. For all these reasons defendant Nos. 2 to 4 have prayed
for rejection of plaint.
3. Plaintiff has filed say and objected the notice of motion on
the grounds that, it is filed with an intention to delay the proceedings.
They are trying to avoid the dues liable to be paid to plaintiff. It is
further stated that though the affidavit was affirmed by the defendant
Nos. 2 to 4 on 20/12/2018, they intentionally filed it after 80 days that
is 01/03/2019. Plaintiff has further stated that defendant Nos. 2 to 4
requested for loan and the loan amount was disbursed through them
only. Defendant No. 1 being a firm cannot speak for itself and always
speaks through its partners as being invisible bind. Plaintiff has referred
the notice issued to defendants in which he has made clear that these
defendants are looking after the daytoday business of the defendant
No. 1 firm.
4. Plaintiff has further stated that partnership firm is not a
distinct legal entity apart from the partners constituting it. The plaintiff
has pointed out the difference between partnership and company. He
has further stated that partnership is an invisible bind that holds the
partners together. For all these reasons the plaintiff has prayed for
rejection of the notice of motion.
5. I have heard both learned advocates at length. I have gone
through the record and proceeding of the suit.
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6. Before going into the merits of the matter, it would be
proper to state the admitted facts. It is admitted that defendant No. 1 is
a partnership firm and defendant Nos. 2 to 4 are the partners thereof.
In this background, the suit instituted by plaintiff with the allegation
that he advanced the loan amount to defendant No. 1 through its
partners that is defendant Nos. 2 to 4. Defendant Nos. 2 to 4 have
come with the case that, partnership firm is a separate legal entity
existing apart from the defendant Nos. 2 to 4. It is not pleaded by the
plaintiff that defendant Nos. 2 to 4 are looking after daytoday business
of the partnership firm defendant No. 1 and they are liable for the
same.
7. In the present Notice of Motion the only question to be
decided is whether the partnership firm is a separate legal entity apart
from the partners. Learned advocate for plaintiff relied upon judgement
in the case of Smt. Vunna Visali Vs. State of A.P. reported in
2000(1)ALD Cri 894. The Hon'ble Lordships have referred the
judgment of Hon'ble Supreme Court in the case of Sham Sunder Vs
State of Haryana in which it is held that;
It is true that under the Indian Partnership Act, 1932, a
‘firm’ or a ‘partnership’ is not a legal entity but is
merely an association of persons agreed to carry on
business. It is only a collective name for individuals,
carrying on business in partnership. The essential
characteristic of a firm is that each partner is a
representative of other partners. Each of the partners
is an agent as well as the principal. He is an agent in
so far as he can bind the other partners by his acts
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within the scope of the partnership agreement. He is a
principal to the extent that he is bound by acts of other
partners. In fact every partner is liable for an act of
the firm. Section 2 (a) of the Partnership Act defines
an ‘act of a firm ’to mean any act or omission by all the
partners, or by any partner or agent of the form which
gives rise to a right enforceable by or against the firm.”
8. The matter before Hon'ble Lordships was arising out of a
criminal proceeding and hence, it was further held that,
“But we are concerned with a criminal liability under
the penal provisions and not a civil liability. The penal
provisions must be strictly construed in the first place.
Secondly, there is no vicarious liability in criminal law
unless the statute takes that also within its fold.
Section 10 does not provide for such liability. It does
not make all the partners liable for the offence whether
they do business or not.”
9. He further relied upon judgment of Hon'ble Supreme Court
in the case of Tanna And Modi Vs. C.I.T. Mumbai Xxv And Ors.
Reported in Appeal (civil) 2696 of 2007 in which it is held that a firm
is a conglomeration of its partners, and is not a juristic person.
10. He further relied upon judgment of Hon'ble Supreme Court
in the case of N. Khadervali Saheb (Dead) By Lrs. Vs. N. Gudu Sahib
(Dead) And Others reported in Appeal (Civil) 568081 of 1994 in
which it is said that;
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A partnership firm is not an independent legal
entity, the partners are the real owners of the assets
of the partnership firm. Actually, the firm name is
only a compendious name given to the partnership
for the sake of convenience. The assets of the
partnership belong to and are owned by the
partners of the firm. So long as partnership
continues each partner is interested in all the assets
of the partnership firm as each partner is owner of
the assets to the extent of its share in the
partnership.
11. Learned advocate for plaintiff as well as the learned
advocate for the defendants have relied upon judgment in the case of
Comptroller And Auditor General Vs. Kamlesh Vadilal Mehta
reported in Appeal (civil) 11458 of 1995. It is held that a partnership
concern is not illegal entity like company; it is a group of individual
partners.
12. Learned advocate for plaintiff further relied upon judgment
in the case of V. Subramaniam Vs. Rajesh Raghuvandra Rao
reported in Civil Appeal No.7438 of 2000. It is held that,
“It may be mentioned that a partnership firm, unlike
the companies registered under the Indian
Companies Act, is not a distinct legal entity, and is
only a compendium of its partners. Even the
registration of the firm does not mean that it
becomes a distinct legal entity like a company.
Hence the partners of a firm are coowners of the
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property of the firm, unlike shareholders with a
company who are not coowners of the property of
the company.
13. This legal position makes it very clear that there is inherent
difference between the Constitution of the firm and formation of the
company. The company is a juristic person that is having a separate
legal entity. However, partnership firm is not a separate legal entity or
a juristic person and it cannot speak of its own. It has to be represented
by the partners. In view of this legal position, even if the plaintiff does
not expressly plead that the defendant Nos. 2 to 4 are looking after the
daytoday affairs of the partnership firm that is defendant No.1 and
they are liable for the same, it will make no difference as such, because
the formation of the partnership firm itself makes liable to the partners
for the acts of the firm. Therefore, in civil litigation, a suit cannot be
maintainable only against the partnership firm without including the
partners. Accordingly, plaintiff has impleaded defendant Nos. 2 to 4 in
the present matter as partners of defendant No.1. It cannot be said that
there is no cause of action against the defendants. Whether the cause
of action as alleged by the plaintiff is proved or not is a matter of
evidence and will be decided at the stage of hearing of the suit.
14. In view of all above discussion, I have come to the
conclusion that defendant Nos. 2 to 4 have not made out any case that
there is no cause of action against them and hence the suit is not
maintainable against them. Therefore, suit is perfectly maintainable
against defendant Nos. 2 to 4. The plaint cannot be rejected on the
grounds mentioned in the present notice of motion. The notice of
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motion deserves to be dismissed with costs. Accordingly, I proceed to
pass following order.
O R D E R
1. Notice Of Motion No. 405 of 2019 is dismissed
with costs.
2. Notice of Motion No. 405 of 2019 is disposed of
accordingly.
(VIDYADHAR B. KAKATKAR)
Judge,
City Civil Court,
Date: 08.11.2021 Gr.Mumbai.
Dictated on : 08.11.2021
Typed on : 09.11.2021
Signed on : 11.11.2021
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CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGMENT/ORDER”
UPLOAD DATE AND TIME NAME OF STENOGRAPHER
12.11.2021 AT 3.40 P.M. MRS. SUPRIYA S. PAWAR
Name of the Judge (with Court Room
no.)
HHJ SHRI VIDYADHAR B.
KAKATKAR (C.R. No.15)
Date of Pronouncement of
Judgment/Order
08/11/2021
Judgment/Order signed by P.O. on 11/11/2021
Judgment/Order uploaded on 12/11/2021
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