PETITIONER: COMMISSIONER OF INCOME-TAX, PUNJAB Vs. RESPONDENT: R. D. AGGARWAL & COMPANY DATE OF JUDGMENT: 06/10/1964 BENCH: <NAME>, J.C. BENCH: <NAME>, J.C. SUBBARAO, K. SIKRI, S.M. CITATION: 1965 AIR 1526 1965 SCR (1) 660 CITATOR INFO : R 1977 SC1259 (15) R 1981 SC 148 (12) R 1981 SC1047 (10) R 1987 SC1234 (3,4,6,10) ACT: Income-tax Act , 1922 , s. 42(1) -"Business connection", meaning of-Assessee canvassing orders for nonresidents in taxable territories without authority to accept orders-No other part in transaction -Relation with nonresident whether amounts to business connection Income intended to be taxed under s. 42(1) -Nature of. HEADNOTE: The assessees were a firm carrying on business as importers and commission agents. They communicated orders canvassed by them from dealers in India to non-residents for acceptance; if a contract resulted and the price was paid by the Indian dealers to the non-resident exporters the assessees became entitled to a commission. In assessment proceedings the income of the assessees was computed by the addition of 5% of the net total value of the sale effected by the non-resident exporters in the previous year, because in <ORG> view there subsisted a 'business connection' between the non-resident dealer and the assessees. The appellate authorities upheld the said view. <ORG> however held that there was no 'business connection' within the meaning of s. 42(1) between the assessees and the non-resident exporters. The Commissioner of Income-tax appealed to <ORG> by special leave. HELD (i) Section 42(1) of the Indian Income-tax Act, 1922, seeks to tax those profits of a non-resident which arise or accrue to him outside the taxable territories through or from a "business connection" within the taxable territories. [665 C-E]. (ii)"Business connection" which is not defined in the Act, may as several forms : it may include carrying on a part of the main business activity incidental to the main business of the non-resident through an agent, or it may merely be a relation between the business of the nonresident and the activity in the taxable territories which facilitates or assists the carrying on of that business. In each case the question whether there is a business connection from or through which income profits and gains arise or accrue to a non-resident must be determined upon the facts and circumstances of the case. [664 H; 665 B]. (iii)The expression "business connection" postulates a real and intimate relation between trading activity carried on outside the taxable territories and trading activity within the territories, the relation between the two contributing to the earning of income by the non-resident in his trading capacity. In the present case, the activity of the assessee in procuring orders was not as agents of the nonresident it, the matter of sale of goods manufactured by the latter nor of procuring raw materials in the taxable territories for their manufacturing process. Their activity only led to the making of offers by merchants in the taxable territories to purchase goods manufactured by the non-residents assessees. [669 G-H; 670 A]. <CITATION> . 58 I.A. 42, Commissioner of Income-tax, <ORG> and Aden v. <NAME> and Sons Ltd. L.R. 63 I.A. 1, <CITATION> , (1950) 18 I.T.R. 423, <CITATION> , (1952) 22 I.T.R. 241, Anglo-French Textile 661 <CITATION> ,  S.C.R. 454 and <CITATION> , (1946) 14 I.T.R. 417, considered. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 808 and 809 of 1963.

Appeals by special leave from the judgment and order dated October 5, 1960, of <ORG> in Income-tax Reference Nos. 11 and 13 of 1958.

<NAME>, <NAME> and <NAME>, for the appellant. <NAME> and <NAME>, for the respondents.

The Judgment of the Court was delivered by Shah <NAME> & Company-called for the sake of brevity 'the assessees-are a registered firm having their place of business at Amritsar in the State of Punjab. The assessees carry on business as importers and as commission agents or non-resident exporters with two of whom we are concerned in these appeals. These two non-resident exporters <ORG> (Belgium) and <ORG> (Italy) are exporters and manufacturers of worsted woollen yarn. The assessees communicate orders canvassed by them from dealers in Amritsar to the non-residents for acceptance; if a contract results and price for the goods purchased is paid by the Amritsar dealer to the non-resident exporter, the assessees become entitled to commission varying between 1 1/2 and 2 1/2 % of the price.

By letter dated March 24, 1951 the assessees were appointed "sole agents" for <ORG> "for sale" of worsted woollen yarns in the Indian territories terminable by one month's notice. The assessees had to "maintain the existing customers" and to secure new customers "conforming to their general terms of sales", and were to receive 21 per cent commission on the net cash amounts arising from the accepted business "concluded by the mediation" of the assessees or directly by <ORG> with the customers. <ORG> appointed the assessees their representatives for the whole of India on condition that the latter did not represent any other <ORG> or yarn producer and did not sell Belgian yam in India on their own account.

