Madhya Pradesh High Court
Ashoka Group vs Shri Hariram Buddhraja on 23 July, 2024
Author: Achal Kumar Paliwal
Bench: Achal Kumar Paliwal
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IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE ACHAL KUMAR PALIWAL
FIRST APPEAL No. 302 OF 2013
(ASHOKA GROUP)
VS
(SHRI HARIRAM BUDDHRAJA AND OTHERS)
Appearnace:-
SHRI K.K. PANDEY- ADVOCATE FOR THE APPELLANT.
SHRI SANKALP KOCHAR- ADVOCATE FOR THE
RESPONDENTS.
SHRI BHUVANESHWAR SINGH THAKUR- PANEL LAWYER FOR
THE RESPONDENT NO.7/STATE
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RESERVED ON : 03.07.2024
PRONOUNCED ON : 23.07.2024
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This appeal having been heard and reserved for judgment, coming on for
pronouncement on this day, the court passed the following
JUDGMENT
This first appeal has been filed by the appellant/plaintiff under Section 96 of CPC against the order dated 10.01.2013 passed in Civil Suit No.172-A/2012 (Ashoka Group through Partner Shankarlal Daswani Vs. Hariram and others) by IVth Additional District Judge, Jabalpur whereby respondents/defendant's application under Order 7 Rule 11(d) of CPC has been allowed and appellant's suit has been dismissed as barred in the light of Section 69 of Indian Partnership Act.
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2. Learned counsel for the appellant/plaintiff submits that provisions of Section 69 of the Indian Partnership Act are not mandatory. Further, after referring to provisions of Order 7 Rule 11 of CPC and relying upon Shiv Developers through its Partner Sunilbhai Somabhai Ajmeri Vs. Aksharay Developers and Others, (AIR 2022 SC 772) and Shakti Bhog Food Industries Ltd. Vs. Central Bank of India and Anr., (AIR 2020 SC 2721), Bhavar Bai, it is urged that suit cannot be dismissed under Order 7 Rule 11 of CPC on the basis of Section 69(2) of Indian Partnership Act. Submissions advanced by learned counsel for the respondents has been dealt by Hon'ble Apex Court in Shiv Developers (supra)
3. It is also urged that presently partnership has been registered. Therefore, appellant's application under Order 41 Rule 27 of CPC be allowed and said documents be taken on record and case be remitted back to Trial Court for deciding the case afresh on merits. With respect to above, learned counsel for the appellant has referred and relied upon Sanjay Kumar Singh Vs. State of Jharkhand (AIR 2022 SC 1372), Mohan Kumar Vs. State of MP and others, [2017(3) MPLJ 300] and Collector and another Vs. Jujhar and others, vide order dated 17.04.2023 passed in SA No. 229/2018. On above grounds, it is submitted by learned counsel for the appellant that appeal filed by the appellant be allowed.
4. Learned counsel for the respondents, after referring to plaint avenrments especially para 1 of plaint as well as partnership deed, submits that partnership was constituted for the sole purpose of sale and purchase of land and buildings 3 etc. After referring to partnership deed and plaint averments, it is also urged that present suit has been filed on behalf of partnership firm to enforce rights of the firm. Further, after referring to impugned order as well as Section 69 of Indian Partnership Act, it is submitted that as on the date filling of suit, partnership firm was unregistered therefore, present suit was barred under Section 69(2) of Indian Partnership Act because present suit has been filed for enforcement of right arising out of contract. With respect to above submissions, learned counsel for the respondents has relied upon Haldiram Bhujiawala and Another Vs. Anand Kumar Deepak Kumar and Another, [(2000) 3 SCC 250] and Shiv Developers (supra).
5. It also urged that as on the date of filing of the suit, plaintiff firm was unregistered, therefore, above defect cannot be cured by registering firm during pendency of present proceedings. With respect of above, learned counsel for the respondents has relied upon Delhi Development Authority Vs. Kochhar Constructions Work and Another, (1998) SCC 559. On above grounds, it is urged that learned trial Court has rightly dismissed appellant's suit under Order 7 Rule 11(d) of CPC, on the ground that it is barred by Section 69(2) of Indian Partnership Act. Hence, appellant's application under Order 41 Rule 27 of CPC cannot be allowed and case cannot be remitted back to trial Court. Hence, appeal filed by the appellant be dismissed.
6. I have heard learned counsel for the parties and perused and examined record of the case minutely and also decisions referred and relied upon by the parties in the light of their submissions.
