MIS. AVK TRADERSversusKERALA STATE CIVIL SUPPLIES CORPORATION LTD.

                         [2013] 10 S.C.R. 562


A                        MIS. AVK TRADERS
                                    v.
     KERALA STATE CIVIL SUPPLIES CORPORATION LTD.
              (Civil Appeal No. 9697 of 2013)
                         OCTOBER 29, 2013
B
          [K.S. RADHAKRISHNAN AND A.K. SIKRI, JJ.]

         Code of Civil Procedure, 1908 - Or.XX/I, r. 10 - Devolution
    of interest during pendency of suit - Suit instituted by
C   partnership firm consisting of two partners - One of the two
    partners died - Subordinate Court allowed amendment sought
    by the sole surviving partner (appellant) and permitted him
    to proceed with the suit as a proprietary concern - Justification
    - Held: Justified - The Court can grant leave to prosecute the
D   suit against the person to or upon whom such interest has
    been devolved - On facts, the partner who died was none other
    than the father of the appellant, and the other heir of the
    deceased partner was the sister of appellant who was not
    interested in joining the firm - Therefore, there was complete
E   devolution of interest in favour of the appellant - High Court
    by taking a hyper-technical approach held that if prayer of
    appellant was allowed, the same would alter the nature and
    character of the suit - Such a stand cannot be countenanced
    considering the peculiar facts and circumstances of the case
F   - Further, the High Court failed to notice that if the partnership
    firm succeeds in the suit, the decree so granted would not be
    executable, and hence a nullity.

      A registered partnership firrn, consisting of only two
  partners, filed a suit against respondent-corporation.
G During pen~ency of the suit, one of the partners died.
  Though the firm stood dissolved, in terms of the
  partnership deed, the sole surviving partner (appellant)
  could continue the business of the firm as a proprietary
  concern. Consequently, all the interests of the firm stood
H                           562
AVK TRADERS v. KERALA STATE CIVIL SUPPLIES 563
            CORPORATION LTD.
devolved upon the appellant. He filed an application for         A
leave to continue to prosecute the suit as a proprietary
concern; and another application seeking necessary
amendment of the plaint. The Subordinate Court allowed
the applications preferred by the appellant.
                                                                 B
     Aggrieved, the Respondent-Corporation preferred
Petition before the High Court. The High Court did not
allow the prayer for amendment of the plaint moved by
the appellant holding that there was no question of
altering and amending the plaintiff-partnership firm as a        C
proprietary concern as that would alter the nature and
character of the suit, which cannot be permitted, and
further that the indefeasible rights of the legal heirs of the
deceased partner were insulated under sub-rule (2) of
Rule 4 of Order XXX of CPC. Hence the present appeal
by the appellant.                                                D
    Allowing the appeal, the Court
     HELD: 1.1. The Subordinate Court allowed the prayer
of appellant possibly bearing in mind the principle laid E
down in Order XXll 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.
                                                              F
Admittedly, the partner who died is none other than the
father of the Appellant and the other sole surviving heir
is his sister. 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 G
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 H
    564       SUPREME COURT REPORTS             [2013] 10 S.C.R.


A necessary for a proper and effective adjudication of real
  dispute between the parties. The High Court by taking a
  hypertechnical approach held that if such a prayer is
  allowed, the same would alter the nature and character
  of the suit. Such a stand cannot be countenanced
B cQnsidering the peculiar facts and circumstances of the
  case. [Para 9] [568-H; 569-A-E]

       1.2. The legal consequences pointed out by the High
  Court might apply in a case where one of the several
C 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 dies. Further, the High Court
  failed to notice that if the partnership firm succeeds in the
  suit, the decree so granted would not be executable, and
  hence a nullity. [Para 10] (569-E-F]
D
       Purushottam Umedbhai & Co. v. Manila/ & Sons AIR
  1961 SC 325: 1961SCR 982; CIT v. Seth Govindram Sugar
  Mills AIR 1966 SC 24: 1965 SCR 488 - cited.

                         Case Law Reference:
E
          1961 SCR 982            cited                Para 7
          1965 SCR 488            cited                Para 7

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
F   9697 of 2013.