In proceedings for assessment of tax in the assessment year 1952-53 the Income-tax Officer, <NAME>, Amritsar computed the income of the assasees by adding Rs. 54,558 being 5% of net total value of yam sold by the non-resident companies to Indian merchants in the previous year, because in his view there subsisted business connections between the non- resident exporters and the assessees. The orders passed by the Income-tax Officer were confirmed in appeal by the Appellate Assistant Commissioner and also by <ORG>.

<ORG> submitted a statement of case to <ORG> on the following two questions "(1) Whether the relationship between the assessee and the non-resident fell within the meaning of the expression "business connection" as used in S. 42(1) of the Indian Income-tax Act ?

(2) If the answer to the (second) question is in the affirmative whether on the facts and in the circumstances of this case any profits or gains accrued or arose or could be deemed to have accrued or arisen to the nonresident on account of the business connection of the non-resident with the assessee during the previous year under consideration."

<ORG> answered the first question in the negative and declined to answer the second question. With special leave, the Commissioner of Income-tax has appealed to this Court against the opinion of <ORG> in these two cases.

Section 42(1) of the Income-tax Act and two related sections ss. 40(2) and 43(1) may first be set out. Section 40 , insofar as it is material, by sub-s. (2) provides :

"Where the . . . agent of any person not resident in the taxable territories . . . . (such person being hereinafter in this sub- section referred to as a beneficiary) is entitled to receive on behalf of such beneficiary, or is in receipt on behalf of such beneficiary of, any income, profits or gains chargeable under this Act, the tax, if not levied on the beneficiary direct, may be levied upon and recovered from such. . .

agent . . . in like manner and to the same amount as it would be leviable upon and recoverable from the beneficiary if in direct receipt of such income, profits or gains." Section 40(2) is an enabling section providing machinery for assessment and recovery of tax from an agent of a non- resident in the taxable territories on income taxable under the Act which the agent is entitled to receive or in fact receives on behalf of the principal if tax be not levied on the principal direct. The

663. clause it may be noticed deals with charge to tax on income which the agent is entitled to receive or in fact receives on behalf of a non-resident beneficiary.

Section 42 , insofar as it is material, provides:

"(1) All income,profits or gains accruing or arising, whether directly or indirectly, through or from any business connection in the taxable territories, shall be deemed to be income accruing or arising within the taxable territories, and where the person entitled to the income, profits or gains is not resident in the taxable territories, shall be chargeable to income-tax either in his name or in the name of his agent, and in the latter case such agent shall be deemed to be, for all the purposes of this Act, the assessee in respect of such incometax :

Provided........

Provided further Provided further (2) Where a person not resident or not ordinarily resident in the taxable

territories, carried on business with a person resident in the taxable territories, and it appears to the Income-tax Officer, that owing to the close connection between such persons the course of business is so arranged that the business done by the resident person with the person not resident or not ordinarily resident produces to the resident either no profits or less than the ordinary profits which might be expected to arise in that business, the profits derived therefrom or which may reasonably be deemed to have been derived therefrom, shall be chargeable to incometax in the name of the resident person who shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income- tax.

(3) In the case of a business of which all the operations are not carried out in the taxable territories, the profits and gains of the business deemed under this section to accrue or arise in the taxable territories shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territories."

LISup.165-17 It may be observed that sub-ss. (2) and (3) illustrate special cases of business connections and do not purport to limit the connotation of that expression.

Section 43 , by the first paragraph, provides "Any person employed by or on behalf of a person residing out of the taxable territories, or having any business connection with such person, or through whom such person is in the receipt of any income, profits or gains upon whom the Income-tax Officer has caused a -notice to be served of his intention of treating him as the agent of the non-

resident person shall, for all the purposes of this Act, be deemed to be such agent:"

This section authorises the Income-tax Officer to appoint a person as statutory agent of a non-resident , and to assess him as agent of a nonresident in respect of the income of the non-resident in the taxable territories. The only question that falls to be determined in these appeals is whether there was in the two cases between the non-resident companies and the assessees such a relation as may be called "business connection, in the taxable territories. If the answer to this question be in the affirmative, the assessees would as statutory agents be chargeable to tax on behalf of the non-resident Companies on profits and gains reasonably attributable to those parts of the operations which were carried on in the taxable territories.

The expression "business" is defined in the Act as any trade, commerce, manufacture or any adventure or concern in the nature of trade, commerce or manufacture, but the Act contains no definition of the expression "business connection" and its precise connotation is vague and indefinite. The expression "business connection" undoubtedly means something more than "business " . A business connection in S. 42 involves a relation between a business carried on by a non-resident which yields profits or gains and some activity in the taxable territories which contributes directly or indirectly to the earning of those profits or gains. It predicates an element of continuity between the business of the non-resident and the activity in the taxable territories a stray or isolated transaction is normally not to be regarded as a business connection. Business connection may take several forms it may include carrying on a part of the main business or activity inci- dental to the main business of the non-resident through an agent or it may merely be a relation between the business of the non-

resident and the activity in the taxable territories, which facilitates or assists the carrying on of that business. In each case the question whether there is a business connection from or through which income, profits or gains arise or accrue to a nonresident must be determined upon the facts and circumstances of the case.

