Bangalore District Court
M/S Cavalier Enterprises vs Global Franchise Architects on 21 August, 2015
IN THE COURT OF THE XX ADDL.CITY CIVIL &
SESSIONS JUDGE(CCH.32), BANGALORE CITY
Present:
Sri. V.B.Suryavanshi, B.Com.,LL.B.(Spl.),
XX Addl. City Civil & Sessions Judge,
Bangalore
DATED THIS THE 21st DAY OF AUGUST, 2015
O.S.No.4929/2012
Plaintiff: M/s CAVALIER ENTERPRISES,
A Partnership firm, having its office
at No.702, Cavalier Tower, Ground
floor, 80 Feet Road, Kalyan Nagar,
HRBR Layout, Bangalore-560 043.
(by-Sri K.R.Bharadwaj, Adv)
/VS/
Defendant: GLOBAL FRANCHISE ARCHITECTS
INDIA (P) LTD., No.15, 2nd Floor,
Saraswathi Complex, 5th Cross
Malleshwaram, Bangalore-560 003.
Represented by its CEO Mr.Joseph
(by Sri.Harikrishna S.Holla, Adv)
Date of Institution of the
11.07.2012
suit
Nature of the suit Money suit
Date of commencement of
24.10.2013
recording of evidence
Date on which Judgment 21.08.2015
pronounced
Total Duration Years Months Days
03 01 10
JUDGEMENT
This is a suit filed by the plaintiff against the defendant for recovery of a sum of Rs.71,76,554/- along with interest and costs.
2 O.S.4929/2012
2. It is the specific case of the plaintiff that, the plaintiff entered into Agreement with the defendant and he has become a Franchisee of "The Cream & Fudge Factory" and "Coffee World and Donut Baker" with the defendant, who is the Franchisor of the said Brands which specialized in selling various foods and beverages products and accordingly, the Agreement was entered into on 24.06.2009 by the plaintiff with the defendant for operating a stores under the trademark and in the name of the above said brands in the ground floor property bearing premises No.702, situated at Cavalier Tower, Ground Floor, 80 feet road, Kalyannagar, HRBR layout, Bangalore. The said Agreement was entered into between the plaintiff and the defendant for a period of 10 years and the commencement of the business was effective from 24.06.2009 and to be ended on 23.06.2019. Accordingly, the plaintiff took the premises on rent commenced the interior works by getting the fittings and furniture installed in the premises as per the specifications and design directed by the defendant. Even after completion of the said work, the plaintiff 3 O.S.4929/2012 could not commence the business, since the defendant did not supply the equipments and materials as per the Agreement Clause No.13.2. The equipments and materials were supplied only during the month of May 2010 and accordingly, the plaintiff commences the business from the month of May 2010. The reason of delay for supplying the equipments and materials was not suitably explained by the defendant and the plaintiff incurred loss by paying the monthly rent of Rs.90,000/- without conducting any business.
3. It is further submitted that, the plaintiff has paid a sum of Rs.15,67,334/- towards the equipments supplied by the defendant and also invested huge amount on the fittings and furnitures to an extent of Rs.9,97,787/-. As per the Clause No.4 of the Agreement, the plaintiff remitted a sum of Rs.6,61,800/- only as Franchisee fee which included the service tax and said amount has been paid by way of cheques bearing No. 560176 Dt.01.07.2009 drawn on South Indian Bank Ltd., Maruthi Sevanagar Branch, Bangalore.
4 O.S.4929/2012
4. The plaintiff further submitted that, he has obtained additional electricity power from BESCOM for running the stores as asked by the defendant by paying requisite fee of Rs.6,56,940/-. Apart from that, the plaintiff invested money on the Air Conditioners for the stores to an extent of Rs.1,50,000/- paid to M/s Tanscold Appliances and also the plaintiff has invested huge amount to an extent of Rs.2,70,000/- to obtain license from the concerned authority to run the business. The plaintiff has also spent a sum of Rs.4,82,838/- towards commissary and warehouse items which was paid to M/s Sriram Distributors. Accordingly, the plaintiff has invested huge amount to start said business with an understanding that the defendant would adhere to the terms and conditions mentioned in the Agreement.
