Sumer Singh Galundia Vs Jeevan Singh (Supreme Court of India)
Summary: The Supreme Court, in Sumer Singh Galundia & Anr. Vs Jeevan Singh (Since Deceased Through LRs) & Ors., held that the death of one partner in a two-partner partnership firm does not automatically result in the abatement of civil proceedings instituted in the firm’s name. A Bench comprising Justice Surya Kant and Justice J.K. Maheshwari set aside the Rajasthan High Court’s order dated 20 July 2019, which had dismissed a pending first appeal as abated following the death of a partner. The Supreme Court explained that Order XXX Rule 4 of the Code of Civil Procedure, 1908 expressly permits proceedings instituted in the name of a firm to continue despite the death of a partner, without making the joinder of the deceased partner’s legal representatives mandatory. The Court further examined Order XXII Rule 10 CPC, dealing with the devolution of interests during pending proceedings, and held that the High Court had misunderstood the precedent in AVK Traders Vs Kerala State Civil Supplies Corporation Limited, (2013) 15 SCC 217.
The dispute originated from Civil Suit No.73 of 1996 filed by M/s Kamal Engineering Works, a partnership firm consisting of Shiv Singh Galundia and his son, Sumer Singh Galundia. The suit sought specific performance of a contract, damages, declaration and permanent injunction. The Additional District and Sessions Judge No.2, Jaipur District, dismissed the suit on 7 November 2003. Aggrieved, the partnership firm preferred a first appeal before the Rajasthan High Court. During its pendency, Shiv Singh Galundia died, leaving his wife, two sons and a daughter as legal heirs. They moved an application under Order XXII Rule 3 CPC seeking substitution as his legal representatives in the pending appeal.
The Rajasthan High Court concluded that because the partnership consisted of only two partners, the death of Shiv Singh Galundia resulted in its automatic dissolution. It further held that the right to sue did not survive in the remaining partner for pursuing the relief originally claimed by the firm and dismissed S.B. Civil First Appeal No.117 of 2004 as abated. Two sons of the deceased partner challenged that decision before the Supreme Court, contending that dissolution of the partnership did not necessarily bring an end to civil proceedings already initiated in the firm’s name.
The Supreme Court found that the High Court had overlooked the specific procedure prescribed by Order XXX Rule 4 CPC. The provision states that, notwithstanding Section 45 of the Indian Contract Act, 1872, where persons sue or are sued in the name of a firm and one of them dies, the legal representative of the deceased need not necessarily be joined as a party. At the same time, the provision preserves the legal representative’s independent right to seek impleadment or enforce a claim against surviving partners. The Bench therefore distinguished the legal consequences of dissolution of a partnership from the procedural question whether existing civil litigation in the firm’s name may continue.
The Court additionally considered Order XXII Rule 10 CPC, under which a suit may, with leave of the court, continue by or against the person upon whom an interest has devolved during the pendency of litigation. The Bench noted that the deceased partner’s legal representatives had already filed a timely application for substitution and found no legal impediment that justified declining their prayer without consideration. Accordingly, the High Court could not treat the death of the partner as sufficient reason to terminate the first appeal.
Turning to AVK Traders Vs Kerala State Civil Supplies Corporation Limited, the Supreme Court explained that the earlier decision did not establish any general rule that a pending suit instituted by a two-partner firm necessarily abates upon the death of one partner. The quoted judgment concerned a registered partnership firm in which the deceased partner’s legal heir was unwilling to participate in the firm’s assets and liabilities, resulting in a devolution of interest in favour of the surviving partner. The Supreme Court clarified that observations about possible difficulties in executing a decree could not be converted into a proposition that the suit itself stood abated.
Accordingly, the Supreme Court allowed Civil Appeal No.9292 of 2022, set aside the Rajasthan High Court’s judgment dated 20 July 2019 and restored S.B. Civil First Appeal No.117 of 2004 to its original number and file. The High Court was directed first to decide the legal representatives’ substitution application dated 20 May 2013 under Order XXII Rule 3 CPC and thereafter proceed to hear the appeal on merits. The Supreme Court expressly clarified that it had not expressed any opinion on the underlying contractual dispute or the substantive entitlement of the parties. The ruling establishes that the death of a partner does not, by itself, extinguish litigation already instituted in the partnership firm’s name, although questions of substitution, devolution of interest and ultimate relief must still be dealt with in accordance with law.
Cases Discussed
1. AVK Traders Vs Kerala State Civil Supplies Corporation Limited (Supreme Court); (2013) 15 SCC 217 — The Supreme Court distinguished and clarified this precedent. It held that the earlier decision concerning a two-partner firm’s dissolution and devolution of interest did not establish that a pending suit must abate on the death of one partner. The observations concerning the enforceability of a decree could not be treated as determining abatement.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER
1. Leave granted.
2. M/s Kamal Engineering Works was a partnership firm comprising two partners – Shiv Singh Galundia and his son – Sumer Singh Galundia. The firm filed Civil Suit No.73/1996 for specific performance of contract, damages, declaration and for permanent injunction. The Additional District and Sessions Judge No. – 2, Jaipur District, Jaipur dismissed the aforesaid Suit on 07.11.2003.