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7. In view of rival submissions of the parties, following issues/questions arise for determination before this court:-
(i) Whether respondent's application filed under Order 7 Rule 11(d) of CPC is maintainable?
(ii) Whether appellant/plaintiff, in view of Section 69(2) of the Indian Partnership Act 1932, being unregistered firm on the date of institution of present suit, could have filed present suit for reliefs claimed in the prayer clause of the plaint on the basis of averments as mentioned in plaint/on the grounds as mentioned in the plaint ?
(iii) Whether registration of appellant's firm after passing of impugned order would cure the defect and suit would be maintainable?
(iv) Whether in view of subsequent registration of appellant's firm, appellant's application under Order 41 Rule 27 of CPC for taking on record above registration of firm, can be allowed and case can be remitted back to trial Court?
8. Perusal of impugned order reveals that learned trial Court has dismissed the suit of appellant/plaintiff under Order 7 Rule 11(d) of CPC on the ground that it is barred in the light of Section 69(2) of the Indian Partnership Act 1932 and held as under:-
"Oknh dks vksj ls izLrqr okn i=@vfHkopu ls ;g Li"V gS fd v'kksdk xzqi ,d Hkkxhnkjh QeZ gS vkSj mDr QeZ ds Hkkxhnkj 'kadjyky nklokuh }kjk lafonk ds varxZr mn~Hkwr vf/kdkjksa dks izofrZr djkus gsrq vU; O;fDr ds fo:) izLrqr fd;k x;k gS] ftlds dkj.k ls ;g okn izpyu'khy ugha gSA vr% vkbZ -,-ua-3 Lohdkj fd;k tkrk gSA"5
Issue No.(i)- Whether respondent's application under Order 7 Rule 11(d) of CPC is maintainable?
9. Perusal of record of the case reveals that respondent/defendant filed an application under Order 7 Rule 11(d) of CPC on the ground that plaintiff, being unregistered firm, suit filed on behalf of the such firm is barred by Section 69(2) Indian Partnership Act and therefore, prayed for dismissal of suit as barred by law.
10. So far as maintanability of respondent's above application is concerned, it would be appropriate to refer Order 7 Rule 11 of CPC which reads as under:-
"Rejection of plaint.-- The plaint shall be rejected in the following cases:--
(a) where it does not disclose a cause of action;
(b) where the relief claimed is undervalued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so;
(c) where the relief claimed is properly valued, but the plaint is returned upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be fixed by the Court, fails to do so;
(d) where the suit appears from the statement in the plaint to be barred by any law;
(e) where it is not filed in duplicate;
(f) where the plaintiff fails to comply with the provisions of rule 9:
[Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature from correcting the valuation or supplying the requisite stamp-paper, as the case may be, within the time fixed by the 6 Court and that refusal to extend such time would cause grave injustice to the plaintiff."
11. It is well settled that while deciding an application under Order 7 Rule 11 of CPC only plaint averments and documents filed along with the plaint are to be taken into consideration. Further, if ground raised in application under Order 7 Rule 11 of CPC is a mixed question of law and fact, then on such ground, application under Order 7 Rule 11 cannot be allowed. In the instant case, present respondent/defendant has filed application under Order 7 Rule 11(d) of CPC on the ground that plaintiff being unregistered firm, cannot file present suit for specific performance of contract in view of Section 69(2) of the Indian Partnership Act 1932. Issue raised by respondent in a pure question of law and it can be decided on the basis of plaint averments and documents filed along with the plaint.
12. Hence, in view of above, it cannot be said that application filed by the respondent under Order 7 Rule 11(d) of CPC is not maintainable. Therefore, principle laid down in Shakti Bhog Food Industries Ltd.(supra) does not help of appellant/plaintiff in any way.
ISSUE NO. (ii)- Whether appellant/plaintiff, in view of Section 69(2) of the Indian Partnership Act 1932, being unregistered firm on the date of institution of present suit, could have filed present suit for reliefs claimed in the prayer clause of the plaint on the basis of averments as mentioned in plaint/on the grounds as mentioned in the plaint ?
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13. Before proceeding further and examining the case on merit, it would be appropriate to refer relevant provisions contained in Section 69 of Indian Partnership Act 1932 which are as follows:-
69. Effect of non-registration (1) No suit to enforce a right arising from a contract of or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner ma 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 person suing are or have been shown in the Register of firm as partners in the firm.
3. The provisions of sub section (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 of Court under the Presidency, towns insolvency Act 1909, or the Provincial insolvency Act, 1920, to realise the property of an insolvent partner.
