Bangalore District Court
Tss Business Ventures vs Uber India Systems Private Limited on 8 October, 2021
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Com. O S 399/2020
IN THE COURT OF LXXXVII ADDL.CITY CIVIL & SESSIONS
JUDGE, (EXCLUSIVE DEDICATED COMMERCIAL COURT
AT BENGALURU (CCH.88)
THIS THE 8th DAY OF OCTOBER 2021
PRESENT:
SRI.CHANDRASHEKHAR U., B.Sc., LL.M.,
LXXXVII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.O.S.No.399/2020
PLAINTIFF : TSS Business Ventures
(Reptd by NBV- Adv)
AND
DEFENDANT : Uber India Systems Private Limited
(Reptd by AGH -Adv.)
ORDERS ON IA I
The defendant has filed IA I under Order VII Rule 11(D) of
CPC r/w Section 69(2) of Indian Partnership Act, 1932, for
rejection of the plant.
2. The representative of defendant company has sworn
to an affidavit, in support of the IA I, wherein, he has stated
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that the plaintiff has filed the suit for recovery of a sum of
Rs.7,73,18,949.76 with interest at 15% per annum. The
defendant has filed detailed written statement and also the
present IA for rejection of plaint. Without prejudice to the
contention raised in the written statement, the defendant has
contended that the suit is barred under Section 69(2) of Indian
Partnership Act, 1963. The plaintiff No.1 in the instant suit is
"TSS Business Ventures", described as a partnership firm,
represented by its partners N. Sampath Kumar and Mrs. Girija
M, as shown in the cause title. Since, the plaintiffs constituted
a partnership firm, engaged in the business of procurement,
distribution and supply of mobile phones and related
accessories. it would appear that, as on the date of filing the
instant suit, neither the plaintiff No.1, the partnership firm
registered under the provisions of the Indian Partnership Act,
nor are plaintiff Nos. 2 and 3 shown as partners in the Register
of Firms. This is evident from the fact that no pleadings have
been made regarding registration and no certificate of
registration has been produced. It is clear from a reading of
the plaint that the plaintiff being unregistered partnership firm
cannot enforce rights arising under a contract in relation to
supply of mobile phones and related accessories. The framing
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of suit itself as a commercial suit under the provisions of
Commercial Courts Act, 2015. Further, Para No.21 of the
plaint, it is clearly stated that the subject matter of the suit
falls within the definition of the commercial disputes and
therefore, since, the dispute relates to a contract between the
firm and third party, then, compliance of Section 69(2) is
mandatory and without firm being registered, no action can be
taken. Accordingly, the defendant has prayed for rejection of
the plaint.
3. The plaintiff has filed objection to IA I, stating that the
application is not maintainable and the same is liable to be
dismissed in limine. It has denied all allegation made in the
suit and that suit is barred under Section 69(2) of Indian
Partnership Act and the provisions of Limitation Act.
4. The cause title itself is clear that the plaintiff Nos. 2
and 3 are filing the suit on behalf of the plaintiff No.1 firm and
not claiming any independent right etc. Since, the partners
have joined in the suit, there is no bar under Section 69 of the
Partnership Act. Further, the partners of an unregistered firm
can institute a suit, provided that all the partners of the firm
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are brought on record in the suit. Further, it has denied other
allegations made in the affidavit regarding filing of the suit
and other allegations made regarding jurisdiction, etc. and
that it is a commercial dispute, etc. Further, none of the
exceptions culled out in Section 69(2) and 69(3) and 69(4) of
the Act is applicable to the present case. The application is
filed only to drag on the proceedings. Accordingly, it has
prayed for dismissal of IA I.
5. Heard.
6. Now, the points that are arise for my consideration
are:-
1. Whether the suit of the plaintiff is barred under
Section 69(2) of the Indian Partnership Act,
1932?
2. What Order?
7. My findings on the above Points are as under:
Point No.1 : In the affirmative.
