Suits by/Against Firms and Persons Carrying on Business in Names Other Than Their Own (ORDER XXX)

Order 30 prescribes the procedure in which the suits by or against Firms and persons carrying on business in names other than their own, and Rule 1 of the said Order, which has been quoted above, permits any two or more persons claiming or being liable as partners and carrying on business to sue and be sued in the name of the firm.[1] It is only a compendious name for the collection of the individuals, who are members of the firm. The position of law is clear that where the suit is brought by or against a firm, in its firm name, the addition of such words as through, “represented by” as partner or manager would not alter its character.[2] Order 30 of the Code of Civil Procedure 1908 (Code of Civil Procedure) mandates that whenever suits are filed by or against a firm, or company, it shall be made a party.

Introduction:

“Know ye the truth and the truth will set us free.”

~ Book of John, 8:32

The Law relating to the practices and procedure to be followed in the Civil Courts is regulated by the Code of Civil Procedure, 1908. The word ‘code’ means “a systematic collection of statutes, body of laws so arranged as to avoid inconsistency and overlapping”.

The Code is divided into two parts: the first part contains 158 sections and the second part contains the First Schedule, which has 51 Orders and Rules. The sections provide provisions related to general principles of jurisdiction whereas the Orders and Rules prescribe procedures and method that govern civil proceedings in India.

The main object of this civil procedure code is to consolidate and amend the laws relating to the procedure and practices followed in the Civil Courts in India. As such, it was enshrined in the preamble of the code that it was enacted to consolidate and amend the laws relating to the procedure to be followed in the civil courts having civil jurisdiction in India. The Civil Procedure Code regulates every action in civil courts and the parties before it, till the execution of the degree and order.

The Aim of the Procedural law is to implement the principles of Substantive law.[3] The Code is a codification of the principles of natural justice. Natural justice means ‘justice to be done naturally’ which is adopted naturally by the habits of every individual. It does not mean godly-justice or justice of nature. It simply means an inbuilt habit of a person to do justice.

Suits by or Against Firms and Persons Carrying on Business in Names Other Than Their Own (Order XXX)

i. Order XXX and the Indian Contract Act, 1872

According to the English law, the liability is joint; according to the Indian Law, it is joint and several.[4] Under s 45 of the Contract Act one of the two joint promisees cannot sue alone. This order modifies that section and if the promisees are partners, it enables one to sue alone but only if he sues in the name of the partnership.[5] The rule does not prevent the members of a firm from suing jointly in their individual names;[6] or a plaintiff from filing a suit against all the members of the firm.[7] If a suit is brought not in the name of the firm but by some of the partners and not by all of them, it is liable to be dismissed.[8]

ii. Relevant Judgments and an understanding of the order

According to Order XXX of the Code of Civil Procedure, 1908, a suit may be instituted by or against any 2 or more persons claiming to be partners in a partnership firm in the name of the firm provided such persons, were partners in the firm on the date when the cause of action occurred. Any party to such a suit may apply to the court for a statement of the names & addresses of all the partners of the firm as on the date of occurrence the cause of action. Where a summons is issued to a firm and is served in the manner provided by rule 3.

Every person upon whom it is served shall be informed by notice in writing given at the time of such service, whether he is served as a partner or as a person having the control or management of the partnership business, or in both characters, and, in default of such notice, the person served shall be deemed to be served as a partner. Rule 1 provides that two or more persons claiming or being liable as partners may sue or be sued in the firm name. But as the rule is permissive, it does not affect the right of the plaintiff to implead all the members of the firm,[9] nor does it affect the right of the parties to sue, not in the name of the firm but in their own names.[10]

Order 30 of the Code of Civil Procedure 1908 (Code of Civil Procedure) mandates that whenever suits are filed by or against a firm, or company, it shall be made a party. Where a firm as such, is a party to the suit, notice can be said to have been served upon it, if it was received by any of the partners. But the facility accorded by law in the matter of service of notice, cannot be treated as an exemption from pleading the firm itself.[11]

If the property in a suit belongs to the firm, a suit for rendering accounts to only some of the partners is not maintainable.[12] One partner may sue in the name of the firm although the other partner refuses to join in the suit. However, if these partners want an indemnity against costs, the suit may be stayed until such security is furnished.[13] Where parties file a suit in the name of their firm and it turns out that one of them has no locus standi, the suit is still maintainable.[14] A suit by or in the name of the firm is a suit by its partners.[15] The rule is an enabling one and does not prevent the partners from suing or being sued.[16]

Rule 3 provides that where a suit is instituted by partners in the name of their firm, the plaintiffs shall declare in writing the names and places of residence of the partners. If the plaintiffs fail to comply with the demand, the court may stay further proceedings. If the demand is complied with, the suit will proceed as if all the partners had been named as plaintiffs in the plaint. As regards signature and verification where a suit is brought in a firm name, it is provided by r 1, sub-r (2), that it will suffice if the pleading or any other document required to be signed or verified is signed or verified by any one of the partners. It is not necessary that all the partners should sign or verify it.[17]

