TMI Blog1968 (4) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills, Kanpur, through the director' Bishan Dayal, son of Lala Kishori Lal.....". As a result of an application for amendment, which was allowed, the description of the defendant was modified as follows: "Rajendra Prasad Oil Mills, Kanpur, through (1)Bishan Dayal, son of L. Kishori Lal, (2)Rameshwar Prasad, son of Lala Kishori Lal, and (3)Sunder Lal, son of L. Ram Bilas......directors of the said mills". Only one written statement was filed, which, according to the heading, was the written statement of Rameshw4ar Prasad. At the very beginning thereof stands recorded what has been described therein as the preliminary objection that " Rajendra Prasad Oil Mills, Kanpur, belonged to N.K. Industries Ltd., Kanpur, a limited company registered under the Indian Companies Act, of which Lala Rameshwar Prasad was the managing director, and the frame of the suit was bad as it was liable to be dismissed on this ground alone. This objection gave rise to the first issue which was as follows : "Has the suit been badly framed ?" The learned civil judge took the view that the suit was not badly framed and, after recording his findings on the other issues, which related to the meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable, the suit which has given rise to this appeal was not maintainable. The contention on behalf of the appellants is that, though a limited company falls within the definition of the expression "person" as embodied in the General Clauses Act, it cannot be held to fall within the purview of the expression "person" in rule 10 of Order 30 of the Code of Civil Procedure by reason of the limitation contained in the definition itself, viz ., " unless there is anything repugnant in the subject or context". Reference has been made to the Companies Act and it has been urged that the provisions contained in section 147 of that Act are repugnant to the notion of a limited company carrying on business in a name or style other than its own name. Section 147 of the Companies Act need not be reproduced. Suffice it to say that the provisions contained therein provide for the mode in which the name of a company along with the address of its registered office is required to be published in all matters connected with the business carried on by that company either at the registered office or elsewhere. The provisions also declare that failure to comply with the above requirements, as incorpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sad Oil Mills may have to be excluded from the purview of the expression by reason of the fact that the provisions contained in section 147 of the Companies Act make out that it is not permissible for a company to carry on business in a name or style other than its own name but it does not follow that, even though the Civil Procedure Code contains nothing to indicate the aforesaid repugnancy, the case of a company carrying on business in a name or style other than its own, must be held to be excluded from the purview of the expression "person" in rule 10 of Order 30 of that Code. The decision of the Supreme Court in the case of Dulichand Laxminarayan v. Commissioner of Income-tax [1956] 29 T.R. 535; [1956] S.C.R. 154; AIR 1956 SC 354 thus lends no assistance to the contention of the learned counsel for the appellants. It does not appear to be the law that the result of the provisions contained in Companies Act, whereby limited companies are prohibited from carrying on business in any name or style other than their own, is that the expression "person" wherever used in the Code of Civil Procedure must be construed as excluding the case of a company carrying on business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing such corporate name may acquire a right to the protection of that name. The limited company in the above case was H. E. Randall, Limited. This company started the trade of selling American shoes under the name, The American Shoe Company. This trade was carried on at a number of shops in a manner which contravened provisions contained in the English Companies Act parallel to those contained in section 147 of the Indian Companies Act. This business, carried on under the name of. The American Shoe Company, acquired a large reputation. The defendants to the suit, which culminated in the above decision, opened a shop in a name which resembled the name of The American Shoe Company. H. E. Randall Limited thereupon brought an action to restrain the defendants from using a name resembling the name of The American Shoe Company on the assertion that the resemblance was such as to represent or lead to the belief that the defendants' business was a branch of or connected with that of the plaintiffs. The defence, inter alia , was that, since the business which ,the plaintiffs carried on under the name, The American Shoe Company, which was different from the plaintiff's corporate name, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted to be disobeyed the provisions of the Companies Act in some respect or another, the proposition is so wide as to become on the face of it absurd. If, on the other hand, it amounts to this, that the non-registration of his debenture by a director is a continuous representation to every other shareholder and creditor that such a debenture does not exist, it assumes a construction of the section to which I cannot assent; and I know of no authority which this or any other court has to add additional penalties to that which the legislature has specifically enacted". It was held that the mere omission to register the debentures, without concealment, did not invalidate the debentures. This decision clearly makes out that the effect of the prohibitions contained in the Companies Act must be held