4) This section shall not apply
a) To firms or to partners in firms which have no place of business in the territories to which this Act extends, or whose places of business in the said territories are situated in areas to which by notification under section 56, this chapter does not apply, or
b) to any suit or claim of set off not exceeding one hundred rupees in value which in the presidency towns, is not of a kind specified in section 19 of the Presidency shall cause Court Act, 1882 or outside the Presidency towns, is not of a kind specified in the Second Schedule to the Provisional small cause Courts Act 1887.
or to any proceeding or execution in other proceeding incidental to or arising from any such suit or claim."
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14. For deciding the present issue, it is necessary to refer relevant plaint averments which read as under:-
^^1& ;g fd oknh v'kksdk xzqi dk Hkkxhnkjh gSA Jh 'kadj yky nklokuh vkRet Lo- Jh ewypan nklokuh v'kksdk xzqi dk Hkkxhnkj gS A Hkkxhnkj dh gSfl;r ls çfroknh Øekad 1 ¼,d½ ls 6 ¼N%½ ls fnukad 11&02&2006 ¼X;kjg Qjojh nks gtkj N%½ dks ,d foØ; vuqca/k fd;k gS mä foØ; vuqca/k i= ij Hkkxhnkj @ Øsrk dh gSfl;r ls Jh 'kadj yky nklokuh rFkk foØsrk dh gSfl;r ls çfroknh Ø- 1 ¼,d½ yxk;r 6 ¼N%½ ds gLrk{kj gSA bl çdkj Jh 'kadj yky nklokuh foØ; vuqca/k fnukad 11&02&2006 ¼X;kjg Qjojh nks gtkj N%½ ds ikyukFkZ okn i= çLrqr djus esa iw.kZ l{ke gS A^^
15. Further, relief clause reads as under:-
"¼1½ ekStk frygjh u-ca- 231] iVokjh gYdk ua- 28 rglhy o ftyk tcyiqj [kljk ua- 118@4 jdok 0-955 gsDVs;j esa ls 23000 oxZQqV tks layXu uD'ks esa yky jax ls nf'kZr gS dk foØ; i= 'ks"k jkf'k :i;s 27]55]000@& ¼lÙkkbZl yk[k ipiu gtkj :i;s½ çkIr dj çfroknh.k Øekad 1 ls 6 oknh ds i{k esa fu"ikfnr djsa ,slh fMØh ikfjr djus dh n;k gks A ¼2½ çfroknh Øekad 1 ls 6 dks ;g funsZ'k fn;k tkos fd foØ; i= ds iwoZ Hkwfe ikd lkQ dj lHkh VSDl vkfn] dtZ vkfn vnk dj ekSds ij Hkwfe dk uki dj lhekadu i'pkr~ mä foØ; i= dk fu"iknu djsa A uki esa tks Hkwfe de ikbZ tkos ml dk ewY; foØ; vuqca/k dh nj 185@& çfroxZQqV ls de fd;k tkos A ¼3½ ;fn 18 QhV pkSMh Hkwfe dk foØ; i= fu"ks/kkKk ds dkj.k lHko uk gks rks mä fu"ks/kkKk okyh Hkwfe de dj 'ks"k Hkwfe dk foØ; i= de Hkwfe dh jkf'k ?kVkdj oknh ds i{k esa fd;k tkos ,slk funsZ'k tkjh djus dh n;k gksA ;g funsZ'k Hkh nsus dh n;k gks fd [kljk ua- 117@2] 117@6 ,oa 118@4 esa ls 30 QhV pkSMk MCY;w- ch-,e- jksM çfroknh Ø- 1 yxk;r 6 cukdj nsa] vFkok mä jksM ds fuekZ.k dk O;; çfrQy jkf'k ls de fd;k tkos A ¼4½ mijksä Hkwfe tks foØ; i= ls oknh dks çkIr gksrh gS] ij LFkk;h fu"ks/kkKk tkjh djus dh n;k gks fd çfroknh Øekad 1 yxk;r 6 oknh ds 'kkafriw.kZ mi;ksx miHkksx ,oa dCts esa vukf/k--r gLr{ksi uk djsa A ¼5½ okn O;; ,oa vU; vuqrks"k tks ekuuh; U;k;ky; mfpr le>s oknh dks izfroknh dz 1 yxk;r 6 ls fnykus dh n;k gksA"
16. Further, perusal of title of plaint reveals that present suit has been filed by Ashoka Group through partner Shankar Lal Daswani.
