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Smart Summary

Concise Analytical Summary of the Opinion (Second Appeal)

Factual and Procedural Background

The appellant supplied books and appliances to Vithoba High School and sued to recover a sum of money. The plaintiff named the school as the 1st defendant and Sri A. G. Shenoy, the manager, as the 2nd defendant; the claim against the manager alleged an oral undertaking by him to hold himself personally liable. The trial court entered a decree against the school and dismissed the suit against the 2nd defendant (the manager). The Managing Trustee of the Vithoba Devaswom (the educational agency managing the school) appealed to the lower appellate court on the ground that the school, not being a legal entity, could not be the subject of a decree. The lower appellate court accepted that contention and set aside the decree against the school. The plaintiff brought the matter in this second appeal challenging the appellate judgment that set aside the decree against the school.

Legal Issues Presented

  1. Whether a decree can validly be passed against a school, given that a school is not a juristic entity or a person capable of holding property.
  2. Whether Order 30, Rule 10 of the Code of Civil Procedure (O.30 R.10 CPC) — allowing a person carrying on business under an assumed name to be sued in that name — can be applied to permit a decree against a school by treating the school as carrying on business in an assumed name on behalf of its managing agency (the devaswom).
  3. Whether, in the absence of making the devaswom a party to the suit, the plaintiff can obtain a decree which binds the devaswom or which can be executed against the devaswom's assets.

Arguments of the Parties

Appellant's Arguments

  • The appellant contended that he was entitled to sue the defendant school and obtain a decree against it by treating the school as a person carrying on business in an assumed name (an analogy to a firm), invoking Order 30, Rule 10 CPC.
  • The appellant further argued that, even without making the devaswom a party to the suit, the school should be treated as conducting business in an assumed name on behalf of the devaswom and therefore a decree could be obtained against the school to reach the devaswom's liability.

Respondent / Managing Trustee's Arguments (as reflected in the proceedings)

  • The managing trustee (representing the devaswom) argued that a school is not a legal entity or juristic person and therefore a decree against the school could not be sustained; the lower appellate court accepted this contention and set aside the decree against the school.
  • Implicitly, the managing trustee's position was that, because the devaswom was not a party to the original suit, the decree could not be made to bind or be executed against the devaswom.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
P. Vasudevan v M. Appu (1969 KLT 46) Expresses that a school is prima facie not a juristic entity and cannot be treated as a person against whom a decree could be passed; questions how a school can hold property. The court relied on this authority to support the proposition that a decree cannot be validly entered against a school because it is not a juristic person capable of holding property.
Mother Provincial v State of Kerala (1969 KLT 749) Holds that a college is not a legal person or entity; property of the college is property of the educational agency; a decree against the college would generally bind nobody unless the college or manager is a label for some legal person. The court analogised a college to a school and used this decision to reinforce that decrees against such institutions are ordinarily unsustainable unless the facts show they represent another legal person.
Tulasidas Mulji v Ebrahimjee (1959 KLT 966) Addresses the scope of O.30 R.10 CPC and whether a suit is effectively against an assumed trade name; emphasizes that the particulars of the plaint determine whether the suit is against an assumed name. The court cited this decision to show that where the cause title and prayer do not indicate a suit against an assumed name, R.10 cannot be invoked to convert the suit into one against an assumed trade name.
R. J. Mohd. Yakub v M/s. Dipa Sahu (AIR 1959 Patna 200) Explains that a Hindu joint family trading concern may be sued in its assumed business name under O.30 R.10, but such a concern cannot sue as plaintiff in the firm name under O.30 R.1; suits by such concerns must be brought by the Karta or all coparceners. The court used this to show the limited and specific contexts in which O.30 R.10 applies and to demonstrate that R.10's scope is restricted to business/ trading concerns and does not convert non-persons into suable entities.
Govindarajula Naidu v Secretary of State (AIR 1927 Madras 689) Interprets "carrying on business" as relating to commercial business and corporate or limited companies working for gain. Referenced to support the view that "carrying on business" in procedural provisions should be understood in a commercial sense, not applicable to schools.
Ellappa v Sivasubramanian (AIR 1937 Madras 293) Also interprets "carrying on business" as commercial in nature and relevant to corporate entities. Used alongside Govindarajula Naidu to reinforce that "carrying on business" should not be extended to educational institutions that are not run for profit.
Harishankar v General Merchants Ltd. (AIR 1956 Orissa 186) States that O.30 R.10 is intended to facilitate commercial transactions and applies to business contexts where parties deal in goods and on credit over distances. The court cited this to underline that O.30 R.10 is commercially oriented and to argue that the Rule does not apply to schools which are not commercial trading entities.
Jamunadhar Poddar Firm v Jamunaram Bhakat (AIR 1944 Calcutta 138) Explains the commercial and creditor-protecting rationale of O.30 R.10: permitting suits against an assumed name avoids injustice and fraud in commercial dealings. The court relied on the exposition to show the purposive limit of R.10 — protecting commerce and credit — and reasoned this purpose does not extend to educational institutions like schools.

