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2004 Supreme(Mad) 136

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE N.KANNADASAN
K.C.Palanisamy - Appellant
Versus
The Registrar of Firms - Respondents
WRIT PETITION No.34553 of 2003 and WPMP No.1233 of 2004
Decided On : 07 February 2004

Advocates Appeared:For The Petitioner:Elizabeth Seshadri for Iyer and Thom, Advocates. For The Respondent: N.G.Kalaiselvi, Special Govt. Pleader.

The central legal point established in the judgment is that when the Registrar fails to exercise statutory duties under the Partnership Act, the court is entitled to grant a positive direction.

Headnote:

Partnership Act - Registration of Firm - Section 64 - Rule 7-A of the Tamil Nadu Partnership (Registration of Firms) Rules, 1951 - The court discussed the provisions of Section 64 of the Partnership Act and Rule 7-A of the Tamil Nadu Partnership (Registration of Firms) Rules, 1951. It highlighted the discretionary powers of the Registrar to make inquiries or investigations, especially in cases of pending disputes among partners. The court also referred to a judgment of the Calcutta High Court, emphasizing that when the Registrar fails to exercise statutory duties, the court is entitled to grant a positive direction.

Fact of the Case:

The petitioner, a Managing Partner of a registered firm, applied for a change in the name of the partnership firm but inadvertently filed the wrong form, leading to the entry of dissolution of the firm in the register of firms. The petitioner sought rectification of the register, which was rejected by the respondent.

Finding of the Court:

The court found that the respondent had not provided any reasons for rejecting the representation of the firm and had not exercised the powers under Section 64 of the Act. Citing a judgment of the Calcutta High Court, the court granted relief to the petitioner, quashed the impugned order, and directed the respondent to consider the representation of the petitioner in terms of Section 64 of the Act.

Issues: The issues involved the incorrect filing of the form leading to the entry of dissolution of the firm in the register of firms, the rejection of the petitioner's representation, and the failure of the respondent to exercise powers under Section 64 of the Act.

Ratio Decidendi: The court's decision was based on the failure of the respondent to provide reasons for rejecting the representation and the failure to exercise statutory duties under Section 64 of the Act, as highlighted in the judgment of the Calcutta High Court.

Final Decision: The impugned order of the respondent was quashed, and the respondent was directed to consider the representation of the petitioner in terms of Section 64 of the Act and to remove the entry relating to the dissolution of the firm within a specified period.

Judgment :-

By consent of parties, the writ petition itself is taken for final hearing.

2. The petitioner is the Managing Partner of a registered firm by name M/s.United Builders Consultants (hereinafter referred to as the firm). He has been carrying on the business of promoters of real estate properties for past 15 years. Initially, the partners of the firm intended to register the firm as a Company under the provisions of The Companies Act, 1956. It appears that an agreement has been entered into by the partners for such conversion. On 24.7.2002, the partners of the firm had applied to the Registrar of Companies, Coimbatore, for registering the firm as a Company under the name and style of United Hi-Tech Builders (Coimbatore) Private Limited. However, the partners were informed that they were entitled to get the existing name of the firm with just the words 'Private Limited' added to it. They were further informed that in the event of incorporation of the Company under a changed name they must take steps to change the name of the firm. Under the said circumstances, the firm intended to register a change in the name of the partnership firm and necessary application was submitted before the Registrar of firms. It is further contended that on 19.11.2002, the petitioner inadvertently filed Form-V prescribed under the Partnership Act, 1932 (hereinafter called as the "Act") instead of furnishing the particulars of the change of name of the firm, it was wrongly stated therein that "the firm United Builders Consultants has been dissolved with effect from 31.03.2002". On the above basis, the respondent has made an entry in the register of firms that the firm was dissolved.

3. The petitioner has realised the mistake later on and sent a letter dated 14.7.2003 signed by all the seven partners of the firm accompanied by an affidavit and requested the respondent to make necessary correction on the ground that the above mistake was bonafide. The partners of the firm have prayed for a rectification of register of firms by removing the entry relating to dissolution of the firm by invoking the powers conferred upon the registrar under Section 64 of The Partnership Act, 1932. The respondent by the impugned communication dated 10.9.2003 has rejected the request of the petitioner, which is challenged in the above writ petition.

4. The learned Special Government Pleader, Mrs.N.G.Kalaiselvi contended that the respondent has not committed any mistake and on the other hand, he has acted upon in terms of the provisions of The Partnership Act, 1932. Inasmuch as the petitioner has submitted an application under Form-V by furnishing the details as contained therein, the respondent is left with no other option but to delete its name from the register of firms.

5. I have considered the rival contentions of the parties.

6. The counsel for the petitioner has submitted that inasmuch as a power is available to the respondent under Section 64 of the Act, the respondent ought to have exercised its discretion on receipt of a representation alongwith the supporting materials, more particularly, the affidavit signed by all the partners. There is nothing on record to suggest that the partners of the firm are having any dispute among themselves and the mistake was purely due to inadvertence. In fact, Rule 7-A of the Tamil Nadu Partnership (Registration of Firms) Rules, 1951 empowers the respondent to make such enquiries or investigation, in case of any pending dispute. In the instant case, even though no dispute is pending and the respondent is armed with the power, by virtue of the Rule 7-A of the Rules, it has not exercised its discretion which causes very serious loss to the business of the firm. Learned counsel has also relied upon the judgment of the Division Bench of the Calcutta High Court in Durga Prosad vs. Registrar of Firms, West Bengal (AIR 1966 CALCUTTA 573). By placing reliance on the said judgment, the counsel prays that the impugned order is liable to be








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