A relation to be a "business connection" must be real and intimate, and through or from which income must accrue or arise whether directly or indirectly to the non-resident. But it must in all cases be remembered that by s. 42 income, profit or gain which accrues or arises to a non-resident outside the taxable territories is sought to be brought within the net of the Income-tax law, and not income, profit or gain which accrues or arises or is deemed to accrue or arise within the taxable territories. Income received or deemed to be received, or accruing or arising or deemed to be accruing or arising within the taxable territories in the previous year is taxable by s. 4 (1 )(a) & (c) of the Act, whether the person earning is a resident or non-resident. If the agent of a non-resident receives that income or is entitled to receive that income, it may be taxed in the hands of the agent by the machinery provision enacted in s. 40(2) . Income not taxable under s. 4 of the Act of a non- resident becomes taxable under s. 42(1) if there subsists a connection between the activity in the taxable territories and the business of the non-resident, and if through or from that connection income directly or indirectly arises. Important cases which have arisen before the <ORG> may be briefly reviewed, not for evolving a definition applicable generally to all cases, but with a view to illustrate what relation between the non-resident and the activity in the taxable territories which contributes to the earning of income may or may not be regarded as business connection. <CITATION> .(1) a Company incorporated under the Indian Companies Act , 1913, which was a subsidiary of an American Company was deemed for the purposes of the Indian Income-tax Act to be the statutory agent of the latter Company and was charged to tax under s. 42 (1 ) in respect of profits made by that Company upon machines exported to the taxable territories and in respect of dividends received from the Indian Company, although the assessee Company was not an agent for the American Company (1) L.R. 58 I.A. 42.

under s. 40 , as it had not received the profits and gains in question. In that case, in consideration of transfer of the goodwill of <ORG> in a specified territory in India shares were allotted by the assessee <ORG> to <ORG>. In respect of those shares dividend was paid to <ORG> by the assessee <ORG> : <ORG> also sent machines to the assessee <ORG> for sale within the territory. The profits made by <ORG> by sale of the machines and dividends received by <ORG> from the assessee <ORG> were held taxable on the ground that there existed a business 'connection.

In Commissioner of Income-tax Bombay Presidency and Aden v. <NAME> and Sons Ltd.(1) advance of a loan by a non-resident was held not to be a business connection. <NAME> & Sons Ltd. a private limited <ORG> carrying on business as managing agents of various companies and as dealers in cloth, borrowed a loan from the <ORG> of Hyderabad and executed a document in Bombay and as security for repayment of the loan deposited shares in joint stock companies and created an equitable mortgage of immovable properties in British India. The loan was to be repaid in Hyderabad then an Indian State. The taxing authorities treated the private <ORG> as agent in the taxable territories of the <ORG> within the meaning of S. 43 of the Indian Income-tax Act, and assessed to tax the interest on the loan which the taxing authorities regarded as profit or gain which must be deemed to have accrued or arisen to the <ORG>, through or from a business connection or property in British India within the meaning of S. 42(1) of the Act. <ORG> held that the loan transaction was an isolated transaction. There being nothing to show that the <ORG> had at any time any interest, direct or indirect, in the respondent <ORG>, there-was no business connection in British India within the meaning of s. 42 of the Act between the <ORG> and the <ORG> and the interest on the loan did not constitute a profit or gain accruing or arising to the <ORG>, directly or indirectly, through or from any business connection or property in British India, chargeable to income-tax in the name of the <ORG>.

In <ORG> v. Com- missioner of Income-tax, Madras (2 ) the assessee a Company registered in the Indian State of Mysore carried on the business of manufacturing woollen, cotton and silk goods at Bangalore. 'Me (1) L.R. 63 I.A. 1. (2) (1950) 18 I.T.R. 423.

assessee's managing agents had their head office at Madras in British India. Under the managing agency agreement, the agents bought raw materials and other articles or things required for the purpose or use of the assessee and sold and disposed of goods manufactured by the assessee. Manufactured goods were also sold in the Mysore State and deliveries were effected in that State, but the agents collected the price of the goods sold in British India and credited it in their books to the account of the assessee as they also acted as bankers of the assessee. It was held by the Income-tax Officer that the assessee Company was liable to pay tax under the Indian Income-tax Act under two heads-

(i) on the profits attributable to the sale proceeds received in British India and (ii) on the profits that accrued or arose outside British India to the assessee by reason of business connection in British India. <ORG> held that the managing agents purchased in British India raw materials required for the business continuously for several years, received the sale proceeds of manufactured goods in British India and credited in their books to the account of the Company acting as bankers, met all the expenditure from out of the collections in their hands, paid for the purchase, made also other payments referred to in the managing agents' accounts. This was a clear case of a business connection in British India in respect of income which accrued or arose to the assessee outside British India.