17. Thus, it is evident from plaint averments as well as plaint title that present suit has been filed by the partner Shankar Lal Daswani on behalf of the Ashoka Group for specific performance of contract. Perusal of the record of the case 9 also reveals that appellant/plaintiff has also filed copy of agreement to sale which shows that partner Shankar Lal Daswani has executed above agreement to sale on behalf of the Ashoka group.
18. Further, with respect to institution of present suit as well as execution of agreement to sale, following documents executed by partners of Ashoka group are relevant which are as under:-
DEED OF PARTNERSHIP This Deed of Partnership is made on 12.09.2005 by and between:
1) Shri Suryaveer Kataria S/o Shri Laxmandas Kataria Rio 4th Bridge, Napier Town, Jabalpur, aged about 33 years.
2) Shri Chandra Prakash Kuichandani Sic Late Shri Naraindas Kulchandani Rio ADB-1, Goodwill Apartment, Napier Town, Jabalpur, Aged about 55 years.
3) Shri Shankerlal Daswani S/o Late Shri Moolchand Daswani R/o Mohit Apartment, Napier Town, Jabalpur, aged about 39 years.
4) Shri Mahesh Bajaj S/o Shri A.L. Bajaj R/o Bhanwartal Extension, Napier Town, Jabalpur, aged about 41 years.
5) Shri Bharatveer Kataria S/o Shri Laxmandas Kataria R/o 4th Bridge, Napier Town, Jabalpur, aged about 28 years.
xxx xxx xxx xxx xxx
HOW THIS DEED OF PARTNERSHIP WITNESSETH AS
UNDER
1. That the business of this partnership shall, be carried on under the name and style of M/s Ashoka Group or under such other name or names as the partners may decide mutually. The place of the buisness shall be. Napier Town, Jabalpur, however partners can change or add more places of business as is mutually agreed between them.
2. XXX XXX XXX XXX
3. XXX XXX XXX XXX 10
4. That the business of the partnership firm shall be that of purchase & sale of land and buildings, builders & developers, Govt. Contractors etc. Besides this, the partners are at liberty to start any other line of trade under this name of firm or under any other trade name as per their mutual agreement.
5. XXX XXX XXX XXX Resolution of meeting of partners of Ashoka Group-
v'kksdk xzqi] tcyiqj vkt fnukad 20&1&2009 dks vdk xzqi ds lHkh Hkkxhnkjksa dh cSBd Fkh Jh 'kadj yky nklokuh ds pkSFkkiqy fuokl LFkku ij lEiUu gqbZ] ftlesa Jh gjhjke cq)jktk] Jh fou; cq)jktk] Jh fueZy flag] Jherh tloUr dkSj] Jherh deythr dkSj vkSj Jherh dqyoUr dkSj ds lkFk fnukZd 11&2&2006 dks gq, foØ; vuqca/k i= dj ij ppkZ dh x;h vkSj bu foØsrkvksa }kjk foØ; i= uk fd;s tkus ds dkj.k Uok.kky; eSa eqdnek djus dk fu.kZ; fy;k x;k rFkk lHkh Hkkxhnkjksa us okn i= izLrqr djus] vf/koäk fu;qä djus lHkh Hkkxhnkjksa dh vksj ls O;ogkj okn dk lapkyu djus] lk{; nsus vkfn lEiw.kZ dk;Zokgh ds fy, Jh 'kadj yky nklokuh dks vf/k--r fd;k gSA Jh 'kadj yky nklckuh }kjk dh x;h dk;Zokgh ge lHkh Hkkxhnkjksa dks Lohdkj gksxhA mifLFkr Hkkxhnkjksa dh mifLFkfr esa gLrk{kj bl çdkj gS& 1-Jh 'kadjyky nklokuh 2-Jh pUæidkus dqypankuh 3- Jh egs'k ctkt 4- Jh lw;Zohj dVkfj;k 5- Jh Hkjr dVkfj;k
19. Further, with respect to issue involved in the case, it would also be appropriate to refer relevants pronouncement having bearing on the issue involved in the case.
20. Hon'ble Apex Court in Purushottam and another Vs. Shivraj Fine Arts Litho works and others, (2007) 15 SCC 58, dealing with present issue, has held as under:-
"21. It would thus appear that registration of a firm was conceived as a protection to third parties dealing with a partnership firm. Registration ensured the certainty of existence of the firm and its membership, so that later an unsuspecting third party contracting with the firm may not run the risk of being defeated on discovery 11 that neither the partnership firm nor its partners existed in fact. On the other hand, an unregistered firm could not bring a suit for enforcing its right arising from a contract.
