Section 74 of the Indian Partnership Act, 1932 prevails over Section 69(2) and allows suits for rights accrued before the Act without registration.

Alfred Henry Lionel Leach, C.J.

1. The question which arises in this appeal is whether Section 74 of the Indian Partnership Act, 1932, which saves rights and remedies which existed before the Act came into force, should be read as being subordinate to Section 69(2), which requires a firm to be registered before instituting a suit to enforce rights, or whether Section 74 should prevail. The facts are simple. The appellant firm filed a suit in the Court of the District Munsif of Vellore claiming from the respondent a sum of Rs. 846-13-2 with interest. The respondent was in the employ of the appellant firm and was given charge of a branch office. It was said that he had overdrawn his account to the extent of the amount claimed. The defence was that the respondent was entitled to a share in the profits of the firm and that if the profits were taken into account there was no indebtedness. The firm had not been registered under the provisions of Section 58 of the Partnership Act when the suit was filed, but during its pendency registration was effected. When the respondent discovered that the appellant firm had not been registered before the institution of the suit he applied for leave to amend his written statement and include a plea that the suit could not be maintained by reason of the non-compliance with the Act. The amendment was allowed and an additional issue was framed. The District Munsif found that the respondent was indebted to the appellant firm in the amount claimed, but refused to grant a decree on the ground that the firm had not been registered before the plaint was filed. The suit was accordingly dismissed. The appellant firm appealed to the Subordinate Judge of Vellore, who concurred in the decision of the District Munsif. The appellant firm then appealed to this Court. The appeal was heard by Stodart, J., who also accepted the contention of the respondent that the suit was bad on account of the failure to register the firm before the suit was launched. The learned Judge, however, granted a certificate under Clause 15 of the Letters Patent and the question now comes before this Court for decision.

2. Section 69(2) of the Partnership Act states that no suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against a 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. Section 74, however, states that nothing in the Act or any repeal effected thereby shall affect or be deemed to affect inter alia:

(a) any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of this Act, or (b) any legal proceeding or remedy in respect of any such right, title, interest, obligation or liability or anything done or suffered before the commencement of this Act.

3. The question now under discussion arose in the case of Girdharilal Son & Co. v. Kappini Gowder AIR1938Mad688 , which came in the first instance before Pandrang Row and Venkataramana Row, J J. Pandrang Row, J., having in mind the fundamental principle that existing rights are not to be taken away except by an express enactment or by an enactment which clearly expresses this intention, held that Section 69(2) does not prevail over Section 74 and that a suit filed by a firm to enforce rights which had accrued before the commencement of the Act could be maintained in spite of the non-registration of the firm. On the other hand Venkataramana Rao, J., considered that Section 69(2) must prevail and was apparently of the opinion that Section 74 was merely inserted in order to save a suit which was pending at the time the Act came into force. As the result of the disagreement the case was re-argued before Varadachariar, J., who agreed with Pandrang Row, J.

4. The opinion of Pandrang Row, J. and Varadachariar, J., is supported by the decision of Sulaiman, C.J., in Danmal Parshotamdas v. Baburam