T.V.R Tatachari, C.J:— When Suit No. 582 of 1967 came up for hearing before S.S Chadha J. on 30th September, 1975, on the original side of this Court, the learned Judge noticed that there was a conflict of judicial opinion as regards the scope of the expression “persons suing” in Section 69 (2) of the Indian Partnership Act, 1932. Considering that the said question of law is one which arises frequently in suits instituted by firms and, therefore, requires to be decided by a larger Bench, the learned Judge referred the following question: —
“Whether the expression “persons suing” in Section 69 (2) of the Act means “all the partners of the firm who were its partners at the time of the accrual of the cause of action” or it means” all the partners of the firm who are its partners at the time of the institution of the suit” ?”
It is thus that this matter has come up before us for our opinion on the aforesaid question of law.
2. For a proper appreciation of the question that has been referred, it is necessary to state briefly the facts of the case. The plaintiff firm was constituted under the name of M/s. Shanker Housing Corporation, Tilak Nagar, New Delhi, and a deed of partnership, Ex. P.W 5/1, was executed on 1st November, 1959, between Sarvashri Raghbir Singh, Net Ram, Tek Chand, Hari Shanker Bhargava, Lala Matu Mal Gupta and Lala Moti Ram. Exhibit D.5 is a certified copy of Form “A”, and it shows that the firm was registered on 9th June, 1960, with the aforesaid six persons as partners of the firm, M/s. Shanker Housing Corporation. The date of entry of the aforesaid six persons is shown as November 1, 1959. It is the admitted case of both the parties that Net Ram retired on 29th August, 1964. According to paragraph 2 of the plaint, Tek Chand died on 4th December, 1966. Exhibit D.6 is a certified copy of Form “A” which was admitted as evidence with the consent of the counsel for the parties. It shows that Net Ram retired on 29th August, 1964, that his son, Mohinder Singh joined the partnership on the same date, 29th August, 1964, that Tek Chand was no longer a partner with effect from 4th December, 1966, and that his son, Mahabir Singh, joined the partnership on 5th December, 1966. The said entries, however, were all made by the Registrar in the Register of Firms on 28th July, 1972 and 23rd August, 1972.
3. It is alleged in paragraph 6 of the plaint, that an urgent meeting of the partnership was called on 29th August, 1964, to consider the request of Net Ram for his retirement from the partnership, that the terms of retirement offered by the retiring partner were considered and settled on that day by the remaining partners, that the same were reduced to writing, confirmed and signed by the partners, and that a copy of the proceedings of the said meeting containing the decision of the partners was attached to the plaint. The minutes of the proceedings of the meeting and the deed of retirement have been proved and marked as Exhibit D.1 and Exhibit P.7 respectively. According to Exhibit P.7, it was decided that the cash payments made up-to-date to Chaudhry Attar Singh, son of Ram Saran of village Badela, Delhi, for the purchase of his land amounted to Rs. 19,680/, and that the said amount was decided to be debited to Net Ram and all rights in the said land should belong to Net Ram who would be responsible to have the sale registered and mutation of the land effected in his name to which the other partners of the firm would have no objection.
4. The suit, No. 582 of 1967, was instituted on 25th August, 1967, by the plaintiff, M/s. Shanker Housing Corporation, Tilak Nagar, New Delhi, through Shri Hari Shanker Bhargava, partner, for the recovery of a sum of Rs. 26,000/- made up of the aforesaid sum of Rs. 19,680/-, which Net Ram had agreed to pay to the partnership, and Rs. 6,320/- by way of interest thereon calculated at the alleged customary market rate of one rupee per cent per month, against the legal representatives of Net Ram who had died sometime after his retirement.
