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M.J. Velu Mudaliar and anr. Vs. Sri Venkateswara Finance Corporation and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal No. 308 of 1966
Judge
Reported inAIR1971AP63
ActsPartnership Act, 1932 - Sections 69 and 69(2); Code of Civil Procedure (CPC), 1908 - Order 30; Partnership (Amendment) Act, 1939 - Sections 31; Motor Vehicles Act, 1932 - Sections 31 and 94
AppellantM.J. Velu Mudaliar and anr.
RespondentSri Venkateswara Finance Corporation and ors.
Appellant AdvocateP.V.R. Sarma, Adv.
Respondent AdvocateM.V. Ramana Reddy, Adv. for ;R. Sundar Ram Reddy, Adv.
Excerpt:
.....appeal failed. - - the defendants failed to satisfy the liability on demand and hence the suit was filed. the registration of the firm is clearly proved by ex. 69(2) were not satisfied and the suit was not competent. 2 it is not open to them to canves the question in this appeal on the ground that the plaintiff- firm failed be prove the fast in controversy. 6. it is however submitted by the learned counsel for the appellants that section 69(2)makes it incumbent on the plaintiff to satisfy the two conditions mentioned therein, and that the suit must be held to be incompetent if the mandatory provisions are not roved to have been satisfied. the consent of the defendants or their omission to raise a plea cannot enable the court make a decree in favour of the plaintiff unless the..........stringent and a suit on behalf of a firm by certain persons may be validly instituted provided the firm is registered and the persons suing prove that their names were shown in the register of firms as partners. the learned judge distinguished, among other the decisions in sardar singer singh v.sikri brother, air 1944 oudh 37 and m/s ram kumar ram chandra v. dominion of india, : air1952all695 . the facts were that there were two partners in a firm of whom one died. the partnerships register and the names of the two partners appeared in the register of firms. one of the partners died and his heirs were not brought on the said register. the partnership was said to have continued its business with the heirs of the deceased partner.the question whether the suit brought by the surviving.....
Judgment:

1. This appeal arises out of an action for recovery of money on foot of hair purchase agreement entered into by the defendants who are father and son. The plaintiff is a firm styled Sri Venkateswara Finance Corporation. and is represented by three persons described as managing partner, The case of the plaintiff is that the 1st defendant is the hirer and his son, the 2nd defendant is the guarantor, who are liable to make payments in 12 monthly installments from 29-1-1963 and that there was default on the pat of the defendant who paid only two paltry summons of Rupees 500/- and Rs. 318/- and that the plaintiff had to pay insurance premium to the tune of Rs. 577/50 Ps. because of the omission o the defendants. Reimbursement is sought in respect of the insurance premium. the defendants failed to satisfy the liability on demand and hence the suit was filed.

2. The defendants challenged the maintain ability of the suit on the ground that the partnership was not registered under the Indian Partnership Ac, and that the names of the partners who are suing were not entered as such in the certificate of registration. They dent that the truncation is one of hire purchase. According to them, the transaction was only one of loan. They pleaded that the motor vehicles belonged to them and that there could be no question of any hire purchase agreement. They stated that there was no valid transfer f ownership of the buses to the plaintiff firm and the agreement was illegal. they claimed to have made a payment of claimed to have made a payment of Rs 2,000/- for which no credit was given.

3. The trial court overruled the defenses and granted a decree to the plaintiff and this appeal is preferred by the defendants.

4. The first contention urged by the learned counsel for the appellants is based on section 69(2) of the Indian Partnership Act. It was pleaded by the defendants that the registration of the firm does not show that the plaintiffs 1 to 3 are partners and it is not also shown whether there were any other partners. The registration of the firm is clearly proved by Ex. A-1. it is described as a certified copy of acknowledgment of the registration of the firm. It is not the registration certificate but it is an official intimation that Sri Venkateswara Finance Corporation was registered as a firm on an application made to the Registrar of firms.

5. There was a categorical plea that the names of the persons suing as partners were not found in the certificate of registration. But, neither party to the suit made by any attempt to prove the conte endants that the requirements of S.69(2) were not satisfied and the suit was not competent. The terms in which the issue was cast and the range of the controversy in the lower Court suggest that the defendants were not keen om pressing this aspect at the trial even if they did not formally abandon on the plea. It is open to grave doubt whether it is permissible for the defendants to agitate the question in this appeal having regard to their omission to ask for the settlement of the issue in express terms. Had the defendants urged that the issue should have been so worded as to make the entry of the names of the partners in the certificate of registration a provable fact, the position would have been different. Then the plaintiff firm would have been duly alerted than the proof of the contents of the registration certificate was a live or debated issue. In the face of an acquiescence on the part of the defendants in the limited scope of issue No.2 it is not open to them to canves the question in this appeal on the ground that the plaintiff- firm failed be prove the fast in controversy.

