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IN THE HIGH COURT OF MADHYA PRADESH (INDORE BENCH)
Abhay M. Naik
Ashishverma
Vs.
Neeraj Vyas & Ors.
C.R. No. 96/2011
Decided On: 12.07.2011
Partnership Firm - Suit Maintainability - The Indian Partnership Act, 1932, Section 69
Fact of the Case:
Plaintiff filed a suit against the defendant, claiming partnership in a business firm and seeking accounts and profits. Defendant contended that the suit was not maintainable as the partnership firm was unregistered.
Finding of the Court:
The court found that the suit for share in the partnership business arose from a contract of partnership and was not covered by any exceptions provided in Section 69 of The Indian Partnership Act, 1932. The court held that the suit was not maintainable due to the absence of firm registration.
Issues: The main issue was the maintainability of the suit in the absence of firm registration as per Section 69 of The Indian Partnership Act, 1932.
Ratio Decidendi: The court relied on the provisions of Section 69 of The Indian Partnership Act, 1932, which stipulate that no suit to enforce a right arising from a contract of partnership shall be instituted unless the firm is registered.
Final Decision: The civil revision was allowed, and the impugned order was set aside. The court held that the plaint was liable to be rejected under Order 7 Rule 11 CPC.
Abhay M. Naik, J.
1. This civil revision has been preferred against the order dated 17.2.2011 passed by the Court of Civil Judge, Class-I, Shajapur, in Civil Suit No. 3A/2004, dismissing thereby application under Order 7 Rule 11 CPC.
2. Briefly stated relevant facts are that plaintiff No. 1 has instituted a suit mainly with allegations that the plaintiff and defendant/revisionist constituted a partnership firm in the name and style M/s Genius Computers, Shajapur with equal shares in it i.e. 50% each. An agreement to this effect was duly executed between them on 4.9.1999. Plaintiff cooperated in running of the said partnership business. After 25.5.2003, defendant No. 1 caused obstruction in the partnership business firm. Plaintiff, thereafter made a demand for accounts and further for half of his profits in the said partnership firm. Defendant No. 1 declined to make payment, hence the suit with following reliefs:-
I) It may be declared that defendant No. 1 and plaintiff are partners in the business of the said firm to the extent of 50% each and the plaintiff, being a partner to the extent of 50%, is entitled to manage affairs of the partnership firm.
II) Defendant/respondent shall be directed to submit accounts and profits & loss statement.
III) Preliminary decree may be passed for the aforesaid and other reliefs claimed in the plaint.
3. In the written statement, it has been inter-alia stated that the said firm is an unregistered partnership firm and the suit in absence of registration of firm is not maintainable.
4. Learned trial Judge, after hearing the arguments, dismissed the application under Order 7 Rule 11 CPC, holdirig thereby the suit to be quite maintainable. Aggrieved by same, present civil revision has been preferred.
5. Shri Sameer Athwale, learned counsel appearing for the revisionist and Shri Anand Singh, learned counsel appearing for respondent No. 1 made their respective submissions, which have been considered in the light of material record, as well as the law governing the situation.
6. It has been contended on behalf of the revisionist that the alleged partnership firm, being unregistered, the suit of the present nature is not maintainable in law by virtue of Section 69 of The Indian Partnership Act, 1932. On the other hand, Shri Anand Singh, learned counsel for respondent No. 1 supported the impugned order.
7. On due consideration of the material available on record, this Court is of the considered view that the application under Order 7 Rule 11 of CPC deserves to be allowed in the light of plaint averments and Section 69 of The India Partnership Act, which reads as follows:-
69. Effect of non-registration.-(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.
(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 showr in the Register of Firms as partners in the firm.
(3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect,-
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or
(b) the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909 (3 of 1909) or the Provincial Insolvency Act, 1920 (5 to 1920) to realise the property of an insolvent partner.
(4) This Section shall not apply.-
(a) to firms or to partners in firms which have no place of business in (the territories to
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