to be limited to the penalties provided for a breach of those prohibitions. The claim of a director of the company who had advanced money to the company was upheld notwithstanding the fact that the debentures issued on the basis of that advance had not been registered in accordance with the requirements of the law which provided for a penalty for nonregistration. Reference may next be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Woollen Mills, Kanpur, which was not a legal entity. The contention was that the Kanpur Woollen Mills, Kanpur, belonged to the British India Corporation Ltd., Kanpur, and since the Kanpur Woollen Mills, Kanpur, was not a legal entity, the notification referring the dispute should have mentioned as opposite party the British India Corporation Ltd., Kanpur, instead of Kanpur Woollen Mills, Kanpur. This contention was not accepted. V. Bhargava J. observed as follows : "This contention has no force in view of the fact that the petitioner- company has itself chosen to carry on business in the name and style of the Kanpur Woollen Mills, Kanpur, and, secondly, any mention of the Kanpur Woollen Mills, Kanpur, has to be read as referring to the petitioner-company on the principle laid down in rule 10, Order 30, of the Code of Civil Procedure.........". After quoting rule 10, the learned judge observed further as follows: "Consequently, even if a regular suit has to be filed, the petitioner-company could have been sued in the name of the Kanpur Woollen Mills, Kanpur, and, therefore, reference of the industrial dispute by referring to the petitioner-company by that name and style does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than his (or its) own name and the provision, being a beneficent one, cannot be construed strictly and in a manner not warranted by the language of the statute. I would like now to refer to another circumstance which appears to me to be conclusive of the matter. Provisions parallel to those contained in section 147 of the Companies Act are to be found in sections 65 and 66 of the Indian Companies Act (VI of 1882) which was in force at the time the General Clauses Act, 1897, was brought on the statute book. Though the question which has arisen for consideration by us relates to the meaning to be assigned to the expression "person" in rule 10 of Order 30 of the Code of Civil Procedure, the contention of learned counsel for the appellants amounts, in substance, to this that, by reason of the provisions contained in section 147 of the Companies Act, it must be held that the expression "person", whenever and wherever used in any statute, must be construed as excluding a limited company from the purview of that expression. Keeping in view the Tact that provisions parallel to those contained in section 147 of the Companies Act formed part of the provisions of the Indian Companies Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rasad Oil Mills, Kanpur, through the director Bishan Dayal, son of L. Kishori Lal. Subsequently, the plaint was amended. The defendant was described as Rajendra Prasad Oil Mills, Kanpur, through : (1) Bishan Dayal, son of L. Kishori Lal, (2) Rameshwar Prasad, son of L. Kishori Lal, and (3) Sunder Lal, son of L. Ram Bilas, Directors of the said Mills". Rameshwar Prasad filed a written statement. In it he took a preliminary objection that Rajendra Prasad Oil Mills, Kanpur, to the knowledge of the plaintiff, belonged to N. K. Industries Ltd., Kanpur, a limited company registered under the Indian Companies Act. There was no firm of the name of Rajendra Prasad Oil Mills. The frame of the suit was bad and it was liable to be dismissed. The trial court held that the evidence proved that the disputed contract had taken place between Murlidhar Verma, the plaintiff, and Rajendra Prasad Oil Mills and not between the plaintiff and N. K. Industries Ltd. Though it was admitted that Rajendra Prasad Oil Mills was owned by N. K. Industries, and was itself not a legal entity, but, since the contract was taken up with the mills, it was not necessary for the plaintiff to institute a suit against N. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould not have such a meaning. It is only then that the context would create such a repugnancy as would make non-applicable the definition of the word 'person' in the General Clauses Act". The proper approach has to be whether the context or the subject presents a repugnancy. If so, of what nature, character or extent. It was urged that rule 10 refers to the person who carries on business by the word "his" ." His " could properly refer to a human being. It could not be used for a juristic personality. Taken literally, the word "his" would refer to a male human and not a female. The excluding of a female would make no sense. Obviously, the word "his" has been used in a descriptive rather than in a restrictive sense. Order 33, rule 1, Civil Procedure Code, defines a pauper with reference to a person who, inter alia , possesses wearing apparel. In Kundan Sugar Mill's case ( supra ), mentioned above, the Full Bench declared that, though a company does not possess a wearing apparel, it would nevertheless be a person within the meaning of that rule and could take its benefit. It was then urged that the last part of rule 10 provides that all other rules of Order 30 would apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court decision in Dulichand Laxminarayan v. Commissioner of Income-tax [1956] 29 I.T.R. 535; [1956] S.C.R. 154, In that case it was held that the word "person" in section 4 of the Partnership Act contemplates only natural or artificial persons and a firm would not be a person within it. The definition of the word "person", occurring in the General Clauses Act, would not wholly apply, because the concept of the