Madras High Court
Selvam Estates Represented By Its ... vs L. Thangapandia Maharajan And Ors. on 12 March, 1991
Equivalent citations: (1991)1MLJ421
ORDER Lakshmanan, J.
1. The above suit was filed by the applicant/plaintiff praying for a judgment and decree:
(a) declaring that the plaintiff firm is the absolute owner of the property described in the schedule;
(b) granting a consequential injunction restraining the defendants from interfering with the plaintiffs peaceful possession of the schedule mentioned property and for costs.
2. Later the plaint was amended as per orders dated 19.12.1990, made in Application No. 6803 of 1990 seeking a relief for a mandatory injunction directing defendants 3 to 5 to demolish the superstructure put up on the plaint schedule property after filing the suit and directing defendants 3 to 5 to deliver the vacant possession of the property to the plaintiff. Originally suit was filed against defendants 1 and 2. Later defendants 3 to 6 were brought on record as party to the proceedings as per the order dated 19.11.1980, made in Application No. 5280 of 1990. The suit was presented in this Court on 9.2.1987 and admitted on 10.2.1987. The suit was filed by the petitioner stating that the plaintiff is a registered partnership firm represented by its Managing partner Mrs. Mohanasundari Murugan.
3. The first defendant filed written statement stating that the suit is not at all maintainable and the plaint is liable to be rejected in limine. In paragraph No. 2 of the written statement the first defendant has stated thus:
2. This defendant states that the plaintiff firm is not registered under Section 69 of the Partnership Act. As such, the above suit is not at all maintainable and the plaint is liable to be rejected in limine.
4. Defendants 3 to 5 who were later impleaded as parties/defendants to the suit have filed a written statement on 7th September, 1990. According to the defendants the suit as framed is wholly misconceived and not maintainable either in law or on facts and circumstances of the case. It is purely an abuse of process of law. In paragraph No. 2 of the written statement, defendants 3 to 5 have stated thus:
These defendants state that the suit as framed is wholly misconceived and not maintainable either in law or on the facts and circumstances of the case. It is purely an abuse of process of law.
5. Defendants 3 to 5 have also filed an additional written statement on 7th January, 1991. This Court framed the following issues:
(1) Whether the suit as framed is maintainable?
(2) Whether the plaintiff has got title to the suit property?
(3) Whether the plaintiff is entitled to the reliefs of declaration and injunction as prayed for?
6. Since the first issue relates to the maintainability of the suit, arguments were heard on behalf of both parties on the question of maintainability. The plaintiff, however, with the permission of the Court filed an Application No. 1190 of 1991 praying permission of this Court to withdraw the above suit with liberty to file a fresh suit on the same cause of action. It was resisted by first defendant and defendants 3 to 5.
7. According to the plaintiff, the suit was filed on the basis that the plaintiff is a registered partnership firm and for the relief of declaring that the plaintiff firm is the absolute owner of the property bearing T.S. No. 1, Plot No. 46/95, Periyakoodal Village and more particularly described in the schedule to the plaint for granting a consequential injunction restraining the defendants from interfering with the plaintiffs peaceful possession of the schedule mentioned property and for other reliefs.
8. As stated above all the defendants contested the suit among other things on the ground that the firm is not registered and hence the suit is not maintainable. It is the case of the plaintiff that the plaint was presented in this Court on 9.2.1987. Before presenting the plaint in this Court, the plaintiff presented the papers for registration of firm on 9.2.1987 itself and the registrar stated that all the papers were in order and that the firm is being registered. The plaintiff was under the bona fide impression that the firm had been registered and thereafter presented the plaint in this Court on 9.2.1987. It is also stated in the affidavit filed in support of this application that though in the certificate it is stated that the papers had been presented on 9.2.1987 and found in order, but the firm was numbered in the Register of firms on 16.2.1987. On seeing this and on the advice of the Senior Counsel it was thought that it would be in the best interest of the plaintiff to withdraw the suit after getting permission from this Court to file a fresh suit on the same cause of action. According to the plaintiff, the defect which was pointed out by the defendants is only a formal defect. Though the application had been presented on 9.2.1987, as per the certificate produced in this Court, the actual registration was made and as mentioned in Form-A which is maintained under Section 59 of the Indian Partnership Act, 1932, only on 16.2.1987. Learned Counsel for the plaintiff produced a zerox copy of the firm's registration certificate signed by the Registrar of Firms, Madras Central. In Column 3, date of registration is mentioned as 16.21987, though the application for registration was presented on 9.2.1987. Since according to the plaintiff the defect pointed out by the defendant is only formal he may be permitted to withdraw the suit with liberty to file a fresh suit on the same cause of action.