22. In Raptakos Brett & Co. Ltd. [(1998) 7 SCC 184] this Court after noticing Section 69 of the Act observed: (SCC p. 191, para
9) "A mere look at the aforesaid provision shows that the suit filed by an unregistered firm against a third party for enforcement of any right arising from a contract with such a third party would be barred at its very inception. To attract the aforesaid bar to the suit, the following conditions must be satisfied:
(i) That the plaintiff partnership firm on the date of the suit must not be registered under the provisions of the Partnership Act and consequently or even otherwise, the persons suing are not shown in the Register of Firms as partners of the firm, on the date of the suit.
(ii) Such unregistered firm or the partners mentioned in the sub-
section must be suing the defendant third party.
(iii) Such a suit must be for enforcement of a right arising from a contract of the firm with such a third party."
23. Relying upon the aforesaid analysis this Court in Haldiram Bhujiawala [(2000) 3 SCC 250] held that the contract contemplated by Section 69 of the Act is the contract entered into by the firm with the third-party defendant. The contract by the unregistered firm referred to in Section 69(2) must not only be one entered into by the firm with a third-party defendant, but must also be one entered into by the plaintiff firm in the course of the business dealings of the plaintiff firm with such third-party defendant.
24. With respect, we find ourselves in complete agreement with the principles enunciated in Haldiram Bhujiawala [(2000) 3 SCC 250] . Having regard to the purpose Section 69(2) seeks to achieve and the interest sought to be protected, the bar must apply to a suit for enforcement of right arising from a contract entered into by the unregistered firm with a third party in the course of business dealings with such third party. If the right sought to be enforced does not arise from a contract to which the unregistered firm is a party, or is not entered into in connection with the business of the unregistered firm with a third party, the bar of Section 69(2) will not apply."
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21. Hon'ble Apex Court in Shiv Developers (supra) also, after referring and relying upon Haldiram Bhujiwala (supra), has held as under:-
"15. In our view, the questions arising in this matter could be directly answered with reference to the principles enunciated by this Court in Raptakos Brett & Co. Ltd. v. Ganesh Property [Raptakos Brett & Co. Ltd. v. Ganesh Property, (1998) 7 SCC 184] , which have further been explained and applied by this Court in Haldiram Bhujiawala [Haldiram Bhujiawala v. Anand Kumar Deepak Kumar, (2000) 3 SCC 250] and Purushottam [Purushottam v. Shivraj Fine Arts Litho Works, (2007) 15 SCC 58] . We may take note of the principles vividly exposited in Haldiram Bhujiawala [Haldiram Bhujiawala v. Anand Kumar Deepak Kumar, (2000) 3 SCC 250] that to attract the bar of Section 69(2) of the 1932 Act, the contract in question must be the one entered into by firm with the third-party defendant and must also be the one entered into by the plaintiff firm in the course of its business dealings; and that Section 69(2) of the 1932 Act is not a bar to a suit filed by an unregistered firm, if the same is for enforcement of a statutory right or a common law right.
16. ................................
"8. The points that arise for consideration are:
(i) Whether Section 69(2) bars a suit by a firm not registered on the date of suit where permanent injunction and damages are claimed in respect of a trade mark as a statutory right or by invoking common law principles applicable to a passing-off action?
(ii) Whether the words "arising from a contract" in Section 69(2) refer only to a situation where an unregistered firm is enforcing a right arising from a contract entered into by the firm with the defendant during the course of its business or whether the bar under Section 69(2) can be extended to any contract referred to in the plaint unconnected with the defendant, as the source of title to the suit property?"
16.1. Answering the first question in the negative, this Court referred to the previous decision in Raptakos Brett [Raptakos Brett & Co. Ltd. v. Ganesh Property, (1998) 7 SCC 184] and held as follows :
"9. The question whether Section 69(2) is a bar to a suit filed by an unregistered firm even if a statutory right is being enforced or even 13 if only a common law right is being enforced came up directly for consideration in this Court in Raptakos Brett & Co. Ltd. v. Ganesh Property [Raptakos Brett & Co. Ltd. v. Ganesh Property, (1998) 7 SCC 184] . In that case, Majmudar, J. speaking for the Bench clearly expressed the view that Section 69(2) cannot bar the enforcement by way of a suit by an unregistered firm in respect of a statutory right or a common law right. On the facts of that case, it was held that the right to evict a tenant upon expiry of the lease was not a right "arising from a contract" but was a common law right or a statutory right under the Transfer of Property Act. The fact that the plaint in that case referred to a lease and to its expiry, made no difference. Hence, the said suit was held not barred. It appears to us that in that case the reference to the lease in the plaint was obviously treated as a historical fact. That case is therefore directly in point. Following the said judgment, it must be held in the present case too that a suit is not barred by Section 69(2) if a statutory right or a common law right is being enforced.
xxx x xxxx xxxx xxxx
11. Likewise, if the reliefs of permanent injunction or damages are being claimed on the basis of a registered trade mark and its infringement, the suit is to be treated as one based on a statutory right under the Trade Marks Act and is, in our view, not barred by Section 69(2).
