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Prithvisingh Devising Vs. Hasan Alli Vazirkhan - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai High Court
Decided On
Case NumberSecond Appeal No. 175 of 1948
Judge
Reported inAIR1951Bom6; (1950)52BOMLR862; ILR1951Bom101
ActsPartnership Act, 1932 - Sections 69 and 69(2)
AppellantPrithvisingh Devising
RespondentHasan Alli Vazirkhan
Advocates:S.S. Gupte, Adv.
DispositionAppeal allowed
Excerpt:
indian partnership act (ix of 1932), section 69(2)--suit by partnership firm--partnership registered after presentation of plaint--whether suit barred.;under section 69(2) of the indian partnership act, 1932, unless a partnership firm is registered, the institution of a suit by it is barred, and that initial defect cannot be cured by any subsequent egistration of the partnership firm.;ponnuchami v. muthusami [1942] a. i. r. mad. 252, followed.;nazir ahmad v. peoples' bank of n. i. [1942] a. i. r. lah. 289, f.b., not followed.;jakiuddin v. vithoba [1939] a. i. r. nag. 301, radha charan v. matilal (1937) 41 c. w. n. 534, and varadarajulu naidu v. rajamanika mudaliar [1937] 2 m. l. j. 273, referred to. - section 31(4) (since repealed) :[tarun chatterjee & h.l.dattu, jj] jurisdiction of high..........high court on a number of occasions and on a plain construction of section 69(2), partnership act, suits instituted by partnership firms without the same being registered have been invariably dismissed for want of registration of the partnerships before the institution of the suit. a plain reading of the terms of section 69(2) of the act, without anything more clearly shows that the institution of a suit to enforce a right arising from a contract is barred unless the firm is registered and the persons suing are or have been shown in the register of firms as partners in the firm. no words could be clearer than these to prevent a suit being instituted by or on behalf of a firm unless the firm was registered, and it is really surprising to find even the few authorities that have been cited.....
Judgment:

Bhagwati, J.

1. This is a second appeal from a decision of the learned Assistant Judge, Thana, who allowed the appeal from a decision of the Joint Civil Judge, Junior Division, Thana, dismissing the plaintiffs' suit.

2. This second appeal raises a short point as to the effect of registration of a partnership after the institution of the suit. The plaintiffs were partners carrying on business as such and in the course of the partnership had dealings with the defendants. The suit was filed by the plaintiffs for recovery of possession from the defendants of suit property and also for recovery of past rents and future mesne profits. The partnership was not registered on or before 10-10-1944, when the plaint was presented at the Court at Andheri. It was subsequently registered on 16-3-1945, and the plea which was taken on behalf of the plaintiffs was that this subsequent registration of the partnership was enough to enable the plaintiffs to maintain the suit, notwithstanding the provisions of Section 69(2), Partnership Act. The learned trial Judge, following the decision of the Madras High Court in Ponnuchami v. Muthusatni A. I. R. 1942 Mad. 252 : I. L. R. (1942) Mad. 355 held against this contention of the plaintiffs and dismissed the plaintiffs' suit. The lower appellateCourt, however, followed the Full Bench decision of the Lahore High Court in Nazir Ahmad v. Peoples' Bank of N. I. A.I.R. 1942 Lah. 289 : I. L. R. (1942) Lah. 517 and held that the subsequent registration of the partnership cured the defect and validated the suit as had been instituted, allowed the appeal and passed a decree in favour of the plaintiffs. This second appeal has been filed by the original defendant 1 against this judgment of the lower appellate Court. The second appeal came on for hearing in the first instance before Dixit J. sitting alone, and in view of the conflict of authorities which was pointed out to him he referred it to a Division Bench. The appeal has accordingly come up before us for hearing and final disposal.

3. The terms of Section 69(2), Partnership Act, may be set out at this stage, and they are:

'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 persona suing are or have been shown in the Register of Firms as partners in the firm.'