Point No.2: As per the final order for the
following reasons
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REASONS
8. POINT No.1: Learned counsel for the defendant
would argue that the suit of the plaintiff is hit by Section 69(2)
of the Indian Partnership Act, 1932 (hereinafter called 'the
Act') for the reason that the plaintiff firm has not been
registered as required under the provisions of the Act and
since, it is specifically stated in the cause title that the 1 st
plaintiff is the partnership firm and plaintiffs No.2 and 3 are
the partners of the said firm dealt with the defendant for the
supply of certain mobiles and other equipment by raising
various invoices and the invoices produced by the plaintiff,
disclose that the same have been raised in the name of
partnership firm, i.e, TSS Business Ventures and therefore,
since, the invoice raised relates to a contract between the firm
and 3rd party, the defendant, then, as required under Section
69(2) of the Act, unless and until, the partnership firm is
registered and names of the partners are shown in the
Register of Firms as partners in the firm, the suit cannot be
instituted. In the said connection, learned counsel for the
defendants, drew the attention of the Court to Section 69 of
the Act, which reads, thus:
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"(i) A suit for specific performance of
agreements brought by an unregistered firm is barred
by s 69.
(ii) A suit based on infringement of statutory
right under the Trade Marks Act 1999 and upon the
common law principles of tort applicable to passing-
off actions filed by an unregistered firm is not barred
under this section. Where an unregistered firm filed a
suit for permanent injunction for passing off against
the defendant, it was held that sub-s (2) of s 69 did
not apply to such suit.
(iii) A suit for recovery of damages for a
misconduct committed by another partner by his act
of forcibly breaking the lock of the shop of the
partnership firm and taking away certain articles
lying therein is not a suit for enforcing a right arising
out of contract or for enforcing a right conferred by
the Act and hence, not barred by s 69.
(iv) A suit filed by an unregistered firm for
recovery of amount of a cheque issued by the
defendant but not honoured is not barred under this
section. The right of action available to an endorse
of a cheque who comes to hold the cheque in due
course is based upon conferment on him by the
statutory provisions the right to sue the maker of
the cheque and also the endorser".
9. With the back ground of definition, learned counsel
took the Court to the plaint averments, wherein, the plaintiff
has specifically stated in para No.3 that "the plaintiffs
constituted a Partnership firm, engaged in the business of
wholesale procurement, distribution and supply of mobile
phones and related accessories, such as, car mounts, cables,
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charges, charging cables, kits, etc. Further, the defendant is a
Private Limited Company, purchased materials worth
Rs.7,73,18,949.76 under different invoices and since, the sale
was made by raising invoices, then, it becomes a contract
between the plaintiff firm and defendant and therefore, when,
it is a contract between the firm and the third party, then, the
firm must be registered before enforcing its right under a
contract. The question of joining all the partners, in case of
non-registration would arise only in respect of rights accrued
under common law or statutory right or relating to the internal
dispute amongst the partners, etc. To support her contention,
she has cited a decision in the case of M/s Park Side
Limited Vs. Blues Luxury Impex Private Limited,
reported in 2013 SCC OnLine Delhi 4174, wherein, his
lordship has held at Para No.10 that:
"Even in the decision relied by the defendant in Bharat
Forge Ltd., Vs. Onil Gulati, AIR 2005 Delhi 369 it was held that
"an invoice which incorporates the particulars of seller,
purchaser, description of goods, weight, quantity, rates and
price including sale tax and other dues accompanied with
additional terms would be regarded as a written contract on
acceptance by the respondent".
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10. So, with the help of the above decision and when
the invoices produced before the Court, which indicate the
name of the plaintiff firm and defendant firm, weight, quantity,
rates, prices, total amount and also the payment of tax, then,
it amounts to a contract with 3rd party and therefore,
compulsorily the registration of the firm is must and therefore,
if the firm is not registered as on the date of suit, then, suit is
not maintainable and therefore, the plaint has to be rejected.
