DUHILANOMAL AND OTHERS Vs. MAHAKANDA HOUSING CO. LTD

012-SLLR-SLLR-1982-2-DUHILANOMAL-AND-OTHERS-Vs.-MAHAKANDA-HOUSING-CO.-LTD.pdf


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Sri Punka I .tin' Rcjirtrls
IIV.V) 2 S.I..R
DUHILANOMAL AND OTHERSVs.
MAHAKANDA HOUSING CO. LTD.
SUPREME COURT
WIMALARATNE. J.. VICTOR PERERA. J.. & COLIN THOME. J.
S.C. APPEAL No. 90/81 C . A. APPEAL No. 8/78. D C. COLOMBO No. 2408/REJUNE: 4. 1982
Contract of tenancy – Civil Procedure Code, s.393 – Death of one of severaldefendants – Right to sue surviving defendants – Obligations of partners wherepartnership is tenant.
The first defendant who was the father of 2nd and 3rd defendants enteredinto a contract of tenancy with P and carried on business in premises No.76.Chatham Street. Colombo I. On 1.4.55 he entered into an agreement with 2ndand 3rd defendants whereby the business was carried on partnership. Clause 15of the Agreement provided that on the death of the partner the partnershipshould not he dissolved. Clause 17 provided that on death of the 1st defendanthis wife should succeed as partner. P sued the defendants for ejectment anddamages on 10.8.73. On 11.10.74 the 1st defendant died and shortly afterwardshis widow also died.
I’ invoked Section 393 of the C.P.C. to sue the 2nd and 3rd defendants. TheDistrict Judge held that the legal representative of the 1st defendant should besubstituted for the 1st defendant. P appealed to the Court of Appeal who revisedthe District Judge'' order
SC Duhilanomal and Others v. Mahakanda Housing Co. Ltd. (Wimalarame, J) 505Held –
Per Wimalarame, J. The tenancy was a partnership asset and in the event ofdeath of one partner the cause of action based on tenancy survives against otherpartners.
That the word ‘alone’ in Section 393 of the C.P.C. means that survivors arcliable to be sued independently without any others being sued.
Per Victor Perera, J. •
The Roman Dutch Law of tenancy applied according to which when the
three defendants entered into a contract of tenancy as partners of a firlh fora purpose of their trade or business there was a joint obligation which createdan obligation in solidum so that each partner was severally liable.
The word ‘alone’ in Section 393 of the C.P.C. means exclusively so that where
there are more defendants than one and one of them dies and if the causeof action survives against the other defendants alone, the plaintiff can continuethe action without bringing in the legal representative.
Cases referred to:
Sankru v. Bhoju AIR (1936} Patna, 548.
Gajanand v. Sardamal AIR (1961) Rajasthan, 223.
Nathurmal Gianchand v. Makaty (1946) 47 NLR 376.
Perera v>. Liyanagama (1956) 58 NLR 454.
Pants AppQhamy v. Selenchi Appu (1903) 7 NLR 16.
Weeraratne v. Abeywardena (1934) 36 NLR 139, 142.
Gunasekara v. Gunasekara (1941) 43 NLR 73, 75.
APPEAL from judgment of the Court of Appeal reported in [1981] 2SLR232
H.L. de Silva, S.A. with Mano Devasagayam for 2nd & 3rd defendants -respondents – appellants.
H.W. Jayewardene, Q.C., with Miss P. Seneviratne for plaintiff – appellant -respondent.
Cur.adv.vult
June 29, 1982
WIMALARATNE, J.
The question for decision in this appeal is whether on the deathof one defendant the right to sue survives against the other defendantsalone in a tenancy action where the defendants had been partnersof a business which they had carried on in the premises, the subjectmatter of the suit. The subject of the continuation of actions afterthe alteration of a party’s status is contained in Chapter XXV ofthe Civil Procedure Code (Cap. 101) and the relevant part of section393 is in these terms “If there be more defendants than one, and
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any one of them dies, and the right to sue survives against thesurviving defendant or defendants alone, the court shall on applicationby way of summary procedure, make an order to the effect that theaction do proceed against the surviving defendant or defendants." 1have emphasised the word “alone" because the main argument centredaround the interpretation of that word in the context in which it appears.
