Gujarat High Court
Rajabali Jadavji Popatiya vs Karim Rajabali Popatiya & on 28 August, 2014
Author: C.L. Soni
Bench: C.L. Soni
C/CRA/254/2013 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL REVISION APPLICATION NO. 254 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE C.L. SONI Sd/-
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1 Whether Reporters of Local Papers may be allowed to see the No
judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the judgment No
?
4 Whether this case involves a substantial question of law as to the No
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5 Whether it is to be circulated to the civil judge ? No
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RAJABALI JADAVJI POPATIYA
Versus
KARIM RAJABALI POPATIYA & 1
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Appearance:
MR AJ SHASTRI, ADVOCATE for the Petitioner
MR APURVA JANI for MR ASHISH M DAGLI for the Respondent No.1
RULE NOT RECD BACK for the Opponent(s) No. 2
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CORAM: HONOURABLE MR.JUSTICE C.L. SONI
Date : 28/08/2014
ORAL JUDGMENT
1. Respondent No.2 is shown as not served. However, since he is not a necessary part for the purpose of deciding this petition, learned advocate Mr. A.J. Shastri rightly requested to permit him to delete respondent No.2 from the title clause of the petition. Permission as sought is granted. The respondent No.2 stands deleted from the title clause of the petition.
Page 1 of 9C/CRA/254/2013 JUDGMENT
2. In this petition filed under Article 226 of the Constitution of India, the petitioner (defendant No.1) has challenged the order dated 12.7.2012 passed by the Principal Senior Civil Judge, Porbandar below application Exh.96 in Special Civil Suit No.40 of 2009 preferred by the petitioner under Order VII Rule 11 of the Code of Civil Procedure ('the Code) for rejection of the plaint on the ground that the suit filed by respondent No.1 herein is barred by Section 69 of the Indian Partnership Act, 1932 ('the Act).
3. Learned Judge has come to the conclusion that the respondent No.1 has prayed for one third share in the joint family (partnership business) and for getting the accounts of that business as well as for dissolution of the partnership in the suit and therefore, such suit is not barred under Section 69 of the Act.
4. I have heard learned advocates for the parties.
5. learned advocate Mr. A.J. Shastri for the petitioner submitted that there is no material placed by respondent No.1 with the suit to establish that he was a partner of the firm. Mr. Shastri submitted that prima facie there is no existence of partnership and it is just a bald assertion of the respondent No.1 in his plaint that the business was carried on between the parties in the partnership firm but there is no written document for so-called partnership and such partnership since cannot be registered, the suit filed by the respondent No.1 arising out of the alleged contract between the parties is barred under Section 69 of the Act and thus not maintainable. Mr. Shastri submitted that the learned Judge has not properly approached the issues raised by the petitioner inasmuch as the learned Judge has considered the issue as regards the partition of the family business which is not germane for decision on the application preferred by the petitioner under Order VII Rule 11 of the Code. Mr. Shastri submitted that there is no cogent cause of action stated in the plaint and claim Page 2 of 9 C/CRA/254/2013 JUDGMENT in the suit without such cogent cause of action cannot be entertained and therefore, the application preferred by the petitioner was required to be allowed. Mr. Shastri submitted that the petitioner had successfully made out a case under Order VII Rule 11 of the Code in the context of provisions of Section 69 of the Act vis-a-vis the claim made in the plaint and therefore, the application preferred by the petitioner was required to be allowed.
6. In support of his arguments, learned advocate Mr. Shastri has relied on the following decisions:-
[1] In the case of Laljibhai Ramjibhai Hamirani Vs. Lavjibhai Haribhai Mandanka and Others reported in 2009(1) GLR 879;
[2] In the case of Loonkaran Sethia etc. Vs. Mr. Ivan E. John and others etc. reported in AIR 1977 (SC) 336;
[3] In the case of Maniyar Solanki & Co. Vs. Sanghi Nathalal Allarakhabhai & Anr. reported in 2001(3) GLR 2041.