To contend further, she would cite a decision in the case of
Purushottam & another Vs. Shivraj Fine Arts Litho
Works & others reported in (2007) 15 SCC 58. In Para
No.23, it is held by referring to the decision in Haldiram
Bhujiawala case, wherein, it is held that:
"the contract contemplated by Section 69 of the
Act is a contract entered into by the firm with 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".
11. One more decision, she would rely upon in the case
of Haldiram Bhujiawala & another Vs. Anand Kumar
Deepak Kumar & another, which was reported in (2000) 3
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SCC 250, which was relied upon in earlier case, stated supra
to the effect that unregistered partnership firm cannot sue a
third party based upon the contract and that the defect is not
curable. The earlier decision in the case of Seth Loonkaran
Sethiya & Others Vs. Mr. Ivan E John & others reported in
(1977) 1 SCC 379, wherein, it is held at Para No.20 and 21
that:
20. "Question 3: For a proper determination of this
question, it is necessary to refer to Section 69 of the
Partnership Act, 1932, the relevant portion whereof is
reproduced below for ready reference:
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 sitting 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
dissolution of a firm or for accounts of a dissolved firm,
or any right or power to release the property of a
dissolved firm, or any right or power to realise the
property of a dissolved firm, or . . . .
21. "A bare glance at the section is enough to
show that it is mandatory in character and its effect is to
render a suit by a plaintiff in respect of a right vested in
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him or acquired by him under a contract which he
entered into as a partner of an unregistered firm,
whether existing or dissolved, void. In other words, a
partner of an erstwhile unregistered partnership firm
cannot bring a suit to enforce a right arising out of a
contract falling within the ambit of Section 69 of the
Partnership Act. In the instant case, Seth Sugan Chand
had to admit in unmistakable terms that the firm
'Sethiya & Co.' was not registered under the Indian
Partnership Act. It cannot also be denied that the suit
out of which the appeals have arisen was for
enforcement of the agreement entered into by the
plaintiff as partner of Sethiya & Co. which was an
unregistered firm. That being so, the suit was
undoubtedly a suit for the benefit and in the interest of
the firm and consequently a suit on behalf of the firm.
It is also to be borne in mind that it was never pleaded
by the plaintiff, not even in the replication, that he was
suing to recover the outstanding of a dissolved firm.
Thus, the suit was clearly hit by Section 69 of the
Partnership Act and was not maintainable."
12. The decision in the case of M/s Sai Nath
Enterprises Vs. North Delhi Municipal Corporation &
another, reported in 2015 SCC OnLine Delhi 14400,
wherein, his Lordship has referred to various aspects of
Section 69 of the Act and has come to a conclusion at Para No.
89, 90, 92.
89. "The provisions of Sub-sections (1) and (2) of
Section 69 are substantive provisions intended to
discourage the non-registration of firms. The provisions
in Section 69(2) is mandatory. The partnership Act is a
special Act which makes the registration of a firm a
condition precedent to the institution of a suit of the
nature mentioned in it by or on behalf of a firm against
a third party. It deals with the question as to when a
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firm can sue, or be sued by, a third party in respect of a
right arising from a contract, and provides certain
requirements as conditions precedent for the institution
of the suit, viz, (a) that the firm is a registered firm, and
(b) the persons suing are or have been shown in the
Register of Firms as partners in the firm.
90. "It is evident that a suit by an unregistered firm
is not maintainable and the bar under Section 69 of the
Act hits at the very root or the very institution of the suit.
If a firm is not registered or if the conditions specified in
Section 69(2) are not complied with, the partners of the
firm may file a suit, but then all of such partners will
have to be joined as plaintiffs. When the conditions
specified in Section 69(2) are satisfied, i.e., the firm must
be registered and the persons suing must be or have
been shown in the Register of Firms as partners of the
firm, then a suit can be instituted by or on behalf of the
partnership firm in the name of the firm".
91. "Order XXX Rules 1 and 2 CPC merely provide
the mode or form and the procedure for suits by or
against a firm. The requirements in Section 69(2) has
to be satisfied first and then the provisions of Order
XXX Rule 1 and 2 CPC are attracted as regards the
mode or form in which the suit may be instituted as
well as the procedure applicable to the said suit. In
providing the mode, Rule 1 prescribes a certain
requirement, viz., that the persons mentioned therein
must have been partners at the time of the accruing of
the cause of action".