firm would be completely repugnant to the subject of partnership law. According to this case, therefore, the enquiry has to be whether the definition in the General Clauses Act or any part of it is repugnant to the subject of the entity sought to be included in the meaning of the word 'person' in any enactment. One relevant question hence would be : is there anything in the law relating to companies which is repugnant to the general definition of the word "person "? Section 147 of the Companies Act, 1956, relates to the publication of name by the company. It corresponds to sections 73 and 74 of the Companies Act, 1913, and section 108 of the English Companies Law, 1948. Sub-section (1) thereof reads: " 147. Publication of name by company. (1) Every company ( a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 are complied with, it could not be said that the company was concealing its identity in its dealings, even though it was carrying it on in an assumed name or style. In H. E. Randall Ltd. v. British American Shoe Co. [1902] 2Ch. 354. Randall was carrying on the business in the name of The American Shoe Company with the corporate name painted and printed as required by the provisions. The defendant started business in shoes under the name of The London American Shoe Company, which was ultimately changed into The British American Shoe Company. The plaintiff brought the action for an injunction against the defendants restraining them from using either of those names, or any other similar name, on the ground that they were stealing the goodwill of the plaintiff's business name. It was urged that the plaintiff was carrying on business in breach of sections 41 and 42 of the Act, inasmuch as they had, for some time in the past, not painted and published their corporate name as required by sections 41 and 42. It was held that sections 41 and 42 of the Companies Act, 1862, imposed certain penalties on a company for non-compliance with its provisions but the additional penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition by the State of any estate from being void on the ground that they were inconsistent with articles 14, 19 or 31. In Kochunni v. State of Madras AIR 1967 Punj. 1643 , Subba Rao J., speaking for the court, held that, in view of the object behind the article as obtainable from its statement of objects and reasons, a law protected by article 31A would be such alone as related to agrarian reforms. The operation of the generality of the language of the article was confined to the true intent and object of the law. Mr. Justice Holmes once said : " We must think things and not words" (per Hidayatullah J. in L. C-Golaknath v. State of Punjab AIR 1967 Punj. 1643. It is thus clear that the language of the law operates within its purpose and policy. As seen above rule 10 of Order 30 is based upon rule 11 of Order 48A of the Rules of the Supreme Court of England. The English rule came up for interpretation in Maclver v. G. J. Burns [1895] 2 Ch. 630. Lindley L. J. observed at page 635 that the object of the rule is to authorise suing persons in the name in which they carry on business, the underlying principle being to facilitate the carrying on of actions against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make enquiries as to who is the owner of the business that is being carried on in an assumed name, and in most cases he would only know the name of the real owner after he had brought his suit, for the defendant must then appear in his own name. (Order 30, rule 6). If it were to be held that a decree obtained by such a producer or merchant in a suit instituted against the assumed name is a void decree, it would lead to manifest hardship, would open up a wide door to fraud and would sap the credit on which commercial dealings largely rest. In our judgment, Order 30, rule 10, Civil Procedure Code, rests on these considerations and they must be kept in view in construing that rule ." The aim and aspiration of rule it was to suppress fraud and mitigate hardship and to advance the interest of commerce by preventing a person, who conceals his identity and is carrying on business in a firm name or in an assumed name, from getting away from his business obligations. Lack of knowledge of the true identity was the real reason for the enactment of this provision. Rule 10 seeks to circumvent the effect of concealment. This being the true intent and object, the rule would apply to only s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess within the jurisdiction in the name or style other than his own name. It was observed : "The words 'any person' are of course large enough to include a foreigner, and a foreigner who is resident abroad, and to include one who has never been in England in his life, and has never had what has been called the protection of the English law, and merely carries on business in England by his agents. But the question is, ought the court to give an interpretation to the words which would include such a person ? " He ruled that the words should not be construed so as to bring within the jurisdiction persons who neither by nationality, nor by residence, are capable of being made subject to the jurisdiction. There is nothing in the language of Order 30, rule 10, Civil Procedure Code, to expressly suggest that the person must be alive, not dead, not a minor and not a foreigner or that the business must not cease to exist. But all these restrictions have been deduced from the object and real reason of the rule; and the operation of the rule has been so confined as to exclude such classes of cases. So, to be in accord with the underlying context and subject of Order 30, rule 10, the w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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