12. For the aforesaid reasons, in both these situations, the unregistered partnership in the case before us cannot be said to be enforcing any right "arising from a contract". Point 1 is therefore decided in favour of the respondent-plaintiffs."
16.2 This Court further exposited on the scope of the words "enforcing a right arising under the contract", as used in Section 69(2) of the 1932 Act; and after a detailed survey of the reports and precedents which led to the frame of the said provision as also after reference to various authorities on the point, this Court explained the rationale and object of the provision that the same was intended to protect those in commerce who deal with a partnership firm in business, inasmuch as they ought to be enabled to know the names of the partners of the firm before they deal with them in business; and the bar of Section 69(2) is not attracted to any and every contract referred to in the plaint as a source of title to an asset owned by the firm. This Court held and explained as under:-
"23. The further and additional but equally important aspect which has to be made clear is that the contract by the unregistered firm referred to in Section 69(2) must not only be one entered into by the firm with the third-party defendant but must also be one 14 entered into by the plaintiff firm in the course of the business dealings of the plaintiff firm with such third-party defendant.
24. ... The real crux of the question is that the legislature, when it used the words "arising out of a contract" in Section 69(2), it is referring to a contract entered into in course of business transactions by the unregistered plaintiff firm with its defendant customers and the idea is to protect those in commerce who deal with such a partnership firm in business. Such third parties who deal with the partners ought to be enabled to know what the names of the partners of the firm are before they deal with them in business.
25. Further, Section 69(2) is not attracted to any and every contract referred to in the plaint as the source of title to an asset owned by the firm. If the plaint referred to such a contract it could only be as a historical fact. For example, if the plaint filed by the unregistered firm refers to the source of the firm's title to a motor car and states that the plaintiff has purchased and received a motor car from a foreign buyer under a contract and that the defendant has unauthorisedly removed it from the plaintiff firm's possession, it is clear that the relief for possession against the defendant in the suit does not arise from any contract which the defendant entered into in the course of the plaintiff firm's business with the defendant but is based on the alleged unauthorised removal of the vehicle from the plaintiff firm's custody by the defendant. In such a situation, the fact that the unregistered firm has purchased the vehicle from somebody else under a contract has absolutely no bearing on the right of the firm to sue the defendant for possession of the vehicle. Such a suit would be maintainable and Section 69(2) would not be a bar, even if the firm is unregistered on the date of suit. The position in the present case is not different."
17. The aforesaid decision in Haldiram Bhujiawala (supra) was further considered and applied by this Court in Purushottam [Purushottam (supra) while holding as under:- "24. With respect, we find ourselves in complete agreement with the principles enunciated in Haldiram Bhujiawala [Haldiram Bhujiawala v. Anand Kumar Deepak Kumar, (2000) 3 SCC 250] . Having regard to the purpose Section 69(2) seeks to achieve and the interest sought to be protected, the bar must apply to a suit for enforcement of right arising from a contract entered into by the unregistered firm with a third party in the course of business dealings with such third party. If the right sought to be enforced does not arise from a contract to which the unregistered firm is a party, or is not entered into in connection with the business of the unregistered firm with a third party, the bar of Section 69(2) will not apply." 15
22. From plaint averments as well as documents referred and quoted in preceding paras, it is evident that present suit has been filed on behalf of the Ashoka Group for specific performance of contract that was executed by one of its partner, on behalf of Ashoka Group, after having been authorized by Ashoka Group. Thus, present suit has been filed for enforcement of a right arising from a contract of firm with third party. Thus, if facts of the present case, as quoted and referred in preceding paras, along with partnership deed/resolution, are examined in the light of legal provision contained in Section 69(2) of the Indian Partnership Act 1932 as well as principles laid down by Hon'ble Apex Court in Haldiram Bhujiwala (supra) Purshottam (supra) and Shiv Developers (supra), then, it is evident that present suit filed by the appellant/plaintiff is clearly barred by Section 69(2) of Indian Partnership Act, 1932. ISSUE NO. (iii) -Whether registration of appellant's firm, after passing of impugned order, would cure the defect and suit would be maintainable?