5. Further, it is submitted that, initially the business of the plaintiff moves smoothly for 3 - 4 months since there were several outlets of the defendant run by them and franchise outlets Coffee World in baseline including the one run by the 5 O.S.4929/2012 defendant and Franchisee outlets at many locations which enabled the defendant to supply the necessary products of good quality as well as provide the operating assistance in accordance with the terms of the Agreement. Later on without any reason the defendant became very irregular in supplying of the products and during this period, the plaintiff tried to ascertain as to why the defendant have stopped the supply of the products through various correspondences Dt.15.11.2011 and 18.11.2011 addressed to the defendant's CEO Mr.Joseph of defendant company bringing to his knowledge about the supply of the items being discontinued. In spite of the said letters, there was neither response nor the supply of the products were put back on track. Later the plaintiff came to know that there was the only Coffee World outlet being functional in baseline and all other outlets had been closed including the one run by the defendant, the Franchise outlets. Hence, the defendant was not in a position to cater to the demands of the plaintiff and the supply of the materials was stopped 6 O.S.4929/2012 which made it very difficult for the plaintiff business. Therefore, during this period the plaintiff started incurring huge loss but in spite of the same never committed any breach of the terms of the Agreement and continued to pay the Royalty fee and other charges as per the Clause No.5 of the Agreement. Moreover, the defendant has also collected royalty fee and other charges the advertising and promotion fee to an extent of 2% of monthly sales and as per the terms and conditions, the defendant is suppose to formulate, develop, produce and conduct advertising as well as promotional programmes in the print media and TV as it determines to be more effective marketing.
6. Further, it is submitted that, the defendant did not comply with its requests and demands, the stores had to vacate since they could not conduct the business without the supply of the materials by the defendants as well as the operating assistance. The defendant issued a legal notice Dt.06.06.2012 claiming arrears of amount towards products supplied between March 2011 and 23rd February 2012, which was baseless, 7 O.S.4929/2012 fabricated and concocted and was suitably replied on 03.07.2012. Moreover, the defendant had shown number of outlets being run by them in Bangalore which included the stores operated by them and Franchise. However, one after the other all their outlets first by the one operated by them and subsequently most of the others franchises operated by were closed. A stage had come when there was not even a single coffee world outlet functioning in Bangalore because of which, they were not able to manufacture items at their base unit and supply to the one and only outlet being run by the plaintiff. Since, there was no supply of items from their side they advised to make items at the plaintiff's end. Apart from that all the coffee world shops have been closed and even cream and fudge, donut baker also closed at many locations and they kept this fact hidden from the plaintiff and tried to force them to continue the business without supply of any products from their end, as promised in the Franchise Agreement. The plaintiff was running the stores without the supply of the materials and even the 8 O.S.4929/2012 plaintiff got issued notice on 15.11.2011 and the defendant did not supplied the materials. Moreover, the plaintiff paying rent to the landlord, royalty fee to the defendant, salary to the staff and the electricity consumption charges without doing any business due to the fault of the defendant till they unilaterally issued the termination notice on 05.04.2012. The defendant arbitrarily terminated the Agreement and stopped supply of items to the plaintiff. Because of non-supply of items to the plaintiff by the defendant, the plaintiff suffered huge loss from 15.11.2011 to 05.04.2012.
7. The plaintiff further submitted that, he has invested in all Rs.61,76,554/- and also sustained damages to an extent of Rs.10,00,000/-. Hence, the plaintiff is constrained to file this suit against the defendant for recovery of money along with interest.
8. On the contrary, the defendant who has filed his written statement has admitted contents of paras 1 to 3 of the plaint and denied about causing of delay in supplying equipments and materials to the plaintiff, thereby plaintiff suffered loss by paying monthly rents. 9 O.S.4929/2012 Further the defendant denied contents of paras 6 & 7 of the plaint. The defendant further denied the replay Dt.23.02.2013 is fabricated and the plaintiff during the period of franchise did not say anything regarding quality of service rendered by the defendant. The defendant further contended that the plaintiff did not incur any expenditure or loss as stated by him and the claim made by the plaintiff towards loss is imaginary and plaintiff himself is responsible for the same, as he failed to run the franchise unit in a professional manner and did not adhere to the conditions stipulated in the Franchise Agreement. Further the defendant is not liable to pay any compensation as claimed by the plaintiff and there is no cause of action. Hence, prays for dismissal of the suit.
9. On the rival pleadings of the both the parties, the following issues have been framed by this court on 27.08.2013:
1) Whether the plaintiff proves that the defendant is liable to pay an amount of Rs.61,76,554/- towards the expenditure and loss incurred by the company during the non operation period of the 10 O.S.4929/2012 stores from 15.11.2011 to 05.04.2012 under various heads as claimed?
