Kamal International vs M/S. Gaurav Textiles & Others
1999 Latest Caselaw 980 Del

ORDER

Dr. M.K. Sharma, J.

1. By this revision petition the petitioner has challenged the order dated 25th October, 1997 passed by the Civil Judge, Delhi in Suit No. 509/1993 dismissing the application filed by the petitioner under Order 1 Rule 10 CPC. The aforesaid suit was registered on the basis of a petition filed under Sections 14 and 17 of the Arbitration Act praying for making the award passed by the arbitrator a rule of the court.

2. Respondent No.1 filed claims against M/s. Kamal International before the Delhi Hindustani Mercantile Association who appointed an arbitrator to decide the disputes and the claims. The arbitrator by his order dated 25.12.92 dismissed the claims of the respondent No.1.

3. Being aggrieved by the said order an appeal was preferred before the Appellant Authority of the Delhi Hindustani Mercantile Association. The appeal was accepted and an award for Rs.43,891.62 was passed against M/s. Kamal International by order dated 27.3.1993. A petition under Sections 14 & 17 of the Arbitration Act was filed for making the aforesaid award a rule of the court on which the aforesaid suit was registered. In the said petition an application under Order 1 Rule 10 CPC was filed on behalf of the objector Sh. H.S. Chopra for impleading him as a party to the suit.

4. According to the applicant, M/s. Kamal International was a sole proprietorship unit of Smt. Santosh Sharma and the transactions in question related to the period when she was the sole proprietor and M/s. Kamal International was only a trading name. It is further stated that Smt. Santosh Sharma was representing M/s. Kamal International as the sole proprietor before the arbitrator. Subsequently, however, it is stated that M/s. Kamal International was purchased by the partnership firm consisting of Sh. H.S. Chopra, Sh. Inder Pal Singh Chopra and Shri Mohinder Pal Singh Chopra and, therefore, they are required to be imp leaded as one of the parties in the proceedings. The said application was, however, dismissed, being aggrieved by which the present petition is preferred.

5. It was submitted by the counsel appearing for the petitioner that M/s. Kamal International was a sole proprietorship firm of Smt. Santosh Sharma and, therefore, at that stage it did not have a separate legal entity and was a mere trading name but with the purchase of the said firm by the applicants they have a right to be substituted and to contest the proceedings and for that they are required to be imp leaded as a party in the suit proceedings before the trial court for making the award a rule of the court. In support of his contention the learned counsel relied upon the decision in D.K. Jaisinghani-Appellant in Hargolal & Sons Vs. S.c. Shahani High School reported in AIR 1940 SIND 1991.

6. The Civil Judge dismissed the application filed under Order 1 Rule 10 CPC holding that the claimant in whose favour the award has been passed as also the court cannot take a notice of the internal arrangement and agreement between the persons representing M/s. Kamal International. It was further held that the award has been passed as against M/s. Kamal International and the same is liable for the liability under the award and, therefore, mere change of the management of the respondents did not diminish the liability of M/s. Kamal International. Accordingly, the said application was rejected.

7. I have perused the records very carefully. It is not disputed that M/s. Kamal International was a proprietorship firm of which Smt. Santosh Sharma was the proprietor. During the proceedings as the management of the same has changed, therefore, the applicant could seek for his impleadment as a party under the proceedings for after the purchase of the goodwill and the firm it has inherited a right to contest the award. M/s. Kamal International was a proprietorship firm and, therefore, was not a legal entity, for at that stage it was represented by Smt. Santosh Sharma.

8. In the light of the documents placed on record, now Smt. Santosh Sharma is no longer the proprietor of the said firm, for the said firm along with its goodwill has been purchased by a partnership firm and, therefore, in my considered opinion, the application filed under Order 1 Rule 10 CPC is required to be allowed. Accordingly, the impugned order is set aside and the aforesaid applicant is added as a party to the present proceedings. The matter is remanded back to the trial court to proceed in accordance with law after adding the applicant as a party to the proceedings.