23. Hon'ble Apex Court in Purushottam (supra), dealing with above issue, has held as under:-
"6. Shri V.A. Mohta, Senior Advocate, appearing on behalf of the appellants before us advanced three main submissions. Firstly, he submitted that once registration is granted, even though after the filing of the suit, the suit should be held to be maintainable as from the date on which registration is granted subject to the law of limitation. Secondly, he submitted that Plaintiff 1 Purushottam in his personal capacity could sue the respondent firm for the amount in question, if the firm of which he was a partner was for reason of non-registration unable to maintain a suit. Lastly, he submitted that Section 69(2) of the Act is not attracted to a case where the contract in question is not with the unregistered firm and for this he relied on the judgment of this Court in Haldiram Bhujiawala v. Anand Kumar Deepak Kumar [(2000) 3 SCC 250] .16
8. The question as to whether the subsequent registration of the firm would cure the initial defect in the filing of the suit arose for consideration in DDA v. Kochhar Construction Work [(1998) 8 SCC 559] . This Court held that in view of the clear provision of the Act it was not possible to subscribe to the view that subsequent registration of the firm may cure the initial defect, because the proceedings were ab initio defective as they could not have been instituted since the firm in whose name the proceedings were instituted was not a registered firm on the date of the institution of the proceedings. This Court also noticed the difference of opinion amongst the High Courts and concluded thus: (SCC p. 562, para
4) "4. Counsel for the respondents, however, invited our attention to two decisions which take a view that subsequent registration of the firm can cure the initial defect provided the registration is before the period of limitation has run out. Our attention was drawn to M.S.A. Subramania Mudaliar v. East Asiatic Co. Ltd. [AIR 1936 Mad 991 : 1936 MWN 1144] and Atmuri Mahalakshmi v.
Jagadeesh Traders [AIR 1990 AP 288] . However, the High Court of Patna in Laduram Sagarmal v. Jamuna Prasad Chaudhuri [AIR 1939 Pat 239 : ILR 18 Pat 114] and the High Court of Madras in T. Savariraj Pillai v. R.S.S. Vastrad & Co. [AIR 1990 Mad 198] take a contrary view and hold that the suit is incompetent ab initio. We have considered these decisions, but in the light of the plain language of Section 69 of the Partnership Act read with Section 20 of the Arbitration Act and in view of the decision of this Court in Shreeram Finance Corpn. [(1989) 3 SCC 476] we are clearly of the opinion that proceedings under Section 20 of the Arbitration Act were ab initio defective since the firm was not registered and the subsequent registration of the firm cannot cure that defect." The same view was also reiterated in U.P. State Sugar Corpn. Ltd. v. Jain Construction Co. [(2004) 7 SCC 332]
9. These decisions squarely answer the first submission of Shri V.A. Mohta. The submission must therefore be rejected."
24. Hon'ble Apex Court in Delhi Development Authority (supra) and Coordinate bench of this Court is Abdul Karim Vs. Ramdas Narayandas, 1950 SCC Online MP 75 has also held similarly.
17
25. Thus, in view of above settled law, subsequent registration of appellant/plaintiff firm would not cure the defect and it would not make suit maintainable.
ISSUE NO. (iv) Whether in view of subsequent registration of appellant's firm, appellant's application under Order 41 Rule 27 of CPC for taking on record above registration of firm, can be allowed and case can be remitted back to trial Court?
26. This issue has been answered by co-ordinate bench of this court in Abdul Karim (Supra) as under:-
"4. The first point argued on behalf of the applicant is that the shop Ramdas Narayandas is really a partnership firm and that as it was not registered on the date of the suit, the Court below was bound to dismiss it under Section 69(2) of the Partnership Act. On behalf of the non-applicant it is argued that the suit is not brought on behalf of the partnership firm and that, at any rate, as no plea founded on Section 69(2) of the Partner, ship Act, was taken on behalf of the applicant in the Court below. it should not be allowed to be taken in revision. It is further stated that the firm has been registered now and, that, therefore, the difficulty, if any, existing on the date of the institution of the suit must be deemed to have been cured.
