Gujarat High Court
M/S Aryan Mines And Minerals ... vs Atulkumar Jamnadas ... on 19 June, 2015
Author: Akil Kureshi
Bench: Akil Kureshi
C/CRA/51/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL REVISION APPLICATION NO. 51 of 2014
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M/S ARYAN MINES AND MINERALS CORPORATION & 2....Applicant(s)
Versus
ATULKUMAR JAMNADAS SOMAIYA....Opponent(s)
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Appearance:
MR ASHISH M DAGLI, ADVOCATE for the Applicant(s) No. 1 - 3
MR MEHUL S SHAH, ADVOCATE for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
Date : 19/06/2015
ORAL ORDER
1. The petitioners-original defendants have challenged an order dated 07.12.2013 passed by the learned Additional Senior Civil Judge, Jamnagar below application Exh.23 in Summary Suit No.12 of 2011. The respondent herein had filed the said Summary Suit seeking decree of Rs.1,95,00,000/- from the defendants, who were a partnership firm and its partners. In such suit, the defendants moved the said application Exh.23 and urged the trial Court to reject the plaint in exercise of powers under O-7, R-11 on the ground that the said suit was filed by the erstwhile partner of the firm, which was an unregistered firm. Since the prayer arose out of an agreement between the partner, firm and the remaining Page 1 of 8 C/CRA/51/2014 ORDER partners, according to the defendants, the suit was barred by Section 69 of the Partnership Act. Such application, however, came to e dismissed by the trial Court by the impugned order dated 07.12.2013. The Court was of the opinion that whether the plaintiff had entered into the partnership as a partner is a question which could not be decided without leading evidence and that therefore on the ground of non-registration of the partnership firm, the suit could not be dismissed. It is this order which the defendants have challenged in this petition.
2. Before taking note of the rival contentions, a few facts need to be noted. It is an undisputed position that the defendant No.1 - M/s.Aryan Mines and Minerals Corporation, a partnership firm (hereinafter referred to as "the said partnership firm") was already in existence, which the defendants No.2 and 3 as its partners when an agreement dated 19.08.2009 titled as Memorandum of Understanding ("MOU" for short) was entered into between the plaintiff and the said partnership firm. In such MOU, it was stated that the said partnership firm had entered into an agreement dated 08.05.2009 with one Chirag Fuels Pvt. Ltd., pursuant to which the partnership firm would operate Bauxite Calcification Plant of Chirag Fuels, look after its production, sale and other related Page 2 of 8 C/CRA/51/2014 ORDER activities. It is further stated in the said agreement that the plaintiff joined the said partnership under the MOU as a 50% partner. In the same paragraph, it is also stated that he would join the said partnership for the purpose of executing the agreement dated 08.05.2009 between the partnership firm and Chirag Fuels and would be considered as a 50% partner thereof. The said agreement between the partnership firm and Chirag Fuels would enure till 07.11.2009. However, if Chirag Fuels extends the contract wit the partnership firm, the present arrangement would continue without entering into a separate MOU. Both the parties to the said MOU, viz. the plaintiff and the said partnership firm would share loss or profit equally. They would also be liable to pay Government taxes in equal measures. Both the sides would be allowed withdrawals in equal proportion.
3. Before filing the suit, the plaintiff issued notices to the said partnership firm. On 08.11.2010, on behalf of the partnership firm, the Legal Advisor replied to such notices, in which it was contended that the plaintiff was never a partner of the said partnership firm. Further, in the plaint also, the stand taken by the plaintiff was that he had signed the said MOU for execution of the work under the agreement between the partnership firm and Chirag Fuels. By way of 50% share, Page 3 of 8 C/CRA/51/2014 ORDER such agreement was also dissolved. By further agreement executed between the plaintiff and the partnership firm on 17.02.2010, in which the defendants issued various cheques in favour of the plaintiff totalling to Rs.1.95 crores.
4. On the basis of such materials on record, learned Counsel Shri Ashish Dagli for the petitioners vehemently contended that the Court below committed serious error in rejecting the petitioners' application under O-7, R-11. Admittedly, the partnership firm was an unregistered one. The suit was filed by a partner of the firm for recovery from the other partners. Such recovery arose out of the agreement dated 17.02.2010. By virtue of Section 69 of the Partnership Act, the suit was thus not maintainable. Counsel relied upon following decisions:-
I. In case of Ghanshyam Vijay Oil Mills & Ors.
Vs. Thacker Ranchhoddas Ratanshi & Ors.
reported in 1983 (2)GLR 1217, where division Bench of the High Court held that a suit filed by an unregistered firm, which survived after one of the partners retired, leaving the remaining partners, would be barred by Section 69(1) of the Partnership Act.