3. The aggrieved partnership firm filed a First Appeal before the High Court. During the pendency of that appeal, one of the partners, namely, Shiv Singh Galundia died. His legal heirs, which included his wife, two sons and a daughter moved an application under Order XXII, Rule 3 CPC in the pending appeal for their substitution as legal representatives of the deceased partner.
4. The High Court vide the impugned order dated 20.07.2019 has taken the view that with the demise of Shiv Singh Galundia – one of the two partners, the partnership firm stands dissolved automatically and, thereafter, right to sue does not survive to the other partner for seeking the relief(s) as were prayed for by the partnership firm in the Suit. Consequently, the first appeal itself has been dismissed as abated. The appellants are the two sons of late Shiv Singh Galundia, who being aggrieved by the impugned order, are before us by way of present appeal.
5. Heard learned counsel for the parties and carefully perused the material placed on record.
6. It appears to us that the High Court has completely overlooked Order XXX Rule 4 of the Code of Civil Procedure which reads as follows:
“4. Right of suit on death of partner.-(1) Notwithstanding anything contained in section 45 of the Indian Contract Act, 1872 (9 of 1872), where two or more persons may sue or be sued in the name of a firm under the foregoing provisions and any of such persons dies, whether before the institution or during the pendency of any suit, it shall not be necessary to join the legal representative of the deceased as a party to the suit.
(2) Nothing in sub-rule (1) shall limit or otherwise affect any right which the legal representative of the deceased may have-
(a) to apply to be made a party to the suit, or
(b) to enforce any claim against the survivor or survivors.”
7. Similarly, Order XXII, Rule 10 CPC too has some bearing on the issue as it provides as under:
“10. Procedure in case of assignment before final order in suit.- (1) In other cases of an assignment, creation or devolution of any interest during the pendency of a suit, the suit may, by leave of the Court, be continued by or against the person to or upon whom such interest has come or devolved.
(2) The attachment of a decree pending an appeal therefrom shall be deemed to be an interest entitling the person who procured such attachment to the benefit of sub-rule(1).”
8. There is no gainsaid that where two persons have sued in the name of a partnership firm and if one of such persons dies during the pendency of the proceedings, it is not necessary to join the legal representatives of the deceased as a party to such proceedings, which shall continue in accordance with law. In other words, the death of one of the partners does not foreclose the continuation of the civil proceedings initiated by the firm. In this view of the matter, the death of Shiv Singh Galundia could not be a valid reason to declare the First Appeal to have abated.
9. Further, the legal representatives of the deceased – Shiv Singh Galundia had already applied for their impleadment in substitution of the deceased and there was no reason for the High Court to decline such a prayer when the application was moved in time without any other legal impediment in accepting their prayer.
10. It also appears to us that the High Court has completely misconstrued the view taken by this Court in AVK Traders vs. Kerala State Civil Supplies Corporation Limited, (2013) 15 SCC 217. This Court in para 12 of the said decision has held as under:
“12. We are in this case faced with a situation of a registered partnership firm, consisting of only two partners, filing a suit when both the partners were alive and during the pendency of the suit, one of the partners died and legal heir of the deceased partner did not show any interest either in the assets of the firm or in the liabilities and had refused to join as a partner. The question is, on dissolution of the partnership firm on the death of the partner, could the suit already filed be proceeded with by the remaining so-called partner? We notice that the subordinate court has allowed that prayer possibly bearing in mind the principle laid down in Order 22 Rule 10 CPC, which deals with the procedure in case of assignment before the final order of the suit. Rule 10 refers to “devolution of any interest” during the pendency of the suit. In such a case, the court can grant leave to prosecute the suit against the person to or upon whom such interest has been devolved. Admittedly, the partner who died is none other than the father of the appellant and the other sole surviving heir is his sister. The sister is admittedly not interested in joining the firm and, therefore, she is not taking over the assets and liabilities of the firm. Therefore, there has been a complete devolution of interest in favour of the appellant. Under the circumstances, the subordinate court had allowed the amendment and permitted the appellant to proceed with the suit, granting necessary amendment, which, according to the subordinate court, was necessary for a proper and effective adjudication of real dispute between the parties. The High Court, in our view, by taking a hypertechnical approach held that if such a prayer is allowed, the same would alter the nature and character of the suit. In our view, such a stand cannot be countenanced considering the peculiar facts and circumstances of the case.”
[emphasis applied]
11. Para 13 of the above-mentioned judgment cannot be said to have held the suit would stand abated in the event of death of one of the partners where the partnership firm comprises two partners. What this Court has observed is that where one of the several partners dies in the suit instituted in the name of the partnership firm “as compared to when one of the two partners of the partnership firm dies”, the decree so granted would not be executable even if the partnership firm succeeds in the suit. It does not mean that the suit stands abated.
12. For the reasons aforementioned, the appeal is allowed, the impugned judgment dated 20.07.2019, passed by the High Court, is set aside and S.B.Civil First Appeal No.117/2004 is restored to its original number and file of the High Court. The High Court shall proceed to decide the application dated 20.05.2013, filed by the legal representatives of the deceased – Shiv Singh Galundia under Order XXII, Rule 3 CPC, for their substitution in place of the deceased and after deciding that application, the High Court will take up the appeal on merits.
13. It is clarified that we have not expressed any opinion on the merits of the case.
14. As a result, pending interlocutory application also stands disposed of.