5. The legal representatives of Net Ram, who are defendants in the suit, contested the suit. They admitted in paragraph 6 of their written statement the holding of the meeting on 29th August, 1974, and the reduction of the terms of retirement into writing. They, however, pleaded that the partners of the plaintiff firm, Mala fide and with a dishonest intention, resiled from the agreement and failed to transfer the land in favour of Net Ram, that they actively resisted the transfer of the land by raising objections in the transfer proceedings and so the land of Attar Singh could not be transferred in favour of Net Ram during his life time or his legal representatives, and that the land had been acquired by the Government and they, the defendants, could not file any claim or objections before the Land Acquisition Collector in the absence of a title to the land. During the pendency of the suit, the written statement was amended and certain preliminary objections were raised. The objections are that the vendor, Attar Singh, had no marketable title to the land on 29th August, 1964, inasmuch as the notifications regarding the acquisition of the land had already been issued under the provisions of the Land Acquisition Act, that the contract has thus been frustrated and is unenforceable under Section 56 of the Contract Act, and that the suit is not maintainable as being barred by the provisions in Section 69 of the Indian. Partnership Act inasmuch as the fact of reconstitution of the plaintiff firm was not registered at the time of the institution of the suit, and even thereafter no intimation had been sent to the Registrar.
6. Thus, Net Ram had retired on 29th August, 1964, and Tek Chand had died on 4th December, 1966. The entries regarding the joining of Mohinder Singh and Mahabir Singh as partners on 29th August, 1964, and 5th December, 1966, respectively, were made only on 28th July, 1972, and 23rd August, 1972. The suit was instituted on 25th August, 1967.
7. Section 69 of the Indian Partnership Act, 1932, deals with the effect of non-registration of a firm. It contains four sub-sections. Sub-section (1) deals with a suit by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in that firm, Sub-section (2) deals with a suit by or on behalf of a firm against any third party. Sub-sections (3) and (4) set out, inter alia, the cases to which the provisions of Sub-sections (1) and (2) shall not apply. For the purposes of the question referred to us, we are concerned only with sub-section (2) as the suit in the present case is of the nature mentioned in that sub-section. It reads as follows: —
“69. The effect of non-registration —
(1) . . . . . . . . . . . . . . ..
(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of firms as partners in the firm.
(3) . . . . . . . . . . . .
(4) . . . . . . . . . . . .”
8. Sub-section (2) lays down the effect of non-registration of a firm by providing that a suit of the nature mentioned therein shall not be instituted in any Court by or on behalf of a firm against any third party unless —
(a) the firm is registered; and
(b) the persons suing are or have been shown in the Register of Firms as partners in the firm.
9. In the present case, the firm was a registered one and so the requirement (a) was satisfied. It is the requirement, (b) that gave rise to the question under reference, and for answering the same, the scope and effect of the requirement (b) mentioned above has to be considered.
10. Section 4 of the Partnership Act defines the term ‘Partnership’ as the “relation between the persons who have agreed to share the profits of a business carried on by all or any of them acting for all”. It further states that “persons who were 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’”. Thus, a firm is not a separate legal entity, but, is only a collective or compendious name for all the partners. So, if a suit to enforce a right arising from a contract is to be instituted “by a firm” against a third party, the firm would be the plaintiff. If the suit is to be instituted “on behalf” of a firm, the partner or partners, who wants or want to institute the suit on behalf of (i.e for the benefit of) the firm would be the plaintiff. But, in both the cases, the suit would in effect be by or on behalf of all the partners of the firm. Section 69 (2) lays down that the suit of the nature mentioned above can be instituted only if (a) the firm is registered, and (b) the persons suing are or have been shown in the Register of Firms as partners in the firm. The use of the words ‘is’ and “are or have been”, which are in the present tense, shows that the point of time contemplated in Section 69 (2) is at the time of the institution pf the suit. That is to say, the firm must be a registered firm by the date of the institution of the suit and the persons suing (i.e all the partners) must have been shown in the Register of Firms as partners of the firm by the date of the institution of the suit. This appears to us to be the plain meaning of Section 69 (2).