<CITATION> (1) the assessee acted as commission agent of a nonresident and entered into transactions within the taxable territories on behalf of the non-resident, but he was not the sole commissions agent of the non-resident who did business through other agents as well. The assessee also purchased cloth on behalf of other constituents. It was held that there was a -business connection, because it was not predicated of a business connection that the broker must be exclusively retained by the assessee. <NAME>, in dealing with the provisions of s. 42(1) observed "...... the language used by the <ORG> is very wide, any business connection is not necessarily that business connection which is constituted by a permanent and exclusive agency. On the other hand a mere casual connection, a connection which has no continuity, would also not be a business connection as contemplated by the <ORG> under section 42 .

(1) (1952) 22 I.T.R. 241.

Therefore, in order that the agency which constitutes a connection between a non- resident and the assessee should be a business connection as contemplated by Section 42there must be an element of continuity in. the agency. An isolated transaction through an agent, or even a connection for a short period, would not necessarily constitute business connection."

Then there is a decision of this Court : <CITATION> (1). The assesses <ORG> incorporated in the United Kingdom owned a spinning and weaving factory at Pondicherry in French India. The assessee had appointed another limited <ORG> in Madras as its constituted agent for the purpose of its business in British India. During the relevant year of account no sales of yam or cloth manufactured by the assessee <ORG> were effected in British India, but all the purchases of cotton required for the factory at Pondicherry were made by the agents in British India and no purchases were made through any other agency. In that case, it was held, that the assessee <ORG> had a business connection in British India within the meaning of s. 42 and a portion of the profits of the non-resident attributable to the purchase of cotton in British India could be apportioned under s. 42(3) .

<CITATION> - pore(2) a non-resident <ORG> carried on business of manufacturing cloth at Ujjain in the Indian State of Gwalior and sent cloth to Cawnpore in British India. Goods were sold by the <ORG>'s salesman at Cawnpore and the sale proceeds were collected by him at Cawnpore. In these transactions, income accrued or arose to the <ORG> in British India within the meaning of s. 4(1) . The <ORG>'s goods were also marketed in British India through brokers who were not the <ORG>'s employees and who were not canvassing orders exclusively for the <ORG>. Offers of purchase sent by brokers to Ujjain were not in any special form. They were either accepted or rejected by the <ORG> at Ujjain, but all contracts were for delivery "F.O.R. Ujjain". Goods were generally consigned to "self" at the place of destination and the merchants took delivery after paying the invoiced price plus freight and insurance to a broker or banker in British India in exchange of endorsed railway receipts. On (1)  S.C.R 454.

(2) (1946) 14 I.T.R. 417.

the facts <ORG> held that there was no business connection in British India.

The distinction between <NAME> case(1) and <NAME> case (2) may be noticed. In the former the commission agents had purchased cloth in the taxable territories for the non-resident and in the latter the agents did not purchase or sell goods for the non-resident : they merely canvassed orders which were in the nature of offers and communicated them to the non-resident who had the option to accept or reject the offers. The sales took place outside the taxable territories, and in the view of <ORG> "Presumably also, the goods were paid for at Ujjain." The <ORG> was on the question framed and referred not called upon to consider whether because of payment of the invoiced price plus insurance and freight to a broker or banker in British India and delivery in exchange of endorsed railway receipts, the case fell within s. 4(1)(a) or s.4 (1 ) (c).

Turning to the facts of the present case, as found by the revenue authorities, contracts for the sale of goods took place outside the taxable territories, price was received by the nonresidents outside the taxable territories, and delivery was also given outside, the taxable territories. . No operation such as procuring raw materials, manufacture of finished goods, sale of good or delivery of goods against price took place within the taxable territories : the assessees merely procured orders from merchants in Amritsar for purchase of goods from the non-resident companies. The orders were offers which the assessees had no authority to accept on behalf of the non-residents. Some commercial activity was undoubtedly carried on by the assessees in the matter of procuring orders which resulted in contracts for sale by the nonresidents of goods to merchants at Amritsar. But on this account no business connection of the assessees with the non-residents within the taxable territories resulted. The activity of the assessees in procuring orders was not as agents of the non-residents in the matter of sale of goods manufactured by the latter, nor of procuring raw materials in the taxable territories for their manufacturing process. Their activities led to the making of offers by merchants in the taxable territories to purchase goods manufactured by the non-residents which the latter were not obliged to accept. The expression "business connection" postulates a real and intimate relation between trading activity (1) 22 I.T.R. 241.

