A suit instituted in contravention of the requirements of Section 69 (2) of the Indian Partnership Act, 1932, which bars institution of a suit by an unregistered firm, suffers from a defect of a like nature within the meaning of Section 14 of the Indian Limitation Act, 1908, and the Plaintiff may be entitled to exclude the time taken in prosecuting the earlier suit if the Plaintiff acted in good faith and with due diligence.

Headnote:
LIMITATION ACT - SECTION 14 - APPLICABILITY - SUIT INSTITUTED IN CONTRAVENTION OF SECTION 69 (2) OF THE INDIAN PARTNERSHIP ACT, 1932 - WHETHER SUFFERED FROM A DEFECT OF JURISDICTION OR A DEFECT OF A LIKE NATURE - WHETHER PLAINTIFF ACTED IN GOOD FAITH AND WITH DUE DILIGENCE - HELD, THE SUIT SUFFERED FROM A DEFECT OF A LIKE NATURE AND THE PLAINTIFF ACTED IN GOOD FAITH AND WITH DUE DILIGENCE.
Fact of the Case:

The Plaintiff, a partnership firm, filed a suit to recover a sum of money from the Defendant. The Defendant pleaded that the suit was barred by limitation as the Plaintiff had instituted an earlier suit for the same cause of action which was dismissed for want of registration of the Plaintiff-firm under the Indian Partnership Act, 1932. The Plaintiff claimed that the time taken in prosecuting the earlier suit should be excluded under Section 14 of the Indian Limitation Act, 1908, as the earlier suit suffered from a defect of jurisdiction or a defect of a like nature and that the Plaintiff had acted in good faith and with due diligence.
Finding of the Court:

The Court held that the earlier suit suffered from a defect of a like nature within the meaning of Section 14 of the Indian Limitation Act, 1908, as the Plaintiff had instituted the suit in contravention of the requirements of Section 69 (2) of the Indian Partnership Act, 1932, which barred institution of a suit by an unregistered firm. The Court further held that the Plaintiff had acted in good faith and with due diligence as the Plaintiff had instituted the earlier suit under a bona fide belief that the firm was duly registered and had taken immediate steps to rectify the defect upon becoming aware of it.
Issues: 1. Whether the earlier suit suffered from a defect of jurisdiction or a defect of a like nature within the meaning of Section 14 of the Indian Limitation Act, 1908? 2. Whether the Plaintiff acted in good faith and with due diligence in prosecuting the earlier suit?
Ratio Decidendi: 1. The Court held that the earlier suit suffered from a defect of a like nature within the meaning of Section 14 of the Indian Limitation Act, 1908, as the Plaintiff had instituted the suit in contravention of the requirements of Section 69 (2) of the Indian Partnership Act, 1932, which barred institution of a suit by an unregistered firm. The Court relied on the decision in Rochaldas v. Uttamchand, AIR 1946 Sind 14, where it was held that the failure of an earlier suit for want of registration as required under the provisions of Section 69 of the Indian Partnership Act was a cause akin to the defect of jurisdiction within the meaning of Section 14 of the Indian Limitation Act. 2. The Court held that the Plaintiff had acted in good faith and with due diligence as the Plaintiff had instituted the earlier suit under a bona fide belief that the firm was duly registered and had taken immediate steps to rectify the defect upon becoming aware of it. The Court relied on the evidence of the Plaintiff's partner, who testified that he had instituted the earlier suit under the impression that the firm was duly registered, and that he had taken immediate steps to rectify the defect upon becoming aware of it.
Final Decision: The Court dismissed the Defendant's appeal and held that the Plaintiff was entitled to exclude the time taken in prosecuting the earlier suit under Section 14 of the Indian Limitation Act, 1908, and that the Plaintiff's suit was within time.

JUDGMENT - 1. A short but interesting question about the applicability of Section 14 of the Indian Limitation Act, 1908, arises in this second appeal.

2. The Appellant before me is the original Defendant in Regular Civil Suit No. 245 of 1961 and the Respondent to this second appeal is the original Plaintiff. The said suit was tried by the learned Joint Civil Judge, Junior Division, at Malegaon, who dismissed the same with costs. Being aggrieved by the order of dismissal, the Plaintiff preferred an appeal to the District Court at Nasik, which was numbered as Civil Appeal No. 11 of 1963. The Defendant had also preferred cross-objections which were heard along with that appeal by the learned District Judge, Nasik, who by his order dated 15th June 1964 allowed the appeal and set aside the decree of the trail Court dismissing the Plaintiffs suit. The Defendant was ordered and decreed to pay to the Plaintiff Rs. 6, 536/12/- along with proportionate costs and future interest on Rs. 4,000/- from the date of suit till realisation. The Defendants cross-objections were dismissed with no order as to costs. Being aggrieved by this decision, the Defendant has preferred this second appeal to the High Court.

3. In order to understand and appreciate the point involved, a few facts may be stated : The Plaintiff Messrs. Shrikisan Ramkisan is a partnership firm, and Regular Civil Suit No. 245 of 1961 was filed by the firm through one of its partners, Shrikisan Mulchand. This firm is doing Sari Adat business at Malegaon. The Defendant is a cloth merchant from Baramati and had dealings with the Plaintiff-firm sought to recover from the Defendant the aggregate amount of Rs. 6,546/12/-. This amount was made up of several items. It is not necessary for the purposes of this second appeal to discuss the nature of the claim but it would be sufficient to state that the trial Court found that the Plaintiff was entitled to recover from the Defendant the full amount but that the suit was liable to be dismissed as barred by the law of limitation. In order to understand this point of limitation, it must be mentioned that the suit was instituted on 17th October 1961 by the Plaintiff-firm claiming to be duly registered under the Indian Partnership Act. In the suit the Plaintiff firm had claimed exception of the period between 7th March 1961 and 17th October 1961 as the period during which the Plaintiff-firm was prosecuting another civil proceedings viz. Regular Civil Suit No. 54 of 1961. This suit filed on 7th March 1961 was dismissed with costs by the learned Civil Judge, Malegaon, on 17th October 1961 filed by the Plaintiff-firm itself. The Plaintiff-firm had described itself as a registered partnership firm in the plaintiff filed in Regular Civil Suit No. 54 of 1961. On 31st August 1961 the Defendant filed his written statement in which a plea was taken that the Plaintiff was required to prove strictly that it was a duly registered firm under the Indian Partnership Act, and that if the Plaintiffs suit was liable to be dismissed with costs. On 17th October 1961 a Purshis was filed by the Plaintiffs Advocate (marked as Exhibit 45 in the subsequent suit) which stated that the Plaintiff-firm was not duly registered under the Indian Partnership Act and that in view of this fact the suit may be dismissed by the Court. It appears that on the previous day an application for registration of the Plaintiff-firm had been made to the Registrar of Firms having jurisdiction in the area, and on such registration having been done, Regular Civil Suit No. 245 of 1961 was filed on the next day by the plaintiff immediately after obtaining the dismissal of the earlier suit.

4. The trial Court held that the Plaintiff was not entitled to the exclusion of the time taken in the earlier proceeding viz. Regular Civil Suit No. 54 of 1961. According to its view, the filing of the former suit was contrary to provisions of Section 69 (2) of the Indian Partnership Act and the same could be rega

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1972 Supreme(Bom) 80

Cases Referred (1)