The facts shortly are that the three defendants were the tenantsof No.76, Chatham Street. Colombo, where they carried on inpartnership the business of W. Lalchand & Co. Claiming that thepremises were excepted premises within the meaning of the RentAct No.7 of 1972, the landlord sued the three defendants by name,but designated them as carrying on a business in partnership, andprayed for their ejectment, for arrears of rent in a sum of Rs. ,13,600/-and for damages at Rs.2.600/- per month from 1.8.73. The defendantspleaded, inter alia, the protection given by section 22 of the RentAct. as well as a promissory estoppel founded upon a promise allegedto have been held out by the plaintiff to permit the defendants toremain in occupation of No.72, on their handing over possession ofpremises No.82 (in both of which they had carried on theii business)as a result of which promise they gave up No.82. After answer wasfiled the 1st defendant Assudamal Duhilanomal who is the father ofthe 2nd and 3rd defendants, died on 11.10.74. The plaintiff thereuponinvoked the provision of section 393 of the Civil Procedure Codeclaiming that the right to sue the 2nd and 3rd defendants survivedagainst them.
The learned District fudge held that as the contractual obligationsbetween the defendants and the plaintiff were not of a. personalnature, the legal representative of the deceased defendant was liableto be sued in respect of such obligations. Hence the landlord wasnot entitled to proceed under section 393 but was obliged to takesteps under section 398(J) in order to substitute the legal representativeof the 1st defendant.
The Court of Appeal reversed the District Judge’s order, and heldthat the causes of action survived against the surviving defendantsalone. It followed certain decisions of the Courts in India, whichhave taken the view that the test as to whether a right to sue survivesin the surviving plaintiffs or against the surviving defendants is whetherthe plaintiffs alone can sue or the surviving defendants could alonebe sued in the absence of the deceased plaintiff or defendantrespectively. See San': •' 7 ,(1) an'! Gainntmd V.v. Scrdc.nial(2)
SC Duhilanomal and Others v. Mahakanda Housing Co. I.td. tWinuiluratne.l-) 307
In seeking an answer to the question whether the causes of actionsurvived against the 2nd and 3rd defendants alone, an' examinationof the partnership agreement is essential. The 1st defendant, whowas the sole proprietor of this business which he carried on at thesame premises for a long period. of time. entered into a. writtenpartnership agreement with the 2nd and 3rd defendants as from1.4.5-5. Clause 15 provided that in the event of the death of Assudama!Duhilanomal the surviving partner shall not dissolve the partnershipbetween the surviving or remaining partners. Clause 17 provided thatin the event of the- death of Assudamal Duhilanomal the survivingpartners shall admit his wife Parabatibai as a partner in full successionto him in the partnership. It may be stated, however, that no stepswere taken by the 2nd and 3rd defendants to admit their mother.Parabatibai as a partner up to the time of her death, sometimeduring the pendency of these proceedings. The legal representativeof the deceased 1st defendant had certainly no right to carry on thebusiness along with the 2nd and 3rd defendants.
Also relevant in seeking an ansyyer to the question we are calledupon to decide are the pleadings… The three defendants filed a jointanswer and admitted that they were tenants of the premises wherethey were carrying on the business of Lalchand & Co. in partnership.In their written submissions filed in the District Court the 2nd and• 3rd defendants claimed the tenancy of the premises as an asset ofthe partnership. There could therefore be no doubt that1 the tenancyof the premises which forms the subject matter of this action is notthe personal property of any individual partner or partners but ofthe partnership itself, and that the tenancy of the premises was takenfor the purpose of the partnership business and for no other.
By reason of section 3 of the Civil Law Ordinance (Cap.79) inall questions or issues which have to be decided in Ceylon withrespect io the law of partnership the law to be administered is thesame as would be administered in England in the like case, in thecorresponding period, if such question or issue had to be decided in- England, unless in any case other provision is made by any enactment.-There is thus no controversy that the English lawVfPartnership hasto be applied when one has to decide upon the liability’of partners.;The liability of partners for all debts and obligations (contracts) iscontained in section 9 of the Partnership Act, 1890 in terms of whichevery partner in a firm is liable jointly with the other partners for,:all debts and obligations of the firm incurred while he is a partner;and after his death his estate is also'severally liable in a due course
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of administration for such debts and obligations, so far as they remainunsatisfied, but subject to prior payment of his separate debts.