2) Whether the plaintiff company further entitled to claim damages to an extent of Rs.10,00,000/- which it incurred due to the financial loss arising out of non operation of the stores as well as losing an opportunity to conduct similar or any other business?
3) Whether the defendant proves that himself is responsible for the loss sustained as plaintiff failed to run the franchise unit in a professional manner and did not adhere to the conditions stipulated in the Franchise Agreement?
4) Whether the plaintiff is entitled for interest? If so, at what rate?
5) Whether the plaintiff is entitled for recovery of the total amount of Rs.71,76,554/- from the defendant for having committed breach of the Agreement?
6) What order or decree?
The following additional issue has been framed on 28.02.2015.
1) Whether the suit is barred Under Section 69(2) of Partnership Act, 1932?
10. The GPA holder of the plaintiff firm is examined as PW.1 and got marked documents at Ex.P1 to Ex.P17 and closed its side. On behalf of the defendant firm, its Assistant Manager has been 11 O.S.4929/2012 examined as DW.1 and got marked document at Ex.D1 to D28.
11. Heard the arguments on both sides.
12. My findings on the above issues are as follows:
Issue No.1 : In the Affirmative
Issue No 2 : In the Negative
Issue No.3 : In the Negative
Issue No.4 : Partly in the Affirmative
Issue No.5 : In the Affirmative
Addl. Issue No.1: In the Negative
Issue No.6 : As per final order
for the following
REASONS
13. Issue Nos.1 & 3: Since, these two issues
being interconnected and interlinked to each other, to avoid repetition of facts and evidence, I have taken these issues together for common consideration.
14. This is the suit filed by the plaintiff against the defendant for recovery of money.
15. It is the specific case of the plaintiff that, the plaintiff entered into Agreement with the defendant and he has become a Franchisee of "The Cream & Fudge 12 O.S.4929/2012 Factory" and "Coffee World and Donut Baker" with the defendant, who is the Franchisor of the said Brands which specialized in selling various foods and beverages products and accordingly, the Agreement was entered into on 24.06.2009 by the plaintiff with the defendant for operating a stores under the trademark and in the name of the above said brands in the ground floor property bearing premises No.702, situated at Cavalier Tower, Ground Floor, 80 feet road, Kalyannagar, HRBR layout, Bangalore. The said Agreement was entered into between the plaintiff and the defendant for a period of 10 years and the commencement of the business was effective from 24.06.2009 and to be ended on 23.06.2019. Accordingly, the plaintiff took the premises on rent commenced the interior works by getting the fittings and furnitures installed in the premises as per the specifications and design directed by the defendant. Even after completion of the said work, the plaintiff could not commence the business since the defendant did not supply the equipments and materials as per the Agreement Clause No.13.2. The equipments and 13 O.S.4929/2012 materials were supplied only during the month of May 2010 and accordingly, the plaintiff commences the business from the month of May 2010. The reason of delay for supplying the equipments and materials was not suitably explained by the defendant and the plaintiff incurred loss by paying the monthly rent of Rs.90,000/- without conducting any business.
16. The plaintiff has paid a sum of Rs.15,67,334/- towards the equipment supplied by the defendant and also invested huge amount on the fittings and furnitures to an extent of Rs.9,97,787/-. As per the Clause No.4 of the Agreement, the plaintiff remitted a sum of Rs.6,61,800/- only as Franchisee fee which included the service tax and said amount has been paid by way of cheque bearing No. 560176 Dt.01.07.2009 drawn on South Indian Bank Ltd., Maruthi Sevanagar Branch, Bangalore.
17. The plaintiff further obtained additional electricity power from BESCOM for running the stores as asked by the defendant by paying requisite fee of Rs.6,56,940/-. Apart from that, the plaintiff invested 14 O.S.4929/2012 money on the Air Conditioners for the stores to an extent of Rs.1,50,000/- paid to M/s Tanscold Appliances and also the plaintiff has invested huge amount to an extent of Rs.2,70,000/- to obtain license from the concerned authority to run the business. The plaintiff has also spent a sum of Rs.4,82,838/- towards commissary and warehouse items which was paid to M/s Sriram Distributors and presently this firm was run by one Mr.Sree Ram who is the senior officials of the defendant. Accordingly, the plaintiff has invested huge amount to start said business with an understanding that the defendant would adhere to the terms and conditions mentioned in the Agreement.
