An unregistered partnership firm cannot enforce rights arising from a contract under Section 69(2) of the Indian Partnership Act, which prohibits such suits against third parties.

JUDGMENT :

N.J. JAMADAR, J.

1. Rule. Rule made returnable forthwith, and, with the consent of the learned Counsel for the parties, heard finally.

2. This Petition under Article 227 of the Constitution of India calls in question the legality, propriety and correctness of an order dated 7 April 2025, passed by the learned Judge, City Civil Court at Mazgaon, in Notice of Motion No.1158 of 2025 in Commercial Suit No.1115 of 2024, whereby the said Notice of Motion taken out by the Petitioner – Defendant No.1 for rejection of the plaint under the provisions of Order VII Rule 11(1)(a) and (d) of the Code of Civil Procedure, 1908 (‘the Code’) came to be dismissed.

3. Shorn of unnecessary details, the background facts can be stated as under :

3.1 The Respondent – Plaintiff is a partnership firm. It is engaged in the business of hospitality. The Petitioner – Defendant No.1 is a private limited company. Petitioner Nos.2 to 4 – Defendant Nos.2 to 4 are its directors. Defendant No.1 Company used to run a club-cum-resort under the name and style of ‘Eskay Resorts’, excluding ‘Eskay House and Hotel Building’ at Borivali (W), Mumbai (the suit property).

3.2 The Defendants were allegedly facing financial constraints. Defendant No.1 Company entered into a leave and licence agreement dated 21 June 2022 with the Plaintiff to give on licence premises described in Annexure A thereto. The Plaintiff claimed to have invested a sum of Rs.7,71,58,450/- for the renovation and repairs of the said premises, as there was an understanding between the parties that the premises would be let out for a longer period.

3.3 It is the claim of the Plaintiff that, in the meeting held on 11 October 2022, it was agreed and decided between the parties that the hospitality business in the suit premises would be jointly carried on by the parties and the income and expenses on account of the Club, would be shared between the Plaintiff and Defendants. As the business was run by the Plaintiff successfully, on 15 February 2023, Defendant No.1 terminated the Leave and Licence Agreement malafide and with a dishonest intent and called upon the Plaintiff to handover vacant and peaceful possession of the premises described in Annexure A to the said Agreement.

3.4 The Plaintiff, thus, instituted the suit for specific performance of the understanding arrived at and entered into between the Plaintiff and Defendants on 11 October 2022; for a declaration that the termination letter dated 15 February 2023, was illegal and invalid, and, in the alternative, for an order and direction to the Defendants to jointly and severally pay to the Plaintiff an amount of Rs.7,71,58,450/- along with interest @ 24% p.a., as and by way of refund of the amount spent and expenses incurred by the Plaintiff pursuant to the understanding between the parties.

3.5 In the said suit, Defendant No.1 took out a Notice of Motion seeking rejection of the plaint on the ground that there was no cause of action for the institution of the suit, and, as the Plaintiff was not the registered partnership firm, the suit was barred by the provisions contained in Section 69(2) of the Indian Partnership Act, 1932.

3.6 The Plaintiff resisted the application by filing an affidavit in reply. It was, inter alia, contended that there was no absolute bar to the institution of the suit by an unregistered partnership firm. The suit to enforce a statutory or common law right was tenable even at the instance of an unregistered partnership firm. Yet, by way of abundant caution, the Plain