9. This application was vehemently opposed by the learned Counsel for the first defendant and the learned Counsel for defendants 3 to 5. I have heard the elaborate arguments of Mr. V.S. Subramaniam, on behalf of plaintiff and Mr. T.V. Ramanujam, on behalf of first defendant and Mr. Raja Kalifulla, on behalf of defendants 3 to 5. Mr. V.S. Subramaniam, learned senior Advocate appearing for the plaintiff in support of his contention cited a decision in Arunagiri Mudaliar In re., A.I.R. 1936 Mad. 697 : 44 L.W. 247. The above suit was filed by the partners who have not been registered under the Partnership Act. Learned Judge held that subsequent suit filed by them after such registration, was not barred under Order 23, Rule 1(3), C.P.C. Learned Judge held as follows:
I do not think this is a case in which the High Court should interfere. Petitioners have been amply compensated in costs. The withdrawal of the suit by the partners who have not been registered as a firm could be no bar to a suit filed on the same cause of action by the same persons when and if they get themselves registered as a firm under the Partnership Act. For the latter suit would be technically by a different plaintiff. I do not see any reason why the unqualified dismissal of a suit filed by a number of persons because they are a firm and are not registered under the Partnership Act should be any bar to the institution of a suit on the same cause of action by the same persons when they have got themselves registered. The defect which existed in the case namely the non-registration of the firm and which the learned District Munsif held to be a mere formal defect not preventing him from giving permission to file a fresh suit - a fresh suit I presume to be filed after the firm is registered under the Partnership Act - may not be a mere formal defect but I do not think it matters, for the reasons stated. Even if the suit had been dismissed in limine a new suit by the firm after registration would not be barred. The petition is dismissed.
Learned Judge was of the view that though a fresh suit to be filed after the firm is registered under the Partnership Act may not be a formal defect, learned Judge permitted the parties to file a fresh suit. According to the learned Judge even if the suit had been dismissed in limine a new suit by the firm after registration would not be barred. Strong reliance was placed on the above' judgment by Mr. V.S. Subramaniam. Since according to the learned Counsel for the plaintiff, the defect pointed out by the other side is only a formal defect, the plaintiff is at liberty to withdraw the suit with liberty to file a fresh suit on the same cause of action. It was contended by tie learned Counsel that the registration of a firm is effected by sending a statement to the Registrar in the prescribed form along with the prescribed fee and that the subsequent filing of the statement and the entry of the name of the firm in the Register of Firms are only ministerial acts done by the Registrar in pursuance to the registration. I am unable to countenance the said contention. I am not inclined to take that a firm can be said to be registered when the statement prescribed by Section 57(1) of the Partnership Act and the required fee are sent to the Registrar of Joint Stock Companies and the registration of the firm is effected only when the entry of the statement is recorded in the Register of Firms and the statement is filed by the Registrar as provided in Section 58. It is well settled principles of law that the registration of the firm is a condition precedent to the right to institute a suit of the nature and that the defect of non registration cannot be remedied by registration of the firm during the pendency of the suit.
10. So far as our High Court is concerned the leading case is Ponnuchami Goundar v. Muthusami Goundar (1941) 2 M.L.J. 968 : 199 I.C. 99 : A.I.R. 1942 Mad. 252. In that case Leach C.J., discussed the question with reference to decided cases and 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.
Reliance was placed by the learned Chief Justice on the decision of the Privy Council in Bhagchand Dagdusa v. Secretary of State A.I.R. 1927 P.C. 176. In that case the question for consideration was whether the provision contained in Section 80, C.P.C. was mandatory and whether a suit instituted without complying with that provision was maintainable. Their Lordships held that the provision was mandatory and that a suit instituted without complying with that provision was not maintainable. Following this decision, Leach C.J. observed as follows:
Section 80, C.P.C., has very much in common with Section 69, Partnership Act. It says that no suit shall be instituted against the Secretary of State for India in Council, or against a public Officer, for an act purporting to be done by him in his official capacity, until the expiration of two months next after notice in writing has been given. The Privy Council also observed that Section 80 imposes a statutory and unqualified obligation upon the Court and Section 69(2), Partnership Act, does the same.
In my opinion the registration of the firm in the instant case is on 16.2.1987 will not put the suit filed on 9.2.1987 on a proper basis and that the Courts duty is to dismiss it. A suit is instituted when the plaint is filed in a Court of competent jurisdiction. Section 69 says that a suit by a firm shall not be instituted until the firm has been registered. The 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.
