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1963 Supreme(P&H) 58
PUNJAB & HARYANA HIGH COURT
Mehar Singh and I.D.Dua JJ.
Moti Ram
Versus
Mst. Daropti Etc.
R.F.A. No. 28 of 1956,
Decided On : MARCH 20, 1963
Non-registration of a firm under the Indian Partnership Act bars a suit by or on behalf of the firm against a third party, unless the suit is for the enforcement of rights to sue for the dissolution of a firm or for accounts of a dissolved firm or any right of power to realize the property of a dissolved firm.
Headnote:
PARTNERSHIP ACT - SECTION 69 - NON-REGISTRATION OF FIRM - EFFECT ON SUIT - SECTION 74 - SAVING OF RIGHTS - DISSOLUTION OF FIRM - REALIZATION OF PROPERTY - LIMITATION ACT, ARTICLE 85 - MUTUAL, OPEN AND CURRENT ACCOUNT - ARTICLE 61 - PAYMENT - ADJUSTMENT OR SETTLEMENT OF ACCOUNTS.
Fact of the Case:
The plaintiffs, proprietors of a dissolved firm, filed a suit against the defendants for the recovery of Rs. 14,500/-. The defendants denied the transactions and pleaded non-registration of the plaintiff-firm under the Indian Partnership Act.
Finding of the Court:
The court held that the suit was within limitation under Article 85 of the Limitation Act, as the payments made by the plaintiffs on behalf of the defendants amounted to payment as contemplated by the Article. However, the court dismissed the suit on the ground that the plaintiff-firm was not registered under the Indian Partnership Act and, therefore, could not maintain the suit under Section 69 of the Act. The court also held that Section 74 of the Act did not save the suit as the Partnership Act was enforced in the erstwhile Pepsu State in April 1951, prior to the institution of the suit.
Issues: 1. Whether the suit was within limitation? 2. Whether the suit for realization of the property of the dissolved firm of the plaintiffs could be maintained even though the firm was not a registered one? 3. Whether Raghbar Dayal was or was a partner of the plaintiffs firm and is, therefore, a necessary party to the suit? 4. Whether both the defendants are partners of the firm Santa Mal Pitamber Parshad and Bishamber Oil Mills at Chandausi? 5. Whether the defendants made forward sale and purchase transactions of the rape-seed for Jeth 2006 through agency of the plaintiffs and suffered a loss of Rs. 23,196/7/- and after settlement of account the plaintiffs are entitled to recover Rs. 2,245/4/9 from them? 6. Whether the plaintiffs, in addition to the amount of loss, are also entitled to recover Rs. 398/13/9 from the defendants on account of miscellaneous expenses. 7. Whether the plaintiffs are entitled to Rs. 2,254/11/3/- or any other amount on account of interest at the rate of Rs. 6/- per cent per mensem?
Ratio Decidendi: 1. Article 85 of the Limitation Act applies to suits for the balance due on a mutual, open and current account where there have been reciprocal demands between the parties. 2. Section 69 of the Indian Partnership Act prohibits suits by or on behalf of unregistered firms against third parties, except for the enforcement of rights to sue for the dissolution of a firm or for accounts of a dissolved firm or any right of power to realize the property of a dissolved firm. 3. Section 74 of the Indian Partnership Act saves rights, obligations or liabilities acquired or incurred before the commencement of the Act, and legal proceedings in respect of those rights, obligations and liabilities.
Final Decision: The appeal was dismissed, but the parties were directed to bear their own costs.
I.D.Dua, J.
1. This is a plaintiffs regular first appeal directed against the judgment and decree of the Additional District Judge, Faridkot dismissing their suit for the recovery of Rs. 14,500/-. The facts giving rise to the suit as stated in the plaint are that the plaintiffs, proprietors of the dissolved firm Gopal Sahai Raghbar Dayal situated in Barnala Mandi, were carrying on the business of Commission Agents under the name mentioned above and the defendants, Proprietors of the firms Santa Mal Pitamber Parshad and Bashamber Nath Oil Mills, Chandausi carry on the business under the names just mentioned. The defendants entered into the following forward transactions through the commission agency of the plaintiff-firm at Barnala during the period beginning from 1st December, 1948 and ending with 10th March, 1949.
(1) On 1st December, 1948 (Maghar Sudi, Sambat 2005 Bk) sale of five hundred bags of Sarson weighing 1125 maunds; to be delivered in the month of Jeth, 2006 Bk)
(2) On 8th December, 1948 (Maghar Sudi 8, Sambat 2005 Bk) sale of one thousand bags of Sarson weighing 2250 maunds; delivery in Jeth 2006 Bk.
(3) On 20th December, 1948 (Poh Badi 4, Sambat 2005 Bk) sale of five hundred bags of sarson weighing 1125 maunds; delivery in Jeth 2006 Bk.
(4) On 12th January, 1949 (Poh Sudi 13 Sambat 2005 Bk), purchase of 500 bags of sarson weighing 1125 maunds; delivery in Jeth 2006 Bk, and
(5) On September March, 1949 (Phagan Sudi 10, Sambat 2005 Bk) purchase of 1500 bags of sarson weighing 3375 maunds : delivery in Jeth 2006 Bk.
2. On settlement of the above transaction, the defendants suffered a loss of Rs. 23,196/7/- which are due to the plaintiffs in addition to the incidental expenses incurred by the plaintiffs on behalf of the defendants. The plaintiffs received from the defendants a sum of Rs. 8,850/- through hundis and Rs. 2,500/- in cash in all amounting to Rs. 11,350/- on different dates upto 25th October, 1951 (Katik Badi 10, Sambat 2008). The plaintiff also incurred miscellaneous expenses regarding hundis and telegrams amounting to Rs. 398/13/9. Entries regarding these business dealings were duly made in Khata bahi, rokar bahi, nakal bahi and khata saodajat naka bahi maintained by the plaintiffs as required by the usage prevailing in Barnala Mandi. After deducting the amount received, the balance outstanding due from the defendants has been claimed to be Rs. 12,245/4/9. Adding to this sum interest at the rate of Rs. -/8/- per cent per mensem in accordance with the usage, which comes to Rs. 2,254/13/4, in all the total amount of Rs. 14,500/- has been claimed to be due from the defendants to the plaintiffs and it is for this amount that the suit was instituted.
3. On behalf of the defendants, separate written statements were filed, one by Bashamber Nath and the second by Pitamber Parshad. Both of them however, contained objections on the basis of merits as also non-registration of the plaintiff-firm under the Indian Partnership Act. Pitamber Parshad was stated by Bishember Nath in his written statement to be the Proprietor of the firm Santa Mal Pitamber Parshad situate at Chandausi. Bishamber Nath himself disclaiming all concern with the said firm. Bishamber Nath also denied that the firm Bishamber Nath Oil Mills had over entered into any transaction with the plaintiff-firm.
4. In the written statement filed by Pitamber Parshad describing himself to be a proprietor of the firm Santa Mal Pitamber Parshad, in addition to the preliminary pleas contained in Bishamber Naths written statement, there is a denial of the allegations relating to the sarson transaction. It has, however, been asserted in this written statement that Santa Mal Pitamber Parshad had entered into some cotton transactions with the plaintiff firm, regarding which huge amount was due from the plaintiffs in respect of which right to file a separate suit had been reserved.
5. The pleas of the parties gave rise to the following issues :-
1. Is the suit
