Andhra HC (Pre-Telangana)
Annapoorna Fertilisers And General ... vs Arunodaya Fertilisers And General ... on 29 June, 1993
Equivalent citations: AIR1994AP157, 1993(2)ALT577, AIR 1994 ANDHRA PRADESH 157, (1993) 2 LS 107, (1993) 2 ANDH LT 577, (1993) 2 APLJ 185, (1993) CIVILCOURTC 569
ORDER Sivaraman Nair, J.
1. The plaintiff in O. S. No. 119 of 1983 before the Subordinate Judge, Machilipatnam is the appellant. That was partnership firm. The suit was instituted against another firm, of which the second defendant was the managing partner. The second defendant was one of partners of the firm Annapurna Fertilisers and General Stores, Bantumilli, which was initially constituted with Sabbisetti Rattayya and others. That was dissolved on 1-11-1982 with the simultaneous retirement of the second defendant from the partnership. Thereafter, a new partnership was formed under the name and style of the old firm consisting of different partners including the erstwhile managing partner. The new firm was constituted with effect from 1-11-1982. Simultaneously, the second defendant formed the first defendant partnership with himself and others. There were transactions between the first defendant firm and the plaintiff firm between December, 1982 and January, 1983.
2. The plaintiff-firm filed O.S. No. 119 of 1983 on 3-9-83 claiming an amount of Rs. 1,43,56.15 ps. from the first defendant-firm and its managing partner-the second defendant. The defendants resisted the suit claim on various grounds. After trial was over, they filed an application for raising an additional issue. That application was allowed by the trial Court by an order dated 30-6-1989. That related to maintainability of the suit. The contention urged in support of the issue of non-maintainability of the suit was two-fold: (i) that the firm which was registered on 8-9-1983 could not have filed a suit to enforce the liability incurred by the defendants in December 1982 and January 1983 much prior to the registration of the new firm; and (ii) that the plaint was presented as if the liability was owned to the old firm, which had been dissolved on 1-11-1992.
3. That was sought to be resisted by the plaintiff contending that the subsequent registration of the firm justified the maintainability of the suit. The trial Court reopened evidence and tried the question of maintainability as additional issue No. 1. The trial Judge held that the firm of the plaintiff, the second defendant and others which was constituted in 1980 and registered under Ex.A.23 was dissolved on 1-11-1982. It was also held that the plaintiff firm was constituted by Ex.A.3 dated 28-3-83 with effect from 1-11-1982 and the same was registered only on 8-9-83 as per Ex.A. 19 at the erliest. The Court held therefore that the suit ws not maintainable in view of the provisions contained in Section 69(2) of the Indian Partnership Act, even though he held in favour of the plaintiff on merits on some of the other issues. The plaintiff has filed this appeal.
4. Counsel for the plaintiff submitted that the liability of the defendant having been found in favour of the plaintiff, there was no justification for dismissing the suit on the ground of maintainability, which was raised at the very fag end of the trial. He also submitted that the duty of the Court being to do justice between parties, dismissal of the suit on a hyper-technical point was improper. Reliance was placed on a decision of our learned brother Radhakrishna Rao, J. reported in Atmuri Mahalakshmi v. Jagadesh Traders, . Reference ws also made to a decision of the High Court of Madras reported in Varadarajulu v. Rajmanika, AIR 1937 Madras 767.
5. Section 69(2) of the Indian Partnership Act is in the following term's:--
"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 registration of firms as partners of the firm,"
6. It appeals very clear that the suit could have been filed by the plaintiff firm only if it was registered as such and the persons suing were shown as partners in the Register of Firms. The finding of the lerned trial Jude on an examination of the various of documents, particularly E.xs. A-17, A-18, A-23 and A-31 was that on the date of institution of the suit, viz., 3-9-1983, the plaintiff-firm was not registered as a partnership firm nor were the managing partner or other partners of the firm shown as partners in the Register of Firms. We have been taken through the documents. We do not find any reason to disagree with the finding to the effect that as on 3-9-1983, the plaintiff-firm was not registered. The oral evidence of D. W. 3 read along with Ex.A.19 also shows that the date when the registrar ordered registration was 8-9-1983. Obviously, therefore, on the date of institution of the suit, the firm was not registered.
7. It was assumed by our learned brother Radhakrishna Rao, J. in Atauri Mahalak-shmi v. Jagadeesh Traders (supra) that if a firm which was not registered on the date of the suit was subsequently registered during the pendency of a suit, that will cure the defect of non-registration and non-compliance with the provisions of S. 69(2) of the Partnership Act. That assumption was made entirely on the basis of the decision of the Madras High Court in Varadarajulu v. Rajamanika (supra). It was unfortunate that a subsequent decision of a division bench of the Madras High Court in K. K. N. Ponnuswami Gounder v. Muthusami Goundar AIR 1942 Madras 252, which overruled the decision in Varadarajulu v. Rajmanika was not brought to the notice of our learned brother Radhakrishna Rao, J., apparently due to the reason that the defendant was not represented by counsel. In Ponnu Chami Nadar, Leach, J. for the Division Bench held that "registration of the firm is a condition precedent to the right to institute the suit and the Court has no jurisdiction to proceed with the trial when the condition precedent has not been fulfilled". The Division Bench also considered a number of decisions of Allahabad, Patna, Lahore, Nagpur and Calcutta High Courts and held that registration of the firm subsequent to the filing of the suit would not cure the defect The plethora of authorities which the learned counsel for the respondent have brought to our notice now could not be adverted to by our learned brother Radhakrishna Rao, J., for that reason.
8. In Bank of Koothaikukulam v. Ittan Thomas, AIR 1955 Travancore-Cochin 155, a Division Bench of the Travancore-Cochin High Court considered this question with reference to a number of decisions of various High Courts in the country, including Varadarajulu v. Rajamanika. On a detailed consideration of all the authorities, the Division Bench held:
"The above review of the case law on the subject shows that the view held by practically all the High Courts in India is that registration of the firm is a condition precedent to its right to institute suit for the nature mentioned in S. 69(2) Indian Partnership Act and that registration after the institution of the suit cannot cure the defect of non-registration before date of suit."
9. A Division Bench of Kerala High Court in Kerala Road Lines Corporation v. Commissioner of Income-tax, Kerala, also took the same view. The Court held that non-registration of the firm under S. 58 disables the firm to file an application for regisration under Section 26-A of the Indian Income-tax Act,
10. In Loonkaran Sethia etc. v. Mr. Ivan E. John, , an almost identical situation arose for consideration before the Supreme Court of India. The Court held:
"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 him or effect payment 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 firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of S. 69 of the Partnership Act."
11. The decision of the Supreme Court reported in M/ s. Shreeram Finance Corporation v. Yasin Khan, is also to the effect that unless a firm is registered and the names of the partners constituting the firm are included in the register of firms as on the date of institution of the suit, the firm is not entitled to sue because of the provisions contained in S. 69(2) of the Partnership Act.
12. In view of the weight of authorities on this question, we affirm the finding of the trial Judge that the suit was not maintainable. We also overrule the decision in Atmuri Maha-lakshami (supra) since it does not reflect the correct position as to the effect of S. 69{2) of the Partnership Act.
13. In this view, it is not necessary for us to consider the findings on the other issues. We affirm the dismissal of the suit as not maintainable and dismiss the appeal. No costs.
14. Appeal dismissed.