6. It is however submitted by the learned Counsel for the appellants that section 69(2)makes it incumbent on the plaintiff to satisfy the two conditions mentioned therein, and that the suit must be held to be incompetent if the mandatory provisions are not roved to have been satisfied. The argument advanced by the appellants is that no act of the defendants can made a suit good or maintainable, which its inception is bad. The consent of the defendants or their omission to raise a plea cannot enable the court make a decree in favour of the plaintiff unless the mandatory terms of the section are satisfied. It is true tat an unregistered firm cannot maintain and action arising from contract on behalf of a firm. Similarly, sub-section (2) enacts that the persons suing should have been shown in the register of firms as partners in the firm.The requirement contemplated by Section 69(2)is mandatory. But when a Court is called upon to dismiss an action on the ground that it is not competent as there-requisite conditions are unsatisfied, the Court not fail to take into account the omission of a defendant to adduce evidence bearing other question. The position in the instant case is that the defendants were merely content with taking a plea in the written statement but did not join issue with the plaintiff in respect of the plea; nor did the defendants press for the inclusion of the plea in the issue so as to focus the attention of the Court and of the plaintiff on the controversy. The defendants did not call upon the plaintiff to disclose the names of the partners. In the circumstances there is no basis for the dismissal of the suit on the ground that the requirements of Section 69(2) are not complied with.

7. Even so, as the question has been argued at great length, I shall deal with it on merits. Learned Counsel for the appellants relied upon the decision in Firm Kapurchand Bhagaji v. Laxman Trimbak. AIR 1952 Nag 57 in support of his contention that the suit is not maintainable. The facts in that case were that a suit was brought for recovery of money on the allegation that the plaintiff was a registered firm and the managing partner was Umedmal. Both the allegations were denied by the defendants. One of the partners was examined as P.W.I, and he gave oral testimony about the registration of the firm and of his status is as the managing partner. the main question decided by the Nagpur High Court was, whether the oral test money of P.W.I. was admissible as secondary evidence in proof of the fact of registration. It was held that it was not admissible. the register of firms was a public document and the fact of registration was held capable of being proved only by production of a copy of the entry in the register of firms. The application for the admission of additional evidence was dismissed on the ground that noise for the reception of additional evidence was made out. The dismissal of the suit by the High Court in revision was based on the ground that the registration of the firm was approved. The learned Judge. who decided the revision petition then made an observation that the plaintiff was not entitled to succeed even if the additional evidence was admitted because there was no proof of the entry of the name of the managing partner in the register of firms. The observation was clearly on obiter dictum and did not arise for consideration because of the rejection of the additional evidence and dismissal of the suit on the ground of the in sufficiency and in admissibility the oral testimony to prove the registration of the firm.

8. My attention was next drawn to Basant Lal. v. Union of India, : AIR1965Pat426 , In that case in the first appellate Court, documents were tendered by way of registration of the firm. No order however, was passed on the application under Order 41, Rules 27 Civil Procedure Code. The appellate Court held that the suit was not maintainable for lack of proof that the names of the plaintiffs filing the suit were entered in the register of firms. The dismissal of the suit by the first appellate Court was upheld in second appeal by the Patna High Court. The view taken in second appeal was that there is no ground for the admission of additional evidence. The learned Judge that decided the appeal. however, observed that the registration certificate did not show that the names of the plaintiffs were entered in the register as p[partners of the firm. This decision also cannot be regarded as a direct pronouncement because the observation was no more than an obiter dictum. It is however retinue to note that certain dicta in this case implied that the fact that the names of the plaintiffs were entered in the register of firms was capable of being proved by the evidence other than an extract from the register of firms.

9. In Hansraj v. G.N. Champalal, 66 Cal WN 262 there was an elaborate review by Chatterjee, J. of the Calcutta High Court of several authorities bearing on the question. The view was expressed that the provisions of S.69(2) are very stringent and a suit on behalf of a firm by certain persons may be validly instituted provided the firm is registered and the persons suing prove that their names were shown in the register of firms as partners. The learned Judge distinguished, among other the decisions in Sardar Singer Singh v.Sikri Brother, AIR 1944 Oudh 37 and M/s Ram Kumar Ram Chandra v. Dominion of India, : AIR1952All695 . The facts were that there were two partners in a firm of whom one died. The partnerships register and the names of the two partners appeared in the register of firms. One of the partners died and his heirs were not brought on the said register. The partnership was said to have continued its business with the heirs of the deceased partner.The question whether the suit brought by the surviving partner and the heirs of the deceased partner was maintainable. The stand taken the plaintiffs was that the heirs of the deceased partner had been taken in as partners. The dismissal of the suit was upheld on the ground that the heirs of the deceased partner having become partners by reason of the partnership agreement the omission of addition of their names in the registrar of firms brought the case within the mischief of sub-section (2) of Section 69. It is not easy to accept the premises on which the learned Judges decision rested namely, that the firm though consisting of two partners, continued to be in existence after the death one of the partners. The names of the two persons, who constituted the firm at the inception were shown in the register of firms, and this fact was not in dispute, Nor was there any contoversy that the person suing ads the jeers of the deceased partners were his heirs. In the circumstances, the application of to bar under S.69(2) does not appear to he inconsonant with the intendement of the provision. The case dealt with the Calcutta High Court related to the legal representatives of the deceased partner whose name was found in the register of firms. Whether the case attracts the provisions of sub-section (2)of Section 69 is open to question. The facts of the present case given rise to an altogether different situation.

