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MADHYA BHARAT HIGH COURT, GWALIOR BENCH
CHATURVEDI, J.
Nand Kishore owner of the Firm Ram Prashad Ram Kuwar - Appellant
Versus
Firm Maheswari Mills, Morena - Respondent
Civil Revn. No.43 of 1952
Decided On : 14-08-1952
Advocate Appeared:
For the Appellant : Motilal Gupta
For the Respondent: Shiv Dayal
S.69(2) of the Partnership Act barred suits by unregistered firms, and subsequent registration of the firm did not cure the defect and validate the suit.
Headnote:
PARTNERSHIP ACT - S.69(2) - REGISTRATION OF FIRM - SUBSEQUENT REGISTRATION - EFFECT - S.73 - SAVING CLAUSE - RETROSPECTIVE EFFECT - RIGHT TO SUE - ACCRUED RIGHT - INTERPRETATION.
Fact of the Case:
The plaintiff, an unregistered firm, instituted a suit against the defendant to enforce a right arising from a contract. The defendant resisted the suit on the ground that it was not maintainable under S.69(2) of the Partnership Act, which barred suits by unregistered firms. The plaintiff contended that subsequent registration of the firm validated the suit, relying on a Full Bench decision of the Lahore High Court. The trial court upheld the plaintiff's plea and dismissed the defendant's objection.
Finding of the Court:
The court held that S.69(2) of the Partnership Act barred suits by unregistered firms and that subsequent registration did not cure the defect. The court relied on the weight of authority, including decisions of the Madras, Bombay, and Nagpur High Courts, which had held that S.69(2) was mandatory and could not be given retrospective effect. The court also held that S.73 of the Madhya Bharat Partnership Act, which saved rights and remedies acquired or accrued before the commencement of the Act, did not apply to the present case because the plaintiff's right to sue had accrued after the enactment of the Act but before S.69 came into force.
Issues: 1. Whether S.69(2) of the Partnership Act barred suits by unregistered firms. 2. Whether subsequent registration of the firm cured the defect and validated the suit. 3. Whether S.73 of the Madhya Bharat Partnership Act saved the plaintiff's right to sue.
Ratio Decidendi: 1. S.69(2) of the Partnership Act barred suits by unregistered firms. The language of the section was clear and explicit, and the great weight of authority supported this interpretation. 2. Subsequent registration of the firm did not cure the defect and validate the suit. S.69(2) was mandatory and could not be given retrospective effect. The postponement of the operation of the section for a year did not indicate an intention by the Legislature to give it retrospective effect. 3. S.73 of the Madhya Bharat Partnership Act did not save the plaintiff's right to sue because the right had accrued after the enactment of the Act but before S.69 came into force. S.73 saved only those rights and remedies that had accrued before the commencement of the Act.
Final Decision: The court dismissed the revision petition filed by the defendant and upheld the trial court's order dismissing the defendant's objection to the maintainability of the suit.
1. This is a revision filed by the defendant in a suit instituted in the Court of Civil Judge, First Class, Morena, against him by the plaintiff Mills. It appears that the plaintiffs firm was not registered when the suit was instituted but was registered after the presentation of the plaint in Morena Court. The defendant applicant resisted the suit on the ground that the suit was not maintainable; but the plea of the plaintiff was that this subsequent registration of the partnership was enough to enable the plaintiff to maintain the suit, notwithstanding the provisions of S.69(2), Partnership Act. The Court upheld the plaintiff's plea observing that S.69(2) had no application in this case and relying on - 'Nazir Ahmed v People's Bank of North India Ltd.', AIR 1942 Lah 289 (FB) held that subsequent registration validated proceedings. The defendant has come to this court and desires me to revise this order.
2. There is no doubt that in Full Bench case of - 'Nazir Ahmed v. People's Bank of North India Ltd.', ILR (1942) Lah 517: AIR 1942 Lah 289 (FB) and also in three other eases viz.; - 'Jakiuddin v. Vithoba', AIR 1939 Nag 301: 186 Ind Cas 670; - 'Radha Charan v. Matilal', 41 Cal WN 534 and - 'Veradarajulu Naidu v. Rajamanika Mudaliar', AIR 1937 Mad 767: 1937-2 Mad LJ 273 the view that prevailed was in favour of the plaintiff non-applicant. It was held that subsequent registration cured the defect and the suit was maintainable. On the other hand, in - 'Subramania Mudaliar v. East Asiatic Co. Ltd.', AIR 1936 Mad 991, in Ibrahim Saheb and Brother v. Gurulinga Aiyer', AIR 1938 Mad 185; in - 'Girdharilal Son and Co. v. Kappini Gowder', AIR 1938 Mad 688 it was held that subsequent registration did not remedy the defect. The views of the Patna High Court - 'Laluram Sagarmal Firm v. Jamuna Prasad', 18 Pat 114, the Allahabad High Court - 'Danmal Parshotam Das v. Babu Ram Chhote Lal', 58 All 495 and the Lahore High Court - 'Krishen Lal Ram Lal v. Abdul Ghafur Khan', 17 Lah 275 were also to this effect.
3. The terms of S.69(2), Partnership Act may be reproduced here for reference and they are:
"No suit to enforce the 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 the Register of Firms as partners of the firm."
4. A plain reading of the terms above, without anything more, shows clearly that unless the firm is registered, the institution of the suit on its behalf to enforce a right arising from a contract will be barred.
5. The entire case law was reviewed in - Ponnuchami Goundar v. Muthusami Goundar', ILR (1942) Mad 355: AIR 1942 Mad 252 and the learned Judges of the Madras High Court came to the conclusion that the registration of a firm is a condition precedent to its right to institute a suit and a Court cannot proceed with a trial of a suit when the condition precedent has not been fulfilled. They further added that the great weight of authority was 'also in favour of the opinion that subsequent registration would not put the suit on a proper basis and that the Court's duty was to dismiss it. The learned Judges also relied on - Bhag Chand Dagadusa v. Secy. of State', 54 Ind App 338: AIR 1927 PC 176, where S.80, Civil Procedure Code has been considered by the Judicial Committee and the provisions thereof had been held to be explicit and mandatory.
The learned Judges observed that S.69, Partnership Act had very much in common with S.80, Civil Procedure Code and on the basis of the Privy Council decision came to the conclusion that subsequent registration could not cure the initial defect and validate the institution of a suit. This view has since then been followed by various High Courts. The Bombay High Court in - 'Prithvi Singh v. Hasan Alli', ILR (1951) Bom 101: AIR 1951 Bom 6: 52 Bom LR 862 and the Nagpur High Court in - 'Abdul Karim v. Ram Das Narayan Das', ILR (1951) Nag 81: AIR