(2) 14 I.T.R 417.

carried on outside the taxable territories and trading activity within the territories, the relation between the two contributing to the earning of income by the non- resident in his trading activity. In this case such a relation is absent.

In that view of the case, these appeals must fail and are dismissed with costs. One hearing fee.

Appeals dismissed.


<NAME>, J.

1. This is an appeal from the decree of the First Class Subordinate Judge of Sholapur allowing a claim of Rs. 12,000 with interest due on loan transactions followed by a settlement of account thereof on November 2, 1929. There was also an alternative claim on a hundi passed contemporaneously with the said settlement, and it is alleged that it was given as security for the major part of the amount found due, viz., Rs. 12,000. The plaintiffs were the four wives of one <NAME> to whom the defendants' shop of <ORG> at Barsi was indebted to the extent of Rs. 12,295 in or about November, 1929. On the above date accounts were taken and the defendants gave a hundi to the said <NAME> for Rs. 12,000. The balance of Rs. 295 was subsequently paid in two sums, one of Rs. 255 and the other Rs. 48 in 1930 or thereabouts. <NAME> died in October, 1932, without presenting the hundi for payment and his widows claiming to represent his estate, being according to the plaint his only heirs, instituted this action to recover the debt on June 1, 1933. It was alleged that the hundi was dishonoured in May, 1933, when it was presented for payment to the drawee one <NAME> of Bombay, and that it being a collateral security for the debt, the suit was instituted on the original transactions represented by the loan found due when the account was stated. The plaintiffs alleged that there were acknowledgments by the defendants in 1930 and 1931 which saved limitation. The contentions of the defendants were that the plaintiffs did not represent the estate of the deceased <NAME>, there being other heirs alive, namely, his daughter and nephews; that as this was an action on a debt, no decree should be passed without a succession certificate or letters of administration to the estate; that the non-presentation of the hundi, for which the only consideration was the debt, within a reasonable time amounted to a discharge of the entire liability; and that the claim was time-barred.

2. It may be noted that during the progress of the suit in February, 1934, the other heirs who had by then compounded their differences with the plaintiffs applied to <ORG> (exhibit 30) for bringing them on the record either as co-plaintiffs or co-defendants. But <ORG> refused to exercise its discretion by adding them as parties. Upon the evidence the learned Judge thought that although there were other heirs of the said <NAME> besides the plaintiffs who were entitled to a share in his estate and therefore interested in the suit for the recovery of the debt due to the estate, the defect due to non-joinder could be remedied by passing a decree directing the plaintiffs to furnish satisfactory security for the shares of the absent heirs, the plaintiffs being entitled to only one-fourth share in their husband's property. On the merits the learned Judge found-as I understand his findings-that, although prima facie non-presentment of the hundi within a reasonable time to the drawee would be improper, upon the terms of the agreement between the parties, the defendants had agreed to pay personally the principal and interest, notwithstanding the hundi, that they never intended that the hundi should be presented by their creditor, that the debt was not intended to be satisfied by the hundi in question, and that limitation was saved by the acknowledgments received from the defendants, written under their authority by their <ORG> in 1930 and 1931, of their liability to pay the identical debt sued upon. Accordingly he passed a decree in the plaintiffs' favour against which the defendants have filed this appeal.

3. On the record it seems to us that the view taken by the learned Judge of the facts is correct and must be upheld. It is common ground that although contemporaneously with the settlement of accounts of past dealings the hundi was given to <NAME> in payment of a major part of the debt, the latter did not present the hundi to the drawee <ORG> in Bombay. There is reason to believe that that omission was deliberate. The conduct is evidently referable to some agreement between the parties. It has been established that the defendants had no surplus to their credit with <ORG> on the date when the hundi was drawn. That is what the servant of <ORG> (exhibit 74) has stated. It is significant that the defendants immediately after drawing the hundi did not, according to their gumasta, inform <ORG> of their having done so in the usual course of business. That omission was certainly not due to inadvertence and was obviously due to the circumstance that they were indebted to <ORG> on the date in question. The suggestion that the hundi was passed with the intention of satisfying a part of the debt is incompatible with the defendants' conduct in subsequently acknowledging the debt and paying interest thereon. In two letters of June 17, 1930, and June 29, 1931, which we hold were written under the defendants' directions, the latter undertook to pay the amount as soon as it was received by them from their other customers and after their business became more steady. Those letters bear no reference to the balance of Rs. 295 after the hundi was passed. The letter of June, 1931, was written after that balance was fully paid. It is unreasonable to assume that <NAME>, a businessman, would for no assignable reason keep the hundi in his office unpresented. The irresistible inference is that that conduct was the result of some arrangement, particularly when till 1932, as admitted by the defendants, the balance of Rs. 12,000 was shown as outstanding against them to the credit of the plaintiffs in their books. What that arrangement was, except the defendants, there is none to say. <NAME> is dead and his widows are not familiar with his transactions. "We are therefore left to judge what the subsequent arrangement was from the conduct of the parties and what the defendants have said. The latter in our opinion are not honest in their explanation. It is a fair conclusion in our opinion that the arrangement was not to treat the hundi as a complete discharge of the debt represented by the sum mentioned in it, and not to present the hundi to <ORG> until further instructions. It seems from the course of their dealings the defendants were in the habit of passing such hundies as securities upon transactions similar to the one in suit. We are therefore fortified in the view, that, presumably, as pointed out in the plaint, the hundi was intended to serve as collateral security merely. Consequently the plaintiffs could notwithstanding the hundi sue on the original consideration represented by the debt.