10. The learned counsel of the appellants also drew my attention to the decision in Firm Buta Mal v. Chaman Lal, AIR 1964, Punj 270. There it was laid down that when a suit was instituted in the name of a firm, the suit is in essence on behalf of the partners. All the partners, it was held, must be deemed to be the persons suing within the meaning S.69(2). Therefore, where a certain person who had been a partner from the beginning of the constitution if the firm was not shown as a partner in the register firms, the suit was held to the incompetent. Though the names of the partners actually suing were found in the register. To my mind, the ratio of this decision is not narrated by the language of section 69(2). The requirement of that section is limited to proof of an entry relevant to the persons suing. But, the learned Judges of the Punjab High Court have wined the scope of the rule far beyond the express terms of sub-section (2) of section 69.

69(2)

12. Relying on this case, it is submitted on behalf of the respondent that the proof of the registration of the firm is sufficient to overcome the hurdle interposed by sub-section (2) of S.69 as a firm may sue in its own name under Order 30, Rule 1 the only requirement is whether the registration of the firm is proved. There is no warrant for holding that the addition of the names of the partners is requisite for maintnaing the action. To insist upon the addition of the names of the partners is virtually to circumvent or set at naught the provisions of Order 30, Rule 1 of the C.P.C. AS the maintainability of the suit brought in the name of a partnership firm cannot be doubted, it would follow that the only requirement that is to be made out is a registration of the firm.

13. The learned Judges observed; In the present case the firm was so described in the plaint, but the words though Ram Kumar adult, son of Sarjoo Prasad, caste Vanish residing at Naua Gung Kanpur, partner of the firm were added. In law this addition was unnecessary and as such it can be treated as redundant and ignored. The above addition does not and cannot alter the fact that the firm is, in fact, the plaintiff. Later they proceeded to state: It would thus appeal that where a suit is instituted in the name of a firm under Rule 1 of Order 30 C.P.C. it is really a suit by the partners suit was, therefore, a suit by the firm and the addition of the words through so and so was redundant and of no consequence. with respect I am of opinion that the reasoning underlying this decision is unexceptionable.

14. In AIR 1944 Oudh 37 (supra) the suit was brought by Sikri Brother, Coal Merchants, through N.R. Nagpal, partner and Manager, Nagnal verified the plaint under his signature and he described himself as the Manager and partner. The partnership was register, but the name of Nagpal was shown in the register of firms as a partner of the Firm It was held by a Division Bench of the Oudh Chief Court that Sikri Brother were the real plaintiffs and that the mere mention of the name of Nagpal through whom the suit was brought, did not make him the plaintiff and that the defect, if any was want of form and not of substance.

15. The views expressed by the Oudh Chief Court and the Allahabad High Court were referred to in Firm Sunkari Uadgiri and Co. v. Union of India, AIR 1954 Hyd 172 where a Single Judge of the Hyderabad High Court led that the production of certificate show that the production of a certificate showing the registration of a firm is sufficient in a case where the suit was instituted in the name of the firm without any further description of the partners suing on behalf of the firm.

16. In construing the provisions of S.69(2) one should bear in mind the procedure contemplated by Order 30 far the institution of suits by or against firms. Rule 1 of the Order 30 enables a suit be a filed in the name of the firm and any party to a suit may in such a case apply to a court for a statement of the names and address of the persons who we at the time of the accruing to the causes of action partners in such firm. If an application in that behalf is made the particulars have to be furnished and verified in such manner a the court may direct Sub-rule (20 says that where persons sue as partners in the name of the firm, any pleading or other document required by the Court to be signed, verified or certified by the plaintiff or the defendant maybe signed verified or certified by any of the partners suing in the name of the firm. The expression suing as partners occurring in section 69(2) of the Partnership Act, must be read and understood in the light of the provisions of Order 30. It is not unreasonable to infer that the requirement contemplated by the later part of sub-section (2) of section 69 was intended to come into play only in case where a disclosure of the names and particulars is called for in accordance with the provisions of Order 30. I am, inclined t think that the conjunction and in S.69(2) has to be construed in the disjunctive sense. The context in which the conjunction is used seems to imply that the legislature used it in a disjunctive sense. If sub-section (2) is to be read as prescribing the two pre-conditions in all cases of suits brought in the name of the partnership firm the provisions of Order 30 may be rendered nugatory, or ineffective. But if the conjunction and is construed in a disjunctive sense, and is read as or; the later part of sub-section (2) of section 69 would come into play only in those cases where a disclosure of the names and particulars is made under Order 30, Civil procedure Code.