The principal contention of learned Counsel for the appellants hasbeen that as, after the death of the 1st defendant, his estate wouldbe severally liable for contractual obligations incurred whilst he wasa party, it is necessary to have the legal representative substitutedto safeguard the interests of the estate. Therefore, he submits, the2nd and 3rd defendants cannot be sued alone after the death of the1st defendant. “Alone” in the context of section 393 means “solely”or “to the exclusion of others”, according to his interpretation.
Commenting on this section Underhill in his book on the The Lawof Partnership (8th Ed) says:-
“The net resultis that the plaintiff can bring only one
action, and not several actions, against the members of thefirm. He is not bound to join all the members of the Arm; ifhe does not choose to do so he loses his rights against thosewhom he has omitted. The Court may, however, at the instanceof any defendant, order the- omitted members of the firm, tobe added as co-defendants.
With regard to torts, on the other hand the plaintiff mayissue separate writs against each partner, eithercontemporaneously or successively; so that if the first one suedbecomes bankrupt, the fact of his having sued him alone wouldbe no bar to a second action against another of the partners” p.71.
Explaining what is meant by joint liability, Underhill says – “withregard to the extent of a partner’s liability, each is individually liablefor the whole of the debts and liabilities of the Arm, and even thoughjudgment be obtained against all jointly, it may be enforced againstone only, leaving all questions of contribution to be settled afterwardsbetween the partners” p.73.
If, then, each partner is liable for the whole of the' debts andliabilities of the partnership, and it is open to a creditor to sue onlysome of the partners, leaving out others, it follows that the causeof action based upon a contractual obligation, in the event of thedeath of one partner after action has been Aled, will survive againstthe surviving partners who continue as defendants. Contracts oftenancy entered into between partners and their landlords will beno different from other contracts in this respect. “Alone”, in thecontext of section 393 of the Civil Procedure Code, means in my
SC Dhilanomal and Others v. Mahakanda Housing Co. I .id. 'Victor Perera, 509
view that the survivors are liable to be sued independently withoutany others being joined; “alone” does not mean “none else otherthan the survivor”. On the death of the 1st defendant his legalrepresentative is entitled only to an accounting and to a share ofthe assets; the beneficial interest in the partnership remains in themembers of the partnership for the time being, that is in the 2ndand 3rd defendants. If the ' legal representative of the deceaseddefendant wished to have the estate safeguarded there is provisionin our Civil Procedure to achieve that purpose. There is also provisionfor the surviving defendants to ask for substitution. They do notappear to have taken steps in that direction. On the other hand theyregret, in their written submissions filed in the District Court, thatthey did not in the first instance claim substitution on the basis thatthe tenancy in this case is an asset of the partnership business.
For these reasons I am of the view that the Court of Appeal wasright in reversing the order of the District Court. This appeal isdismissed with costs.
COLIN-THOME, J. — I agree.
VICTOR PERERA, J. I * * * * &
I have had the advantage of perusing the judgment of my brother
Wimalaratne, J. and I agree with his conclusion .that the appeal ofthe 2nd and 3rd defendants-appellants should be dismissed. However,in my view the interpretation and application of Sections 393 and398 of the Civil Procedure Code are matters of extreme practicalimportance when dealing with the continuation of actions after the
alteration of a party’s status and I have therefore attempted to setdown my views independently as I have approached the considerationof this matter somewhat differently.
The plaintiff-Company filed this action on the 10th August 1973alleging that it had let the premises No.76,“Chatham Street. Colombo,to the three defendants who were carrying on business in partnership
at the said premises under the name, style and firm of “W. Lalchand
& Company”. The plaintiff-Company had purported to terminate themonthly tenancy. In paragraph 10 of the plaint the cause of actionwhich had accrued to the plaintiff to sue the three defendants jointlyand severally was
for ejectment from the premises;
recovery of all arrears of rent amounting to Rs. 13,008/-; and
510Sri Lanka Law Reports(I9H2I 2 S.L*R.
recovery of damages at Rs.2,600/- per mensem from 1stAugust 1973 until the plaintiff is restored to vacant possessionof the said premises.
The, reliefs prayed for in the prayer were on the same basis. Intrinsically,the action was one between a landlord and his three tenants basedon a contract of tenancy, in which he was seeking to enforceobligations arising therefrom. The three defendants filed a jointanswer admitting that they were the tenants of the premises andwere carrying on business in partnership denying that they were inarrears, denying the validity, of the notice of termination of thetenancy and praying for a dismissal of the action.