18. Further it is noticed that initially the business of the plaintiff moves smoothly for 3 - 4 months since there were several outlets of the defendant run by them and Franchise outlets Coffee World in baseline including the one run by the defendant and Franchisee outlets at many locations which enabled the defendant to supply the necessary products of good quality as well as provide the operating assistance in accordance with 15 O.S.4929/2012 the terms of the Agreement. Later on without any reason, the defendant became very irregular in supplying of the products and during this period the plaintiff tried to ascertain as to why the defendant have stopped the supply of the products through various correspondences Dt.15.11.2011 and 18.11.2011 addressed to the defendant's CEO Mr.Joseph of the defendant company bringing to his knowledge about the supply of the items being discontinued. In spite of the said letters there was neither response nor the supply of the products were put back on track. Later the plaintiff came to know that there was the only Coffee World outlet being functional in baseline and all other outlets had been closed including the one run by the defendant, the Franchise outlets. Hence, the defendant was not in a position to cater to the demands of the plaintiff and the supply of the materials was stopped which made it very difficult for the plaintiff business. Therefore, during this period the plaintiff started incurring huge loss but, in spite of the same never committed any breach of the terms of the Agreement 16 O.S.4929/2012 and continued to pay the Royalty fee and other charges as per the Clause No.5 of the Agreement. Moreover, the defendant has also collected royalty fee and other charges the advertising and promotion fee to an extent of 2% of monthly sales and as per the terms and conditions, the defendant is suppose to formulate, develop, produce and conduct advertising as well as promotional programmes in the print media and TV as it determines to be more effective marketing.
19. Further, the defendant did not comply with its requests and demands, the stores had to vacate since they could not conduct the business without the supply of the materials by the defendant as well as the operating assistance. The defendant issued a legal notice Dt.06.06.2012 claiming arrears of amount towards products supplied between March 2011 and 23rd February 2012, which was baseless, fabricated and concocted and was suitably replied on 03.07.2012. Moreover, the defendant had shown number of outlets being run by them in Bangalore which included the stores operated by them and Franchise. However, one 17 O.S.4929/2012 after the other all their outlets first by the one operated by them and subsequently most of the others franchises operated by were closed. A stage had come when there was not even a single coffee world outlet functioning in Bangalore because of which they were not able to manufacture items at their base unit and supply to the one and only outlet being run by the plaintiff. Since, there was no supply of items from their side they advised to make items at the plaintiff's end. Apart from that, all the coffee world shops have been closed and even cream and fudge, donut baker also closed at many locations and they kept this fact hidden from the plaintiff and tried to force them to continue the business without supply of any products from their end, as promised in the Franchise Agreement. The plaintiff was running the stores without the supply of the materials and even the plaintiff got issued notice on 15.11.2011 and the defendant did not supplied the materials. Moreover, the plaintiff paying rent to the landlord, royalty fee to the defendant, salary to the staff and the electricity consumption charges without doing 18 O.S.4929/2012 any business due to the fault of the defendant till they unilaterally issued the termination notice on 05.04.2012. The defendant arbitrarily terminated the Agreement and stopped supply of items to the plaintiff. Because of non-supply of items to the plaintiff by the defendant, the plaintiff suffered huge loss from 15.11.2011 to 05.04.2012.
20. The plaintiff further submitted that he has invested in all Rs.61,76,554/- and also sustained damages to an extent of Rs.10,00,000/-. Hence, the plaintiff is constrained to file this suit against the defendant for recovery of money along with interest.
21. On the contrary, the defendant who has filed his written statement has admitted regarding entering into an Agreement with the plaintiff and also the defendant has denied that the defendant has delayed in supplying equipments and thereby the plaintiff suffered loss. Moreover, the plaintiff did not incur any expenses and the claim made by the plaintiff towards loss is an imaginary and if any loss sustained by the plaintiff, the plaintiff himself is responsible for the same, as he failed 19 O.S.4929/2012 to run the franchise unit in a professional manner and did not adhere to the conditions stipulated in the Franchise Agreement, hence the defendant is not liable for payment of compensation claimed by the plaintiff. There is no cause of action.
22. One GPA holder of the plaintiff firm Mr.Rajesh has been examined as PW.1 and he has reiterated the plaint averments in his oral testimony and got marked Ex.P1 to P15 documents. He has spoken about entering into Agreement with the defendant company and also about investing of huge money and also spoken about non-supply of the products by the defendant to the plaintiff, thereby they sustained heavy loss and accordingly, the PW.1 is constrained to file this suit against the defendant for recovery of money.