17. In (1962) 66 Cal WN 262 the contention was urged that the word or should be substituted for and in reading and construing sub-section (2). But the contention was repelled on the ground that there was no compelling necessity to interpret the word in aidsjunctive sense. The learned Judge, however, did not take into consideration the provisions of Order, 30. I am of opinion that the word and occurring in sub-section (2) should be read as or. If this construction is adopted, it would follow that the expression persons suing as partners of the firm could be made applicable only to the persons whose names are disclosed as partners in accordance with the procedure laid down by Order 30.

18. A review of all the authorities goes to show that it is only the obiter dicta of the deciding of the Nagpur and patna High Courts that lend support to the contention a advanced by the appellants. The case in AIR 1952 Nag 57 supra is distinguishable for reasons already indicated by me. Nor is the authority in AIR 1964 Punj 270 supra in point. The last mentioned case rests on a construction of section 69(2) which is too wide and does not give due weight to the actual phraseology employed in the section. The ratio of the decisions of the Oudh Chief Court and the Allahabad High Court is clearly applicable to the case on hand. The High court of Hyderabad also shared that view on the application of the principles laid down in : AIR1952All695 supra. I hold that that the suit is maintainable although the the persons suing has not been produced by the plaintiff.

19. The hire purchase agreement describes P.R.C. Reddi as the managing partner of Sri Venkateswara Finance Corporation. The hire purchase agreement is admitted to be true. in the reply notice given by the defendants as also in the written statement. It is thus admitted by the defendants that Sri Venkateswara Finance Corporation is represented by its managing partner P.R.C. Reddi who is described in the plaint as one of the managing partners. The provisions of section 69(2) only postulate that the name of the persons suing must be shown to have been entered as partners in the register of firms. The mode of proof of that fact is not in any way restricted, It is consequently upon to the plaintiff to adduce evidence that the name of a partner suing on behalf of the firm has been entered as such in the register of firms. Viewed in this angle, the requirement of even the second part of S.69(2) must be deemed to have been fulfilled. The addition of the two other persons who are also described as managing partners must be disregarded as inconsequential because the suit on behalf of the firm, if brought even by one of the managing partners cannot be dismissed as incompetent.

20. The next contention urged by the learned counsel for the appellants is that the hire purchase agreement is illegal and cannot be sued upon. The illegality vitiating the agreement has not been clearly formulated. All that he was able to urge is that the motor vehicles inquisition were previously owned by the defendants and that there was no valid transfer of the title to the plaintiff firm. I do not think this contention is well founded. The submission of Counsel is that there is a breach of the terms of section 31 of the Motor Vehicles Act. this contention rests upon the erroneous reading of the section. All that the section requires is that after the transfer the authorities concerned must be notified about the change of the ownership.. If there is an omission in that regard, certain polities are indicated. The omission to notify the change of ownership does not make that transfer it self illegal. The view which I am inclined to take on a construction of section 31 is borne out by a decision of the Madras High Court Murthyasami Grounder v. Thulasi Ammal, (1970) 1 Mad LJ 263 which I came acore after the conclusion of the arguments. The learned Judge construed Section 31 in the sense that the transfer itself is not rendered illegal for contravention of the duty imposed upon the parties to the transfer. There is no substance in the argument that there was no valid transfer of the vehicle. Nor is there any foundation for the counsels submission that the delivery of the vehicle to the hirer is illegal without an intimation of the transfer of owner ship to the authorities concerned. The plying of the vehicles by the hirer on foot of the hire purchase agreement is not illegal and no provision of he Motor Vehicles Act is contravened by the insurance of the vehicles by the hirer although the ownership continues to vesting the other party to the agreement.

21. It is then urged that the amount actually lent was only Rs, 9,500/- and not Rs.10,400/- as claimed by the plaintiff. There is an admission that Rs. 10.450/- was lent in paragraph (50 of the written statement. In view of this admission, now right can be attached to Ex. A.2. Further the document relied on by the Counsel for the appellants shows that the total amount due was Rupees 10,450/- because of the addition of the insurance charges to the cash that was advanced to the hirer.

22. There is no substance in the other contentions urged by the learned counsel for the appellants.

23. The appeal fails and is dismissed with costs.

24. Appeal dismissed.


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