Order XXX Rule 10 CPC

Source: Supreme Court  

Why in News? 

Recently, Justices Vikram Nath and Sandeep Mehta t ruled that a proprietorship and its proprietor are legally the same, holding that a suit filed against a proprietorship firm can validly proceed in the proprietor's name, setting aside the Andhra Pradesh High Court's contrary decision. 

• The Supreme Court held this in the matter of Dogiparthi Venkata Satish And Anr. V. Pilla Durga Prasad & Ors.(2025). 

What was the Background of Dogiparthi Venkata Satish And Anr. V. Pilla Durga Prasad & Ors. 2025 Case? 

• The present dispute originated from a property lease transaction involving landlords Dogiparthi Venkata Satish and another, who owned certain schedule property. Upon request from Aditya Motors, a sole proprietorship concern operated by respondent Pilla Durga Prasad, they agreed to lease out the premises. A registered lease deed was executed on 13th April, 2005, formally leasing the schedule premises to Aditya Motors. 
• During the lease period, Aditya Motors, without obtaining consent from the owner-appellants, permitted M/s. Associated Auto Services Pvt. Ltd. to occupy and use the leased premises. Upon expiry of the stipulated lease period, the lessee failed to vacate the premises despite termination of tenancy rights. The appellants, after serving due notice under Section 106 of the Transfer of Property Act, 1882, instituted eviction proceedings against the original lessee, the unauthorized occupant, and its directors. 
• In the original suit, Aditya Motors was impleaded as defendant no.1, M/s. Associated Auto Services Pvt. Ltd. as defendant no.2, and the company's two directors as defendants nos. 3 and 4.  
• During litigation pendency, appellants filed an application under Order VI Rule 17 of the Code of Civil Procedure seeking plaint amendment. The primary amendment sought deletion of Aditya Motors as defendant no.1 and substitution of Pilla Durga Prasad as the lessee's representative in his personal capacity. 
• The amendment application was allowed by order dated 28th March, 2018, which attained finality as it remained unchallenged. The cause title consequently changed from "Dogiparthi Venkata Satish and another Vs. Aditya Motors and others" to "Dogiparthi Venkata Satish and another v. Pilla Durga Prasad and others." 
• Following the amendment, the defendant filed an application under Order VII Rule 11 seeking plaint rejection. The respondent contended that since the registered lease deed was executed with Aditya Motors as lessee, and the plaint had been amended to delete Aditya Motors and substitute Pilla Durga Prasad, no cause of action was disclosed against Pilla Durga Prasad individually. 
• The appellants opposed this application, asserting that Aditya Motors was merely a proprietorship concern with Pilla Durga Prasad as sole proprietor. They argued that since proprietorship concerns lack juristic personality, substituting the proprietor would not prejudice any substantive rights. They contended the cause of action had always been against Pilla Durga Prasad personally, as he was the sole lease deed signatory. 
• The Trial Court rejected the Order VII Rule 11 application by order dated 2nd July, 2018. Aggrieved, Pilla Durga Prasad filed a civil revision petition before the High Court of Andhra Pradesh at Amaravati. The High Court allowed the revision petition and set aside the Trial Court's order, holding that the proprietorship concern ought to have been made a party as it could be sued but could not sue independently, relying primarily upon Order XXX Rule 10. 

What were the Court’s Observations? 

• The Supreme Court observed that the Trial Court had correctly rejected the Order VII Rule 11 application, while the High Court committed serious error in interpreting Order XXX Rule 10. The Court noted that a proprietorship concern is merely a trade name adopted by individuals for conducting business activities and does not constitute a juristic person with independent legal existence. 
• The Court held that the permissive language in Order XXX Rule 10, particularly "may," indicates that making a proprietorship concern a party is discretionary rather than mandatory. The provision does not preclude suits being filed directly against proprietors, especially when proprietorship concerns can only be defended by proprietors themselves. 
• The Court observed that when proprietors are impleaded representing proprietorship concerns, no prejudice is occasioned to interested parties. Proprietorship interests are adequately protected by the sole person owning and controlling them. Order XXX Rule 10 creates no bar against instituting suits directly against proprietors. 
• The Court noted that whether proceedings are instituted against proprietorship concerns in their trade names or through proprietors acting as representatives amounts to the same legal effect. The High Court had adopted an overly technical approach without recognising that no prejudice had been caused. 
• The Court concluded that the cause of action had legitimately accrued against the proprietor personally, as he was the sole lease deed signatory on behalf of the proprietorship concern. The Supreme Court allowed the appeal and set aside the High Court order, directing the Trial Court to proceed with suit adjudication on merits. 

What is Order XXX Rule 10 of Code of Civil Procedure? 

• About 
  • Order XXX Rule 10 of the Code of Civil Procedure, 1908 is a procedural provision that governs suits against persons carrying on business in names other than their own personal names. 
• Statutory Provision 
  • The rule states that any person carrying on business in a name or style other than his own name, or a Hindu undivided family carrying on business under any name, may be sued in such name or style as if it were a firm name, and in so far as the nature of such case permits, all rules under this Order shall apply accordingly. 
• Key Elements of the Rule 
  • Order XXX Rule 10 applies to two categories of business entities. First, it covers any person who conducts business operations under a trade name or business style that differs from their personal name. Second, it encompasses Hindu undivided families that carry on business activities under any designated name or style. 
  • The rule provides that such persons or Hindu undivided families may be made defendants in legal proceedings using their business name or trade style, treating them as if they were partnership firms for procedural purposes. 
  • The provision employs permissive language by using the word "may," indicating that suing in the business name is optional rather than mandatory. Plaintiffs have the discretion to sue either in the trade name or in the personal name of the proprietor.