Report No. 27
Order XXX, rule 10
1. How far the word "person" in Order 30, rule 10, applies to an undivided Hindu family is a question on which there is some controversy. The Madras High Court1 has in one case held that it applies only to an individual. In that case, the firm consisted of four minors consisting of a joint undivided Hindu family, who were described as "R.M.P.M. Chettiar firm", etc. The court stated, that the whole of Order XXX was a reproduction of the rules in Order XLVIIIA of the Rules of the Supreme Court, and Order 30, rule 10 was based on Order 48A, rule 11 of the English Rules, which had been held to apply only to a single individual carrying on business under an assumed or trading name. The court also relied on the differences in language between rule 10 of Order XXX and rule 1, because while the former spoke of "any two or more persons", the latter spoke of "any person carrying on business".
2. On the other hand, some High Courts have taken the view, that rule 10 applies to a number of individuals carrying on business either under a firm name or under an assumed name when these individuals do not in law constitute a partnership resting on contract, provided the suit is in respect of matters connected with the business so carried on. Thus, the Calcutta High Court2 has applied this rule to a joint Hindu family (dissenting from the Madras view) and held that the word "person" must be given the meaning assigned by the General Clauses Act, and should include any association or body of persons whether incorporate or not.
The object of rule 10, it was stated, was to avoid hardship. Business may be carried on by correspondence, and orders placed 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 as to who is the owner of the business that is being carried on in an assumed name; in most cases he would only know the name of the real owner only after he had brought his suit. (See Order )0(X, rule 6). If a decree obtained by such a merchant in a suit instituted against the assumed name was to be treated as void, it would open up a wide door to fraud, and would sap the credit on which commercial dealings largely rest. (It was pointed out, that in England there was no concept of joint family firms). But in a later case3, the Calcutta High Court seems to have taken a different view.
3. In an Allahabad case4, there are observations that a joint family is a "person". But the actual question in that case was whether there can be a partnership of a joint Hindu family with itself, and in that context the court observed, "The members of a joint Hindu family" are a body of individuals who come under this definition of "person" (in the General Clauses Act). A partnership has been held to be an "association" of persons5 under the Excess Profits Tax Act. The Patna High Court has taken the wide view in a recent case6-7. So also have the Kerala8 and Orissa9 High Courts.
4. In the Punjab the matter has been dealt with by amending Order XXX, rule 1. The Punjab Amendment was made under a Chief Court Notification issued soon after the 1908 Code came into force. The provision as enacted by the Legislature applied only to contractual partnerships10. The position under the Punjab Amendment has been lucidly explained in the under-mentioned case11. As explained there, in the Punjab, (i) a joint Hindu family firm may sue in the firm name (if any); or (ii) all members may sue joint in their individual names; or (iii) in certain circumstances (e.g. where a contract is entered into with the manager), he, as Karta, may sue in his own name alone.
5. As the controversy seems to survive even now12, some Clarification appears to be desirable.
As to position at Hindu law, see Mulla13.
It is considered that instead of making a separate rule, the necessary provision should be added in rule 10.
Hence the amendment.
1. Chidambaram v. National City Bank, ILR 1937 Mad 28: AIR 1936 Mad 707. (Venkatasubba Rao and Venkataramana Rao JJ.).
2. Jamunadhar Peddar Firm v. Jamunaram Bhakat, ILR (1944) 2 Cal 131: AIR 1944 Cal 138 (R.C. Mitter and Blank JJ.).
3. India R.L. Factories v. Purshottamdas, AIR 1960 Cal 327 (331), para, 27 (A.N. Ray J.) following (1947) Munshilal & Co. v. Modi Bros., 51 CWN 563 (S.R. Das J.).
4. Mahabir v. Ram Kishan, AIR 1936 All 855 (856).
5. A.G. Pandu Rao v. Collector of Madras, AIR 1954 Mad 1049.
6. Rameshwar v. Keshab Prasad, AIR 1962 Pat 360 (discusses case-law).
7. See also Alekh v. Krishna, AIR 1941 Pat 596 (Fazl Ali J.).
8. Tulsidas v. Ebrahimjee, AIR 1960 Ker 75.
9. Hari Shankar v. General, AIR 1956 Ori 186.
10. See Atma Ram v. Umar Ali, AIR 1940 Lah 256 (260).
11. Firm Nand Gopal v. Firm Mehnga Mall, AIR 1940 Lah 425 (426) (Tek Chand J.).
12. See the case-law discussed in This, Midji v. Ebrahimjee, AIR 1960 Ker.
13. Mulla Hindu Law, (1959), paras. 251(1) and 251(7).