Bombay High Court: Expressing that, a firm is not a legal entity, N.J. Jamadar, J., held that a partnership firm is only a collective or compendious name for all the partners.
The present matter was filed to recover the amount which the plaintiffs claimed to have invested in defendant 1 – firm, along with the interest at the rate of 24% p.a. on the basis of the credit notes.
The plaintiffs asserted that defendant 1 was a registered partnership firm and defendants 2 to 4 were its partner and in charge of day-to-day affairs of defendant 1 -firm and otherwise responsible for the conduct of the affairs and business of defendant 1—firm.
Plaintiffs’ case was that upon the representation of defendants 2 to 4 that the plaintiffs would get a handsome return on the investment made with the defendants, the plaintiffs had invested a sum of Rs 1 crore, over a period of time. The said amount was to be repaid on demand along with interest.
Further, the defendant committed default in repayment, hence the suit was filed.
Analysis and Decision
Defendant 1—firm has 8 partners and the names of the partners are reflected in the record maintained by the Registrar of Firms. Hence, it was incumbent upon the plaintiffs to implead all the partners of defendant 1 – firm.
The Bench stated that, there is no qualm over the claim of the plaintiffs that defendant 1 is a registered partnership firm and defendants 2 to 4 are its partners.
Section 25 of the Partnership Act, 1932, provides that every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
High Court stated that, a partnership firm does not have any existence apart from its partners. Therefore, a decree in favour of or against the firm in the name of the firm has the same effect like a decree in favour of or against the partners.
Hence, when a firm incurs a liability, it can be assumed that all the partners have incurred that liability and so the partners remain liable jointly and severally for all the acts of the firm.
In view of the above, Court concluded by stating that the plaintiffs are not enjoined to implead all the partners of the firm.
Impleadment of the rest of the partners is not necessary. [Aziz Amirali Ghensani v. Ibrahim Currim & Sons, Interim Application (L) No. 1897 of 2022, decided on 8-4-2022]
Advocates before the Court:
Mr. Rashmin Knandekar, a/w Ms. Karishni Khanna, i/b Amit Tungare, Ms. Jill Rodricks, Mr. Vineet Jain and Mr. Deep Dighe,for the Plaintiffs.
Mr. Siddha Pamesha, a/w Declan Fernandez, i/b Purazar Fouzdar, for Defendant no.4/Applicant in IA.
Mr. Jamsheed Master, i/b Natasha Bhot, for Defendant no.3. Mr. Zain Mookhi, a/w Ms. Janhavi Doshi, i/b Manir Srivastava Associates, for Defendant no.2.