Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(Del) 3480

IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
Ankit Bansal – Appellant
Versus
S Paramjeet Singh Khurana – Respondent
C.R.P. 81 of 2023 & CM APPL. 15612 of 2023 & CM APPL. 15613 of 2023
Decided On : 18-07-2023

Advocates appeared:
Mr. Vishal Ranjan and Mr. Sanjay Jha, Advocates, for the Petitioner.
Nemo, for the Respondent.

The exceptions under Section 69(3)(a) of the Indian Partnership Act, 1932, apply to suits seeking rendition of accounts between partners after the dissolution of a firm.

Headnote:
CPC - Challenge to Order VII Rule 11 - Indian Partnership Act, 1932 - Section 69 - Summary Judgment
Fact of the Case:

The petitioner sought rejection of the plaint under Order VII Rule 11 of the CPC on the ground that the suit of the respondent was arising out of an unregistered partnership firm, invoking Section 69 of the Indian Partnership Act, 1932. The respondent objected to the application, citing the notarized partnership deed.
Finding of the Court:

The learned District Judge dismissed the objections, citing exceptions under Section 69(3)(a) of the Partnership Act, which extends to cases of enforcement of rights to sue for dissolution of a firm or for accounts of a dissolved firm. The court emphasized that the cause of action arose from the dissolution of the partnership firm.
Issues: The main issue was the maintainability of the suit under Order VII Rule 11 of the CPC, based on the non-registration of the partnership firm and the applicability of Section 69 of the Partnership Act.
Ratio Decidendi: The court held that the exceptions under Section 69(3)(a) applied to the suit, as it primarily sought rendition of accounts between partners after the dissolution of the firm. The court emphasized that the merits of the case need not be considered at the stage of maintainability or rejection of the plaint.
Final Decision: The revision petition was dismissed, as the court found no error in the impugned order and concluded that there was no basis for interference under Section 115 of the CPC.

ORDER

Chandra Dhari Singh, J. (Oral)--The instant revision petition under Section 115 of the Code of Civil Procedure, 1908 (hereinafter "CPC") has been filed on behalf of the petitioner/revisionist for challenging the validity, legality and correctness of the order dated 14th February, 2023 passed by learned District Judge (Commercial)-03, District Court, Saket, New Delhi in CS (COMM) No. 217 of 2020, by way of which the application of the petitioner filed under Order VII Rule 11 of the CPC has been dismissed along with cost.

2. The suit between the parties before the learned District Judge was filed by the respondent herein for recovery of a sum of Rs.88,30,310/- along with pendente lite and future interest @ 24% p.a. and permanent and mandatory injunction against the petitioner herein. In the said suit, the petitioner before this Court raised objections to its maintainability and thus, sought rejection of the plaint under Order VII Rule 11 of the CPC on the ground that the suit of the respondent herein was arising out of the partnership firm which was not registered with the Registrar of Firms and hence, attracts the provisions of Section 69 of the Indian Partnership Act, 1932 (hereinafter "Partnership Act"). On the other hand, the respondent herein objected to the application on the ground that the partnership deed between the parties was duly notarised.

3. The said application under Order VII Rule 11 of the CPC was dismissed by the learned District Judge vide order dated 14th February 2023 while also imposing a cost of Rs.10,000/-. The petitioner is before this Court upon being aggrieved of the same.

4. The learned counsel appearing on behalf of the petitioner submitted that the impugned order has been passed without appreciating the provisions under the Partnership Act. It is submitted that a plain and simple reading of the plaint and its prayer revealed that the suit filed is for recovery of the amount, without settling the accounts that the respondent herein had invested in the partnership firm. The settled position of law is that till the debts and liabilities of the firm have been fully paid off, no partner can claim any property as his own nor can he claim that he has any specific share or interest in any property of the firm, however, the respondent, i.e., the plaintiff before the Court below, has preferred the suit without settling his accounts.

5. It is further submitted on behalf of the petitioner that the learned District Judge failed to consider that Section 69 of the Partnership Act provides that no suit shall be instituted to enforce a right arising from a contract on a behalf of any person(s) suing as a partner in a firm against the firm or any person(s) being the partner, unless the firm is registered, however, in the case of the instant parties, there was no such registration of their partnership firm.

6. The learned counsel also submitted that it is a settled proposition of law that for deciding the application under Order VII Rule 11 of the CPC, the Court has to primarily look into the plaint only and by a plain and simple reading of the plaint filed by the respondent, it is evident that the respondent is seeking nothing but recovery of all the amount that he had invested in the partnership firm, along with interest, and nowhere the rendition of the accounts had been sought.

7. It is submitted that the impugned order is contrary to the legal position that has been settled by way provisions under the law as well as judicial pronouncements. It is also submitted that the impugned order suffers from errors that are apparent on the face of the record and hence, the impugned order dated 14th February 2023 is liable to be set aside.

8. Heard the learned counsel for the petitioner and perused the record.

9. The petitioner/revisionist has preferred the instant revision petition against the order of the learned District Judge in the suit initiated by the respondent and pending between the parties. By way of