Very Important Point
Though suit for possession filed by respondent (an unregistered Partnership firm) was partly barred u/s. 69(2) of Partnership Act, 1932, the decree passed in suit needs no interference.

Headnote:(i) Indian Partnership Act, 1932 —Section 69(2)—Effect of non-registration—Respondent/Plaintiff/ Landlord and, an unregistered partnership firm filing suit for possession against appellant/Defendant/ Erstwhile tenant—Partly on cause of action arising out of contract of lease and partly on cause of action arising under Transfer of Property Act—Whether the suit filed by respondent barred u/s. 69(2) of the Partnership Act either wholly or in part? (Barred partly) (T.P.A. 1882 —Sections 111(a) r/w 108(B)(q); CPC 1908—Order 7 Rule 11).
       Held : In the present case we are concerned with the lease which has come to an end and the erstwhile tenant has remained in occupation as a tenant at sufferance. Under law the erstwhile landlord is entitled to restoration of possession by enforcement of statutory obligation of the erstwhile tenant as statutorily imposed on him under Section 108(q) read with Section 111(a) of the Property Act. The non-compliance of the statutory obligation by the defendant when made subject matter of corresponding legal right of the erstwhile landlord cannot be said to be giving rise to enforcement of any contractual right of the plaintiff arising from the expired contract of tenancy. As seen earlier, the controversy would have clearly ended in favour of the respondent and against the appellant if the plaint had referred to only the law of the land under which the defendant was required to be evicted on the expiry of the lease. But unfortunately for the plaintiff the suit is also based on the breach of the covenant of the lease as seen from paragraph 2 of the plaint. It is, therefore, not possible to interpret the averments with reference to the covenant of the lease only as referring to a historical fact as tried to be submitted by Dr. Singhvi for the respondent. (Para 22)
       The net effect of this discussion, therefore, is that the plaint as framed by the plaintiff respondent is based on a composite cause of Action consisting of two parts. One part refers to the breach of the covenant on the part of the defendant when it failed to deliver vacant possession to the plaintiff lessor on the expiry of the lease after 15th March, 1985 and thereafter all through out and thus it was guilty of breach of covenants 14 and 17 of the lease. The second part of the cause of Action, however, is based on the statutory obligation of the defendant lessee when it failed to comply with its statutory obligation under Section 108 (q) read with Section 111(a) of the Property Act. So far as this second part of the cause of Action is concerned it cannot certainly be said that it is arising out of the erstwhile contract. (Para 23)
       Held finally : The net result of this discussion is that the present suit can be said to be partly barred by Section 69 sub-section (2) so far as it sought to enforce the obligation of the defendant under Clauses 14 and 17 of the contract of lease read with the relevant recitals in this connection as found in paragraph 2 of the plaint. But it was partly not barred by Section 69 sub-section (2) in so far as the plaintiff based a part of its cause of Action also on the law of the land, namely, Transfer of Property Act where under the plaintiff had sought to enforce its statutory right under Section 108(q) read with Section 111(a) of the Property-Act. Enforcement of that right had nothing to do with the earlier contract which had stood determined by efflux of time. The first point for determination therefore, has accordingly, to be held partly in favour of the plaintiff and partly in favour of the defendant. As the decree for possession is passed on the basis of both parts of causes of Action, even if it is not supportable on the first part, it will remain well sustained on the second part of the very same cause of Action. (Para 24)
       But held : In view of our conclusion on point No. 1, though the appellant partly succeeds thereon the ultimate decree for peaceful possession against the appellant would remain well sustained. (Para 23)
       (ii) Indian Partnership Act, 1932—Section 69(2)—Effect of subsequent registration—Suit by plaintiff partly on contract and partly on statutory provisions for possession—Plaintiff an unregistered firm at time of suit—Later got registered — Whether subsequent registration under Partnership Act could revive the suit?—Conflicting decisions—Matter requiring decision by a larger Bench—But not referred as in view of conclusion on Point 1 that decree will remain sustained despite non-registration of firm, this point does not require decision and so is left open. (Para 26)
       Held : Point No. 2, therefore, is answered by observing that it is not necessary on the facts of the present case in the light of our decision on the first point to decide this point one way or the other. Point No. 2 is, therefore, left undecided as not surviving for consideration. (Para 30)
       Held finally : As a result of the aforesaid discussion, it is held that the suit as filed by the respondent was partly barred under Section 69 sub-section (2) of the Partnership Act but was partly not barred and consequently the decree passed by the Trial Court as confirmed by the High Court is held to have remained well sustained and calls for no interference in the present appeal. In the result, this appeal fails and is dismissed. (Paras 31 and 32)