7. As against the above arguments, learned advocate Mr. Apurva Jani for learned advocate Mr. Ashish Dagli for respondent No.1 submitted that the suit is for share in the joint family business. Mr. Jani submitted that for the suit claiming to be a partner in the partnership firm, for the accounts of the partnership firm and for dissolution of the partnership firm, there is no bar under Section 69 of the Act. Mr. Jani submitted that sub-section (3) of Section 69 of the Act clearly provides that the bar contemplated under sub-section (1) of Section 69 of the Act shall not apply to the suit for enforcement of the claim of dissolution of the partnership and for accounts of the partnership business. Mr. Jani submitted that there is no provision in the Partnership Act for written agreement of the partnership. Referring to Section 4 of the Act, which defines 'partnership', 'partner', 'firm' and 'firm-name', Mr. Jani submitted that the partnership as defined is just a relation between the parties who have Page 3 of 9 C/CRA/254/2013 JUDGMENT agreed to share the profit of the business carried on by them and it is nowhere provided that there has to be written agreement between the parties for such partnership business. Mr. Jani submitted that the application under Order VII Rule 11 of the Code was preferred by the petitioner only on the ground that the suit is barred by Section 69 of the Act and it is not the ground that the suit does not disclose the cause of action and therefore, it is not permissible for the petitioner to contend before this Court that no cogent cause of action is stated in the plaint. Mr. Jani submitted that the learned Judge has well considered the provisions of Section 69 of the Act and the claim made by the respondent No.1 in the suit and has committed no error in coming to the conclusion that the suit preferred by respondent No.1 is not barred by Section 69 of the Act.
8. Mr. Jani also drew the attention of the Court to the application preferred by respondent No.1 in the suit under Order VI Rule 17 of the Code seeking amendment in the plaint so as to point out that the suit is essentially for seeking share in the property of the joint family business. Mr. Jani thus urged to dismiss the petition.
9. In support of his submissions, Mr. Jani has relied on following decision(s):-
[1] In the case of Vinubhai Najibhai Chavda Vs. Maheshkumar Ramchandra Raval reported in 2013(3) GLR 2503.
10. Having heard learned advocates for the parties, it appears that the claim in the suit filed by the respondent No.1, who is son of the petitioner, is on the basis that there was a joint family business between him, the petitioner and his another brother and he was not given accounts of such business after 1985. Therefore, to take accounts of the joint family partnership business, for dissolution of partnership and for one-third share in the partnership, the suit is filed. In the plaint, it is stated that the petitioner- defendant No.1 has Page 4 of 9 C/CRA/254/2013 JUDGMENT refused to consider the respondent No1. (plaintiff) as partner of the firm. Therefore, while claiming to be a partner in the partnership, the above-said reliefs are asked in the suit.
11. The question is whether the suit for the above such claims is barred by the provisions of Section 69 of the Act.
12. Section 69 of the Act reads as under:-
"69. Effect of non-registration.--
(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 suing 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 the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or
(b) the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909 (3 of 1909) or the Provincial Insolvency Act, 1920 (5 of 1920) to realise the property of an insolvent partner.
(4) This section shall not apply,--
(a) to firms or to partners in firms which have no place of
business in 8 [the territories to which this Act extends], or whose places of business in 9 [the said territories], are situated in areas to which, by notification under 10 [section 56], this Chapter does not apply, or
(b) to any suit or claim of set-off not exceeding one hundred rupees in value which, in the Presidency-towns, is not of a kind specified in section 19 of the Presidency Small Cause Page 5 of 9 C/CRA/254/2013 JUDGMENT Courts Act, 1882 (5 of 1882), or, outside the Presidency-
towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887 (9 of 1887), or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.
13. Sub-section (3) of Section 69 of the Act clearly provides that provisions of sub-sections (1) and (2) of Section 69, which provides for bar of suit, shall not affect the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm.
14. In the case of Laljibhai Ramjibhai Hamirani (supra), suit was filed against third party for the relief pertaining to sale transaction by the plaintiff claiming to be partner of the firm. Suit was not for dissolution of the firm or for accounts of the dissolved firm. In such fact situation, the Court held that the suit was barred by Section 69 of the Act. This judgment shall have no application to the facts of the present case.
15. In the case of Loonkaran Sethia (supra), the Hon'ble Supreme Court has held and observed that a partner of erstwhile unregistered firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Section 69 of the Act. In the said case, the claim was to enforce the contract with third party in connection with the unregistered partnership. This judgment will also have no application to the facts of the case.