There is no decided case of our High Court on the construction of Section 69(2), Partnership Act. Speaking for myself, I may say that this point has been urged before the Judges of the Original Side of this High Court on a number of occasions and on a plain construction of Section 69(2), Partnership Act, suits instituted by partnership firms without the same being registered have been invariably dismissed for want of registration of the partnerships before the institution of the suit. A plain reading of the terms of Section 69(2) of the Act, without anything more clearly shows that the institution of a suit to enforce a right arising from a contract is barred unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. No words could be clearer than these to prevent a suit being instituted by or on behalf of a firm unless the firm was registered, and it is really surprising to find even the few authorities that have been cited against this proposition. There are, however, three cases which have been reported and which go to support this contention, viz., a subsequent registration of the partnership firm can cure the initial defect in the institution of a suit. These authorities are, Jakiuddin v. Vithoba A.I.R. 1939 Nag. 301: 186 I. C. 670; Radha Charan v. Matilal 41 C. W. N. 534 and Varadarajulu Naidu v. Rajamanika Mudaliar, : AIR1937Mad4767 . All these authorities were, however, considered by the learned Judges of the Madras High Court in a decision reported in Ponnuchami v. Muthusami A.I.R. 1942 Mad. 252: I. L. R. (1942) Mad. 355. In that case an unregistered partnership had instituted a small cause suit in the Court of the District Munaif of Palni. It had applied for registration before the filing of the plaint, but the application had not been granted. In fact it was not granted until over a month had elapsed after the filing of the plaint. In these circumstances, the District Munsif dismissed the suit with costs. The matter went into appeal and the learned Judges of the Madras High Court considered the reported cases which disclosed a difference of opinion on this point. They pointed out that the question had been considered on different occasions by four Judges of the very same High Court, viz., by Menon J. in Subramania Mudaliar v. The East Asiatic Co., Ltd. 71 M. L. J. 663 : A. I. R. 1936 Mad. 991, Stodart J. in Firm of Syed Ibrahim Sahib & Brother v. Gurulinga, Aiyar : AIR1938Mad185 , Horwill J. in Varadarajulu v. Rajamanika A.I.R. 1937 Mad. 767 : 176 I. C. 916 and Venkataramana Rao J. in Girdharilal Son & Co. v. Kappini Gowder, : AIR1938Mad688 . Menon, Stodart and Venkataramana Rao JJ. had formed the opinion that subsequent registration did not remedy the defect. On the other hand, Horwill J. had held that it did. They then considered the case of Bhagchand Dagadusa v. Secretary of State where Section 80, Civil P. C. had been considered by their Lordships of the Privy Council and the provisions thereof had been laid down as explicit and mandatory. They observed that Section 80, Civil P. C. had very much in common with Section 69, Partnership Act, and came to the conclusion, as Venkataramana Bao J. had done in the case of Girdharilal Son & Co. v. Kappini Gowder : (1988)2MLJ44 that subsequent leave could not cure the initial defect and validate the institution of a suit. They then referred to the decision of Horwill J. in Varadarajulu Naidu v. Rajamanika Mudaliar A. I. R. 1937 Mad. 767 : 176 I. C. 916and distinguished it, observing that whatever might be the principle which applied to the rectification of irregularities and deficiencies in the cause of action, that principle could not be applied in these circumstances. They stated that the decision of Howill J. derived support from the judgment of the Calcutta High Court in Radha Charan v. Matilal 41 C. W. N. 534 and that of the Nagpur High Court in Jakiuddin v. Vithoba A. I. R. 1939 Nag. 301 : 861. C. 670. They, however, observed that those cases were decided by Judges sitting alone. They further considered the decisions of the Patna High Courtin Firm Laduram Sagarmal v. Jamuna Prasad : AIR1939Pat239 , the Allahabad High Court in Danmal Parshotamdas v. Baburam Chhotelal, : AIR1936All3 and the Lahore High Court in Kishan Lal-Ram Lal v. Abdtil Ghafur Khan 17 Lah. 275 : A. I. R. 1935 Lah. 893 which were all decisions of the Division Bench of the respective High Courts and had held that subsequent registration of the firm would not allow the suit to proceed. The learned Judges of the Madras High Court ultimately wound up by saying that the great weight of authority was 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, and they considered that the majority opinion was correct (p. 253) :

'A suit is instituted when the plaint is filed in a Court of competent jurisdiction. Section 69 says that a suit by a firm shall not be instituted until the firm has been registered. The registration of the firm is a condition precedent to the right to institute the suit and the Court has no jurisdiction to proceed with the trial when the condition precedent has not been fulfilled.'

It may be noted that the decision of Horwill J. reported in Varadarajulu Naidu v. Raja-manika Mudaliar (1987) 2 M. L. J. 273 is the same as the one which is reported in A. I. R. 1937 Mad 767.