Court's Reasoning and Analysis

The court's analysis proceeded in a sequence of legal determinations tied closely to precedent and the statutory context:

  1. Nature of a school: The court began by asking whether a decree "against the school" is a legally coherent concept. Relying on authoritative decisions (notably P. Vasudevan v M. Appu and Mother Provincial v State of Kerala), the court concluded that a school is prima facie not a juristic person and cannot be treated as a person capable of holding property; consequently, a decree targeted at a "school" as such is ordinarily unsustainable.
  2. Role of the educational agency: Drawing on Mother Provincial, the court explained that the property used by a school is in truth the property of the educational agency (the managing devaswom), and therefore any binding remedy must concern that legal person rather than the school label itself.
  3. Applicability of O.30 R.10 CPC: The appellant's reliance on O.30 R.10 (that a person carrying on business under an assumed name may be sued in that name) was examined. The court observed that the expression "person" in R.10 cannot properly be applied to a school that is not a juristic entity. The court further analyzed the intended scope of R.10 by reference to commercial authorities (Govindarajula Naidu, Ellappa, Harishankar, Jamunadhar Poddar and R. J. Mohd. Yakub) and concluded that R.10 is directed to commercial trading contexts (protecting creditors and facilitating commerce) and not to educational institutions which, by statute and rules (Kerala Education Act 1958 and Kerala Education Rules 1959), are not run as business or for profit.
  4. Statutory and regulatory support: The court noted specific regulatory provisions (Kerala Education Rules, R.8 of Chapter V) which require fee and income of a school to be utilised for educational purposes only, supporting the conclusion that a school is not a commercial enterprise amenable to the trade-oriented rule O.30 R.10.
  5. Party identity and procedural consequence: Because the suit was instituted against the school and not against the devaswom (the managing trustee/body), the court held that no decree could be sustained against the devaswom on the basis of the suit as filed. The mere participation of the managing trustee in appeal proceedings representing the school does not retroactively make the devaswom liable for the plaint claim where the suit had not been framed against it or its assets.
  6. Conclusion on appellant's contentions: The court found the appellant's argument that the school could be treated as an assumed business name of the devaswom to be unsustainable. The Rule O.30 R.10 cannot be stretched beyond its commercial purpose to encompass schools; consequently, the decree at trial against the school could not stand and the appellate court's decision to set it aside was affirmed.

Holding and Implications

Holding: The second appeal is dismissed. The judgment below setting aside the decree against the school is upheld and the appeal fails; the dismissal was ordered with costs to the Additional 3rd respondent.

Implications:

  • The direct effect is that the trial court's decree against the school cannot be sustained because a school is not a juristic person capable of being the subject of such a decree unless the facts show it is a label for some other legal person.
  • Order 30, Rule 10 CPC (permitting suits against persons carrying on business under an assumed name) does not extend to educational institutions like schools, which are not commercial trading concerns and are regulated so that fees and income are used for educational purposes.
  • Because the devaswom (the managing agency) was not made a party to the suit, the appellant cannot recover the claimed amount from the devaswom's assets on the basis of the decree obtained against the school.
  • The court's ruling follows and applies existing authorities on the non-juristic character of educational institutions and the commercial purpose of O.30 R.10; the decision is an application of those principles to the facts before the court and does not purport to expand the scope of O.30 R.10 beyond its commercial context.

This summary is limited to and derived exclusively from the content of the provided opinion.

    Educational Supplies Depot. Trivandrum v. Vithoba High School Others

    1. The main question involved in this second appeal is whether a decree against a school is sustainable in law. It appears to us that such a decree cannot he passed against a school as it is not a juristic entity much less a person with the right to hold property. The answer to this question is also contained in a judgment of this court by Krishna Iyer, J. reported in P. Vasudevan v M. Appu (1969 KLT 46) wherein the learned judge poses the question whether a maintenance grant payable to the manager of an Aided school can be attached in execution of a decree against the school. The question was answered in the following words:

    "I do not really understand what is meant by a decree against the school. The school prima facie is not a juristic entity and cannot be treated as a person against whom a decree could be passed ............ I do not know how the school as such can hold property not being a juristic person"
    .