11. The contention on behalf of the defendants which has given rise to the question under reference is based on the provisions in Rules 1 and 2 of Order 30 of the Code of Civil Procedure which read as follows: —
“R — 1. Suing of partners in the name of firm.
(1) Any two or more persons claiming or being liable as partners and carrying on business in India may sue or be sued in the name of the firm (if any) of which such persons were partners at the time of the accruing of the cause of action, and any party to a suit may in such case apply to the Court for a statement of the names and addresses of the persons who were, at the time of the accruing of the cause of action, partners in such firm, to be furnished and verified in such manner as the Court may direct.
(2) Where persons sue or are sued as partners in the name of their firm under sub-rule (1), it shall, in the case of any pleading or other document required by or under this Code to be signed, verified or certified by the plaintiff or the defendant, suffice if such pleading or other document is signed, verified or certified by any one of such persons.”
“R — 2. Disclosure of partners' names.
(1). Where a suit is instituted by partners in the name of their firm, the plaintiffs or their pleader shall, on demand in writing by or on behalf of any defendant, forthwith declare in writing the names and places of residence of all the persons constituting the firm on whose behalf the suit is instituted.
(2) Where the plaintiff or their pleader fail to comply with any demand made under sub-rule (1), all proceedings in the suit may, upon an application for that purpose, be stayed upon such terms as the Court may direct.
(3) 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 respects shall follow, as if they had been named as plaintiffs in the plaint:
Provided that all the proceedings shall nevertheless continue in the name of the firm.”
12. The contention is that the provision in Rule 1 of Order 30 requires that the “persons suing in the name of the firm” should be partners at the time of the accruing of the cause of action, and, therefore, the same meaning should be given to the words “persons suing” in Section 69 (2) of the Partnership Act, 1932, and the “persons suing” in requirement (b) therein means the person who were partners at the time of the accruing of the cause of action and not on the date of the institution of the suit and it is sufficient for the purposes of requirement (b) if they have been shown in the Register of Firms as partners in the firm.
13. In our opinion, the contention is based upon a misunderstanding of the respective scope and effect of Section 69 (2) and Rules 1 and 2 of Order 30. Sub-sections (1) and (2) of Section 69 are substantive provisions intended to discourage the non-registration of firms. The provision in Section 69 (2), with which alone we are concerned in the instant case, is mandatory and makes the registration of a firm a condition precedent to the institution of a suit of the nature mentioned in it by or on behalf of a firm against a third party. It deals with the question as to when a firm can sue, or be sued by, a third party in respect of a right arising from a contract, and provides certain requirements as conditions precedent for the institution of the suit, viz. (a) that the firm is a registered firm, and (b) the persons suing are or have been shown in the Register of Firms as partners in the firm.
14. On the other hand, Rules 1 and 2 of Order 30 of the Code of Civil Procedure provide the mode or form and the procedure for suits by or against a firm. In other words, the requirements in Section 69 (2) should be satisfied first in order that a suit of the nature mentioned in it can be instituted, and then the provisions of Rules 1 and 2 of Order 30 are attracted as regards the mode or form in which the suit may be instituted as well as the procedure applicable to the said suit. In providing the mode, Rule 1 prescribes a certain requirement, viz., that the persons mentioned therein must have been partners at the time of the accruing of the cause of action.
