Important Point
Changes in the constitution of a firm does not affect the registration once made but information about changes have to be given and failure to comply attracts penalties u/s 69-A of the Partnership Act.

Headnote:Indian Partnership Act-Section 69(2A)-Maharashtra Amendment introduced by Act 29 of 1984-Suit filed by a partner for dissolution and accounts-Maintainability-Partnership was duly registered-Plaintiff being one of the founder partner-His name was in Register of Firms as a partner-Death of one of the partners-His widow inducted into the partnership-Whether induction of a new partner will result in dissolution of the firm?-(No)-Whether registration given to the firm under first Partnership Deed ceases when a new partner was introduced into the firm?-(No)-Changes in constitution of firm will not affect registration once made-However, information about changes have to be given-Failure to comply attracts penalties u/s 69A-A person who is not shown in Register of Firms by induction after registration cannot file a suit for dissolution or accounts.
       Held that Section 69(3)(a) of the Central Act enables the partners of both registered and unregistered firms to file a suit for dissolution and/or accounts. That being the position by introducing sub-section (2A) in Section 69, the Maharashtra Legislature has placed certain restrictions to the extent that even the suit for dissolution of a firm or for accounts, the suit can be filed only if the firm is registered and the ‘person’ suing as a partner is shown in the Register of Firms as a partner in the firm. In other words, a person, who is not shown in the Register of Firms by induction after registration even though the firm is registered, cannot file a suit for dissolution or accounts. This does not in any way mean that the registration given to the firm earlier will cease. In this case, the firm was registered and there was only a reconstitution of the firm and the first respondent, the plaintiff in this case, is a person whose name is shown in the Register of Firms along with the names of the appellants and, therefore, there is compliance of Section 69(2A). (Para 24)
       The name of the newly introduced partner, of course, does not find a place in the Register of Firms. That means the person whose name does not find a place in the Register of Firms may incur certain disabilities and that will not disable the Plaintiff to press the suit against the firm, which was registered against the persons whose names find a place in the Register of Firms. We are not called upon to decide what are the disabilities of the person, whose name does not find a place in the Register of Firms. For the purpose of Section 69(2A), the partnership firm will mean the firm as found in the certificate of registration and the partners as found in the register of firms maintained as per rule in Form ‘G’. The present suit being one for dissolution and accounts by one of the partners, whose name admittedly finds place in the Register of Firms alongwith the names of all the appellants, the requirements of Section 69(2A) are satisfied. Section 4 of the Act is also complied with for this limited purpose. (Para 26)
       Further held that on the induction of the second respondent, the existing firm was only reconstituted on the facts of this case and, therefore, there is no necessity to get a fresh registration. If by virtue of non-compliance of certain mandatory provisions in not informing the Registrar of Firms about the change in the constitution of the firm, certain penalties provided in the Act alone are attracted and that will not lead to the conclusion that the registration of the firm ceased. This conclusion is based on a conjoint reading of Sections 58-63 and the Forms prescribed thereunder. (Para 27)

Judgment

K. Venkataswami, J.-Leave granted.

This appeal by special leave has arisen under the following circumstances :-

2. The appellants are the partners of a suit firm called ‘M/s. Paramount Builders’. The partnership was entered into on 29.11.1979 with the following individuals as partners:

S. No. Name of Partners Share

1. Shri Sharad Vasant Kotak 15

2. Shri Dilip Vasant Kotak 15

3. Shri Anil Dhirendra Kotak 15

4. Smt. Hemkuver Vasant

Kotak 15

5. Smt. Lilavati Dhirendra

Kotak 15

6. Shri Mohanlal Hinji Chawda 12½

7. Shri Ramniklal Mohanlal

Chawda 12½

3. The said partnership firm was registered on 15.12.1980 under Registration No. 158675 with the Registrar of Firms. On 6.5.1986, Shri Mohanlal Hinji Chawda, a partner of the firm (Sr. No. 6 above) died and in his place, his widow Smt. Jijiben Mohanlal Chawda was admitted as a partner in the firm. After the admission of the said Smt. Jijiben Mohanlal Chawda, another deed of partnership was made consisting of the old six partners and the newly admitted partner Smt. Jijiben Mohanlal Chawda. As a matter of fact, the induction of the new partner was not brought to the notice of the Registrar of Firms by forwarding the required particulars. It is on record that still later on 3.11.1992 another partnership deed was brought into existence consisting of the same partners. It is also on record that yet another partner Smt. Hemkuver B. Kotak (S. No. 4 above) died in September, 1994. The fact of death of this partner also was not intimated to the Registrar of Firms. While so, the 1st respondent gave a notice of dissolution of the firm to the appellants and also filed a suit for the dissolution of the partnership firm bearing Suit No. 5016/94 on 15.12.94 in the High Court of Judicature at Bombay on the original side. Initially in the plaint, the constitutional validity of Section 69(2A) of the Indian Partnership Act (hereinafter called the ‘‘Act’’), as amended by Maharashtra Act, was not raised. The 1st respondent moved a Chamber Summons No. 301/97 seeking permission of the Court to carry out certain amendments to the plaint. Briefly, the amendments sought were that subsequent changes and/or modifications in the partnership deed of M/s. Paramount Builders under the deed of partnership dated 20.10.1986 and also in the deed of partnership dated 3.11.1992 are merely in the nature of changes and/or modifications which do not affect registration of the said firm of M/s. Paramount Builders, as required under the Act, for entitling a partner to institute a suit for reliefs against the partners on dissolution of firms and alternatively, the other amendment sought was to challenge the vires of Section 69(2A) of the Act as in force in State of Maharashtra.

4. The amendment sought was seriously opposed by the appellants inter alia contending that the suit as filed was not maintainable and, therefore, the amendment cannot be allowed. In other words, according to the appellants on and from 20.10.1986 when a new partnership deed was made, the registration already given to the firm ceased to have validity and the partnership as at present must be deemed to be an unregistered one and, therefore, the suit was hit by Section 69(2A). It was also contended that without impleading State of Maharashtra and Union of India, the vires of Section 69(2A) in the Partnership Act cannot be challenged. The learned trial judge accepting the objections raised by the appellants found that Section 69(2A) of the Act creates a bar on the threshold of the filing of the suit for the relief covered in the suit and the very suit filed by the plaintiff was incompetent. That being the position, the application for amendment could not be permitted. Consequent

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1997 Supreme(SC) 1683

Important PointChanges in the constitution of a firm does not affect the registration once made but information about changes have to be given and failure to comply attracts penalties u/s 69-A of the Partnership Act.

Cases Referred (6)

Important Point
Changes in the constitution of a firm does not affect the registration once made but information about changes have to be given and failure to comply attracts penalties u/s 69-A of the Partnership Act.