Pending the trial of the action the 1st defendant,. who was thefather of the 2nd and 3rd defendants-appellants died on the 11thOctober 1974. Thereupon the plaintiff-respondent alleging that theright to sue on the cause of ^action pleaded in the plaint survivedagainst the 2nd and 3rd defendants applied to Court for an orderthat the action do proceed against them. Curiously he had omittedto use the word “alone” in his petition and affidavit. The 2nd and3rd defendants-appellants objected to the said application. The DistrictJudge held that the cause of action did not survive against the 2ndand 3rd defendants alone, that the provisions of Section 393 werenot applicable to.. this case and directed that the plaintiff shouldproceed under Section 398(1) by substituting the legal representativeof the deceased 1st defendant.
The plaintiff-respondent "appealed to the Court of Appeal fromthat order and the Court of Appeal by its order dated 18th September1981 set aside the order of the District Judge and made order thatthe action do proceed in terms of Section 393 against the 2nd and3rd defendants-appellants. The 2nd and 3rd defendants-appellantshave appealed against this order of the Court of Appeal.
In the : District Court submissions were made on behalf of theplaintiff and of the 2nd and 3rd defendants almost entirely on thequestion of tenancy and the consequences that affected the tenancyon the death of one of the co-tenants. It was contended on behalfof the 2nd and 3rd defendants that on the death of the 1st defendanthis rights as a tenant devolved on his legal representative and thatshe was therefore entitled to be substituted. It was contended''Onbehalf of the plaintiff that on the death of one of the co-tenants the1'tenancy accrued to the surviving tenant. The District Judge took theview that the legal representative of the deceased tenant succeededto the tenancy rights "lonr with the surviving tenants.
SC. Ohilanomal anil Oilier>' r. Mahakmula Housing ( o. Ltd. I Vidor Per era. J I 511
The plaintiff in his petition of appeal to the Court of Appeal tookup the position that the three defendants were jointly and severallybound by the contract of tenancy and that on the death of the first,defendant the plaintiff, was entitled to proceed against the surviving.,defendants alone. It is not clear what other submissions were madeat the hearing of the appeal before the Court of Appeal. But theCourt of Appeal, in its judgment had started on the premise that“the case before us concerns a partnership” and proceeded to examinethe Law of Partnership by reference to several reported cases dealingwith the partnership law in England as the Law of Partnership inSri Lanka was the English Law. The argument before us alsoproceeded on the basis of the judgment of the Court of Appeal. Inmy view it was not necessary to venture into the realm of PartnershipLaw as the plaintiff-respondent had based his entire appeal on thequestion whether the co-tenants were bound jointly and severally or not.
It will therefore be necessary to consider the pleadings filed in theDistrict Court in order to find a solution to the problem that hadarisen in this case. The case had not proceeded beyond the pleadings- ,at the stage when the 1st defendant died. The plaintiffs cause of •action was based purely and simply on a contract of tenancy betweenhim and the three defendants. A contract of tenancy is governed bythe Roman Dutch Law, subject to the statutory limitations which,had been introduced into the Common Law by the Rent Restriction ..Acts. Therefore the answer .to the contentions raised have to befound in the Roman Dutch Law. The plaintiff-respondent had quitecorrectly pleaded that the tenancy was with the several defendantsand not with the Firm or Partnership. A Partnership or Firm cannotenter into a contract of tenancy as it is not a legal persona. Thisposition has b€en clearly decided by the Supreme Court in the casesof Nathurtnal Glanchand vs. Makaty (3) and Perera vs. Liyanagama
: A contract of tenancy being governed by the Roman DutchLaw, it is necessary to refer to that law to determine the questionsof procedure that arises in this case. In my view it was not necessaryto invoke the provisions of the English Law in regard to this tenancy 'action.
The Roman Dutch Law authorities appear to lay down clearly, thatan obligation contracted generally by several persons is not an,,obligation binding on each of them in solidum unless there is something.in the nature of the subject to induce a different construction and ,render if several in respect of the separate interests of, the contracting.,narties. This principle was accepted in the case of Panis Appuhamy
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vs. Selenchi Appu (5) where two joint lessees were sued for therecovery of rent in respect of premises taken by them without anyindication that each lessee bound himself in solidum and the Courtheld that each lessee was not severally liable fbr the whole debt.But the Roman Dutch Law made an exception in the case of partnersof a Firm when they enter into a contract of tenancy on account oftheir trade or business. According to the Roman Dutch Law authorities,where tenants were partners they were liable in solidum (Wille -Landlord and Tenant, 4th Edn. p.177). However, even in cases whereco-lessees were not partners, the liability in regard to cancellationof a lessee for failure to pay rent was regarded as an indivisibleobligation which could be enforced against a co-lessee alone -Weeraratne vs. Abeywardena (6).
