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2009 Supreme(Bom) 1051
IN THE HIGH COURT OF BOMBAY
J. H. Bhatia, J.
SADASHIV PANDURANG CHAVAN
Versus
RAMAKANT MAHADEO MANERKAR
S. A. No. 18 of 2009
Decided On : AUGUST 20, 2009
C.G.Gavnekar, SUREL S.SHAH
The main legal point established in the judgment is the unconstitutionality of sub-section (2-A) of Section 69 of the Indian Partnership Act, 1932, as inserted by the Maharashtra Amendment Act, 1984.
Headnote:
APPEAL - Recovery of Amount - Indian Partnership Act, 1932, Section 69 - Summary: The court discussed the applicability of Section 69 of the Indian Partnership Act, particularly sub-section (2-A) as inserted by the Maharashtra Amendment Act, 1984, which prohibited the filing of a suit for dissolution of a partnership firm or for settlement of accounts by a partner if the partnership firm was not registered. The court found that the sub-section (2-A) was unconstitutional and struck it down, allowing the appeal and restoring the judgment and decree passed by the trial Court.
Fact of the Case:
The plaintiff claimed to have been admitted as a partner in the defendant's business and filed a suit for recovery of an amount based on an agreement and a dishonored cheque. The defendant denied the claim and contended that the suit was not tenable due to non-registration of the firm.
Finding of the Court:
The trial Court decreed the suit in favor of the plaintiff, but the Appellate Court found the suit not maintainable under the provisions of section 69 of the Indian Partnership Act, leading to the dismissal of the suit.
Issues: The main issue was whether the suit for recovery of amount based on an agreement and a dishonored cheque was tenable under the law in view of section 69 of the Indian Partnership Act.
Ratio Decidendi: The court held that the sub-section (2-A) of Section 69, as inserted by the Maharashtra Amendment Act, 1984, was unconstitutional and struck it down, thereby allowing the appeal and restoring the judgment and decree passed by the trial Court.
Final Decision: The appeal was allowed, and the judgment and decree passed by the trial Court in the suit were restored. The execution of the decree was stayed for a further period of eight weeks.
"whether the First Appellate Court was right in allowing the appeal and dismissing the suit on the ground that the suit filed by the plaintiff/respondent for recovery of amount on the basis of an agreement entered into between the plaintiff and the defendant, who were partners in a firm was not tenable under the law in view of section 69 (2) (a) as applicable to the State of Maharashtra ?"
( 2 ) WITH consent of the learned counsel for the parties, matter is taken up for final hearing immediately. Perused the judgments of both the Courts below as well as the relevant oral and documentary evidence.
( 3 ) TO state in brief, it is the case of the plaintiff/appellant that the defendant/respondent was already carrying on business as proprietor in the name and style of 'manerkar Traders' at C. S. No. 1259, "c" Ward, Laxmipuri, kolhapur. There were cordial relations between the plaintiff and the defendant. In January, 1996, the defendant offered to admit the plaintiff as a partner in his business and this offer was accepted. As per the agreement, plaintiff paid some amounts to the defendant towards the capital in the business. Plaintiff was admitted to partnership firm with half share in the same. Remaining half share was to continue with the defendant. Plaintiff also started looking after the affairs of the business in the capacity of the partner. His name was also, recorded as partner in different registers including records maintained by Agriculture produce Market Committee (In short 'a. P. M. C. ' ). According to the plaintiff, the defendant had assured him to get the partnership firm registered. However, shortly differences and disputes occurred between them on account of business debts and liabilities. In view of the disputes, it was agreed that the plaintiff would quit the partnership firm and receive an amount of Rs. 1,55,000/- towards his share in the business. Accordingly, agreement or Memorandum of Understanding (MOU) was entered into between the plaintiff and the defendant in presence of the witnesses on 7th February, 1997. Defendant issued a post-dated cheque bearing number 025275 dated 31-12-1997 against his account with Ravivar Peth co-operative Bank, Kolhapur. According to the plaintiff, the cheque was presented to the bank for encashment and on 4-2-1998 cheque was returned to the plaintiff with endorsement "drawer stopped the payment". In view of the cheque being dishonoured, plaintiff filed Special Civil Suit No. 257/98 for recovery of l,64,800/-including principal amount of Rs. 1,55,000/- as per the cheque and the interest thereon.
( 4 ) DEFENDANT denied the claim of the plaintiff. He denied that plaintiff was ever admitted as partner in his business and that the plaintiff had supplied funds to him from time to time as a capital for business and that the plaintiff was also looking after the business of the firm as partner. According to him, record of the a. P. M. C. was forged with the assistance of the officials of the Committee to include the name of the plaintiff as partner of Manerkar Traders. According to him, no settlement had taken place nor he had issued a cheque to the plaintiff. According to him, on 2nd February, 1997 cheque was lost from his bag, which he was carrying and, therefore, he had informed the bank at appropriate time to stop the payment. It was further contended that the suit was not tenable for non registration of the firm.
( 5 ) SEVERAL issues were framed by the trial Court and after hearing the learned counsel for both the parties, the trial Court gave findings in favour of the plaintiff and against the defendant. The trial Court also held that the suit is not hit for non-registration of the firm because suit was based on an agreement dated 7th february, 1997 and also on the cheque dated 31st December, 1997, which was dishonoured. In the result, suit was decreed to the extent of Rs. 1,61,393/-inclusive of principal amount and in