As regards appearance in a suit brought against a firm, it is to be noted that a firm cannot appear as a firm, and the partners should therefore appear individually in their own names, but all subsequent proceedings should continue in the name of the firm (r 6). Where a suit is brought against a firm, no partner can put in a personal defence.[18] He can only file a written statement for and in the name of the firm. The decree must also be in the name of the firm,[19] though all the partners may not have appeared.[20] Rule 1(2) has no application to a decree or to any proceedings in the execution of a decree. One of the joint decree-holders, who are partners, cannot certify the satisfaction of the decree without the consent of other decree-holders.[21]

A suit of dissolution of partnership constituted between a family firm and a stranger, is not maintainable in the name of the family where at the date of the institution of the suit, due to the insolvency of some of the members of the family and minority of some others, there is only one effective member of the plaintiff firm,[22] even on the assumption that O 30, r 1 is applicable to a case where a joint family ‘firm’ had entered into partnership with another person.

The court shall direct such a statement to be furnished and verified in a specific manner. The proceedings in the suit shall then continue in the firm’s name but the final decree shall contain the names of the partners and all consequences shall follow as if the suit has been against the partners individually. Also, the partners will appear individually in their own names in all court proceedings. The decree obtained against the firm name adopted by the person for his business cannot be challenged as being a nullity.

The executing Court can substitute name of such person for the name of the firm.[23] A single person trading in a firm name cannot sue in the name of the firm, he can be sued in that name under the provisions of this Rule.[24] Similarly, a suit may also be instituted by or against any person or any Hindu, Undivided family, carrying on any business in a name other than his own name, in the same manner as against a partnership firm.

When two or more persons are sued in the name of the firm and any of them dies, during the pendency of the suit or before institution of the suit then it is not necessary to make his legal representative a party to the suit.[25]  However, the legal representative can make an application, to be made a party and can also enforce any claim against the surviving partners.

A partner served summons can appear in the court under protest that he was not a partner of the firm when the cause of action accrued and he can apply to the court for determination of such a question any time before the date of hearing and final disposal of the suit. Where a summons is served in the manner provided by rule 3 upon a person having the control or management of the partnership business, no appearance by him shall be necessary unless he is a partner of the firm sued.[26] Where a firm as such, is a party to the suit, notice can be said to have been served upon it, if it was received by any of the partners. But the facility accorded by law in the matter of service of notice, cannot be treated as an exemption from pleading the firm itself.[27]

iii. Application of the order

Rule 1 is applicable to proceedings under the Displaced Persons (Debts Adjustment) Act 1951[28]. Where a decree is passed against a firm of which one of the partners is the Ruler of a former Indian State, it cannot be held to be invalid for want of the requisite consent under s 86, and the objection that it could not be executed for want of such consent is not open to the partners other than the Ruler.[29] This order does not apply to petitions under art 226 of the Constitution of India; nor to proceedings before an arbitrator, and therefore, a court passing a decree on an award or executing a decree on an award must decide the question of liability of the partner under O 21, r 50(2)[30].

There was a conflict of judicial opinion on the application of this order in relation to O 21, r 50(2). Where a decree obtained against a firm is sought to be executed against a partner, who was not summoned personally in the suit, one view was that having regard to O 21, r 50(2), it was open to the partner to raise defences on the merit of the original claim[31]. As against this, it was held that the only plea which could be considered at that stage was whether the person sought to be proceeded against was a partner[32].

The question came in for elaborate consideration by the Supreme Court in Gambhir Mal v JK Jute Mills Gambhir Mal v JK Jute Mills and agreeing with the latter view, the court held that O 21, r 50(2) and O 30 must be read together, and that when a decree against a firm is put in execution against a person, who was not summoned in the suit, he can show that he is not a partner, but not that the decree is erroneous on merits[33].

Conclusion and Analysis

The Civil Procedural Code has been very important in the legal framework owing to its various procedural aspects as well as its objective of pursuing of an efficient justice system through fair trial, free provision of legal aid and speedy justice among other ideals. It was drafted by the Committee headed by Sir Earle Richards. The Committee before submitting the draft to the West Minister Parliament travelled India, read its history and ancient texts and then knew the traditions and culture of this country, and draft legislation was prepared keeping all such things in view.[34] The Code engendered various innovative measures to achieve its goal of speedy trials like that of arbitration and measures of settlement which helps reduce the backlog of cases and provides fair trial to people in a more efficient manner. the Code is well-defined and careful deliberations have been made towards its modifications so that it could suit the present societal terms.[35]


[1] Union of India V. Firm Ram Krishna Daya Ram – Second Appeal No. 1691 Of 1977 [2004] Inuphc 594 (19 August 2004).

[2] Mohammed Ali v. Abraham George, 1953 Tr. Co.163.

[3] LexisGreen Civil Procedure: Law Books & Bare Acts on a Pen Drive.

