Patna High Court
Bihari Lal Shyamsundar vs Union Of India (Uoi) And Ors. on 10 February, 1960
Equivalent citations: AIR1960PAT397, AIR 1960 PATNA 397
Author: V. Ramaswami
Bench: V. Ramaswami
JUDGMENT
1. In the suit which is the subject-matter of this appeal the plaintiff claimed damages for non-delivery of a hale of cloth despatched from Ahmadabad to Muzaffarpur railway station. The bale of cloth was not delivered by the defendant in spite of several demands made by the plaintiff and in spite of notices under Section 77 of the Indian Railways Act and Section 80 of the Code of Civil Procedure. The case of the defendant was that the suit was not maintainable because the plaintiff firm was not registered and Section 69 (2) of the Partnership Act was a bar. The defendant also denied liability to pay compensation as the loss of consignment was due to circumstances beyond the control of the defendant.
The trial court held that notices under Section 77 of the Indian Railways Act and Section 80 of the Code of Civil Procedure were properly served. The trial court also held that the plaintiff was entitled to compensation, and since there was no disclosure on behalf of the defendant there must be an inference of negligence and misconduct on the part of the railway. The trial court held that defendant No. 3, the Western Railway, and defendant No. 1, the Union of India, would be liable to pay the compensation and there was no liability on the part of defendant No. 2, the North Eastern Railway.
The trial court, however, dismissed the suit on the ground of the bar imposed by Section 69 (2) of the Indian Partnership Act. The decree of the trial court has been upheld by the lower appellate court and it was held that the suit was not maintainable because the plaintiff firm was not registered.
2. On behalf of the plaintiff who has preferred this appeal it was contended by learned Counsel that the view of the law taken by the lower appellate court is wrong and the case is governed not by Section 69 (1) and (2) of the Indian Partnership Act but by Section 69 (3) of the Indian Partnership Act. The provisions of Section 69 ot the Indian Partnership Act are reproduced below:--
"69. (1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.
(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.
(3) The provisions of Sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect -
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or
(b) the powers of an official assignee, receiver or Court under the Presidency-Towns Insolvency Act. 1909, or the Provincial Insolvency Act, 1920, to realise the property of an insolvent partner.
X X X X X X"
In our opinion the argument addressed on behalf of the appellant is correct and the present case is governed by Section 69(3) of the Indian Partnership Act. It was pointed out by the Madras High Court in Shanmugha Mudaliar v. P. V. Rathina Mudaliar AIR 1948 Mad 187, that the intention of the Legislature was to impose a disability for non registration only during the subsistence of the partnership, and the words in Section 69 (3), particularly "or any right or power to realise the property of a dissolved firm" removed any disability which existed during the continuance of the partnership. It was held in the Madras case that where an unregistered partnership has been dissolved, money due to the partnership from a third party in respect of dealing between him and the partnership during its subsistence can be recovered by means of a suit.
It was observed by Gentle, C. J. in the course of his judgment that the Partnership Act placed no prohibition upon an unregistered partnership making contracts either between the partners inter se or with some third party, nor upon an unregistered partnership acquiring property or assets. All that the Partnership Act did was to make a suit instituted by an unregistered partnership to recover property unenforceable. A similar view as to interpretation of Section 69 (3) has been expressed by Chagla, J. (as he then was) in Bhagwanji Morarji v. Alembic Chemical Works Co. Ltd., AIR 1943 Bom 385.
It was held in that case that a suit by the partners of a dissolved firm to recover unliquidated damages for breach of contract was a suit to realise the property of the dissolved firm, and as such damages can be realised by the partners of the dissolved firm although the firm has not been registered. In our opinion, the present case is governed by the principle laid down in AIR 1948 Mad 187 and AIR 1943 Bom 385, which authorities, in our opinion, lay down the correct law on this point.
In the present case, therefore, we are of opinion that the partners of the dissolved firm are entitled to bring the suit for compensation from the railway for non-delivery of the consignment of cloth. It follows, therefore, that this appeal must be allowed and the decree of both the lower courts must be set aside and the plaintiff must be granted a decree against defendants 1 and 3 for a sum of Rs. 1205/10/9, including the price of the goods, and profits at the rate of 6 1/4 per cent on the price of the goods. The plaintiff is also entitled to interest on this amount at 6 per cent from the date of the decree, that is, from today. The suit will be dismissed against defendant No. 3. We according ly allow this appeal, but the parties will bear their costs throughout.