Order XXX – Suits by or against firms or persons carrying on business in names other than their own
- Rule 1 states that where two or more persons claim to be partners or are liable to be partners and are carrying on business in India, they may sue or be sued in the name of the firm of which they were partners at the time the cause of action was accruing.
- Any party to the suit may apply to the court for a list of the partners of such firm when the cause of action was accruing.
- It shall be sufficient for the purposes of the CPC if one or more of the partners sign the plaint or the written statement, as the case may be.
- Rule 2 provides that where the partners sue in the name of the firm, the defendants may demand in writing that the names of all partners of the firm be declared.
- The proceedings in such case shall continue in the name of the firm. However, the decree shall mention the names of all partners.
- Where such names are declared, the proceedings shall continue as they are. However, where the names are not declared and on an application to that effect, the proceedings shall be stayed by the court.
- Rule 3 deals with service of summons on partners.
- In such case, the service shall be made either on (a) one or more of the partners or (b) at the principal place of business of the firm upon the person who is in charge of the management of such place at the time.
- Such service shall be made whether or not any of the partners are in India at the time.
- However, where to the knowledge of the plaintiff, the partnership stands dissolved, service of summons shall be made on any of the persons who are in India at the time and who are sought to be made liable.
- Where a summons is served, the person so served must also be given a notice as regards the capacity in which he is being sued, i.e. whether as a partner or as a person in charge of the partnership business or both. (Rule 5)
- Where no such notice is given, the person shall be deemed to have been sued as a partner.
- Where summons is served on a person who is in charge of the partnership business, he need not appear unless he is a partner of the firm which is sued. (Rule 7)
- The partners shall be required to attend and appear at the proceedings individually though the proceedings shall be continued in the name of the firm. (Rule 6)
- Where a partner dies, before the institution of the suit or during its pendency, it shall not be necessary to join his legal representatives as parties to the suit. (Rule 4)
- However, this shall not bar such legal representative from exercising his right as being made a party to the suit or enforcing any claim against any of the surviving partners.
- Rule 8 provides that a person who has been served summons under Rule 3 may appear in protest stating that he was not a partner of the firm when the issue arose.
- Thereafter, such person or the plaintiff may apply to the court anytime from the date fixed for the hearing till the date of final disposal of the suit to determine whether the person was a partner at the material time and whether he is liable.
- Where the court makes a finding that the person was in fact a partner, the person shall continue to be sued. However, this shall not mean that the person cannot put up a defence denying the liability of the firm as regards the matter.
- If the court makes a finding that he is not a partner, the suit shall proceed as it is and the plaintiff shall not be allowed to sue such a person.
- Order 30 also applies to suits instituted by one or more partners against the firm or between firms having certain common partners. In such case, execution may be issued only with the leave of the court.
- Thereafter, the court may even direct accounts and inquiries to be made at the time of the execution.
- Order 20 Rule 15 provides for a preliminary decree to be passed for dissolution of a partnership firm before passing a final decree.
- Order 21 Rules 49 and 50 deal with the execution of decrees against partnership firms.
- A decree for attachment of partnership property can be filed only where the decree is passed against the firm or any of its partners.
- Where the decree holder applies to the court to charge the interest of any partner in the firm, the court may continue to do so.
- The decree against the firm may be executed against the following-
- Any property of the firm
- Any person who is either a partner or a person in charge of the business of the firm and summons has been served on such person and he has appeared in the proceedings
- Any partner on whom summons have been served and he has failed to appear
- Any other person, where the decree holder applies to the court to grant leave to sue such person and the same is allowed. In this case, the liability of the person may either not be disputed or it may be disputed and thus his liability must first be determined by the court before the decree may be executed against him.
- Where a decree is passed against the firm, except where it is passed against its property, only those partners shall be made liable or be affected by it as were served the summons to appear and answer.
- Rule 10 of Order 30 deals with cases where an HUF is carrying on business in any name or any person is carrying on business in any other name or style other than his own. In such cases, such person(s) shall sue and be sued in such name as if it were a firm name. The provisions of Order 30 shall be accordingly made applicable in such cases.
(Editor @ Legal Bites)