A suit to enforce a right arising from a contract cannot be instituted in any Court by or on behalf of an unregistered partnership firm.

Headnote:
PARTNERSHIP - REGISTRATION - SUIT BY UNREGISTERED FIRM - ADMISSION OF PLAINTIFF IN EARLIER SUIT - RELEVANCE - EVIDENCE ACT, S. 58 - PARTNERSHIP ACT, S. 69.
Fact of the Case:

Plaintiff, Shriram, filed a suit against the Defendant, Gourishankar, for the recovery of Rs. 9,368-2-3, alleging that the Plaintiff and his two cousin brothers formed a joint Hindu family, that the Plaintiff was the manager of the joint Hindu family, and that the Defendant had dealings with the Plaintiff's shop and owed the amount claimed. The Defendant denied the liability and contended that the Plaintiff's firm was not a joint Hindu family firm but an unregistered partnership firm, and that the suit should be dismissed as the firm was not registered as required by law.
Finding of the Court:

The trial Court dismissed the suit on the ground that the Plaintiff's firm was not a joint Hindu family firm but an unregistered partnership firm and that the suit was not maintainable under Section 69 of the Partnership Act. The Court also found that the Plaintiff had not submitted statements of account to the Defendant as required by the Money-lenders Act and that, therefore, he was not entitled to costs and interest.
Issues: 1. Whether the Plaintiff's firm was a joint Hindu family firm or an unregistered partnership firm. 2. Whether the suit was maintainable under Section 69 of the Partnership Act. 3. Whether the Plaintiff was entitled to costs and interest.
Ratio Decidendi: 1. The Court held that the Plaintiff had failed to prove that he, Satyanarayan, and Ratanlal formed a joint Hindu family which carried on business in the name of the joint family firm of "Gangaram Premsukhdas". The Court considered the oral and documentary evidence, including the opinion of witnesses and admissions made by the Plaintiff in an earlier suit, and found that the evidence did not support the Plaintiff's claim that the firm was a joint Hindu family firm. 2. The Court held that the suit was not maintainable under Section 69 of the Partnership Act because the Plaintiff's firm was an unregistered partnership firm. The Court noted that Section 69 of the Partnership Act is express and mandatory and that no suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against a party unless the firm is registered. 3. The Court held that the Plaintiff was not entitled to costs and interest because he had not submitted statements of account to the Defendant as required by the Money-lenders Act.
Final Decision: The Court dismissed the appeal and upheld the trial Court's decision to dismiss the suit.

JUDGMENT - 1. This is an appeal by the original Plaintiff Shriram Sardarmal Didwani, against the judgment and decree of the Additional District judge, Khamgaon, in Civil Suit No. 16-B of 1952, dismissing with costs his suit against the Defendant Gourishankar for the recovery of the principal amount of Rs. 9,368-2-3, together with interest amounting to Rs. 2,051-1-0. In the plaint it was alleged that the Plaintiff and his brothers Satyanarayan and Ratanlal, who are sons of one Surajmal, formed a joint Hindu family, that the Plaintiff Shriram who is the manager of this joints Hindu family, has filed the suit as manager and that the plaintiff had been adopted by the brother of Surajmal. In the plaint it is also alleged that this joint Hindu family was carrying on business in the name of the firm "Gangaram Premsukh" at Khamgaon and that the Defendants family was carrying on business in the name of "Mitanandji Joharmal shop at Fattekhedi. The Defendant was adopted into the family of Mitanandji in 1938. There were dealings between the plaintiffs shop and the Defendants shop for several years before 1938. Accounts between the parties were checked in Diwali 1948 A.D. when Rs. 1,630-7-0 were found due from the defendant. As defendants shop did not possess a foodgrain licence and as there was a foodgrain licence in the name of Jainarayan Narsingdas, the paternal uncle of the defendant before his adoption into the family of Joharmal, defendant and Shrikisan, another paternal uncle of his, made the plaintiff open a separate khata in the name of Jainarayan Narsingdas on the 12-5-1949, and asked the plaintiff to close the khata of "Mitanandji Joharmal" and further instructed that the amount of Rs. 540 standing to the debit of the defendant in the khata of "Mitanandji Joharmal" should be transferred to the account of Jainarayan Narsingdas. At the end of Diwali 1949 Rs. 8,428-9-6 were found due from the defendant to the shop of the plaintiff which liability was admitted by the defendant. From Diwali 1949 to Diwali 1950 the defendant made transactions with the plaintiffs shop but in the account of Jainarayan Narsingdas, At the Diwali of 1950 the liability of Rs. 6,088-2-3 was verified and admitted by the defendant. Later, Shrikisan was prosecuted in connection with his grain trade and for giving bribes. On the 3rd February 1951, therefore, defendant and Shrikisan came to the plaintiff and asked that the account standing in the name of Jainarayan Narsingdas in which Rs. 5,368-2-3 were to the debit of defendant should be transferred to the khata of "Mitiuiandji, Joharmal" to be reopened in that name. On that date, it is also the case of the plaintiff, that Rs. 4,000 were given by way of a loan to Shrikisan the paternal uncle, before adoption of the defendant and at his instance. The plaint, therefore, claimed that the liability of the defendant on that date was of Rs. 9,368-2-3. A suit was, therefore, filed to recover this amount together with interest at Re. 1 per cent per mensem, which according to the plaint, was the agreed rate.

2. The defendant Gourishankar in his original written-statement did not contest the allegation of the plaintiff that the plaintiff and his two cousin brothers Satyanarayan and Ratanlal formed a joint family, but the plaintiffs claim was disputed on merits. All the allegations in the plaint regarding the liability of the defendant were denied. According to the defendant, apart from the purchase of small quantities of grain from the plaintiffs Khamgaon shop there were no other kinds of dealings or transactions between the plaintiff firm and the Kirana shop of the defendant, and according to the defendant no amount remained unpaid to the plaintiff for such dealings. The allegations made in the plaint regarding the various adjustments were all denied. It was further pleaded that Jainarayan and Shrikisan had no authority to have dealings on behalf of the defendant and that they had no authority or necessity to borrow any

Click Here to Read the rest of this document

1959 Supreme(Bom) 123

IN THE HIGH COURT OF BOMBAYKotval S.P. and Raju V.B., JJ.Appellants: Shriram Sardarmal DidwaniVs.Respondent: Gourishankar alias Rameshwar JoharmalA.F.O.D. No. 43 of 1955Decided On: 15.12.1959Counsels: For Appellant/Petitioner/Plaintiff: C.P. Kalele, Adv.For Respondents/Defendant: N.A. Athalay, Adv.

A suit to enforce a right arising from a contract cannot be instituted in any Court by or on behalf of an unregistered partnership firm.