8. The question then is whether in view of the statement of the learned counsel for the non-applicant that the firm has since been registered, the case should be remanded to the Court below for amendment of the plaint. In Ponnuchami Goundar v Muthusami Goundar, I.L.R. (1942) Mad. 355 (A.I.R. (29) 1942 Mad. 252), it has been held that under Section 69 of the Partnership Act, the registration of a firm is a condition precedent to its right to institute a suit and a Court has no jurisdiction to proceed with tee trial of a suit when the condition precedent has not been fulfilled. It has further been held that registration of the firm subsequent to the date of institution of the suit cannot remedy the defect and the Court is bound to dismiss it. A contrary view as to the effect of the registration of a firm subsequent to the Suit was expressed by Gruer, J. in obiter in Jakiuddin v. Vithoba, 1939 N.L.J. 427:
(A.I.R. (26) 1939 Nag. 301) but it was abandoned by him later in Kanchedilal v. Gaorishankar, Civil Revn. No. 765 of 1938, D/-10- 18 7-1940. In Mahadeo v. Shah Vijaya Kumar Hiralal, Civ. Revn. No. 613 of 1949 D/-20-4-1950, Deo, J., has come to the same conclusion as Gruer, J. in his second decision. It is no doubt true that in Varadarajulu Naidu v. Rajamanika Mudaliar, A.I.R. (24) 1937 Mad. 767 (176 1.C. 916) and Radha Charan Saha v. Matilal Saha, 41 C.W.N. 534, it was held that a suit could be validated by the subsequent registration of the firm. But the first of these two decisions was overruled in Ponnuchami Goundar v. Muthusami Goundar, I.L.R. (1942) Mad 355 (A.I.R. (29) 1942 Mad 252) and the second one is the solitary case which takes this view. In addition to the decisions I have referred to. I may mention that the High Courts of Patna. Lahore and Allahabad have in (Firm) Mohanlal Ram Gopal v. (Firm) Udai Ram Sewa Ram, A.I.R. (23) 1936 Pat 140 (161 1.C. 516), Krishan Lal Ram Lal v. Abdul Ghafur Khan, 17 Lah. 275 (A.I.R. (22) 1935 Lah. 893): Danmal Parshotamdas v. Baburam Chhotelal, 58 ALL. 495 (A.I.R. (23) 1936 ALL. 3) respectively have taken the same view as in Ponnuchami Goundar v. Muthusami Goundar, I.LR. (1942) Mad. 355 (A.I.R. (29) 1942 Mad. 252). In the face of this overwhelming authority. I cannot feel persuaded to following She Calcutta decision. The suit must therefore, be dismissed and cannot be sent back."
27. Hence, in view of law laid down in Purshottam (supra), Haldiram Bhujiawala (supra), Shiv Developers (supra), Delhi Development Authority (supra), Abdul Karim (supra), present suit was not maintainable at the time of institution itself, as it was barred at its very inception due to non-registration of appellant/plaintiff firm and subsequent registration of appellant/plaintiff firm would not cure above defect. Therefore, present suit cannot be remanded back to trial court to decide the case afresh in the light of subsequent registration of appellant/plaintiff firm.
28. Appellant/plaintiff has also filed an application under 41 Rule 27 of CPC (IA No. 5629/2013) for taking on record copy of registration. Learned counsel for the appellant has submitted that above copy of registration be taken on record and case be remanded back to the trial Court for deciding application 19 under Order 7 Rule 11 of CPC afresh on merit. With respect to above, learned counsel for the appellant has relied upon Sanjay Kumar Singh (supra), Mohan Kumar (supra) and Collector (supra).
29. From record of the case, it is evident that at the time of filing on the present suit, appellant firm was not registered and it has been registered subsequently after dismissal of suit under Order 7 Rule 11(d) of CPC. Hence, on account of above defect, suit was not maintainable since inception. Therefore, above defect could not have been cured subsequently. Therefore, no purpose would be served by allowing application under Order 41 Rule 27 of CPC and taking on record subsequent registration. Hence present IA cannot be allowed and above registration cannot be taken on record. Resultantly, the present IA is dismissed. CONCLUSION:-
30. Hence, in view of discussion for forgoing paras, no ground is made out to interfere in the findings recorded by the trial court. There is no illegality or perversity in the findings recorded by the trial Court. Trial court has rightly dismissed appellant/plaintiff's suit under Order 7 Rule 11 (d) of CPC on the ground that is barred by Section 69(2) of Indian Partnership Act. Hence, Appeal filed by the appellant is dismissed and findings recorded by the trial court is affirmed.
[ (ACHAL KUMAR PALIWAL) JUDGE Digitally L.R.signed by LALIT SINGH RANA Date: 2024.07.25 11:43:22 +05'30'