    2. Raman Nayar, C. J., speaking for the Full Bench of this court expressed the same view regarding the status of a college which in legal concept would be the same as a school. The opinion is at page 769 in Mother Provincial v State of Kerala (1969 KLT 749). It runs as follows:

    "A college is not a legal person or even a legal entity, and there is nothing in the Act which makes it one. That being so, it seems to us that no suit will lie by or against a college there is nothing to show that the word, "college" is used in the sub-section as a label for some legal person. A college as such has no property as we have already explained, the property of a college is really the property of the educational agency, used by it for running the college. It seems to us that a decree obtained in the kind of suit contemplated by the sub-section, namely a suit by or against a private college in the name of the manager, would be a useless decree binding on nobody unless it is held on the facts of the particular case that the college or the, manager is only a label for some other legal person."

    3. It was then argued by the learned counsel of the appellant that he would be still entitled to sue the defendant school as a person carrying on business in the name or the style other than its own name as it were a firm. The learned counsel evidently based the analogy on account of the provisions contained in O.30 R.10 CPC. We fail to see how such a contention is available to the appellant. On the face of it the contention appears to us as not sustainable.

    4. It is necessary in this regard to state the facts of the case so far as it is necessary to appreciate the appellant's contention. The appellant sued the Vithoba High School as the 1st defendant and one Sri. A. G. Shenoy as the manager of the school being the 2nd defendant to recover certain sum of money from them on the basis that the appellant supplied books and appliances for the use of the school alleging that the 2nd defendant, manager, at the time of the purchase orally undertook to hold himself personally liable for the amount. The trial court gave a decree against the school, but the suit against the 2nd defendant was dismissed. Then the Managing Trustee of the Vithoba Devaswom which managed the school as its educational agency filed an appeal to the lower appellate court contending that the school not being a legal entity the decree against it could not be sustained. Accepting that contention the appeal was allowed and the decree against the school was also set aside. It is against the appellate judgment that the plaintiff has come up in second appeal.

    5. It is clear that the suit was not instituted against the devaswom which managed the school. But, it was against the school it was laid. Under such circumstance a decree could not be passed against the devaswom which was a party to the suit even on the basis of the application of O.30 R.10 CPC. In this connection, the decision reported in Tulasidas Mulji v Ebrahimjee (1959 KLT 966) may be seen. It was a suit for damages directed originally against two defendants namely, "Tulsidas Mulji, son of Mulji Vishram trading under the name and style of Vishram Khimjee and tindal of TulsidasMulji". The plaint was subsequently amended and the 3rd defendant, described as follows, "Mulji Vishram, Son of Vishram Khimjee trading under the name and style of Vishram Khimjee". It was contended on the basis of R.10 of O.30 CPC that there was nothing to prevent under that Rule being applicable to those cases where more persons than one carry on business in an assumed name though strictly speaking they are not partners. But M. S. Menon, C. J., sitting in the Division Bench referred to above held:

    "We find it impossible to say that the suit either before or after the amendment was a suit against the trade carried on in the name and style of "Vishram Khimjee". The cause title makes it clear that the suit before the amendment was against Tulsiram Mulji and his tindal and that the suit after the amendment was against him, the tindal of the vessel and his father Moolji Vishram who was brought on record as the 3rd defendant. The prayer before and after the amendment was not for a decree against Vishram Khimjee, but for a decree "directing the defendants jointly and severally to pay the plaintiffs the sum of Rs.10,736-10-6".

    6. It was, therefore, clear that the present appellant cannot get a decree against the school so long as the devaswom was not made a party to the suit. The fact that the managing trustee filed the appeal in the lower appellate court representing the school is not sufficient to make the devaswom liable for the plaint claim unless the suit was instituted to recover the amount from the assets of the devaswom. In the absence of such a suit, the appellant's contention for the recovery of the amount from the devaswom cannot be sustained.

    7. It is contended on behalf of the appellant that even without making the devaswom a party to the suit, he would be still entitled to get a decree against the school on the basis that the school is deemed to be conducting its business in an assumed name on behalf of the devaswam. It is to be observed that the O.30, R.10 does not enable a person carrying on business under the name and style other than his own to sue in that name as a plaintiff. All that it provided is that he can be sued in that name as a defendant the reason being that persons who deal with him in his assumed name should not be debarred from suing in that name, because he has assumed that name in dealing with them. Therefore, it can be said that the above rule will also apply to a case where more persons than one carry on business to an assumed name though strictly speaking they are not partners. It was on the basis of the above proposition that the case reported in R. J. Mohd. Yakub v. M/s. Dipa Sahu (AIR 1959 Patna 200) was decided. The observation in that decision is as follows:

    "The position in law, therefore, is that a Hindu joint family trading concern, though not a firm in the legal sense, may be used in its assumed name of the business under the provisions of O.30, R.10, Code of civil Procedure, but such a Hindu Joint family trading concern cannot sue as a plaintiff in the firm name under the provisions of O.30, R.1. Such a suit must be brought either by the Karta of the family or by all the members of the joint family who are coparceners."