15. Order 30 of the Code of Civil Procedure was added newly in the Code of Civil Procedure, 1908. Normally, when a person wishes to obtain a decree against several persons, or when several persons wish to obtain a decree against a person, all the said persons must be made parties to the suit. Similarly, when a person makes a promise to more than one person, the right to enforce the promise rests with them all under the provisions of Section 45 of the Indian Contract Act, so that all of them are necessary parties to a' suit to enforce the promise. It was, therefore, held in some decisions under the old Code of 1882 which did not contain any provisions corresponding to the present Order 30, that in suits by or against firms, all the partners of the firm were necessary parties. It was to enable two or more partners alone to sue or be sued, as a kind of exception to the provisions of Section 45 of the Contract Act, that the present provisions in Order 30 were introduced in the Code of 1908. It is, however, provided in Rule 1 of Order 30 that any two or more persons claiming or being liable as partners may sue or be sued in the name of the firm (if any) of which such persons were partners at the time of the accruing of the cause of action. As stated by us earlier, a firm is not under the law a juristic person, but is a compendious name for all the persons who are members of the firm (partners): The effect of using the name of the firm, as provided in Rule 1, is merely to bring all the partners before the Court and the procedure indicated in Rules 1 and 2 of Order 30 is only a convenient method for showing the persons who constituted the firm at the time of the accruing of the cause of action, and a decree in favour of or against a firm, in the name of the firm, has the same effect as a decree in favour of or against all the partners. The various rules of Order 30 make this clear. Rule 1 of Order 30, in providing the mode or form of the suit, prescribes a requirement that the two or more persons who, claiming or being liable as partners, sue or be sued in the name of the firm must be persons who were partners at the time of the accruing of the cause of action.
16. Thus, the provisions in Section 69 (2) of the Partnership Act and those in Rule 1 of Order 30 deal with different aspects and operate separately. The former deals with the question as to when a firm can sue or be sued by a third party in respect of a right arising from a contract and prescribes certain requirements for the same, while the latter deals with the mode or form and the procedure for suits by or against firms, and prescribes a certain requirement for the same. It would not, therefore, be correct to interpret the words “persons suing” in Section 69 (2) and the point of time at which the requirements in Section 69 (2) are to be fulfilled, by referring to the provision in Rule 1 of Order 30. In our opinion, the scope and effect of the two sets of provisions may be stated thus:
17. Under Section 69 (2), a suit to enforce a right arising from a contract can be instituted by or on behalf of a firm against any third party only if (a) the firm is registered and (b) the persons suing, i.e, all the partners of the firm at the time of the institution of the suit, are or have been shown in the Register of Firms as partners in the firm, while under Rule 1 of Order 30 two or more persons who claim as partners may sue, or who are liable as partners may be sued, in the name of the firm (if any), provided such persons were partners at the time of the accruing of the cause of action. If the facts in a given case are such as to attract the applicability of the provisions in both Section 69 (2) and Rule 1 of Order 30, the requirements in both the provisions should be fulfilled. In such a case, if a suit to enforce a right arising from a contract is to be instituted by or on behalf of a firm against any third party, the firm has to be a registered firm, and the partners of the firm as on the date of the institution of the suit must have been shown in the Register of Firms as partners in the firm, and further they must have been partners of the firm at the time of the accruing of the cause of action.
18. As regards the scope and effect of Section 69 (2) of the Partnership Act, a view similar to the one expressed by us above has been taken in the following decisions, vide —
(1) Firm Manghoomal Jethamal v. Firm Aratmal Satramdas, A.I.R 1922 Sind 13;
(2) Pratapchand Ramchand & Co. v. Jehangiriji, A.I.R 1940 Bombay 257;
(3) Sri Meenakshi Mills v. C. Swaminatha Mudaliar and Bros., A.I.R 1944 Madras 443;
(4) Bank of Koothathikulam v. Itten Thomas, A.I.R 1955 Travancore-Cochin, 155.
(5) Dr. V.S Bahl v. M/s. S.L Kapur and Co., A.I.R 1956 Punjab 24;
(6) Kesrimal v. Dalichand, A.I.R 1959 Rajasthan 140;
(7) Hansraj Manot v. M/s. Goraknath Champalal Pandey, 66 C.W.N 262;
(8) Firm Buta Mal Dev Raj v. Chanan Mai and others. A.I.R 1964 Punjab 270;
(9) Firm Alwar Iron Syndicate v. Union of India, A.I.R 1970 Rajasthan 86;
(10) M/s. Badrimal Ramcharan & Co. v. M/s. Gana Kaul & Sons, A.I.R 1971 J&K 109;
(11) M/s. Chandrabhan Bansilal Ramratan Dass v. The Municipal Council, Bikaner, A.I.R 1975 Rajasthan 35; and
(12) Ram Kumar Shew Chandrai v. Dominion of India. A.I.R 1977 Calcutta 37.