[4] See Indian Contract Act 1872, ss 42-45.

[5] Hari Singh v Firm Karan Chand Hari Singh v Firm Karan Chand AIR 1927 Lah 115; Shew Karan v Satyanarain Shew Karan v Satyanarain AIR 1978 Cal 495.

[6] Chaudhari Atma Ram v Mian Umar Chaudhari Atma Ram v Mian Umar AIR 1940 Lah 256; Rampur Tannery and Mfg Co Ltd v Umar Uddin Rampur Tannery and Mfg Co Ltd v Umar Uddin AIR 1954 All 11.

[7] Kuver Bank Ltd v State of West Bengal, AIR 1975 All 207.

[8] Afsaar Hussain v Trilokchand AIR 1975 Ori 84.

[9] Kazmi v Lachman Kazmi AIR 1930 Pat 239, (1931) ILR 9 Pat 717, 127 IC 575.

[10] Shambhu Dayal v Chunnilal Devkinanadan Shambhu Dayal v Chunnilal Devkinanadan AIR 1980 Raj 69.

[11] Sreevalli v Chinni Seetharamaiah Sreevalli v Chinni Seetharamaiah AIR 2005 AP 521.

[12] Tarachand v Hulkar Mal Tarachand v Hulkar Mal AIR 1979 Del 160.

[13] Bhadreswar Coal Co v Satischandra Bhadreswar, AIR 1936 Cal 353.

[14] Ramlal v Ajit Kumar Ramlal v Ajit Kumar AIR 1973 Cal 372.

[15] GK Salimath v SM Vaneechand & Co GK Salimath v SM Vaneechand & Co AIR 1972 Mys 209.

[16] Thomas v George Thomas v George AIR 1973 Ker 94; Ram Lal v Ajit Kumar Ram Lal v Ajit Kumar AIR 1973.

[17] VO Devassy v Periyar Credits VO Devassy v Periyar Credits AIR 1994 Ker 405.

[18] Ellis v Wadeson Ellis v Wadeson [1899] 1 QB 714.

[19] Harris v Beauchamp Brother Harris v Beauchamp Brother [1893] 2 QB 53, 535.

[20] Lysaght Ltd v Clark & Co Lysaght Ltd v Clark & Co [1891] 2 QB 552.

[21] Muthuswamy v Narainha Muthuswamy v Narainha AIR 1934 Mad 330.

[22] Devji Goar v Tricumji Jiwandas Devji Goar v Tricumji Jiwandas AIR 1945 PC 71, 221 IC 398, (1944) 49 Cal WN 299.

[23] G Pardeshi versus Hindustan Chain (Pvt) Ltd – AIR 1981 Ori 149.

[24] 1969 MPLJ 413; (1983) 87 Cal WN 539; AIR 1982 All 44; AIR 1976 Kant 64; (2003) 2 MahLJ 987; AIR 1999 SC 1484, Para 6.

[25] CPC order I to XXX, https://www.latestlaws.com/bare-acts/central-acts-rules/civil-laws/code-of-civil-procedure-1908/cpc-order-order-xxx/.

[26] Order XXX: Suits by Or Against Firms and Persons Carrying on Business in Names Other Than Their Own, http://www.advocatekhoj.com/library/lawareas/suits/business.php?Title=Suits&STitle=Suits%20by%20or%20Against%20Firms%20and%20Persons%20Carrying%20on%20Business%20in%20Names%20other%20than%20their%20own.

[27] Sreevalli v Chinni Seetharamaiah Sreevalli v Chinni Seetharamaiah AIR 2005 AP 521.

[28] Iron & Hardware Co v Firm Shamlal & Bros Iron & Hardware Co v Firm Shamlal & Bros AIR 1954 Bom 423, (1954) ILR Bom 739.

[29] Mandalsa Kumari v Ram Narain Pvt Ltd Mandalsa Kumari v Ram Narain Pvt Ltd AIR 1959 Bom 529, (1959) ILR Bom 1468, (1959) 61 Bom LR 651.

[30] Prem Lata v Ishar Dass Prem Lata v Ishar Dass (1995) 2 SCC 145.

[31] Bhagwan v Hiraji Bhagwan v Hiraji AIR 1932 Bom 516, (1932) 34 Bom LR 1112; Cooverji Varjong v Coorbai Nugsey.

[32] GM Shahani v Havero Trading Co Ltd GM Shahani v Havero Trading Co Ltd (1947) 51 Cal WN 488.

[33] AIR 1963 SC 243, [1963] 2 SCR 190, (1963) 1 SCA 356; Ramangouda v Firm G Bosangouda Ramangouda v Firm G Bosangouda AIR 1969 Mys 111, (1968) 1 Mys LJ 466.

[34] Code of Civil Procedure By: Dr. Justice B.S. Chauhan Judge Supreme Court of India.

[35] Civil Procedure Code, 1908- More Effective and Justice Oriented, https://www.lawctopus.com/academike/civil-procedure-code-1908-effective-justice-oriented/.

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