Page 4 of 8 C/CRA/51/2014 ORDER II. In case of M/s.Paras Ram Darshan Lal Vs. Union of India & Anr. reported in AIR 1979 Delhi, page No.135, in which the learned Single Judge observed that bar Section 69 of the Partnership Act would apply also to a dissolved firm.
III. In case of T.Savariraj Pillai Vs. R.S.S. Vastrad and Company, reported in AIR 1990 Madras, page No.198, in which it was observed that the requirement of Section 69 are mandatory in nature.
IV. In case of Loonkaran Sethia Vs. Mr.Ivan E.John & Ors. reported in AIR 1977 Supreme Court page No.336, in which it was reiterated that Section 69 is mandatory in character and its effect is to render a suit by the plaintiff in respect of a right vested in him or acquired by him under the contract which he entered into as a partner of an unregistered firm, whether existing or dissolved, void.
V. In case of Maniyar Solanki and Co. Vs.
Sanghi Nathalal Allarakhabhai & Ors.,
reported in 2001 (3) GLH, page No.59, for Page 5 of 8 C/CRA/51/2014 ORDER similar purpose.
5. On the other hand, learned Counsel Shri Mehul Shah for the plaintiff submitted that the plaintiff had never entered into said partnership as a partner. He only joined the partnership firm in execution of one of the contracts. Merely because the two sides agreed to share the profit and loss in equal measures, would not be indicative of the intention of the parties to create a partnership firm. He submitted that even according to the defendants, the plaintiff had never entered the partnership as a partner as can be seen from the reply of the firm dated 08.11.2010. In the plaint also, the plaintiff never claimed to be the partner of the firm. He lastly contended that even if the plaintiff is considered to be the parter of the firm, since the suit is for taking accounts of a dissolved firm then the agreement dated 17.02.2010 should be treated as one dissolving the partnership and the suit would be one for taking accounts, in which case, bar of Section 69 of the Partnership Act would not apply as held by this Court in case of Vinubhai Najibhai Chavda vs. Maheshkumar Ramchandra Raval, reported in 2013 (3) GLR, page No.2503.
5. Having thus heard learned Counsel for the parties and having perused documents on record, the central question is do the defendants establish beyond Page 6 of 8 C/CRA/51/2014 ORDER any debate from the plaint and the materials produced by the plaintiff that the plaintiff had become partner of the said partnership firm and that therefore the suit filed by him against the partnership and its surviving partners would be barred by Section 69 of the Partnership Act. In my opinion, this issue cannot be finally judged at this stage, since many aspects of the matter would have to be examined and gone into. I have already noted relevant terms of the MOU dated 19.08.2009. Close scrutiny of such terms would show that the said partnership firm, which was already in existence, had obtained a contract with M/s.Chirag Fuels, pursuant to which the partnership firm would manage the plant of Chirag Fuels, carry out the production, sale and other related activities. The plaintiff joined the said partnership firm for execution of such work contract. It was specifically provided that in connection with such agreement, the plaintiff would be the equal partner of the said partnership firm. The plaintiff on one side and the partnership on the other would share the loss and profit in equal measures. All other costs including Government taxes would be borne equally. It was also provided that the agreement with Chirag Fuels would come to an end on 07.11.2009. However, if for some reason, period of the agreement is extended, the plaintiff would continue to be involved in execution of such work without Page 7 of 8 C/CRA/51/2014 ORDER the necessity of executing a fresh MOU.
6. One perfectly legitimate way of looking at this agreement would be that the plaintiff joined hands with the partnership firm for implementing a contract in the nature of operating the plant, carrying out production and looking after sales for and on behalf of Chirag Fuels. Whatever the loss and profit both sides, i.e. plaintiff on one side and the partnership on the other, would share equally. Merely because the plaintiff and the partnership agreed to join hands in this manner and also share loss and profit, would not mean that the MOU was intended to be a partnership document or that the plaintiff was inducted as a partner of the firm. However, whether this document, as can be seen, has inducted the plaintiff as partner of the firm or bringing into existence entirely a new partnership, some of these issues will have to be gone into at the time of disposal of the suit. This, however, not to suggest that this is the only way of interpreting the documents on record. The trial Court therefore committed no error. This Revision Petition is therefore dismissed. Rule is discharged.
(AKIL KURESHI, J.) SHITOLE Page 8 of 8