19. The decisions in which a different view has been taken are the following. In Sardar Singar Singh and Son v. Sikri Brothers, A.I.R 1944 Oudh 37 (13), a suit was instituted on behalf of a firm, Sikri Brothers, by one N.P Nagpal. In the body of the plaint and in the verification, he described himself as a partner in that firm. The defendant contended that the suit was not competent as the firm was not a registered one. But, it was found that the firm was a registered one, that only the names of two partners were shown in the Register of Firms, and that by the date of the institution of the suit Nagpal had joined as a partner. It was held by a Division Bench of the Chief Court of Oudh, Thomas C.J and Ghulam Hasan J., that the suit could proceed on the ground that the real plaintiff was the firm Sikri Brothers, and the mere mention of Nagpal through whom the suit was instituted did not make him the plaintiff. This view was dissented from by a Division Bench of the High Court of Punjab, Bhandari C.J and Falshaw J., in Dr. V.S Bahal v. M/s. S.L Kapur and Co., A.I.R 1956 Punjab 24 (5), which pointed out that the words “persons suing” in Section 69 (2) of the Partnership Act mean all the partners in the firm as on the date of the institution of the suit, and that since Nagpal was a partner by the date of the institution of the suit, it was necessary, for the suit to be instituted at all, that his name should be shown as a partner in the Register of Firms. With respect, we agree with the view of the Division Bench of the High Court of Punjab, and in our opinion, it rightly dissented from the view of the Division Bench of the Chief Court of Oudh.
20. In Chaiman Lal and another v. Firm New India Traders Mica Merchants and others, A.I.R 1962 Patna 25 (14), a firm was registered with two partners, and three others became partners subsequent to the registration. But, the names of the three new partners were not shown in the Register of Firms. A Division Bench, Kanhaiya Singh and Ramratna Singh JJ., held that there is nothing in the Partnership Act to indicate that a suit filed in the name of such a firm should fail, that Section 69 (2) has to be read with Order 30 Rule 1 of the Code of Civil Procedure, and that those provisions, when read together, “apparently mean that when a suit is instituted in the name of a registered firm, only those persons who are registered as partners of the firm can get the benefit of a decree in favour of the firm or shall be liable for a decree against the firm. Subject to these conditions, the suit is maintainable . . . . . . . .” With respect, we are unable to agree with the said interpretation of the provisions in Section 69 (2) and Order 30 Rule 1. Apart from expressing the said view, no reasons were given for the said interpretation. In Firm Buta Mal Dev Raj v. Chanan Mal and others, A.I.R 1964 Punjab 270 (8), a Division Bench of the High Court of Punjab, Falshaw C.J and Harbans Singh J., also dissented from the said view of the Division Bench of the Patna High Court.
21. In Bharat Sarvodya Mills Co. Ltd., Ahmedabad v. M/s. Mohatta Brothers, A.I.R 1969 Gujarat 178 (15), a Division Bench of the High Court of Gujarat, J.B Mehta and B.G Thakore JJ., held that the provision in Section 4 of the Partnership Act shows that the expression “firm” is only a collective term for the partners and it does not create any distinct legal entity, that the meaning of the expression “suit by a firm” will have to be found from the provisions of Order 30 of the Code of Civil Procedure, that in Madalse Devi v. Ram Narain Pvt. Ltd., A.I.R 1965 Supreme Court 1768 (16), the Supreme Court interpreted the expression “suit by a firm” to mean that even though in form the suit is by a firm and in the name of the firm, in reality it is a suit by all the partners constituting a firm at the time of the accrual of the cause of action, that, therefore, the persons would obviously be all the partners who constitute the firm at the time of the accrual of the cause of action, and that “if when the suit is filed by a firm it is in reality a suit by all the partners constituting a firm at the tune of the accrual of the cause of action and they being the plaintiffs or the persons suing, the names of all these partners who constitute the firm at the time of the cause of action must be shown to be or to have been entered in the Register of Firms as partners in the firm”.