        From the Judgment and Order dated 29.03.2012 of the
    High Court of Kerala at Ernakulam in Original Petition (C) No.
    631 of 2012.
G       Gaurav Mitra, Shivendra Singh, Madhurima Tatia for the
    Appellant.

          Ramesh Babu M.R. for the Respondent.

H         The Judgment of the Court was delivered by
 AVK TRADERS v. KERALA STATE CIVIL SUPPLIES 565
             CORPORATION LTD.
    K.S. RADHAKRISHNAN, J. 1. Leave granted.                          A
      2. OS No.39 of 2008 was a suit preferred on 1.1.2008 by
M/s AVK Traders, a partnership firm, for realization of an
amount of Rs.53,39,648/- against the Respondent Corporation
for claims with regard to various supplies made to the
Corporation during the year 2004-06. Respondent Corporation
                                                                      8
filed its written statement on 26.5.2008 denying the claim. M/s
AVK Traders was a partnership firm with only two partners, the
Appellant and his father. The partnership was later re-
constituted. The re-constituted partnership under the Partnership
Deed dated 4.11.2002 contained the following clause :-                C

    "In the event of retirement of partner or refusal of the legal
    representative of the deceased partner to become. the
    partner of the partnership as on the expiry of the period
    given to them to become partners or on the expiry of the          D
    period given to them to become partner, the other partner
    shall have the power to purchase his share by giving notice
    to retired partner or the legal representative of the
    deceased partner in writing to that effect within three
    calendar months or receipt of the notice by the retained          E
    partner or the legal representative of the deceased partner.
    If the surviving partner fail to purchase the share of the
    partnership or the legal representative fail to express their
    interest within the said period, the partnership shall dissolve
    as on the expiry of three months mentioned earlier. ..... "
                                                                      F
During the pendency of the suit on 2.2.2009, the father of the
Appellant, who was a partner, expired. The Appellant and his
sister were the only legal representatives of the deceased
father. On the death of the father, the partnership stood
dissolved w.e.f. 24.5.2009 since the sister was not interested        G
in becoming a partner of the firm.

     3. In view of the above-mentioned clause, though the firm
stood dissolved on 24.5.2009, the sole surviving partner could
continue the business of the firm as a proprietary concern.           H
    566       SUPREME COURT REPORTS                   [2013) 10 S.C.R.


A Consequently, all the interests of the firm stood devolved upon
  the Appellant and he filed I.A. No.817 of 2002 in O.S. No.39 of
  2008 for leave to continue to prosecute the suit for and on behalf
  of M/s AVK Traders as a proprietary concern. The Appellant
  also preferred I.A. No.814 of 2012 seeking necessary
8 amendment cf the plaint. Appellant also filed I.A. No.815 of
  2012 under Order XXlll Rule 17 read with Section 151 CPC
  praying for recalling and examining PW1. The Subordinate
  Court by a common order dated 8.2.2012 allowed all the
  aforementioned applications preferred by the Appellant. With
C regard to the prayer for continuing the suit, the Subordinate
  Court held as follows :-

          "In the instant case, out of two partners in the plaintiff firm,
          one partner died during the pendency of the suit and as
          such the partnership got dissolved. Therefore, I hold that
D         the other partner viz. the 2nd petitioner is entitled to
          continue the suit. Hence, necessary amendment is also
          required to the plaint. Therefore, for a proper and effective
          adjudication of the real dispute between the parties the
          proposed amendment is also liable to be allowed ...... "
E
       4. The Respondent Corporation preferred I.A. No.809 of
  2012 under Order XIV Rule 5 CPC seeking framing of
  additional issues. The Subordinate Court vide order dated
  8.2.2012 dismissed I.A. No.809 of 2012 filed by the Respondent
F Corporation.

         5. Aggrieved by the above-mentioned orders, the
    Respondent Corporation preferred Original Petition (Civil)
    No.631 of 2012 before the High Court of Kerala seeking the
    following reliefs :-
G
           "(a)   To call for the records leading to Ext.P11, P11 (a),
                  P11(b) & P12 and set aside the same.

