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Rajasthan Trading Co. Vs. the Registrar of Firms and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petn. No. 1898 of 1973
Judge
Reported inAIR1975AP232
ActsPartnership Act, 1932 - Sections 63(1) and 71(2); Andhra Pradesh Partnership (Registration of Firms) Rules, 1957 - Rule 4(2); Constitution of India - Article 245
AppellantRajasthan Trading Co.
RespondentThe Registrar of Firms and anr.
Appellant AdvocateC.P. Sarathy and ;C. Jayashree Sarathy, Advs.
Respondent AdvocateGovt. Pleader for Revenue
DispositionPetition allowed
Excerpt:
.....(1) and 71 (2) of partnership act, 1932, rule 4 (2) of andhra pradesh partnership (registration of firms) rules, 1957 and article 245 of constitution of india - change in constitution of firm - notice to registrar - refusal to accept on grounds that intimation beyond time limit as per rule 4 (2) - writ petition filed challenging validity of rule 4 (2) - statute does not provide for such limitation - held, rule 4 (2) prescribing limitation is ultra vires powers of state government. - - f 2/8052/72 dated 30-11-1972 informing that the form v notice cannot be taken on the office record since the petitioner failed to inform the change in the constitution of the firm within 15 days from the date of the said change as required under sub-rule (2) of rule 4 of the andhra pradesh partnership..........is as to the validity of rule 4 (2) of the andhra pradesh partnership (registration of firms) rules, 1957. 2. the aforesaid question arises in the following circumstances: the petitioner is a partnership firm named m/s rajasthan trading company, osmanganj hyderabad, registered under the indian partnership act, 1932. the firm was registered on 8th october, 1968 subsequently, there were alterations in the constitution of the firm and they were carried out as and when the changes were notified to the registrar of firms, hyderabad on 14-11-1969 the partners of the firm were: sri satyanarayan bhangadia, smt ratan bai bhattad, sri nandlal sarda, smt. yashodabai, sri pannalal hiralaj bhangadiya, religious and charitable trust, bidar, represented by their trustees, sri srigopal.....
Judgment:

Chennakesav Reddy, J.

1. The only question requiring determination in this writ petition presented under Article 226 of the Constitution is as to the validity of Rule 4 (2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957.

2. The aforesaid question arises in the following circumstances: The petitioner is a partnership firm named M/s Rajasthan Trading Company, Osmanganj Hyderabad, registered under the Indian Partnership Act, 1932. The firm was registered on 8th October, 1968 Subsequently, there were alterations in the constitution of the firm and they were carried out as and when the changes were notified to the Registrar of Firms, Hyderabad On 14-11-1969 the partners of the firm were: Sri Satyanarayan Bhangadia, Smt Ratan Bai Bhattad, Sri Nandlal Sarda, Smt. Yashodabai, Sri Pannalal HiralaJ Bhangadiya, Religious and Charitable Trust, Bidar, represented by their trustees, Sri Srigopal Bhattad, and Sri Raj Kumar and Sri Kant, minors. On 19-10-1971 the last mentioned two minor partners viz., Sri Raj Kumar and Sri Kant ceased to be the partners of the firm. On 20-10-1971 the firm was reconstituted with the other seven existing partners and the newly admitted partners, Smt. Kesavbai, Sri Venugopal Inani and Sri Srigopal Inani, Sri Kailashanarayan, minor by guardian Satyanarayana Bhangadia and Sri Kachrulal, minor by guardian Smt. Sarjoobai (the last two minors being admitted to the benefits of partnership).