22. We are unable to agree with the said view. As pointed out by us, the provisions in Section 69 (2) and in Order 30 Rule 1 deal with different aspects and operate separately. It is true that under Order 30 Rule 1, when two or more persons who claim as partners are to sue, or are to be sued as being liable as partners, in the name of the firm, the suit would in reality be by all the partners constituting the firm at the time of the accruing of the cause of action. But, that does not necessarily mean that the words “persons suing” in Section 69 (2) also mean all the partners of the firm as on the date of the accruing of the cause of action. As pointed out by us, the language in Section 69 (2) which is in the present tense has to be given its plain grammatical meaning, and when so read, it would follow that “persons suing” in Section 69 (2) mean “all the partners of the firm at the time of the institution of the suit”. We have also pointed out that if a suit is such as would attract both the provisions the requirements in both the provisions will have to be fulfilled. In such a case, if a suit to enforce a right arising from a contract is to be instituted by or on behalf of a firm against any third party, the firm has to be a registered firm, and the partners of the firm as on the date of the institution of the suit must have been shown in the Register of Firms as partners in the firm, and further they must have been partners of the firm at the time of the accruing of the cause of action. We may here point out that the decision of the Division Bench of the Gujarat High Court was reversed on another point by the Supreme Court in Mohatta Brothers v. Bharat Sarvodaya Mills Co. Ltd., 1976 Supreme Court 1703 (17).
23. In Gurushiddayya Kalkayya Selimath and others v. Shah Hirachand Vanechand and Co. and others. A.I.R 1972 Mysore 209 (18), a Division Bench of the High Court of Mysore, G.K Govinda Bhat and K. Jagannatha Shetty JJ., held that a suit by or in the name of a firm is really a suit by or in the name of all its partners, that a suit to enforce a right under a contract can be brought only by a party to that contract, that a stranger to the contract cannot sue on the contract, that the partners entitled to sue on a contract or the partners constituting the firm at the time of the accrual of the cause of action for the suit, that the expression “persons suing” in Section 69 (2) of the Partnership Act, therefore, means “all the partners of the firm who were its partners at the time of the accrual of the cause of action”, and that if the names of all the partners who constituted the firm at the time of the execution of the suit mortgage were shown in the Register of Firms as partners, the conditions laid down by Section 69 (2) of the Partnership Act having been satisfied, the suit would be maintainable.
24. We are unable to agree with the said view. The general principle that a stranger to a contract cannot sue on the contract is not applicable in the case of a partner of a firm. The definition of a firm in Section 4 of the Partnership Act shows that a firm is only a compendius term for all the partners of the firm, and each partner acts for all. Therefore, even when a partner of the firm enters into a contract for and on behalf of the firm, all the partners of the firm have to be regarded as parties to the contract, and the partners other than the partner who entered into the contract cannot be regarded as strangers to the contract. Section 69 (2) of the Partnership Act contemplates a contract in respect of which the firm (i.e all the partners) have a right to enforce the same. The reasoning of the Division Bench appears to have missed this aspect. We may point out here that in Ram Kumar Shew Chandrai v. Dominion of India, a Division Bench of the High Court of Calcutta, Murari Mohan Dutt and Ramkrishna Sharma JJ., expressed dissent from the aforesaid decision of the Mysore High Court on another point.
25. For all the above reasons, we answer the question referred to us as follows: —
The expression “persons suing” in Section 69 (2) of the Act means “all the partners of the firm who are its partners at the time of the institution of the suit”.
Costs of this reference shall be costs in the suit.
Answered accordingly.