           (b)    To declare that the respondent/plaintiff is not entitled
                  to continue the suit as a Proprietary concern.
H
AVK TRADERS v. KERALA STATE CIVIL SUPPLIES 567
 CORPORATION LTD. [K.S. RADHAKRISHNAN, J.]
      (c)   To direct the Court below to frame additional issues       A
            as prayed for in Ext.P-4.
      (d)   To issue any other appropriate order or direction as
            this Hon'ble Court may deem fit and proper in the
            facts and circumstances of the case."
                                                                       B
The High Court did not allow the prayer for amendment of the
plaint moved by the surviving partner and held as follows :-
     "When the above be the settled position of law, the
     application for amendment moved by the surviving partner
     to alter the cause title to convert the suit as one by the C
     proprietary concern with him as its 'proprietor', which was
     instituted in the name of a firm, for the reason of the death
     of the Managing Partner and also non-interestedness of
     the legal heirs of that partner to come on record, has no
     basis or merit at all, as the death of the Managing Partner D
     in no way affects the continuance of the suit instituted in
     the 'firm name', in view of the protection afforded under
     Order XXX Rule 4 of the Code."
      6. The High Court also took the view that there is no
question of altering and amending the plaintiff firm as a              E
proprietary concern as that would alter the nature and character
of the suit, which cannot be permitted. Further, it was also held
by the Court that no further dilation over that aspect is called
for in the case other than pointing out that the indefeasible rights
of the legal heirs of a deceased partner in a suit filed by a firm     F
are insulated under sub-rule (2) of Rule 4 of Order XXX of the
Code. The High Court, however, did not interfere with the order
of the Subordinate Court allowing the application for recalling
PW1 for further examination. With regard to the prayers of the
Respondent Corporation for raising additional issues, the High         G
Court took the view that the same should have been allowed.
Consequently, the prayer made by the Respondent Corporation
for framing additional issues was allowed. Aggrieved by the
above-mentioned order, this appeal has been preferred by the
Appellant.                                                             H
    568       SUPREME COURT REPORTS               [2013) 10 S.C.R.


A         7. Learned counsel appearing for the Appellant submitted
  that on the death of one of the partners of a partnership firm
  consisting of only two partners, remaining partner has become
  the sole proprietor/owner with all assets and liabilities and as
  such he can always proceed with the suit as per the provisions
B contained under Order XXll Rule 10 CPC. Learned counsel
  also submitted that the reasoning of the High Court, if at al!
  apply, could apply in a case where there are more than one
  partners after the death of a partner, in the event of which the
  firm could continue with minimum of two partners. In such a
c situation, learned counsel suggested that the provision of sub-
  rule (2) of Rule 4 of Order XXX of the Code would apply.
  Learned counsel placed reliance on the judgment of this Court
  in Purushottam Umedbhai & Co. v. Manila/ & Sons [~IR 1961
  SC 325), particularly para 9 of the said judgment in support of
  this contention. Learned counsel also made reference to the
0
  judgment of this Court in CIT v. Seth Govindram Sugar Mills
  [AIR 1966 SC 24].

        8. Learned counsel appearing for the Respondent
  Corporation, on the other hand, submitted that if the Appellant
E is allowed to continue the suit in the name of the firm, all the
  defence set up by the defendant in the written statement would
  be frustrated. Learned counsel also submitted that if the
  amendment sought for is allowed, that will alter the very nature
  and character of the suit and that the High Court has rightly
F rejected that prayer which calls for no interference by this Court.

       9. 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
G 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
H by the remaining so-called partner. We notice, the Subordinate
AVK TRADERS v. KERALA STATE CIVIL SUPPLIES 569
 CORPORATION LTD. [K.S. RADHAKRISHNAN, J.]
Court has allowed that prayer possibly bearing in mind the             A
principle laid down in Order XXll 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          B
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. 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      c
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
                                                                       0
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.                                                           E

     10. We are of the view that the legal consequences
pointed out by the High Court might apply in a case 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               F
partners of the partnership dies. Further, the High Court failed
to notice that if the partnership firm succeeds in the suit, the
decree so granted would not be executable, and hence a nullity.
In such circumstances, we are inclined to allow this appeal and
set aside the order of the High Court interfering with the·order       G
of the Subordinate Court allowing the application for
amendment and permission to prosecute the suit as prayed for.
Ordered accordingly.

8.8.8.                                           Appeal allowed.
                                                                       H