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2024 Supreme(Online)(Mad) 79305
IN THE HIGH COURT OF JUDICATURE AT MADRAS
G. Ilangovan, J
S.K.R. Balu – Appellant
Versus
N.S. Sarathy – Respondent
SA(MD)No.421 of 2024
For the Appellants/Petitioners: V. Meenakshi Sundaram for S. Michael Heldon Kumar
For the Respondents: K. Govindarajan, N. Vallinayagam
A suit filed by partners of an unregistered firm to enforce contract rights is barred under Section 69 of the Indian Partnership Act, 1932, unless the relief sought is limited to dissolution or accounting as specified under Section 69(3).
Headnote:(A) Indian Partnership Act, 1932 - Section 69 - Suit for declaration and permanent injunction by an unregistered partnership firm - Bar on maintainability - Plaintiffs claimed a joint venture which was essentially a partnership business - Admission in the plaint and notice regarding partnership status requires compliance with registration - Suit for recovery or enforcement of rights arising from contract by an unregistered firm is barred - Exceptions under Section 69(3) limited to dissolution or accounting - Suit not falling within exceptions is not maintainable. (Paras 15, 17, 26, 27)
Facts of the case:
The appellants (plaintiffs) and respondents (defendants) entered into a business agreement for a transport service. The plaintiffs alleged they contributed capital and sought a declaration and injunction, claiming the business was a joint venture. The defendants contended it was their sole proprietary concern and that the suit was barred under Section 69 of the Partnership Act due to non-registration.
Findings of Court:
The Court found that the plaintiffs admitted the existence of a partnership in their own legal notices. Consequently, the suit for declaration and injunction brought by an unregistered firm, without seeking dissolution or accounts, is hit by the bar under Section 69 of the Partnership Act.
Issues: Whether the suit filed by the plaintiffs is barred by Section 69(1) of the Indian Partnership Act, 1932, given the denial of the partnership by the defendants and the nature of the reliefs sought.
Ratio Decidendi: The legal bar under Section 69 of the Partnership Act applies to suits brought by partners of an unregistered firm to enforce rights arising from a contract; since the plaintiffs did not seek the specific reliefs of dissolution or accounting permitted under Section 69(3), the suit was correctly dismissed by the lower courts.
Result: Second Appeal dismissed.
| Table of Content |
|---|
| 1. nature of the dispute and plaint allegations. (Para 1 , 2 , 3) |
| 2. procedural history and the core legal question of partnership registration. (Para 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11) |
| 3. admission of partnership status bars independent joint venture claims. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22) |
| 4. statutory bar under section 69 of the partnership act. (Para 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32) |
J U D G M E N T
1. This second appeal is filed against the judgment and decree dated 22/04/1999 passed in AS No.4 of 1999 by the Additional District Judge-cum-Chief Judicial Magistrate, Thanjavur, confirming the judgment and decree, dated 10/07/1997 made in OS No.45 of 1993 by the Subordinate Judge, Kumbakonam.
2. Plaint averments in brief:- The plaintiffs 1 and 2 are the husband and wife. The defendants 1 and 2 are brothers. On 01/05/1987, they decided to commence a joint business called 'Durga Transport' at Kumbakonam. It was decided that each must contribute 25% of the capital for the purchase of the transport bus including the route, etc. They decided to purchase the Bus bearing registration No.TDO 4748 along with permit running between Kumbakonam and Avoor. The route number is 18. An agreement was entered between one Mohamed Kasim on 01/05/1987. On behalf of the four persons, the first plaintiff paid Rs.10,000/- each. In pursuance of the agreement, totally 1,40,000/- was paid to Mohamed Kasim on 02/05/1987. Vehicle was taken possession on 11/05/1987. Since the partnership deed was not ready and registered on the date of purchase, the joint purchase of the bus rout business account was submitted in the name of the first defendant before the concerned authorities. But unfortunately the vendor Mohamed Kasim died on 29/05/1987 before the conclusion of the sale transaction and transfer. His wife name by Mumtaj Begam agreed to receive the balance amount of sale and undertook to transfer the route and permit also to any one of the four persons or in the name of all the persons. The plaintiffs paid Rs.7,500/- in cash to the defendants towards their share capital. The pro-notes were handed over to the first defendant. So, the capital amount of the joint business was shown for a sum of Rs. 2,17,500/-. On 23/06/1997, Mumthaj Begum transferred the right through RTO office.
3. Under the Motor Vehicles Act permit cannot be granted in the name of joint owners. So, permit was granted in the name of the first defendant and subsequently, the vehicle was replaced by another vehicle TAO 9889. It was orally agreed that income upto 11/09/1990 must be adjusted towards loan obtained through the first defendant. From 11/09/1990, the defendants are liable to give account for their profit. The defendants are tried to alienate the vehicle TAO9889 without the permission of the plaintiffs. A notice, dated 03/04/1992 was issued to the defendants claiming profit from 11/09/1990 to till 1992. So, the suit is laid for declaration, consequential permanent injunction and for costs.
4. The statement:- The suit is laid under section 69(i) of the Partnership Act. The suit is bad for mis joinder of parties. The second defendant is not a necessary party and is residing in Dubai now. It is further denied that the plaintiffs and the defendants decided to jointly commence a joint venture business in the common name and style of Sri Durga Transport. The plaintiffs did not invest any money. The first plaintiff wanted to join with the first defendant to run the business. So, they entered into agreement with one Mohamed Kasim. But he died before the sale. So that proposal was also dropped. The first defendant paid advance to Mohamed Kasim out of his own funds. After the death of Mohamed Kasim, the first defendant on his own, entered into an agreement with Mumthaj Begum, the wife of the deceased Mohamed Kasim. On his own, purchased the vehicle on 29/10/1987 from Mumthaj Begum for Rs. 1,85,000/-. It is his own money. Since Mohame