23. On the contrary, the defendant has examined one Sri.Jagadeesh T.Hugar as DW.1, who happens to be the Asst.Manager and he has stated that, the plaintiff entered into an Agreement with the defendant and become a Franchisee of 'The Cream & Fudge Factory & Coffee World and Donut Baker' on 24.06.2009 for 20 O.S.4929/2012 operating a stores under the trademark and brand names stated above. Moreover, the DW.1 has stated that the plaintiff has commenced the interior works by getting the premises on rent as per the designs directed by the defendant. Further he has stated that they have not responsible for incurring loss by the plaintiff.
24. On perusal of the evidence of the PW.1, wherein he asserts that by virtue of the Franchise Agreement entered into between himself and the defendant on 24.06.2009, the plaintiff taken the premises on rent and invested huge amount as per the Clauses in the Agreement and as per the designs given by the defendant. Since, as per the Agreement the defendant is suppose to supply materials to the plaintiff for smooth running of the business and despite the requests and demands made by the plaintiff, the defendant did not supplied the materials and even the plaintiff came to know that other Franchis under the defendant company have been closed and despite that the plaintiff was running his business. Because of non- 21 O.S.4929/2012 supply of materials by the defendant, the plaintiff sustained heavey loss and also damages.
25. On the contrary, the DW.1 who has categorically denied about sustaining of loss by the plaintiff and if at all the loss sustained by the plaintiff, it is not because of the defendant, defendant is not liable to pay said amount.
26. It is also very significant to note that, PW.1 in his evidence has stated that on 15.11.2011 and 18.11.2011, the plaintiff has addressed a letters to the CEO of defendant company Mr.Joseph in order to know why the supply being discontinued and in spite of the said letters there was no response for supply of the goods to the plaintiff. So, on perusal of the examination-in-chief of the PW.1 and also the plaint averments wherein despite there being a letters written by the plaintiff on 15.11.2011 and 18.11.2011 to the defendant, but the defendant did not replied nor supplied any materials to the plaintiff in order to carry out smooth business as per the terms and conditions enumerated in the Agreement.
22 O.S.4929/2012
27. DW.1 during course of the cross examination has admitted to the following effect:
"It is true to suggest that on 15.11.2011 and 18.11.2011 the plaintiff company has made two correspondences with us with regard to supply of raw materials. I do not know whether we have responded to these correspondences".
28. So, if the above version is taken into consideration, it is clearly evident that the plaintiff has written two letters to the defendant company for supply of the materials. But the defendant company though have received the letters from the plaintiff company, they ought to have supplied the materials or if there had been any violations of the conditions, they ought to have replied suitably to the plaintiff company for non- supply of the materials. So, once the letters have been addressed by the plaintiff company to the defendant company for supply of the materials under the Agreement, the defendant company ought to have supplied the materials to the plaintiff for running smooth business. So, once the letters have been 23 O.S.4929/2012 received by the defendant and if there is no reply or supply of materials as per the letters, it shows that the defendant have violated the terms of the Agreement as entered into between the plaintiff and the defendant.
29. So, on perusal of the cross examination of the DW.1, a safe inference can be drawn that the defendant company has not supplied the materials to the plaintiff.
30. Moreover, it is also pertinent to note that during the course of the cross examination the DW.1 has admitted about expenditure for the purpose of furnitures by plaintiff to the tune of Rs.9,97,787/- and also expenses of Rs.1,50,000/- towards the fittings of the Air Conditioners. Moreover, DW.1 has admitted that the defendant company was obligated to operating assistance in running the business by the plaintiff and also the defendant company was bound to initiate training to its employees in preparing the food items.