92. "Therefore, the provisions in Section 69(2) of
the Partnership Act and those in Order XXX Rule 1 CPC
would operate separately. The former deals with the
question as to when a firm can sue or be sued by a
third party in respect of a right arising from a contract
and prescribes certain requirements for the same,
while the latter deals with the mode or form and the
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procedure for suits by or against firms, and prescribes
a certain requirement for the same".
13. Ofcourse, she has cited some more decisions to the
similar effect, but, in view of the decision of the Apex Court, I
am not inclined to refer other decisions as the same aspect
has been dealt with by various Courts under Section 69(2) of
the Partnership Act. So, with the help of the above decision,
she would argue that the registration of the firm is a
mandatory and if it is not registered, just because, all the
partners joined to prosecute the case against the third party
arising out of the contract, it would not cure the defect.
Subsequent registration would not cure the defect as held in
many decisions.
14. Per contra, learned counsel for the plaintiff would
argue that though the firm was not registered and since, all
the partners have joined, there is no impediment to prosecute
the defendant, even under a contract. In the said regard, she
would rely upon the decision in the case of Haldiram
Bhujiawala and another Vs. Anand Kumar Deepak
Kumar and another reported in (2000) 3 SCCC 250. The
very same decision, which has been relied upon by the
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defendant, but, it is stated in the said decision that a suit is
not barred by Section 69(2) of the Partnership Act 1932, if a
statutory right or common law right is being enforced.
Learned author Mr. Mulla on Indian Partnership Act, VII edition
brought out by Lexis Nexis, has given illustrations under
Section 69 which are cognizable without there being any
registration of the firm. In page No.296, under Section 69
illustration is given and wherein, it is specifically stated that :
"(i) A suit for specific performance of agreement
brought by an unregistered firm is barred by s 69.
(ii) A suit based on infringement of statutory
right under the Trade Marks Act 1999 and upon the
common law principles of tort applicable to passing-
off actions filed by an unregistered firm is not barred
under this Section. Where an unregistered firm filed a
suit for permanent injunction for passing off against
the defendant, it was held that sub-s (2) of s 69 did
not apply to such suit.
Similarly, as per illustration (iii) A suit for
recovery of damages for a misconduct committed by
another partner by his act of forcibly breaking the lock
of the shop or the partnership firm and taking away
certain articles laying therein is not a suit for
enforcing a right arising out of the contract or for
enforcing a right conferred by the Act and hence, not
barred by Section 69.
Similarly, the illustration (iv) deals with a suit
filed by an unregistered firm for recovery of amount
of a cheque issued by the defendant, but, not
honoured is not barred under this section. The right
of action available to an endorsee of a cheque who
comes to hold the cheque in due course is based
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upon conferment on him by the statutory
provisions, the right to sue the maker of the cheque
and also the endorser".
15. So, when we peruse above illustrations, it amply
indicate that if the suit is by unregistered firm to exercise
statutory rights or a common law right as stated above, then,
there is no bar. As per the decision cited by learned counsel
for the defendant, when, it is a contract between an
unregistered firm and a third party, then, it is hit by Section
69(2) of the Act. In view of the above fact, the above decision
is not helpful to the plaintiff. Similarly, she has cited two more
decisions, one in the case of Mahendra Perfumery Works
Vs. B.K. Annapurnamma, reported in 2014 SCC OnLine
Kar 13262, wherein, it is held at Para No.4 that:
4. "in the instant case, the suit is one for permanent
injunction restraining the defendant from infringing the
statutory right under the Designs Act, 2000. Therefore, what
the plaintiff is trying to enforce is not a contractual right, but,
a statutory right. Secondly, the suit is not filed in the name of
the partnership firm but it is filed by the persons who are the
partners of the unregistered firm and the suit is filed against
the third party. Therefore, the bar contained under S. 69(2) of
the Act is not attracted".