In the case of Gunasekera vs. Gunasekera (7) it was held that inthe case of a contract or obligation governed by Roman Dutch Law,the liability of several defendants, who were partners, was an obligationin solidum and each was liable in respect of the entire obligation.On a consideration of all these authorities it is clear that the threedefendants had entered into the contract of tenancy as partners ofa Firm for the purpose of their trade or business and that thereforethis contractual relationship of tenancy, though with them as individuals,took the case out of the ordinary rule creating a joint obligationand created an obligation in solidum. Therefore each of the defendantsbecame jointly and severally liable in respect of the entire obligationunder the contract of tenancy entered between the plaintiff-respondentand the three defendants.
In this context it will be necessary to examine the Sections 393and 398 of the Civil Procedure Code to examine the consequencesof the death of a co-defendant who was a partner. Similar provisionsare to be found in the Indian Civil Procedure Code. Chittaley andRao in their Comrtientaries (7th Edn.) have clearly set out how theIndian Courts had interpreted the identical words used in our Code.The term "right to sue’’ has been interpreted to mean the "right toseek relief’ and therefore in actions where a personal relief is soughtor a right to a personal office or where damage is sought in respectof a tort, the right to sue has been held not to survive. The term"survive” has not been used in a technical sense, but has been usedin its ordinary sense of "outlive”. The term “alone” in these sectionshave been held to mean “exclusively”, that is, to the exclusion ofothers and not as the Court of Appeal has held to give greateremphasis. Therefore when there are more defendants than one in
SC Dhilanomal and Others v. Mahakanda Housing Co. l td. t Victor Perera. J.) 513
an action already instituted arid any one of them dies, if the rightto sue on a stated cause of action survives against the other defendantsalone, then only will a plaintiff be permitted to continue the actionagainst them without bringing the legal representative of the deceaseddefendant into the suit. In the instant case in view of the applicabilityof the Roman Dutch Law to this contract of tenancy there could beno doubt that the right to seek relief against the surviving defendantsalone has survived for the reason that the defendants were partnersand that the tenancy was entered into for the purpose of their tradeor business each of the defendants being liable in solidum to perforhitheir obligations towards the plaintiff.
At the argument before the Court of Appeal the 2nd and 3rddefendants-appellants had produced a Deed of Partnership No. 112dated 14.11.1955 marked “X” which they had not produced in theDistrict Court. According to this Deed the 1st defendant had beenthe sole proprietor of the business he had carried on at these premisesunder the business name of “W. Lalchand & Company”. In 1955he had admitted his two sons the 2nd and 3rd defendants as partnerswith him. Thereafter all three defendants had been accepted as thetenants of the premises. Clause 15 of the Deed provided that thedeath of any partner shall not dissolve the partnership between thesurviving partners. Clause 17 provided that on the death of the 1stdefendant, the 2nd and 3rd defendants shall admit the 1st defendant'swidow as a partner in his place. All these provisions have the effectof rendering the 2nd and 3rd defendants-appellants the sole survivingpartners till they admit the 1st defendant’s widow into the partnership.It was conceded that the widow of the 1st defendant had not beenbrought in as a partner at any stage and that she has since died.This document therefore fortifies the position that in regard to thetenancy which alone is the subject matter of this action, the rightto seek relief has survived against the 2nd and 3rd defendants-appellantsalone because they were partners. Therefore the plaintiff-respondentwas entitled to invoke the provisions of Sectiqn 393 of the CivilProcedure Code. In adverting to the provisions in the Deed ofPartnership, one does not have to examine the Law of Partnership.The provisions in this Deed help to determine the question ofprocedure in- regard to the pending action relating to a contract oftenancy where the defendants happen to be partners and nothing more.
The appeal of the 2nd and 3rd defendants-appellants from theorder of the Court ofJ Appeal is therefore dismissed with costs forthe above reasons.
Appeal dismissed.