31. As per the Franchise Agreement entered into between the plaintiff and the defendant, wherein, all products and related item preparation, dispensing, storage and display equipment; equipment, fixtures, 24 O.S.4929/2012 furniture and exterior and interior signs and decorations required for the store; beverage products and cooking materials, containers, packaging materials and other paper and plastic products, utensils, uniforms, menus, forms and cleaning and sanitation materials and other supplies and materials used in the operation of the Store must confirm to the specifications and quality standards established by the Franchisor from time to time. So, in view of the terms and conditions of the Franchise, they all interior and exterior designs and fixtures and furnitures should be as to the conformity of the defendant company and the plaintiff has contended that he has paid a sum of Rs.15,67,334/- towards the equipment supplied by the defendant and also invested huge amount to the fittings and furnitures to an extent of Rs.9,97,787/- and also the plaintiff has remitted a sum of Rs.6,61,800/- only as Franchisee fee by way of cheque bearing No.560176 Dt.01.07.2009 and drawn on the South Indian Bank Ltd., Maruthi Sevanagar, Bangalore. Moveover, the plaintiff has also spent amount for obtaining electricity 25 O.S.4929/2012 power and invested money on Air Conditioners and plaintiff has also invested Rs.2,70,000/- to obtain license from the concerned authority to run the business and the plaintiff has also spent Rs.4,82,838/- towards the commissary and warehouse items which was paid to M/s Sriram Distributors. So, on perusal of entire testimony of PW.1 and also if the reliance is placed on the invoices as placed before the court, admittedly the plaintiff has invested huge amount as per the specifications and designs directed by the defendant for running the business. The plaintiff after commencing the business has adhered to the standard Franchise Agreement Dt.24.06.2009. The plaintiff has contended that on 15.11.2011 and 18.11.2011 he has addressed letters to the defendant company for supply of items and even despite the requests, the defendant could not supply the materials and thereby the plaintiff has sustained loss to the tune of Rs.61,76,554/- and also damages of Rs.10,00,000/-.
32. It is very significant to note that, on perusal of the cross examination of DW.1 wherein DW.1 in 26 O.S.4929/2012 unequivocally admitted about receiving of letters from the plaintiff on 15.11.2011 and 18.11.2011 and also he has admitted to the extent that he has not replied to the said letters and it is the specific case of the plaintiff that the two letters have been addressed by the plaintiff company to the defendant company asking them to supply the materials and also in order to know why they have not supplied the materials in time. So, the admission of the DW.1 clearly goes to show that there was no supply of the materials by the defendant to the plaintiff. So, that has made the plaintiff to incur loss and after having invested huge amount as per the Agreement, it is for the defendant company to supply the materials from time to time in order to run the business smoothly. Therefore, a safe presumption can be drawn before the court about non-supply of the materials by the defendant to the plaintiff that the plaintiff despite of invested huge amount has sustained loss and it is only because of the defendant. So, accordingly, I answer issue No.1 in the Affirmative and 3 in the Negative.
27 O.S.4929/2012
33. Additional issue No.1: It is the specific contention of the defendant that since the plaintiff firm is not registered under the Partnership Act, 1932 and as on the date of the institution of the suit, the plaintiff firm ought to have been registered under the Partnership Act, 1932, therefore, the suit filed by the plaintiff is hit by Sec.69 (2) of the Partnership Act.
34. On the contrary, the plaintiff has contended that since the contentions raised by the defendant is not tenable under law as the defendant has not taken this contention in the written statement. Moreover, the defendant has also admitted the Franchise Agreement in his written statement and also in examination-in- chief of the DW.1 he has estopped from taking the plea. Apart from that the plaintiff has established that since during the pendency of the trial the firm registered under the Partnership Act 1932 and whatever the contentions taken by the defendant is not tenable.
35. The learned counsel for the defendant has vehemently argued and brought my notice that in view of provisions of Sec.69(2) of Partnership Act 1932, the 28 O.S.4929/2012 unregistered firm cannot file a suit and there is a bar to filing the suit and in the present case wherein the suit filed by the plaintiff is clearly hit the provisions of sub- sec.(2) of Sec.69 of the said Partnership Act as on the date of the suit, the plaintiff firm was not registered. Moreover, the learned counsel for the defendant has also brought to my notice that Sec.69(2) of the Partnership Act is a penal provision which deprives the plaintiff of its right to get its case examined on merits by the court and simultaneously deprives the court of its jurisdiction to adjudicate on the merits of the controversy between the parties and said provisions U/s 69(2) is a mandatory in nature and make the suit incompetent on he very threshold. Moreover, the learned counsel for the defendant also brought to my notice that said provision of law, the unregistered firm being one of the laws can be raised for the first time in appeal and merely because, the defendant has not taken the contention in the written statement still the suit of the plaintiff is not maintainable. 29 O.S.4929/2012
36. On the contrary, the learned counsel for the plaintiff has vehemently argued and brought to my notice that the contention taken by the defendant cannot hold any water and though the defendant has not taken this specific plea in his written statement but anyhow during the pendency of the trial, the plaintiff got registered the firm under the Partnership Act.
37. The learned counsel for the defendant has relied on the ruling reported in AIR 1989 SC 1769 in Shriram Finance Corporation /vs/ Yasin Khan, wherein their Lordships have held that, if the firm is not registered under the Indian Partnership Act and new partners added and minors admitted to benefit of firm and under such circumstances, if the firm is not registered, the suit is not maintainable in view of Sec.69(2) of the Partnership Act.
