High Court of Judicature at Madras
The Honourable Mr. Justice E. Padmanabhan
M/s. K.R.M. Money Lenders rep by its Power Agent Karuppiah
Versus
Mr. A. Manoharan @ Doss
Second Appeal No. 771 of 1998
Decided On : 15-04-1999
PARTNERSHIP ACT - SECTION 69(2) - REGISTRATION OF FIRM - SUIT BY UNREGISTERED FIRM - MAINTAINABILITY - JURISDICTION - POWER OF ATTORNEY - COMPETENCY - INHERENT DEFECT - WAIVER - DECREE AGAINST OTHER DEFENDANTS - VALIDITY.
Fact of the Case:
Plaintiff, a partnership firm, filed a suit for declaration of title and possession of suit property, and for recovery of rent from defendants 1 to 8. Defendant 9, who claimed no interest in the suit property, was impleaded as a formal party. The trial court decreed the suit in favor of the plaintiff. On appeal, the first appellate court allowed the appeal of defendant 9 and dismissed the suit against him, while confirming the decree against defendants 1 to 8 and 10 and 11. The plaintiff preferred a second appeal.
Finding of the Court:
The court held that the suit was not maintainable as the plaintiff firm was not a registered partnership firm, as required under Section 69(2) of the Partnership Act. The court further held that the power of attorney granted to the person who instituted the suit was incompetent, as it was not executed by the plaintiff firm. The court also held that the inherent defect in the institution of the suit could not be waived by the defendants, and that the decree against the other defendants could not be upheld when the suit itself was non est in law.
Issues: 1. Whether the suit was maintainable by an unregistered partnership firm? 2. Whether the power of attorney granted to the person who instituted the suit was competent? 3. Whether the inherent defect in the institution of the suit could be waived by the defendants? 4. Whether the decree against the other defendants could be upheld when the suit itself was non est in law?
Ratio Decidendi: 1. Section 69(2) of the Partnership Act bars a suit by an unregistered partnership firm. 2. A power of attorney granted to a person who is not a partner of the firm is incompetent to institute a suit on behalf of the firm. 3. An inherent defect in the institution of a suit, such as the failure to register the partnership firm, cannot be waived by the defendants. 4. A decree against some defendants cannot be upheld when the suit itself is non est in law.
Final Decision: The court set aside the judgment of the two courts below and dismissed the entire suit, holding that the plaint was non est and the suit was not maintainable due to the statutory bar under Section 69(2) of the Partnership Act.
1. The plaintiff, a partnership firm who had succeeded before the trial court and lost before the first appellate court is the appellant in this second appeal. This second appeal is directed against the judgment and decree dated 20.1.1998 made in A.S. No. 70 of 1997 on the file of the Principal District Judge, Chengalpattu in setting aside the judgment and decree dated 31. 1997 made in O.S.No. 67 of 1984 on the file of the Sub Court, Thiruvellore.
2. This court ordered notice of motion to the respondents as the controversy requires to be decided in this second appeal lies in a narrow compass and it is not necessary to refer to the exhibits as such.
3. The question that has been raised before this court being whether the lower appellate court has acted illegally in framing an issue and deciding the same against the appellant without a pleading or proof with respect to either registration of the firm or the bar as to adjudication of claim at the instance of an unregistered firm without raising a jurisdictional ground in the memorandum of appeal.
4. It was further contended that the lower appellate court has acted with illegality in dismissing the suit against the 9th defendant while confirming the judgment against 10th and 11th defendants, who claimed to be the tenants under the 9th defendant. Incidentally, it had also been contended that the 9th defendant who had not claimed any right over any portion of the suit property and who had been impleaded as a formal party could not challenge the decree after having admitted that he is not claiming any portion of the suit property, nor he has any interest in the suit property nor he is an aggrieved party.
5. The plaintiff KRM Money Lenders represented by Karuppiah, its power agent claiming to be a registered partnership firm carrying on business at 7/5, Thatha Muthiappan Street, Chennai-1 instituted the suit O.S.No. 67 of 1984 for a declaration of plaintiff’s right and title to the suit properties and for possession of the same besides for recovery of Rs. 10, 800 from defendants 1 to 8 and for other incidental reliefs.
6. According to the plaintiffs, the defendants 1 to 4 along with their father Arumugham executed a mortgage by conditional sale on 28. 1973 in favour of the plaintiff for a sum of Rs. 10, 000, on valid consideration received in cash for mortgaging the suit property with the superstructure thereon for clearing the earlier mortgage debts dated 12. 1960, 9. 1962, 22. 1965 and 24. 1967 and transferred the possession of the schedule mentioned properties to the plaintiff with all rights of easement and privileges thereto and to hold the same until repayment of the said sum of Rs. 10, 000 with interest at 9% per annum on condition that on repayment within 7 1/2 years from the date of deed dated 28. 1973 the plaintiff will reconvey and in the event of non payment within the stipulated time, the plaintiff shall become the absolute owner of the schedule mentioned properties free from the right of redemption of the defendants 1 to 4. It is the claim of the plaintiff that the plaintiff has become the absolute owner on and from 3. 1981. It is further pleaded by the plaintiff that the defendants 1 to 4 and their deceased father have not paid the interest every month as agreed and as the defendants 1 to 4 have failed to repay the amount, the plaintiff has foreclosed the right of redemption of the defendants 1 to 4 and consequently the sale has become absolute. It is further pleaded by the plaintiff that defendants 5 to 8 are the tenants in occupation of the premises, who have committed default in payment of rent due to the plaintiff and defendants 5 to 8 have been paying rental dues to the defendants 1 to 4 despite legal notice. Hence the plaintiff is entitled to recovery of rental dues or in the alternative damages for use and occupation from the defendants at the rate of Rs. 300 per month for the past three years up to the date of filing of the suit. The suit sch
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