TMI Blog1956 (2) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... registration as a firm constituted under a deed of partnership dated the 17th February, 1947. In the opening paragraph of that deed the names and descriptions of the parties thereto were set out in the following words : "We, Dulichand Laxminarayan Firm, through Malik (partner) Laxminarayan son of Laljimal, Laxmi Narayan Chandulal Firm through Malik (partner) Chandulal son of Nanakchand, Mukhram Bholaram Firm through Malik (partner) Tekchand son of Bholaram, Jeramdas Hiralal Firm through Malik (partner) Beharilal son of Asharam and Mangatrai Ganpatram through Malik (partner) Ganpatram son of Mangatrai, Agarwar Bani, aged 50, 40, 28, 25, 45 residing at Raigarh are partners in equal shares with effect from 5th January, 1946, in the firm Dulichand Laxminarayan in whose name Importers' Licence of cloth is issued for Raigarh State group-Raigarh, Jaipur Saraigarh, Udeypur and Sakti State, on the following terms and conditions ................................" Then follow 15 clauses containing the terms on which the partnership business was agreed to be done. At the foot of the deed signatures were appended in the following order one below the other : Laxminarayan for Dulichand La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner on the ground that as all the five executants of the deed had signed the application for registration, the requirements of law had been satisfied. Accordingly on the 12th June, 1951, the Tribunal directed registration of the firm. On the application of the Commissioner of Income-tax, Madhya Pradesh, the Tribunal under section 66(1) of the Act drew up a statement of case and submitted to the High Court of Nagpur the following question of law, namely : Whether on the facts of the case the assessee is entitled to registration under section 26A of the Income-tax Act ? The reference came up for hearing before a Bench of the Nagpur High Court on the 30th December, 1953. Following their own judgment delivered earlier in the day in Miscellaneous Civil Case No. 189 of 1951, Jabalpur Ice Manufacturing Association v. Commissioner of Income-tax, Madhya Pradesh and Bhopal, the High Court answered the referred question in the negative. In view, however, of the importance of the question involved in the reference the High Court, under section 66A(2) of the Act, gave a certificate of fitness for appeal to this Court. Hence the present appeal. Section 26A of the Act under which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er a firm as such can be a partner in another firm. Section 26A of the Act quoted above postulates the existence of a firm, for otherwise no question of its registration can possibly arise. The Act, however, does not indicate what a firm signifies or how it is to be constituted. Indeed section 2(6B) of the Act clearly provides, inter alia, that "firm" and "Partnership" have the same meanings respectively as they have in the Indian Partnership Act, 1932. We have, therefore, to go to the last mentioned Act to ascertain what a firm is and how it can be created. Turning, then, to the Indian Partnership Act, 1932, we come to section 4 which defines "partnership", "partner", "firm" and "firm name" in the words following :--- 4. Definition of "partnership", "partner", "firm" and "firm name" : "Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm name." This section clearly requires the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecognition, as, for instance, in Scotland. That is, however, not the English common law conception of a firm. English lawyers do not recognize a firm as an entity distinct from the members composing it. Our partnership law is based on English law and we have also adopted the notions of English lawyers as regards a partnership firm. Some of the mercantile usages relating to a firm have, however, found their way into the law of partnership. Thus in keeping accounts, merchants habitually show a firm as a debtor to each partner for what he brings into the common stock and each partner is shown as a debtor to the firm for all that he takes out of that stock. But under the English common law, a firm, not being a legal entity, could not sue or be sued in the firm name or sue or be sued by its own partner, for one cannot sue oneself. Later on this rigid law of procedure, however, gave way to considerations of commercial convenience and permitted a firm to sue or be sued in the firm name, as if it were a corporate body (see the Code of Civil Procedure, Order XXX, corresponding to Rules of the English Supreme Court, Order XLVIII-A). The law of procedure has gone to the length of allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s country that a firm as such is not entitled to enter into partnership with another firm or individuals. It is not necessary to refer in detail to those decisions many of which will be found cited in Jabalpur, Ice Manufacturing Association v. Commissioner of Income-tax, Madhya Pradesh, to which a reference has already been made. We need only refer to the case of Bhagwanji Morarji Goculdas v. Alembic Chemical Works Co. Ltd. and Others, where it has been laid down by the Privy Council that Indian law has not given legal personality to a firm apart from the partners. This view finds support from and is implicit in the observations made by this Court in Commissioner of Income-tax, West Bengal v. A.W. Figgies Co. and Others. In In re Jai Dayal Madan Gopal, Sulaiman, C. J., followed the Calcutta decisions and was not prepared to dissent from the view that the word "person" in section 239 of the Indian Contract Act, 1872, should not be interpreted so as to include a firm. The learned Chief Justice, however, expressed the view that it was difficult to say that there was anything in section 239 itself which made the application to that section of the definition of "person" as given in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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