Describe the mode in which the service can be effected in a suit against a firm. And Where a partner of a firm has died, how will the suit proceed?

Question: Describe the mode in which the service can be effected in a suit against a firm. And Where a partner of a firm has died, how will the suit proceed?

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Answer

A firm is known by its partners and the partners and the firm can sue or be sued together under the name of the firm or individual partners. If the firm is found to be liable for any act, the partners are personally liable to pay the damages that occurred and ordered by the court.

Order XXX of the Code of Civil Procedure, 1908 provides for the procedure to sue and be sued by a firm and how to proceed with such suits.

Rule 1 of Order XXX provides for the procedure to instate a suit for legal action either by the firm or against the firm. According to the provision, if the partners of the firm are aggrieved by the action of certain persons or if certain persons are aggrieved by the actions of the partners, the partners can sue or be sued in the name of the firm. It means that the suit shall be titled in the name of the firm but the partners shall be the ones liable for the execution of any order of the court.

In Shankar Housing Corp v. Mohan [AIR 1978 Del 255.], the Delhi High Court explained the purpose of Rule 1 and stated that Rule 1 requires suing the firm to avoid the difficulty of finding the guilty partner and suing him/her separately. The aggrieved person can sue the firm and all the partners will be held equally and jointly liable.

In Purushottam Umedbhai & Co. v. Manial & Sons [AIR 1961 SC 325], the apex court observed that Order XXX of the code does not apply to firms carried on the name of the owner himself such as a sole proprietorship firm. It applies to situations where firms are carried on the names of other persons such as partnerships. The rule requires that at the time when the action led to the rise of a cause of action, the persons should be the partners of the firm or claim to be the partners of the firm to sue or be sued. It means that a partner who has retired from the firm cannot sue or be sued in the name of the firm.

Rule 3 deals with the process and manner of issue and service of summons to the partnership firm. The rule recognizes the following four manners of service of summons depending on the situation and need:

• Service on the Partner: The plaintiff may opt to serve the summons issued by the court upon one or more of the partners of the firm at their place of residence respectively. If the summon is duly received by even one partner with acknowledgement, it will be deemed to be served upon the firm and all the partners thereof. If the partner refuses to receive summon, the court at its discretion may deem it to be served.
• Service at the Place of Business: The plaintiff may serve to summon upon the firm by sending it to the place of business from where the firm carries on its business and serving it upon the person in the management of the firm at that time. The plaintiff should serve to summon upon the place of business at the time stipulated by the court itself.
• Service to Third Person: In R.D. Khan v. Bombay Iron Syndicate [AIR 1953 Bom 23], the Bombay High Court held that in the above two situations when the to summon is served to the partners or upon the firm manager and the partners are out of India at the time of receipt, the receipt of the summon by the third person shall be deemed to be complete service as it shall be the duty of the third party to inform the partners of the firm.
• Service in Case of Dissolution: When the firm has dissolved, i.e. ceased to carry on business and it is within the knowledge of the plaintiff, and then the plaintiff shall serve the summons on the individual partners of the dissolved firm who were associated with it at the time when the cause of action arose. The plaintiff shall decide which partners were liable or whom he seeks to make liable and serve the summons upon them.

In P. Sen (Engineering) Pvt. Ltd. v. Delite Builders [AIR 1993 Cal 28], the court held that service of such summon shall be complete even if it is received by someone acting on behalf of the partners.

Similarly Order XXX, Rule 4 CPC is an enabling provision and if a suit is brought in the name of all the partners of a firm and in the event any one of them dies, the surviving partners can competently continue the suit without bringing on record the legal representatives of the deceased partner.

In that case, the action would be an action solely against the surviving partners and if the legal personal representatives of a deceased partner are not added expressly as defendants, and the action is brought against the firm in the firm’s name, then judgment can only be obtained as against the surviving partners and be enforced against them and against the partnership assets.

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