4. We agree with the lower Court upon the evidence of the plaintiffs' own servant who received the two letters of acknowledgment that they were given by the defendants expressly in reply to a demand from the plaintiffs' husband, and do contain express acknowledgments of the debt and liability to pay. It was said in the evidence of the defendant <NAME> (exhibit 52) that the <ORG> was not authorized to write such letters, that important letters of business were entirely written by <NAME> himself and that the letters, exhibits 54 and 55, were not written at his dictation. The defendant could have been corroborated by his <ORG>, but he has been kept back. The accounts too have not been produced. It seems to us therefore that prima facie this action to recover the debt due to the estate of <NAME> was within time. In the above view of the matter it is clear that non-presentment of the hundi within a reasonable time cannot be urged to defeat the claim on the debt.

5. The question that presents real difficulty is in regard to the frame of the suit. It is obvious that if this action was to recover a debt due to the estate of a deceased <NAME>, those alone who represent his estate could bring it. The contention of the defendants in that respect was twofold : first, that the estate of the deceased <NAME> was not completely and fully represented by his widows in the absence of other heirs of <NAME> ; and, secondly, that this being a suit for the recovery of a debt through <ORG> due to the estate of the said <NAME>, no decree against the debtor could be passed except on the production, by the person claiming to be entitled to the debt, of a probate or letters of administration or a succession certificate, showing his title to represent the estate.

6. On the first part of the defence, the decisions of our <ORG>s are somewhat inconsistent and not uniform. We were referred to several authorities showing conflict of view in regard to the right to represent the estate of a deceased <NAME> by some of his heirs. Those authorities dealt with suits instituted by creditors themselves against only some of the heirs of a deceased <NAME> debtor. The view of <ORG> as expressed in <CITATION> (1882) I.L.R. 8 Cal. 370 was that any creditor of a deceased <NAME> could sue any one of the heirs in possession of the whole or any part of the estate, without joining the other heirs, and that in that suit he could claim not only the defendant's share of the debt but the entire debt due from the estate. The reasoning underlying the Calcutta case was that the creditor's suit was an administration suit and that an heir of a deceased <NAME> in possession of his estate could represent the other heirs. That was also the Bombay view as expressed in <CITATION> (1887) I.L.R. 12 Bom. 101 and Davalava v. Bhimaji Dhondo (1895) I.L.R. 20 Bom. 338. In the latter case upon a review of authorities <NAME> came to the conclusion that the heirs of a deceased <NAME>, who were not parties to the suit on a mortgage, were bound by the decree for possession passed in favour of the mortgagee against some of the heirs in possession. There a <NAME> died leaving a widow, a minor son and two daughters. After his death a suit was instituted by the mortgagee from the deceased against the latter's son represented by his guardian mother, claiming possession of the land mortgaged to him as owner under a gahan lahan clause in the mortgage. The widow was in possession of the estate, and a decree ex parte was passed directing her to deliver possession of the land to the mortgagee, and he was accordingly put in possession. It was held that the decree was binding on the daughters though they were not parties to the suit, and that they were not entitled to redeem the mortgage as against the mortgagee or a purchaser from him. The other cases referred to, such as <NAME> v. <NAME> (1897) I.L.R. 21 Bom. 412, were cases arising from partnership, and it was held that a decree against some of the heirs bound the entire body of heirs on the principle of implied representation. There is no case of our <ORG> directly bearing upon the point under consideration, namely, the right of some of the heirs to recover the entire debt due to the estate of a deceased <NAME>.