38. The learned counsel for the defendant has also relied on the ruling reported in AIR 1998 SC 3085 in M/s Raptakos Brett & Co /vs/ Ganesh Property, wherein their Lordships have held that U/s 69(2) of the Partnership Act, which deprives the plaintiff of its right 30 O.S.4929/2012 to get its case examined on merits if the firm is not registered under the Act.
39. The learned counsel for the defendant has also relied on the ruling reported in AIR (29) 1942 Madras 634 in Goverdhandoss Takersey /vs/ M.Abdul Rahiman & another and another ruling reported in AIR 1981 Allahabad 405 in Ram Adhar /vs/ Rama Kirat Tiwari their Lordships have held that non-registration of a firm being one of law can be raised even in the appeal stage also.
40. On the contrary, the learned counsel for the plaintiff has relied on the ruling reported in AIR 1998 SC 3085 in M.s Raptakos Brett & Co /vs/ Ganesh Property, wherein their Lordships have held that:
(G) Partnership Act (9 of 1932),s.69(2)-
Suit by unregistered firm against third party for enforcement of contract - Effect of firm getting registered during pendency of suit - Suit should be allowed to revive from date of registration - That would avoid proliferation of litigation.
31 O.S.4929/2012
41. Wherein, their Lordships have held that suit by unregistered firm against third party for enforcement of contract and firm getting registered during the pendency of suit, suit should be allowed to revive from date of registration that would avoid proliferation of litigation.
42. Further, their Lordships have also observed that suit by an unregistered partnership, against a third party and he is treated to be incompetent as per Sec.69, sub-section (2) of the Partnership Act, if pending the suit before a decree is obtained the plaintiff puts its house in order and gets itself registered the defect in the earlier filing which even though may result in treating the original suit as still born, would no longer survive if the suit is treated to be deemed to be instituted on the date on which registration is obtained. If such an approach is adopted, no real harm would be caused to either side and further their Lordships have also held that, a fresh suit on the same cause of action and if the earlier suit is permitted to be continued it would continue in the old number and the 32 O.S.4929/2012 parties to the litigation would be able to get their claim adjudicated on merits.
43. The learned counsel for the plaintiff has also relied on the ruling reported in AIR 2000 SC 1287 in M/s Haldiram Bhujiawala and another /vs/ Anand kumar Deepak kumar and another, wherein their Lordships have held that in view of Sec.69(2) of the Partnership Act, which cannot bar enforcement by way of suit by unregistered firm in respect of statutory right or a common law rights.
44. It is very significant to note that, admittedly, during the pendency of the trial, the plaintiff firm was got registered and accordingly, the Registration certificate is placed before the court and same is marked as Ex.P16 and the acknowledgement issued by the District Registrar for having registered the firm is marked as Ex.P17. So, on perusal of Ex.P16 and P17 wherein the firm was registered on 11.03.2015 i.e., during the pendency of the trial.
45. Now, question arises before the court: whether the plaintiff firm registered during the pendency of the 33 O.S.4929/2012 trial can be taken into consideration in view of Sec.69(2) of Partnership Act, 1932?
46. As discussed by their Lordships in AIR 1998 SC 3085, have clearly held that the suit by the unregistered against the third party and the firm getting registered during pendency of suit should be allowed to avoid proliferation of litigation. So, if the reliance placed on the dictum laid down by their Lordships in the supra ruling, admittedly, during the pendency of the trial, the plaintiff firm was registered under the Partnership Act and in view of the dictum, the suit is very much maintainable.
47. The learned counsel for the defendant has also filed I.A.5 U/o 17 rule11(d) for rejection of the plaint on the ground that the plaintiff firm is not registered as on the date of the suit, as contemplated u/s 69(2) of the Partnership Act, 1932,
48. On perusal of the prayer in I.A.5 and also objection filed by other side, admittedly, the firm was registered during the pendency of the trial. So, in view of the dictum laid down by their Lordships in the supra 34 O.S.4929/2012 ruling, the I.A.5 does not survive for consideration and same is dismissed.
