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1954 Supreme(P&H) 109

PUNJAB & HARYANA HIGH COURT
Bhandari and Falshaw JJ.
V S Bahal
Versus
S L Kapur And Co
of,
Second Appeal No. 275 of 1952,276 of 1952,
Decided On : NOVEMBER 16, 1954

A suit by an unregistered partnership firm or a firm with partners not shown in the Register of Firms is not maintainable, and the defect cannot be cured by subsequent registration or addition of partners' names.

Headnote:

PARTNERSHIP ACT - SECTION 69 (2) - REGISTRATION OF FIRM AND PARTNERS - SUIT BY UNREGISTERED FIRM OR BY FIRM WITH PARTNERS NOT SHOWN IN REGISTER - VALIDITY - SUBSEQUENT REGISTRATION OR ADDITION OF PARTNERS' NAMES - EFFECT.

Fact of the Case:

A partnership firm, S. L. Kapur and Co. , instituted two suits against Bhagwan Das and Dr. V. S. Bahal for arrears due from them as occupants of rooms in the Coronation Hotel run by the firm. The defendants contested the suits on the ground that the plaintiff firm was not registered and that the suits could not proceed under Section 69 (2) of the Indian Partnership Act, which requires a firm to be registered and the persons suing to be shown as partners in the Register of Firms.

Finding of the Court:

The trial court and the lower appellate court held that the suits could proceed despite the firm's failure to register and the absence of one of the partners' names in the Register of Firms. The court found that the firm had been duly registered in 1940 and that the withdrawal of one of the partners in 1942 did not affect the firm's registration. However, the court also found that the firm's subsequent addition of a new partner in 1946 and the failure to notify the Registrar of this change until after the suits were instituted constituted a defect in the form of the suit.

Issues: 1. Whether the withdrawal of a partner in 1942 amounted to a dissolution of the firm, necessitating a fresh registration. 2. Whether a suit could be filed on behalf of the firm despite the addition of a new partner whose name was not communicated to the Registrar until after the suit was instituted.

Ratio Decidendi: 1. The withdrawal of a partner in 1942 did not amount to a dissolution of the firm, as the two remaining partners continued to carry on the business in the same name. The notification to the Registrar under Section 63 of the Act that the partner had ceased to be a partner was sufficient compliance with the law. 2. A suit cannot be filed on behalf of an unregistered partnership firm or a firm with partners not shown in the Register of Firms. The defect of not registering the firm or not showing all partners in the Register of Firms cannot be removed pendente lite.

Final Decision: The appeals were allowed, and the plaintiff's suits were dismissed. However, the parties were ordered to bear their own costs.

Judgment

, J.

1. The circumstances giving rise to these two second appeals (Regular Second Appeals Nos.275 and 276 of 1952) are as follows. Separate suits were instituted by a firm named Messrs. S. L. Kapur and Co. , through Maharaj Narain managing partner against Bhagwan Das and Dr. V. S. Bahal appellants for Rs.3,500/- and for Rs.1,319/15/-respectively. In both the cases the sums were claimed as arrears due from the defendants as occupants over a long period of certain rooms in the Coronation Hotel at Delhi which is run by the plaintiff firm. The suits were contested by the defendants on all possible grounds but both the suits were decreed by the trial Court, and the appeals of both the defendants were dismissed by the 1st additional District Judge except to the extent that the decree against Dr. V. S. Bahal was reduced from Rs.3,500/- to Rs.3,000/-. The defendants have filed these second appeals.

2. The only point now raised in the appeals is whether the suits could proceed in view of the provisions of Sec.69 (2), Indian Partnership Act, which reads: "69 (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 Register of Firms as partners in the firm"

3. The facts relevant for the decision of this point are as follows: The firm S. L. Kapur and Co. , was originally registered under the Act on 5-4-1940 when Maharaj Narain through whom the present suits have been instituted was shown as a partner along with Harjas Rai and Feroze Din. In 1942 Harjas Rai ceased to be a partner. The resolutions of the partners of the firm dated 6-9-1942 Ex. a and 24-10-1942 Ex. b show that in fact the partnership was dissolved and that harjas Rai ceased to have anything to do with the business of the firm at Delhi including the coronation Hotel, and accounts were settled between them, and it also appears that out of the liquor licences in the name of the partners the one at Delhi was henceforth taken in the name of maharaj Narian and Feroze Din, while the licence at Kanpur was thereafter in the name of harjas Rai alone, who was to carry on his own business there. Copies of these resolutions were sent to the Registrar of Partnerships in November 1942 under section 63 with an intimation that Harjas Rai had ceased to be a partner. Thereafter in 1946 maharaj Narian and Feroze Din joined one Sultan Ahmad with them as a partner. This change in the constitution of the firm, however, was only notified to the Registrar in July 1951, the present suits having been instituted about a year before that in July 1950.

4. Both the defendants raised the plea that the plaintiff firm was not a registered firm and that maharaj Narian was not shown in the Register as a partner in the firm and, therefore, the suit could not proceed under Sec.69 of the Act. The issue was framed in each case. "is the plaintiff firm a registered firm? If not, to what effect?" the trial Court found that the firm had been duly registered in the year 1940 and the only aspect of the matter which it considered was the effect of the withdrawal of Harjas Rai in 1942, regarding which it was held that this did not affect the plaintiffs right to bring the suits.

5. The matter was more exhaustively considered by the lower appellate Court, which agreed with the trial Court regarding the effect of the withdrawal of Harjas Rai, but also went into the question of the effect of the fact that in 1946 Maharaj Narian and Feroze Din had joined with them Sultan Ahmad as a partner and had not notified the Registrar of the change in the constitution of the firm under Sec.63 of the Act until after the suit had been pending for a year or so. It seems that in fact the details regarding the joining of Sultan Ahmad as a partner and the notification of this fact to the Registrar in July 1951 were only brought out in certain evidence which was led before the





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