Subsequent registration of a partnership firm during the pendency of a suit cannot validate the proceedings and a suit filed by an unregistered partnership firm is liable to dismissal under Section 69 of the Partnership Act.

Falshaw, J.

1. This is an appeal by a joint Hindu family firm Des Raj-Prem Chand of Kaithal against a decree for Rs. 5288/- passed by the Subordinate Judge of Kaithal in favour of another firm of the same place which described itself in the plaint as the registered firm Hira Lal-Kali Ram alias Krishna Dehati Store.

2. The plaintiffs case was that on the 22nd of October 1945, when the defendant firm had to deposit a sum of Rs. 8500/- with the cloth Association at Kaithal in connection with its quota of cloth the defendant firm had only Rs. 3500/- available and so borrowed Rs. 5000/-from the plaintiff firm. The sum of Rs. 8500/-was then deposited with the Cloth Association through its munim Ram Sarup P. W. 2 on the same day. No acknowledgment of the debt was taken from the defendant firm and the main evidence of the plaintiff firm consisted of en-tries in its own account books. It was alleged that several oral demands were made from the defendant firm for the repayment of the amount, but as these were refused, the present suit was instituted on the 22nd July 1946, admittedly with-out any written notice of demand having been sent to the defendant firm. The defence was a flat denial that any loan of Rs. 5000/- had been taken from the plaintiff firm by the defendant, and the plea was also raised that the plaintiff firm was not a registered firm and so could not institute the suit in view of the bar contained in section 69 of the Partnership Act, the suit being liable to dismissal on this ground alone. Issues were framed as follows:

(1) Whether the plaintiff firm is registered under the Partnership Act? If not what is its effect?

(2) Whether Ishwar Chand one of the partners of the defendant firm borrowed Rs. 5000/- in cash as parol debt on Katik Badi 1, Sambat 2002 equal to the 22nd of October 1945 from the plaintiffs?

(3) Whether the plaintiffs are entitled to any interest according to usage or by way of damages? If so at what rate?

3. The lower Court overruled the defendants contention on the first of these issues, and found, though not without some hesitation, that the loan was proved and that the plaintiff was entitled to interest at the rate claimed by him.

4. From the brief mariner in which the first issue has been dealt with by the learned Subordinate Judge it would appear that the main point involved was not considered at all. The plaintiff apparently produced the certificate, Exhibit P-4, in proof of the registration of the firm, and the lower court thought that it was enough to settle the matter although the date of the certificate of registration, Exh. P. 4. is the 18th of December 1946, i.e., some five months after the suit was instituted and two months after issues had been framed in the suit. From this it is quite clear that when the suit was instituted the plaintiff firm was not a registered firm and so was not under the terms of section 69 of the Partnership Act entitled to institute the suit, and the question whether the subsequent registration of the firm during the pendency of the suit could validate the proceedings has not been considered at all. On this point there are decisions of most of the High Courts in India to the effect that subsequent registration of the plaintiff firm pendente lite could not validate the proceedings and that a suit filed by an unregistered partnership firm was liable to dismissal on this ground alone. The only three decisions in which a contrary view has been expressed, -- Varadarajulu Naidu V/s. Rajamanika Mudaliar, A. I. R. 1937 Mad. 767. -- Jakiuddin Badruddin V/s. Vithoba Jagannath. A.I.R. 1939 Nag. 301, and -- Radha Charan V/s. Matilal, 41 Cal. W. N. 534, all appear to have been overruled by the subsequent decisions of the same High Courts. In particular the decisions in AIR 1937 Mad 767 was considered in -- Poonuchami Goundar V/s. Muthusami Goundar, I.L.R. (1942) Mad. 355 by the learned Chief Justice Sir Lionel Leach and Happell, J., who held that registration o£ the firm