49. Having regard to the totality and facts and circumstances of the case and also relying on the document, i.e., Ex.P15-Lease agreement and also as the plaintiff could not carry out his business under the lease, because of non-supply of the materials by the defendant. Apart from that, though there was a correspondences by the plaintiff firm on 15.11.2011 and 18.11.2011 addressed to the CEO of defendant company, but the defendant company though have received said letters they could not reply the letters nor supplied any materials, it shows that the defendant has intentionally has not supplied materials to the plaintiff firm despite the plaintiff having invested huge amount by establishing several outlets by spending huge amount for interior and exterior as per design given by the defendant. So, accordingly, I answer additional issue No.1 in the Negative.
50. Issue No.2: The plaintiff has sought for damages to the tune of Rs.10,00,000/- incurred due to 35 O.S.4929/2012 financial loss arising out of the non-operation of the stores and also losing opportunity to conduct similar or any other business. Of course, it is the contention of the plaintiff that he has sustained loss to the tune of Rs.10,00,000/-, but in order to substantiate the same the plaintiff ought to have placed some evidence before the court to show that how he arrived a figure of Rs.10,00,000/- i.e., damages but, unfortunately the plaintiff has not placed any iota of evidence before the court. In the absence of such evidence, it is very difficult to assess the plaintiff has sustained damages to the extent of Rs.10,00,000/-. Under such circumstances, I answer issue No.2 in the Negative.
51. Issue No.4 & 5: In view of findings on issue Nos.1 and 3, the plaintiff is entitled for the reliefs as far as recovery of money as claimed in the plaint except the damages. So, I answer issue No.4 partly in the Affirmative and issue No.5 in the Affirmative.
52.Issue No.6: For the foregoing reasons, I proceed to pass the following 36 O.S.4929/2012 ORDER The suit of the plaintiff is decreed partly with cost.
It is ordered and decreed that, the suit of the plaintiff is decreed for Rs.71,76,554/- with interest @ 6% p.a from the date of the suit till recovery.
Draw decree accordingly.
(Dictated to the judgment writer, transcribed by her, corrected and then pronounced by me in open court, this the 21st day of August, 2015) ( V.B.SURYAVANSHI ) XX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.
ANNEXURE List of witnesses examined for the Plaintiff :
PW.1 : Sri. Rajesh List of documents marked for the Plaintiff :
Ex.P1 Special power of attorney
Ex.P2 VAT Registration certificate
Ex.P3 Enrollment certificate
Ex.P4 Trade license certificate
Ex.P5 Endorsement issued by
Commercial Tax Dept.
Ex.P6 Registration of firms certificate
Ex.P7 Endorsement issued by Pollution
37 O.S.4929/2012
Control Board
Ex.P8 Receipt issued by Electricity
board
Ex.P9 Music certificate
Ex.P10 & Test certificates (2)
P(1)a
Ex.P11 & Purchase orders (5)
P11(a) to (d)
Ex.P12 & Services bills (13)
P12(a) to (l)
Ex.P13 & Payment vouchers (13)
P13(a) to (l)
Ex.P14 Tax Invoices (63)
Ex.P15 Original lease agreement
Ex.P16 Partnership registration certificate
Ex.P17 Ack.for registration issued from
District Registrar.
Witnesses examined for the defendant:
DW.1 Sri Jagadeesh T.Hugar Documents marked for the defendant:
Ex.D1 Copy of Board Resolution Ex.D2 to 8 Firm Registration Certificates (7) Ex.D9 Trade License issued by BBMP Ex.D10 to Food License in Form-C (3) 12 Ex.D13 Tax Invoices (13) Ex.D14 Audit Reports (5) Ex.D15 Credit Notes Ex.D16 Letter Dt.23.2.2012 Ex.D17 Letter Dt.14.3.2012 Ex.D18 Letter Dt.5.3.2012 38 O.S.4929/2012 Ex.D19 Letter issued to plff. Dt.16.3.2012 Ex.D20 Software printouts (13) Ex.D21 Account extracts of ICICI bank Ex.D22 Invoices (127) Ex.D23 Bills (650) Ex.D24 Delivery challans (58) Ex.D25 Delivery challans (240) Ex.D26 Original agreement Dt.23.7.2009 Ex.D27 Franchise Agreement Ex.D28 Certificate U/s 69 of Indian Evidence Act ( V.B.Suryavanshi ) XX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY
Judgment pronounced in the open court (vide separate Judgment) Order The suit of the plaintiff is decreed partly with cost.
It is ordered and decreed that, the suit of the plaintiff is decreed for Rs.71,76,554/- with interest @ 6% p.a from the date of the suit till recovery.
Draw decree accordingly.39 O.S.4929/2012
XX ACC & SJ,B'lore 40 O.S.4929/2012