IMPORTANT POINT
An unregistered partnership firm cannot file a suit for enforcement of a contract against a third party, as per Section 69 of the Indian Partnership Act.

JUDGMENT :

Biren Vaishnav, J.

1. This first appeal has been filed by the original plaintiff under Section 96 of the Code of Civil Procedure challenging the legality and validity of the order passed by the learned 7th Additional Senior Civil Judge, Bhavnagar below Ex. 14 in Summary Suit No. 11 of 2014. By an order dated 15.12.2015, the learned Civil Judge has entertained the defendant’s application under Order 7 Rule 11 (a) of the Code of Civil Procedure and dismissed the summary suit on the ground that the suit was barred by Section 69 of the Indian Partnership Act, 1932 (‘The partnership Act’ for short).

2. Facts in brief are as under:

2.1 It was the case of the plaintiff – appellant that during the course of business transactions, since the year 2009, with the opponents, for the year 2009-10 the defendant – opponents had made payments of Rs.1,18,18,142/- against a total outstanding of Rs.1,44,12,937/-. Therefore, Rs.25,94,795/- were outstanding. Similarly for the year 2010-11, during the course of business transactions when the defendants had ordered goods amounting to Rs.7,85,52,604/- from the appellants and the goods were delivered to them, after a lot of dilly dallying, the opponents paid an amount of Rs.1,77,60,840/-.

2.2 It is the case of the appellants in the plaint that on 29.03.2011, on a request made by the defendants the appellants came to Vadodara for collecting payments. On 31.03.2011, they were compelled to enter into one settlement as a result of which the defendant – opponents transferred Rs.74,51,000/- out of the total amount of Rs.1,77,60,840/-. The appellant’s case therefore in the plaint was that they are entitled to Rs.1,03,09,845/- from the defendants. A summary suit was accordingly filed being Summary Suit No. 11 of 2014. On a summons issued by the trial court, the defendants – opponents herein filed an application for Leave to Defend under Order 37 Rule 3(5) which was allowed on 22.06.2015. On that very date they filed an application under Order 7 Rule 11 of the Civil Procedure Code, 1908 (for short ‘the CPC’) interalia stating that in view of the fact that the firm was an unregistered partnership firm on the date of filing of the suit, the suit was barred under the provisions of Section 69 of the Partnership Act. The application was allowed giving rise to the present appeal.

3. Mr. Hriday Buch, learned counsel for the appellant would submit that the order entertaining and allowing the application under Order 7 Rule 11 of CPC is bad. Reading Section 69 of the Partnership Act, Mr. Buch would submit that what is evident from the plaint when read in juxtaposition with the provisions of Section 69 is that the provisions would arise only when the suit is for a business transaction arising out of a contract of the firm which is not the case on hand. He would submit that what is evident from reading the order impugned before this court is that the transaction in question even according to the trial court was entered into the period prior to 01.04.2011, and when the trial court itself had observed that based on the compromise deed executed, when it was prima facie a case that the business was entered into between the plaintiffs and the defendants where the plaintiff was the owner of a proprietary firm, merely because the firm was subsequently converted into a partnership, that itself would not bar the suit on the ground that the firm was unregistered.

3.1 Mr. Buch would submit that the transactions that occurred on 31.03.2011 were business transactions between the proprietary firm and the defendants and the dispute essentially was of transactions in the nature of contracts for enforcing a right arising from a contract as a proprietary firm and therefore merely because the suit was filed by an unregistered partnership firm will itself not bar the suit. In support of his submission, Mr. Buch would rely on a decision of the Apex Court in the case of Purushottam and Another vs. Shivraj Fine Arts Litho Works and Others re