A suit for recovery of money by partners of an unregistered firm is not maintainable under Section 69 of the Indian Partnership Act, 1932, which mandates registration for such suits.

ORDER :

1. This petition arises from the order passed by the High Court of Andhra Pradesh at Amravati dated 17-7-2019 in Civil Revision Petition No.2944/14 by which the High Court allowed the Revision filed by the respondents (original defendants) and thereby set aside the order passed by the District Judge, Vizianagaram in Original Suit No.80/12 deciding a preliminary issue as regards the maintainability of the suit instituted by the petitioners – herein (original plaintiffs) for recovery of money.

2. It appears from the materials on record that the petitioners – herein (original plaintiffs) instituted Original Suit No.80/12 praying for the following reliefs:-

VI. Therefore, the plaintiffs pray that the Honourable Court may be pleased to pass a Decree and Judgment in favour of the plaintiffs and against the defendant:-

a) For recovery of Rs.30,00,000/- (Rupees Thirty Lakhs only) from the defendant;

b) Costs of the suit; and) For such relief or other reliefs as the Honourable court deems fit and proper in the circumstances of the case, in the interests of justice.”

3. In the suit proceedings, the issue as regards the maintainability of the suit was raised on the ground that a partner of an unregistered partnership firm could not have filed the Suit for recovery of money, being hit by Section 69 of the Indian Partnership Act, 1932 (hereinafter, the “Act”).

4. The aforesaid issue was decided as a preliminary issue and the Trial Court held that the suit is maintainable. The Trial Court took the view that although there is a partnership deed on record yet as the partnership business had not commenced, the suit could be said to be maintainable.

5. The defendants being dissatisfied with the order passed by the Trial Court deciding the preliminary issue as stated above challenged the same by filing a Civil Revision Application before the High Court.

6. The High Court took the view that the suit is not maintainable, being hit by Section 69 of the Partnership Act. The High Court in its impugned order while allowing the revision application, observed as under:-

“3. The counsel for petitioner submits that the suit is not maintainable for the reason that it is hit by Section 69(1) of the Indian Partnership Act, 1932 (for short, the Act). The issue involved is whether a partner of an unregistered firm can maintain a suit against the other partner. For the sake of convenience, Section 69(1) of the Act is extracted hereunder:

Section 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 a behalf of any persons 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:

Provided that the requirement of registration of firm under this sub-section shall not apply to the suits

or proceedings instituted by the heirs or legal representatives of the deceased partner of a firm for accounts of the firm or to realise the property of the firm.

4. The counsel for the respondents-plaintiffs submits that the partnership business has not yet commenced, and in the written statement filed by the petitioner-defendant in the suit, it is categorically mentioned that the business was stopped in the year 2009. The counsel for the petitioner, in answer to the said submission, draws the attention of this Court to the partnership agreement, wherein it is clearly mentioned that the plaintiff was offering partnership to the respondents as she was not able to carry on the business. The reason for closure of the business is immaterial since it is clearly mentioned in the agreement itself that the petitioner-defendant was not in a position to continue the Crusher and hence, she is offering partnership to the respondents. Hence, it has to be understood from the agreement that knowing fully well that the Crusher was n