IMPORTANT POINT
The court established that for a partnership firm to maintain a suit, it must be registered, and the names of the partners as of the date of filing must be recorded in the Register of Firms, as mandated by Section 69(2) of the Indian Partnership Act.

JUDGMENT :

Sathish Ninan, J.

The suit for money under a contract of insurance, was dismissed by the trial court. The plaintiffs are in appeal.

2. The plaintiffs are two partnership firms. The second plaintiff is stated to be a sister concern of the first plaintiff. The plaintiffs are represented by its common Managing Partner. The firms are engaged in seafood processing business. Plaintiffs 1 and 2 had entered into contracts of insurance with the first defendant Insurance Company for Rs.1.20 Crores and Rs.70 lakhs respectively. The second defendant is the Bank from which the plaintiffs had availed credit facilities on hypothecation of the stock in trade. The plaintiffs had a common storage facility. On 22.07.1994, there occurred a major fire in the storage room, resulting in huge damage. Immediately, the incident was intimated to the defendants. The first defendant, through its surveyor, estimated the loss of the first plaintiff at Rs. 51,62,498/-, and of the second plaintiff at Rs. 36,72,091. Though the claim of the plaintiffs were for a higher amount, they acceded to the assessment. However, the Insurance Company repudiated the entire claim. Hence the suit was filed for realisation of the damages, with interest at 13%, it being the rate payable to the second defendant Bank by the plaintiffs under the credit facilities.

3. The first defendant contended that the plaintiffs firms are unregistered and hence the suit is barred under Section 69(2) of the Indian Partnership Act, 1932 (for short, “the Act”). It was contended that the suit is bad for mis-joinder of parties. The repudiation of the claim was justified contending that the fire incident was not an accident but was caused by the plaintiffs themselves though their deliberate and fraudulent action, to secure insurance claim.

4. Before the trial court, the plaintiffs examined PWs.1 to 16 and marked Exts.A1 to A46. On the side of the first defendant, DWs.1 to 4 were examined and Exts.B1 to B19(f) were marked. The trial court negatived the defence plea that the plaintiffs had deliberately caused the fire incident. However, the suit was held to be barred under Section 69(2) of the Act and dismissed the same.

5. We have heard Sri.P.B.Krishnan, the learned Senior Counsel for the appellants and Sri.George Cherian, the learned Senior Counsel on behalf of the first respondent.

6. The points that arise for determination are :-

(i) Is the finding of the trial court that the suit is barred under Section 69(2) of the Act, correct in law?

(ii) Was the trial court right in negativing the plea of mis-joinder of parties?

(iii) Does the finding of the trial court with regard to the entitlement of the plaintiffs for the insurance claim warrant any interference?

7. The trial court found that the plaintiffs firms were registered as early as in the year 1978 and 1990 respectively. The registration is evidenced by Exts.A31 and A32. However, finding that the names of the persons who were partners of the firms as on the date of filing of the suit were not shown in the Register of Firms as partners, held the suit to be barred under Section 69(2) of the Act. The finding that the names of the partners as on the date of suit, did not find a place in the Register of Firms, is not disputed.

8. Since the arguments are centered around the understanding of Section 69(2), it is extracted hereunder:-

“S. 69. Effect of non-registration.-

(1) ...

(2) No suit to enforce a right arising from a contract shall be instituted in any court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.”

On a plain reading of the Section it is evident that the mandates thereunder to institute a suit by a partnership firm are, as on the date of filing of the suit, (i) the firm shall be a registered one, and (ii) the persons suing are or have been shown in the register of firms as partners in the firm. The first req