16. This is one, which I have already stated that the
right is being exercised in respect of statutory or common law
right. It was not based upon a contract between the parties.
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In the present case, the suit is filed by not only by the
partners, but also by the partnership firm as 1 st plaintiff.
Therefore, the above decision is not applicable to the case on
hand.
17. Similarly, she has cited one more decision in the
case of M/s Yessay Foodoils Vs. P.A Moosa, reported in ILR
2009 KAR 724, which also dealt with suit coming under
statutory right or common law right. In view of the above
fact, all the decisions cited by learned counsel for the plaintiff
are not applicable to the case on hand. The last decision that
is cited by the learned counsel for the plaintiff is in the case of
Sainath Enterprises Vs.North Delhi Development
Corporation, which has been cited by the defendant and
probably when the entire judgment is read, it would rather
help the defendant than the plaintiff and by picking some
paras of the Judgment is not sufficient and when the entire
Judgment at Paras No. 90 to 93 are read, then, certainly, the
suit is hit by Section 69(2) of the Act. The last decision is one
in the case of Messrs. S.N. Bagla & Company Vs. Shree
Hanuman Sugar & Industries Limited, reported in 2001
SCC OnLine Cal 691. In Para No.13, it is held that:
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13. "In view of the aforesaid decision of the Apex Court, I
am of the view that even though the claim of the plaintiff on
the basis of contract is barred for non-compliance with the
requirement of Section 69(2) of the Partnership Act, the
plaintiff is entitled to get recovery of the amount advanced
along with compensation for enjoying the money under the
provision of Section 70 of the Contract Act, which is a 'law of
the land'.
18. It was a suit for recovery of money advanced by
the unregistered firm for the purpose of business of the
defendants and the plaintiff had maintained running account
regarding the same and the defendant, wherein, unlawful
possession of the premises and it was specifically held that
the wrongful occupation of the defendant is only a breach of
terms and conditions of the contract and can legitimately take
in its sweep unlawful occupation after the lease expired on
efflux of time as per Section 111 (A) of Transfer of the property
Act r/w Section 108 (2) of the Act. The decision has come in
a different context and they are the parties agitating their
rights under common law or for the damages for illegal
occupation, after the termination of the contract, therefore, it
would not attract Section 69, but, it is not so here. It is
admittedly dealings, supply of goods to the defendant
company by raising invoices and the defendant has made
some payment and there is a contract as per the invoices, to
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pay interest etc., within time. Therefore, it amounts to
contract with third party, which attracts the bar under Section
69 (2) of the Act. So, in view of the above fact, the decision
cited by learned counsel for the plaintiff are not at all
applicable to the case on hand. On the other hand, it is clear
from the decisions cited by the defendant and also the
illustrations given by learned author Mr. Mulla in his book, The
Partnership Act, at page No.296, as stated above is very clear,
under which circumstances, Court can come to a conclusion
that the suit is barred under Section 69(2) of the Act.
Admittedly, till today the plaintiff has not produced certificate
of incorporation, showing the names of the partners nor that it
has been duly registered. Therefore, in view of the above
fact, I am of the view that the suit is seriously hit by Section
69(2) of the Act and it is a mandatory requirement that ought
to have been complied by the plaintiff before commencement
of transaction with the defendant or at least before the filing
of the suit. Therefore, I am of the view that the plaint is liable
to be rejected. Hence, I answer point No.1 in the affirmative.
19. Point No.2: For the above said reasons, I proceed
to pass the following.
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ORDER
IA I filed by the defendant under Order VII Rule 11(D) of CPC r/w Section 69(2) of Indian Partnership Act, 1932 is hereby allowed.
Consequently, the plaint stands rejected.
(Dictated to the Stenographer, typed by him, corrected and then pronounced by me in the open court on this the 8th day of October, 2021).
(CHANDRASHEKHAR U), LXXXVII Addl.City Civil & Sessions Judge, (Exclusive dedicated commercial Court) Bengaluru.
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