16. In the case of Maniyar Solanki & Co.(supra), this Court has held and observed that Section 69 of the Act makes it clear that no suit to enforce a right arising from the contract shall be instituted in any Court by or on behalf of the firm against any third party unless the firm is registered and persons suing are shown or have been shown in the register of firms as partners in the firm. Such is not the issue in the present case and therefore, the said judgment will have have no application to the facts of the present case.
Page 6 of 9C/CRA/254/2013 JUDGMENT
17. In the case of Bhartesh Chandra Jain Vs. Shoiab Ullah and others reported in (2004)13 SCC 358, the Hon'ble Supreme Court has held and observed in para 5 as under:-
"5. The language of clause (a) of sub-section (3) of Section 69 of the Act shows that suits for dissolution of an unregistered firm or for accounts of a dissolved firm or for any right or power to realise the property of a dissolved firm have been expressly excluded from the embargo put on the filing of suits by an unregistered firm or by any partner of an unregistered firm. The first prayer in the plaint squarely falls within this exception. The order of the High Court, therefore, cannot be sustained and the order of the Additional District Judge must be restored."
18. In the case of Mukund Balkrishna Kulkarni Vs. Kulkarni Powder Metallurgical Industries and Another reported in (2004)13 SCC 750, the Hon'ble Supreme Court has held and observed in para 9 and 10 as under:-
"9. The sub-section contains embargoes which must coexist before a plaintiff can be non-suited under that sub-section. The two embargoes relevant for this case are: (1) that the suit should be filed by person "suing as a partner in a firm"
and (2) that the suit must be to enforce a right arising from a contract. The submission of the respondents which was accepted by the High Court was that the prayer of the appellant, namely, for a declaration of the existence of the partnership and the share between the parties was a suit to enforce a right under a contract against the firm. A prayer for such declaration could not be said to be made by person suing as a partner. It was a prayer to be a partner and is therefore not debarred under the provisions of Section 69(1). Furthermore, what was in fact being prayed for by the appellant was a declaration of the existence of a contract between the parties. That could not be said to be a suit to enforce a right arising from a contract. The second prayer of the appellant was not to continue as a partner of the firm but to dissolve the firm. To that extent the appellant was suing "as a partner". This he was entitled to do under Section 69(3)(a) which insofar as it is relevant, reads as follows:
"69.(3) The provisions of sub-sections (1).... shall not affect-
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm."Page 7 of 9
C/CRA/254/2013 JUDGMENT The right of partner to ask the dissolution of a firm is a right the enforcement of which is otherwise forbidden under Section 69(1). It is because of the exception under sub-
section (3) of Section 69 that a person suing as a partner can enforce a right under the contract for dissolution of the firm and accounts. The claim for a half share in the firm's assets would be a necessary corollary to a prayer for dissolution. Without the prayer for specified shares in the firm's assets and business, the relief that may be granted in a suit for dissolution would be ineffective. In the circumstances of the case, we allow the appeal and set aside the decision of the High Court and affirm the decision of the first appellate court. There will be no order as to costs."
19. In light of the above principles settled by the Hon'ble Supreme Court and considering the prayers made by respondent No.1 in the suit, it cannot be said that the suit preferred by respondent No.1 is barred by Section 69 of the Act.
20. Learned advocate Mr. Shastri however submitted that there is no concept of oral partnership. The respondent No.1 has just made bald assertion in the plaint as regards partnership business between the parties and there is no written partnership between the parties and therefore, the suit is not maintainable. Such cannot be said to be the objection as regards bar of the suit so as to attract the provision of Order VII Rule 11 of the Code. Apart from this, the partnership is always a contractual relationship between the parties to share the profit of the business carried on by them. There could be oral contract also for such business. In fact, learned advocate Mr. Jani was right in submitting that Section 4 of the Act defining partnership nowhere provides for a written document of a partnership but it just defines partnership relation between the persons who agree to share the profit of the business carried on by them. Therefore, there could be oral partnership as well. However, such question has no relation with issue raised by the petitioner in his application under Order VII Rule 11 of the Code. The Court finds that the learned Judge has not committed any error in rejecting the application at Exh.96 preferred by the petitioner under Order VII Rule 11 of the Code.
Page 8 of 9C/CRA/254/2013 JUDGMENT
21. For the reasons stated above, the petition is dismissed. Rule is discharged. Interim relief, if any, stands vacated.
Sd/-
(C.L. SONI, J.) omkar Page 9 of 9