    8. It is relevant in this regard to refer to the provisions of R.10 of O.30 CPC which runs as follows: --

    "Any person carrying on business in a name or style other than his own name may be sued in such name or style as if it were a firm name; and, so far as the nature of the case will permit, all rules under this Order shall apply."

    The expression "person" occurring in the above Rule cannot to our mind, in the circumstances of the case, be applied to a school which is not a person and much less juristic entity. The expression "carrying on business' under S.19 and 20 CPC & O.3, R.2 CPC is interpreted as relating to commercial business applying to a corporate body or to a limited company who work for gain in Govindarajula Naidu v Secretary of State (AIR 1927 Madras 689) and Ellappa v Sivasubramanian (AIR 1937 Madras 293). There is nothing wrong to give the same meaning to the expression "carrying on business" in R.10 of O.30 CPC. Those expressions cannot, therefore, be applied to a school which evidently cannot be run on a business proposition. Neither the provisions of the Kerala Education Act 1958 nor the Kerala Education Rules, 1959 envisage that a school is run as a business. R.8 of Chapter V of the Kerala Education Rules provides that the fee and other income of a school shall be utilised for educational purposes only. If that be so, O.30, R.10 will have no application in respect of a suit against the school as the provisions of that Rule applies only to trade or business in which the sole determination is one of making profit. It can be seen from the scope of the above Rule that it relates only to business in a limited sense. That it applies only to business is held in a decision reported in Harishankar v General Merchants Ltd., (AIR 1956 Orissa, 186). The observation is at page 190. It runs as follows:

    "Business is carried on usually from one part of the world to another through post and goods are supplied on such orders. The goods are generally supplied sometimes on credit. The correspondence is carried on in the firm name. Persons, residing in distant places and supplying goods on credit in the firm name which ordered the goods cannot be expected to know the) names of the persons who are carrying on the business. It is to facilitate commercial transactions that O.30, R.10 is intended."

    9. Again the above proposition is stated and explained in a detailed manner in another decision reported in Jamunadhar Poddar Firm v Jamunaram Bhakat (AIR 1944 Calcutta 138). The observation is at page 141. It runs as follows:

    "O.30, R.10 enables a person to sue him as defendant in that assumed name. This distinction which has been made in O.30 itself has, in our judgment, been made in the interest of commerce. There is no inconvenience or injustice, if a person carrying on business under a firm name or any other assumed name is made to sue in his real name, but different and weighty considerations would apply when he is sued by another person in the assumed name which he carries or has carried on business. Business may be carried on by correspondence and orders may be, and are usually, placed from one part of the world to another through post and goods may be supplied, on credit on such orders. A producer or merchant living in one part of the globe cannot be expected to know or to make enquiries and in some cases it is not possible for him to know or to make enquiries as to who is the owner of the business that is being carried on in an assumed name, and in most cases he would only know the name of the real owner after he had brought his suit, for the defendant must then appear in his own name (O.30, R.6). If it were to be held that decree obtained by such a producer or merchant in a suit instituted against the assumed name is a void decree, it would lead to manifest hardship, would open up a wide door to fraud and would sap the credit on which commercial dealings largely rest."

    10. It is clear from these decisions that the R.1 to 9 of O.30 CPC deal with suits by a firm or against a firm as well as suits inter se among the members of the firm while R.10 is intended to meet cases where one or more persons conducting trade or business in an assumed name being sued as defendant. "Partner" in the R.1 to 9 of O.30 CPC means a partner by contract and not by personal law. It is for proceeding against a defendant who conducts trade or business in an assumed name that the provisions of R.10 is enacted to cover a case different from the cases which come within the purview of R.1 to 9 of O.30 CPC. If R.1 to 9 apply only to cases of trade or business, we do not think that R.10 can be stretched to any length to bring in its ambit anything other than trade or business. In view of the foregoing reasons we find that there is no merit in this appeal and it has only to be dismissed.

    11. In the result, the appeal fails and the same is dismissed with costs of the Additional 3rd respondent.

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    Comments

    Educational Supplies Depot. Trivandrum v. Vithoba High School Others
    (Nov 27, 1969)