[1935] EACA 148

# ORIGINAL CIVIL.

## Before SIR JOSEPH SHERIDAN, C. J.

#### SANT RAM, Plaintiff

# 1, TOTA RAM; 2, DAULAT RAM; and 3, JAGDISH RAM. Trading as "TOTA RAM & CO.", Defendants.

## C. C. No. 276 of 1933.

Practice—Action against firm—Personal defence put in by two partners—Leave to amend—Unconditional appearance entered by one defendant—Defence denying that he was partner -Order 27 rr. 7, 8.

An action was brought against T. R., D. R., and J. R. (Trading as T. R. & Co.). T. R. and J. R. put in a defence not purporting to be the defence of the firm. D. R. entered an unconditional appearance, but put in a defence denying that he was a partner.

$Held$ (19-6-35).-(1) That the plaintiff was not entitled to enter judgment in default of defence against the firm, but that T. R. and J. R. should be allowed to amend their defence by expressing it to be on behalf of the firm. (Ellis v. Wadeson (1899 1 Q. B.714) followed).

(2) That in the circumstances of this case the fact that D. R. had not entered an appearance under protest (under 0.27 r. 8) should not preclude him from denying that he was a member of the firm.

Schwartze for the plaintiff: No defence has been put in by the firm: Ellis v. Wadeson (1899 1 Q. B. 714). The second defendant, not having appeared under protest cannot be heard to deny that he is a partner: 0.27 rr. 7, 8: Weir v. McVicar $(1925$ 2 K. B. 127).

Mangat for the defendants.

RULING.—This suit was filed against Tota Ram, Daulat Ram and Jagdish Ram (trading as Totaram & Co.) as long ago as the 7th November, 1933. All parties have been represented by counsel practically from the time the suit was filed. On the 26th February, 1935, the parties with the advice of their counsel decided to go to arbitration and a submission to arbitration was formally drawn up and issued. The parties were in agreement to submit to arbitration the matters raised in the pleadings and that the question of the liability of the second defendant should be left over for decision until after the filing of the award. The correctness of the pleadings was not questioned until 17th June, 1935. Counsel for the plaintiff having died Mr. Schwartze was instructed to appear for the plaintiff and he has raised three points on the pleadings for my consideration and decision. (I should have mentioned that the case has come once more into the list through one of the arbitrators having intimated his inability to act.)

The first point is that the first and third defendants. who were served as partners, omitted to state that their defence was on behalf of the firm and the argument was that because of this defect the plaintiff was entitled to judgment against the firm. The case of Ellis and Another v. Wadeson and Another (1899) 1 Q. B. 714) was relied on as an authority. That case is quite different from the present one for there a surviving partner, who had entered a defence of a personal nature instead of defending on behalf of the firm as he should have done, had judgment signed against the firm but not before he had been given an opportunity of amending his defence and had failed to do so. He appealed and not unnaturally lost the appeal but the point of importance is that the Court of Appeal gave him leave to amend his defence within a reasonable time. In the case before me on the contrary the correctness of the pleading has not been questioned until nineteen months after the filing of the suit and not until after the parties had agreed to go to arbitration. There can be no question as to the two defendants being entitled to amend in these circumstances and on the authority of the case to which I have been referred, I allow an amendment to the effect that their defence is on behalf of the firm. The second point is that the second defendant having entered an unconditional appearance cannot be heard to say, as he does in his defence, that he is not a partner. Mr. Schwartze relies on this defendant not having appeared under protest under O. 27 r. 8. This rule reads:-

"Any person served with a summons as a partner under rule 3 may appear under protest denying that he is a partner, but such appearance shall not preclude the plaintiff from otherwise serving a summons on the firm and obtaining a decree against the firm in default of appearance where no partner has appeared."

This Rule follows word for word the rule in force in England prior to 1929 which was passed in consequence of the decision in Davis and Co. v. Andre and Co. (24 Q. B. D. 598). So far as I have been able to discover it has never been decided that the effect of that Rule was to take away from a person who, having been served as a partner, had entered an appearance unconditionally any rights he possessed previously. The point did not call for decision in the case of Weir and Co. v McVicar and Co. (1925 2 K. B. 127). In his judgment at page 136 of the report ATKIN L. J. (as he then was) says: "I say nothing as to what the position of the appellant would be if, though desiring to -dispute his partnership, he had appeared unconditionally. It may be that an unconditional appearance would amount to such

an admission of partnership as would preclude him from afterwards pleading in the alternative that he was not a partner, but it is not necessary to determine that point now." In the circumstances of the present case, where there has been such a lapse of time before raising the point, and where from my order of the 26th February, 1935, it is clear that the parties agreed that the issue of the liability of the second defendant was to be determined after the filing of the award, it would not only be improper but unjust to allow the point to be raised against the second defendant at this stage and in regard to it, I decide against the plaintiff. On the construction to be placed upon the rule, I will say that the argument put forward by Mr. Goddard in Weir and Co. v. McVicar and Co. (supra) at page 129 commends itself very strongly to me. It reads: -

"But it cannot have been intended by that rule to take away from a person served as a partner a right which he previously had of disputing the partnership as well as the liability of the firm. The object of the rule was only to enable a person so served to raise the double defence at the earliest possible moment. He could have raised it in his pleadings before."

The third point is shortly that the defendant's pleading in regard to the first five items in the account attached to the plaint and the first two items on the credit side of that account does not amount to such a specific denial as that the plaintiff should be called upon to prove the indebtedness and it has been urged that the amount not being unliquidated the plaintiff should have judgment entered for him without evidence. With this submission, I am in entire disagreement; there is a specific denial and so it must have been understood by counsel for the plaintiff when the case was referred to arbitration. The liability for this amount constitutes practically the whole substance of the case and were it not in issue there would have been no question of arbitration. The case will proceed to hearing subject to the making of the amendment I have referred to.