11. Counsel for the contesting defendants 1 and 3 to 5 cited the following decisions in support of their contention. According to Mr. T.V. Ramanujam, for withdrawal of the suit, there must be a plaint, which according to him, is non-est in the eye of law in the present case. Hence the plaintiff is not entitled to such indulgence in the hands of this Court. According to him, the suit as framed is fully misconceived and not maintainable either in law or on the facts and circumstances of the case. On the date of the plaint viz., on 9.2.1987 the plaintiff firm was not registered under Section 69 of the Partnership Act and as such the above suit is not at all maintainable and the plaint is to be rejected in limine.
12. Mr. T.V. Ramanujam, placed reliance on the judgment in Bank of Koothattukulam v. Thomas A.I.R. 1955 Travancore-Cochin 155, a Division Bench of Travancore-Cochin High Court held as follows:
Reading Sections 58 and 59 together a firm cannot be said to be registered when the statement prescribed by Section 58 and the required fee are sent to the Registrar of Joint Stock Companies. The registration of the firm is effected only when the entry of the statement is recorded in the Register of Firms and the statement is filed by the Registrar as provided in Section 59.
It is necessary not only that the firm should be registered, but the person suing must be shown as a partner in the firm. And when it is found that on the date when the plaint is filed the second part of this condition has not been carried out then Section 69(2) is not complied.
The registration of the firm is a condition precedent to its right to institute a suit of the nature mentioned in Section 69(2), Partnership Act. The registration after the institution of the suit cannot cure the defect of non-registration before the date of suit.
In Loon Karan v. Ivan E. John , the Supreme Court held as follows:
Section 69 of the Partnership Act is mandatory in character and its effect is to render a suit by a plaintiff in respect of a right vested in 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 the matter of Abani Kanta Pal, A.I.R. 1986 Cal. 143, a Division Bench of Calcutta High Court held as follows:
If a firm is not registered, excepting a suit as contemplated by Section 69(3), the Court will have no jurisdiction to entertain a suit in violation of Section 69(1). In other words, the plaint that has been filed by the plaintiff will be considered a void plaint, if it contravenes the provisions of Sub-sections (1) and (2) of Section 69. If the plaint is treated as a void plaint the question of amendment of such a plaint does not arise at all. If the plaint is not a void plaint, but a defective one, in that case, an amendment may be made for the purpose of curing or removing the defect. It is true that under Sub-section (3), enforcement of any right to sue for dissolution of a firm or for accounts of a dissolved firm is not hit by the provisions of Sub-sections (1) and (2) of Section 69 of the Partnership Act. But, where the plaint is void, there is no question of bringing the same within the purview of Sub-section (3) of Section 69 by way of amendment.
Shreeram Finance Corporation v. Yasin Khan , was relied on by the learned Counsel for the defendants to say that the suit has been instituted against a person (1st defendant) who is not a partner. The firm registration certificate also does not show the name of the first defendant Thangapandiyan as a partner of the plaintiff firm. The Supreme Court in the above case held that the said suit is clearly hit by the provisions of Sub-section (2) of Section 69 of the said Partnership Act, as on the date when the suit was filed, two of the partners shown as partners as per the relevant entries in the Register of Firms were not, in fact, partners, one new partner had come in and two minors had been admitted to the benefit of the partnership firm regarding which no notice was given to the Registrar of Firms. Thus, the current partners as on the date of the suit were not shown as partners in the Register of Firms. Thus, the Supreme Court dismissed the suit filed by the appellant on the question of maintainability in view of the provisions of Sub-section (2) of Section 69 of the Partnership Act by confirming the view taken by the trial court and the High Court. The Supreme Court further held that though the plaint was amended on a later date that cannot save the suit. The Bar under Section 69 can only be with reference to the plaintiff and not with reference to the persons who are sued as defendants.
13. Another recent decision of our High Court was also relied on by the learned Counsel for the defendants which is T. Savariraj Pillai v. R.S.S. Vastrad and Co. . Sathiadev, J. held that requirements of Section 69 of the Partnership Act are mandatory and the suit filed by a party without complying with the requirements under Section 69 of the Partnership Act is fatal and hence, the suit filed is void. Hence, permission to withdraw the suit with liberty to file a fresh suit cannot be granted.