7. <ORG> adopted the above view of <ORG> in the earlier decisions. But in the full bench case of <CITATION> (1915) I.L.R. 40 Mad. 243 that Court followed <ORG> in holding that a sale effected, to pay off a debt due from his estate by some of the heirs of a deceased Mahomedan who may be in possession of the whole or part of the estate was binding on them to the extent of their share only and did not bind the other heirs. The reasoning of that decision proceeds on the ground that under Mahomedan law each heir inherits a separate and distinct share and that the theory of representation is unknown to the Mahomedan law, or in other words one heir does not represent the other heirs-(see <CITATION> (1901) I.L.R. 23 All. 263 and <CITATION> (1935) I.L.R. 58 All. 594. It is obvious ' that if the estate vested immediately on the death of a Mahomedan in each of his heirs in proportion to his share according to the Mahomedan law on account of several inheritance, the theory of representation can have no place. A third ground in support of that view might be found in some of the cases where the question of representation has come up for decision. <CITATION> (1901) I.L.R. 25 Mad. 26 the question did not directly arise for the Court was dealing with the question of discharge of the promisor by payment or offer to some of the promisees. The following observations however in regard to the indivisible character of the right or interest acquired upon legal devolution of the estate of the deceased on his heirs are interesting (p. 35):

When a right accruing to a single person from a covenant in his favour devolves, on his death, on two or more of his heirs in several shares, no question can possibly arise as to whether the covenant was joint or several, and the only difference caused by the death of the covenantee is that the cause of action which resided in one person, is, by operation of law, transferred to a number of parceners, who, as observed by <NAME>, C.J., in <NAME> v. <NAME> (1834) 10 Bing. 526, 529, constitute one heir.

The earlier view of implied representation was not followed in the later decisions of this Court. <CITATION> (1903) I.L.R. 27 Bom. 292 : S.C. 5 Bom. L.R. 91 the Court was dealing with a payment made by the mortgagor due on the mortgage to one of the heirs of the mortgagee, without the concurrence of the rest, and it was held that it did not amount to a valid discharge. The grounds stated in the judgment of <NAME> are these (p. 295):

The right which the several heirs jointly get on the mortgagee's death to enforce the mortgage, is a right created by law in consequence of the devolution upon them of the single and indivisible right which the mortgagee had as the sole promisee, and not in consequence of their being ' joint promisees The reasoning underlying the decisions of <ORG> that each of the several heirs in possession of the assets is to the extent to which he is in possession a legal representative of the deceased person, and no one of them represents the entire assets or estate of the deceased person, seems to have been approved in the later decisions of this Court, such as <CITATION> : Mirkha v. Bhagirithibai (1918) I.L.R. 43 Bom. L.R. 412 : S.C. 21 Bom L.R. 329; and <CITATION> (1923) I.L.R. 47 Bom. 712 : S.C. 25 Bom. L.R. 408. That view has the merit of being in unison with that of the other <ORG> in India and is in my view in accord with the spirit of the <NAME> law. <CITATION> the question arose whether a money decree obtained against the estate of a deceased <NAME> in a suit by a creditor against some of his heirs was binding against the heir who was not a party to the suit in which the creditor's decree was obtained. The Court held that the heir who was not made a party was not bound by the creditor's decree as the other heirs did not represent her interest. There the Court stated that the rule of representation derived from Hindu law was not applicable to <NAME>s as was done in <CITATION> where the theory of substantial representation derived from Hindu law was applied to <NAME>s. Such an application the Court thought was opposed to the principle underlying the decision of the full bench in <CITATION> (1917) I.L.R. 41 Bom. 588 : S.C. 19 Bom. L.R. 579 F.B. It may be noted that the case of Davalava v. <NAME> was expressly referred to and discussed. The theory put forward that creditors' suits against the heirs in possession should be regarded as administration suits binding on all the heirs was expressly discarded on the authority of <NAME> v. <NAME> (1885) I.L.R. 7 All. 882 F.B. The case of <NAME> v. <NAME> (1904) I.L.R. 32 Cal. 296 : S.C. L.R. 32 I.A. 23 7 Bom was also referred to as showing that the special rule as to representation by managers of joint families of Hindus could not be applied to a case where a creditor of a deceased <NAME> sought to recover his debt from some of the heirs of the deceased. It is therefore clear upon the recent decisions of this Court, the abstract ratio decidendi of which binds us, that a creditor of a deceased <NAME> could himself institute a suit against some of the heirs of a deceased in possession of his property to recover the debt, and succeed only to the extent of the share of the debtor's heirs who are parties to the action.

8. The question here is whether that proposition could be applied to the claim made by only some of the heirs of a creditor to recover the debt due to the estate of a deceased <NAME>. We are inclined to hold that having regard to the unity of title and unity of interest of the entire body of heirs, some of the latter cannot represent the other heirs, and, therefore, a suit by some heirs to recover a debt due to the estate of the deceased will be defective on the ground of absence of title or lack of representation in the heirs who sue. Such a suit essentially must be on behalf of the entire body of heirs and must conform to the requirements of the law. If there is a devolution of the right to recover one distinct and entire debt upon the death of the deceased <NAME> who was a single promisee, the right devolved would also be single and indivisible. The law will not enable different sharers to institute different actions on that debt in proportion to their respective interests in the estate of the deceased. The principle of joint action by joint promisees will in our opinion apply by analogy where the owner of a single right dies and is succeeded by several heirs. According to <NAME> in <NAME> v. <NAME> (1834) 10 Bing. 526 "several co-heirs constitute one heir and are connected together by the unity of interest and unity of title." Some only of the several heirs of a deceased <NAME> cannot therefore enforce a debt without the concurrence of the rest so as to give a valid discharge to the debtor. The necessity of that concurrence is, as is sufficiently obvious, to avoid multiplicity of actions against the debtor. Therefore we think that in an action to recover a debt the claimants must in the first instance represent the totality of the estate of the deceased and the interests of his heirs.