Judgement Key Points

Key Points: - A suit filed by an unregistered partnership firm to enforce a right arising from a contract is partly barred under Section 69(2) of the Partnership Act if it is based on contractual obligations (!) (!) (!) (!) . - A suit filed by an unregistered partnership firm can be partly not barred if a part of the cause of action is based on statutory rights under the Transfer of Property Act, such as the right to possession after lease determination (!) . - The decree for possession, if based on both contractual and statutory causes of action, remains well-sustained on the statutory part even if the contractual part is barred (!) (!) . - The erstwhile tenant, after the expiry of the lease, is considered a tenant at sufferance, akin to a trespasser, with no independent right to continue possession (!) (!) (!) . - The landlord's right to possession after lease determination can be enforced based on the statutory obligation of the erstwhile tenant under Section 108(q) read with Section 111(a) of the Transfer of Property Act (!) (!) . - The claim for possession based on statutory obligations under the Transfer of Property Act is distinct from enforcing rights arising from the expired contract of tenancy (!) . - The question of whether subsequent registration of a partnership firm can revive a suit that was initially barred was left undecided as the decree was sustained on other grounds (!) (!) . - The suit was filed by an unregistered partnership firm, M/s. Raptakos Brett & Co. Ltd., against Ganesh Property (!) (!) . - The lease agreement was for a period of 21 years, ending on March 15, 1985 (!) . - The decree for possession passed by the Trial Court and confirmed by the High Court was upheld (!) (!) .

What is the effect of non-registration of a partnership firm on a suit filed to enforce a right arising from a contract?

What is the effect of subsequent registration of a partnership firm on a suit that was initially barred due to non-registration?

What is the basis of a landlord's claim for possession against an erstwhile tenant after the expiry of the lease?

Judgment

S.B. Majmudar, J.—Leave granted.

2. We have heard learned counsel for the parties finally in this appeal. Hence, this appeal is being disposed of by this judgment.

3. This appeal by special leave seeks to challenge the decision rendered by learned Single Judge of the High Court of Judicature at Calcutta confirming decree for possession passed against the appellant-defendant by the learned Judge, 7th Court of City Civil at Calcutta in Title Suit No. 1481 of 1986. In order to appreciate the grievance of the appellant-defendant, it is necessary to note a few relevant background facts.

Factual Matrix:

4. The respondent-plaintiff is the owner of suit premises consisting of ground floor of a building situated at Marquis Street, Calcutta. The said premises were rented to the appellant-defendant on a monthly rent of Rs. 2045/- by a registered lease dated 16th March, 1964. This lease was for a period of 21 years commencing from 16th March, 1964 and ending on 15th March, 1985. On the expiry of the said period, the respondent-plaintiff alleging to be a registered partnership firm, filed the aforesaid suit praying for a decree for possession as well as damages @ Rs. 200/- per day for illegal occupation of the premises by the appellant-defendant. The defence of the appellant-defendant was that after the expiry of the lease period, it had continued to be a tenant by acceptance of rent by the defendant-landlord and hence it had become a tenant by holding over under Section 116 of the Transfer of Property Act, 1882 (for short ‘the Property Act’). Further defence was taken by the appellant-defendant by way of a separate application seeking dismissal of the suit under Order 7 Rule 11(d) of Code of Civil Procedure (for short ‘CPC’) on the ground that the suit for possession as filed by the plaintiff-respondent, which was an unregistered partnership firm, was not maintainable.

5. Learned Trial Judge, framed relevant issues on the pleadings and came to the conclusion that the defendant-appellant was not a tenant holding over and was in unlawful possession of the premises after the expiry of the lease period. On the question of maintainability of the suit, the Trial Court held that the suit was not hit by Section 69 sub-section (2) of the Indian Partnership Act, 1932 (for short ‘the Partnership Act’). Accordingly, a decree for possession was passed. The appellant-defendant carried the matter in first appeal before the High Court. As noted earlier, the learned Single Judge who decided the said appeal, held against the appellant-defendant and dismissed the appeal. That is how the appellant-defendant is before us in the present case.

Rival Contentions:

6. Learned senior counsel, Shri R.F. Nariman for the appellant-defendant, placed a solitary contention for our consideration. He submitted that on a proper reading of the plaint as filed by the respondent it has to be held that the respondent sought to enforce a right arising out of the contract of lease between the parties and as on the date of the suit, the respondent was not a registered partnership firm, the suit was ex-facie not maintainable and was required to be dismissed on this ground alone. However, he fairly stated that on merits, as the West Bengal Rent Act does not apply to a lease for 21 years and more and as the finding of the courts below that the appellant was not a tenant by holding over, he cannot urge any other contention save and except the aforesaid solitary one. In support of his contention he also submitted that it is a fact that even though pending the suit the respondent plaintiff’s firm got registered the said registration was of no avail to the respondent as the suit which was a still born one could not be revived on account of this subsequent event. In support of this contention Shri Nariman placed reliance on various decisions of this court and High Courts to which we will make a reference at an appropriate stage in later part of this judgment.

7. Learned senior co

Click Here to Read the rest of this document

1998 Supreme(SC) 960

Very Important PointThough suit for possession filed by respondent (an unregistered Part­nership firm) was partly barred u/s. 69(2) of Partnership Act, 1932, the decree passed in suit needs no interference.

What is the effect of non-registration of a partnership firm on a suit filed to enforce a right arising from a contract?

What is the effect of subsequent registration of a partnership firm on a suit that was initially barred due to non-registration?

What is the basis of a landlord's claim for possession against an erstwhile tenant after the expiry of the lease?

Cases Referred (17)

Very Important Point
Though suit for possession filed by respondent (an unregistered Partnership firm) was partly barred u/s. 69(2) of Partnership Act, 1932, the decree passed in suit needs no interference.