4. This decision of the learned Judges of the Madras High Court in Ponnuchami v. Muthusami I. L. R. (1942) Mad 355 : A. I. R. 1942 Mad. 252, in our opinion, lays down the correct position in law. The duty of the Courts when construing the plain terms of a statute has been repeatedly laid down by their Lordships of the Privy Council and to adopt the phraseology in Bhagchand's case : 'The Act, albeit a Procedure Code, must be read in accordance with the natural meaning of its words.' It is no use trying to go behind the plain words of the section and trying to find out what must be the reason behind the words-as they have been used. The duty of the Court is to read the words in accordance with their natural meaning, and, if that is done as we indicated in the early part of our judgment, there is no other meaning which can be attached to the plain words of Section 69(2) of the Act except that the very institution of the suit is barred unless the partnership firm is registered. That initial defect cannot be cured by any subsequent registration of the partnership firm.

5. The lower appellate Court, however, based its decision on the observations of the Full Bench in Nazir Ahmad v. Peoples' Bank ofN. I. A.I.R. 1942 Lah. 289 : I.L.R. (1942) Lah. 517 . It was a case arising under Section 171, Companies Act. The suit was instituted against the company in liquidation without leave under Section 171. An objection was takenthat the suit was not maintainable and it was held that the suit should not be dismissed merely on that ground. The learned Judges there held that where the plaintiff instituted a suit against the company in liquidation without the leave of the Court under Section 171, and subsequently applied for such leave within the period of limitation of the suit but the leave was granted only after the period of limitation had expired, the suit should not be dismissed and limitation should be calculated in the same way as if the suit had originally been instituted with leave. Ram Lall J. in the course of his judgment incidentally considered the provisions ofSection 69, Partnership Act, and observed at p. 295 that the right to enforce a claim was granted by a decree and if the condition for theenforcement of that remedy was complied with before the grant of a decree, it made no difference whether this condition was complied with before or after the institution of a suit so long as it was complied with before the decree was made. With the utmost respect to the learned Judge, we fail to understand how the notion of the right to enforce a claim being created by the decree could be brought in, in the construction of the plain words of the section. The words of the section do not say anything with regard to the right to enforce a claim being granted by the decree. They only refer to the institution of a suit to enforce a right arising from a contract. It would only be after a decision was reached by the Court in the suit whichwas thus instituted that the question would arise as regards a decree being passed granting the right to enforce that claim. That step follows the institution of a suit. What Section 69(2) ofthe Act, however, is concerned with is the institution of the suit itself, and if one has regard to the plain words of Section 69(2), they bar the institution of the suit itself, irrespective of what would happen on the determination or adjudication of that right in favour of the plaintiff after such suit was instituted. These were the remarks of Ram Lall J. which created theconfusion in the mind of the lower appellate Court and the lower appellate Court went on to discuss the reason of the rule by trying to distinguish the terms of Section 80, Civil P. C., and Section 69(2), Partnership Act, by going behind the plain words of those sections and trying to divine what was the reason of the rule enacted in those respective sections. This was certainlynot the legitimate function of the Court, havingregard to the observations of their Lordships of the Privy Council above quoted that the Act must be read in accordance with the natural meaning of its words. We are of the opinion, with the utmost respect to the learned Judges of the Lahore High Court who decided the case in Nazir Ahmad v. Peoples' Bank of Northern India Ltd. A. I. R. 1942 Lah. 289 : I. L. R. (1942) Lah. 517 that the plain terms of Section 69(2), Partnership Act, bar the institution of a suit to enforce a right arising out of a contract unless the firm is registered and the persons suing are or have been shown in the register of firms as partners in the firm and a subsequent registration of the partnership firm cannot and does not cure the initial defect in the institution of the suit.

6. This being the true position in law, we have come to the conclusion that the decision of the lower appellate Court was wrong and the decision of the trial Court was correct.

7. We will, therefore, allow the appeal, set aside the decree passed by the lower appellate Court and restore the decision of the trial Court in so far as it dismissed the plaintiffs' suit.

8. In regard to the costs, the trial Court, in view of the fact that the defendants had failed in all their contentions on the merits of the case, had ordered that each party should bear and pay his own costs of the suit. We are of the opinion that the same order should be made also with regard to the costs of the parties before the lower appellate Court as also here. Bach party will, therefore, bear and pay his own costs throughout.


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