14. It is very useful to refer a very recent judgment of our High Court by Srinivasan, J. in A.P.S. Baharudeen v. Antony 1991 T.L.N.J. 27. That is an appeal filed by plaintiffs in a representative capacity, who lost their case before both the courts below. They sought permission to withdraw the Second appeal with liberty to file a fresh suit. C.M.P. No. 13722 of 1990 was filed for the said relief in the second appeal. The said C.M.P. was resisted by the respondents in the appeal. Learned Judge in his detailed and well considered judgment held as follows:
It is now well settled that permission to withdraw the suit with liberty to file a fresh suit is governed by Order 23, Rule 1(3) of the Code of Civil Procedure only and the Court is bound to function within the four corners of the rule. The sub-rule comprises of two parts. The first part found in Sub-rule (3)(a) refers to a suit which must fail by reason of 'some formal defect' while the other part in Sub-rule (3)(b) speaks of 'sufficient grounds' for allowing the plaintiff to institute a fresh suit. Divergent views have been expressed as to whether "sufficient grounds" found in Clause (b) should be read ejusdem generis with "some formal defect" found in Clause (a) or independent of Clause (a) of Order 23, Rule 1(3) of the Code of Civil Procedure. One view is that the words "sufficient grounds" have been used by the Legislature ejusdem generis with "with formal defect". Another view is that "sufficient grounds" in Sub-rule 3(b) need not be 'formal defect' and they must be given a wider meaning and scope. A third view which is in between the two extremes has also been expressed that 'sufficient grounds' should mean grounds analogous to formal defect though not of the same genus.
15. The learned Judge was of the view that permission to withdraw a suit with liberty to file a fresh suit can be granted if the suit has to fail by reason of formal defect or a ground analogous thereto. The learned Judge further held as follows:
But, Courts are uniform in holding that a plaintiff who has failed to establish his case on merits, is not entitled to as of right to withdraw the suit and file a fresh suit. On a reading of the two clauses in Sub-rule (3) of Order 23, Rule 1 of the Code of Civil Procedure, it is clear that the Legislature has advisedly used a distinctly different language. While Clause (a) refers to the pending suit which must fail by reason of some formal defect, Clause (b) refers to the suit to be instituted with the leave of the Court. If a matter fails under Clause (a), the Court is concerned only with the question whether the suit must fail by reason of a formal defect. On the other hand, if Clause (b) is invoked by a party, then the Court must address itself to the question whether there are sufficient grounds for allowing the party to institute a fresh suit for the same subject-matter of part thereof. Hence, in my view, it is not correct to say that sufficient grounds' should be read ejusdem generis with formal defect or that they should be analogous thereto. Sufficient grounds' would cover a wider field and not restricted to a 'formal defect' or a similar defect. However, when the question arises before an appellate Court after the adjudication of the matter on merits by one Court or two courts, the test will be whether the Court is justified in depriving the defendant of the benefit of a finding rendered in his favour after a full trial. It is well known that when a Court grants leave to file a fresh suit on the identical cause of action, the withdrawn suit has no existence in the eye of law. It is not available for any purpose and the parties are relegated to the same position which they occupied before the suit was brought. Hence, the Court has to consider in each case when an application is filed in the appellate stage for withdrawing the suit with liberty to file a fresh suit, whether the defendant should be driven back to the original position in which he was prior to the filing of the suit, even though he has come out successful after a full trial.
16. I have carefully considered the rival submissions made by the learned Counsel for the plaintiff and the learned Counsel for the respective defendants. The above review of the case law on the subject shows that the views held by practically all the High Courts in India is that the registration of the firm is a condition precedent to its right to institute a suit of the nature mentioned in Section 9(2) of the Partnership Act and that., the registration after the institution of the suit cannot cure the defect of non-registration before the date of the suit. It follows from this, that the plaintiff is not entitled to withdraw the present suit and file a fresh suit on the same cause of action, since in my opinion, the defect pointed out by the defendants is not a formal defect but goes to the root of the matter. Hence I have no jurisdiction to proceed with the trial when the condition precedent to the right to institute a suit has not been fulfilled in this case. Hence the question of withdrawing a void plaint does not arise since it is not a formal defect. If the plaint is treated as a void plaint the question of granting permission does not arise at all. As stated above the plaint was filed on 9.2.1987. However, the plaintiff has filed the present suit and also impleaded other defendants and obtained various interim orders on the basis of a void plaint. The defendants have been made to incur legal expenses and oppose the plaint and other interim applications, time and again on the basis of a void plaint. Hence, in my opinion, the defendants have to be compensated with costs. I order a sum of Rs. 1,000 to the first defendant and Rs. 1,000 to defendants 3 to 5 as costs. Thus I hold that the suit filed is void and hence the permission to withdraw the suit with liberty to file a fresh suit on the same cause of action is not necessary. Both the application and the suit are dismissed with costs as stated above. All the interim orders passed by this Court pending suit, are hereby dissolved.