9. It has been urged that the <ORG> below could have removed the defect upon the application of some of the heirs who had applied to the <ORG> to make ' them parties. Although the powers of the <ORG> under Order I, Rule 10, of the Civil Procedure Code, are wide enough to add parties to a suit or proceeding, merely because a person claims to be interested in a suit and wants to be added as a party, the <ORG> would not ordinarily without the concurrence of the plaintiff make him a party. We do not find fault with the rejection of the application to add parties in view of the attitude of the plaintiffs. It appears however that after the appeal was filed by the defendants, one of the plaintiffs died and as her legal representatives the remaining heirs of the deceased <NAME> have been made co-respondents to this appeal. But even the fact that all the heirs are represented in the appeal does not solve the initial difficulty due to the want of certificate of representation obtained in proper form as required by Section 214 of the Indian Succession Act. That section deals with the recovery of a debt through <ORG> due to a deceased <NAME>, and according to its provisions such a suit is barred unless the claimant produces a certificate granted under Section 31 or Section 32 of the Administrator-General's Act, 1913, or a succession certificate granted under Part X of the Indian Succession Act, 1925, or a certificate granted under the Succession Certificate Act of 1889, and having the debt specified therein. Unless it were possible to hold that the plaintiffs represent, upon the production of a proper certificate, the estate of <NAME>, it is not possible to pass a decree for the entire debt in their favour.

10. The question is, whether, having regard to the defect in procedure, the claim of the estate to recover the debt should be defeated. Mr. <NAME> for the respondents has conceded that upon the claim to recover a debt due to a deceased <NAME> a civil <ORG> cannot pass a decree without a certificate, and he has urged that that difficulty, as well as the difficulty arising from the provisions of Section 22 of the Indian Limitation Act by reason of bringing the other heirs as parties to the appeal, could be obviated if he was given time to produce the certificate contemplated by Section 214 of the Indian Succession Act. On the other hand it is strenuously contended for the appellants-defendants that the negligence of the plaintiffs or their omission to follow the legal procedure to recover the debt should not be allowed to prejudice the defence even if based upon a technical plea. There is no doubt that the provisions of Section 214 of the Indian Succession Act (XXXIX of 1925) govern the procedure in such cases. Those provisions as interpreted by several decisions merely emphasize that the <ORG> cannot pass a final decree in the absence of a certificate. Merely because a suit is instituted without a certificate, it does not debar the plaintiffs from producing the certificate before the decree is passed. There have been instances where a <ORG> has deferred passing a decree pending the production of a proper certificate. It has been argued for the appellants that as there was a defect in the institution of the suit by reason of the omission to produce a certificate along with the plaint the suit could not be regarded as having been properly filed when it was originally registered, and that for the purpose of limitation, the suit could be regarded as properly instituted only when the certificate is produced. No authority has been cited in support of that view. <CITATION> (1892) I.L.R. 16 Mad. 454 it was held that where the <ORG> considered that a certificate was necessary, it was enough to produce the certificate before the decree-see also Raichand v. <NAME> (1930) 33 Bom. L.R. 1372 and <CITATION> (1910) L.R. 38 I.A. 7 : S.C. 13 Bom. L.R. 67. <CITATION> (1920) I.L.R. 42 All. 549 the <ORG> observed that there was no provision of law which required that a certificate must be filed along with the plaint, and that an opportunity should be given to the plaintiffs for obtaining and producing one. With respect we agree with that view. In the circumstances of this case, and having regard to the fact that an earlier attempt was made by the other heirs in February, 1934, to be brought on the record when the claim was not barred by time, the plaintiffs we think should be given an opportunity to remove the defect resulting from the omission to produce a certificate. It is manifest that the lower <ORG> in passing a decree upon this action for debt due to the estate of a deceased <NAME> without a certificate acted without jurisdiction. We therefore set aside that decree and remand this case to the lower <ORG> for passing a fresh decree for the plaintiffs if they produce a certificate of representation to the estate of the deceased <NAME>, within six months from the date of the receipt of the papers by the lower <ORG>. On failure to furnish such a certificate within the time allowed, the suit shall be dismissed. As this result has been brought about by the negligence of the plaintiffs, we think that they should bear the costs of the defendants throughout.