3. The petitioner filed notice of the change in the constitution of the firm as required under Section 63(1) of the Indian Partnership Act (hereinafter referred to as the Act) in the office of the Registrar of Firms on 4-9-1972 The required amount towards the notice fee was also paid. But the Registrar of Firms returned the said notice to the petitioner in his letter No. F 2/8052/72 dated 30-11-1972 informing that the form V notice cannot be taken on the office record since the petitioner failed to inform the change in the constitution of the firm within 15 days from the date of the said change as required under Sub-rule (2) of Rule 4 of the Andhra Pradesh Partnership Rules. The petitioner alleges that the petitioner-firm underwent number of changes in its constitution after the first registration, that he has been intimating the Registrar of Firms about the said changes and that at no time an objection was taken that the change should be intimated within 15 days from the date of any such change in the constitution although the petitioner had not filed the said notices within 15 days. The petitioner also alleges that the action of the Registrar in returning the notice dated 4-9-1972 is not warranted by the provisions of the Act. The petitioner, therefore, filed the present writ petition seeking to quash the notice of the Registrar of Firms dated 30-11-1972 and to direct the Registrar of Firms to record the change in the constitution of the firm.

4. In the counter-affidavit filed on behalf of the Registrar of Firms, it is admitted that in several cases, statements, intimations or notices relating to a firm under Sections 60, 61, 62, 63(1) or 63(2) of the Act filed in the office after the expiry of the period of 15 days had been accepted. In this case when the matter was brought to the notice of the Government for clarification the Government in their Memo dated 14-9-1972 informed the Registrar, and in pursuance of the said orders of the Government, notices and statements received, after the prescribed period of 15 days under Rule 4 (2) of the Andhra Pradesh Partnership Rules are to be rejected. It is stated that statements and notices received after the period of 15 days are being rejected in pursuance of the orders of the Government.

5. The learned counsel for the petitioner submits that under Section 63(1) of the Act, a notice to the Registrar may he given when a change occurs in the constitution of the registered firm specifying the date of change and the Registrar shall make a record of the notice in the entry relating to the firm in the register of Firms and file the notice along with the statement relating to the firm. He submits that it is mandatory on the part of the Registrar to make a record of notice and file the notice along with the statement relating to the firm. He submits that it is mandatory on the part of the Registrar to make a record of notice, and file the notice along with the statement relating to the firm when once the firm gives a notice. He argues that the Registrar has no power to return the notice on any grounds and particularly on the ground that the notice should be given within 15 days since the section itself does not impose any such limitation. He argues that no rule can be framed beyond the scope of the section itself. It is also his submission that Section 71 of the Act which empowers the State Government to make rules does not empower the Registrar to frame rules to prescribe time-limit for the notice and hence Rule 4 (2) of the Andhra Pradesh Partnership Rules, 1957, is beyond the scope of the rule-making power under Section 71 of the Act and is ultra vires of the provisions of the Act.

6. On the other hand, the learned Government Pleader supports the validity of the rule on the ground that Section 71(2) (e) and (j) of the Act empower the Government to prescribe the period of limitation for filing the statements, intimations or notices.

7. To answer the question, it is necessary to read the relevant provisions of the Act and the rules made thereunder. Section 63(1) of the Act reads as follows:--

'When a change occurs in the constitution of a registered firm any incoming, continuing or outgoing partner, and when a registered firm is dissolved any person who was a partner immediately before the dissolution or the agent of any such partner or person specially authorised in this behalf, may give notice to the Registrar of such change or dissolution, specifying the date thereof; and the Registrar shall make a record of the notice in the entry relating to the firm in the Register of Firms, and shall file the notice along with the statement relating to the firm filed under Section 59.'

Section 71 empowers the State Government to make rules subject to the condition of previous publication. Section 71(2) (b) and (c) which are relevant for our purpose read:--

'71 (2) The State Government may also make rules:--

(a) x x x

(b) requiring statements, intimations and notices under Sections 60, 61, 62 and 63 to be in prescribed form, and prescribing the form thereof:--,

(c) prescribing the form of the Register of Firms, and the mode in which entries relating to firms are to be made therein, and the mode in which such entries are to be amended or notes made therein.'

Sub-rule (2) of Rule 4 of Andhra Pradesh Partnership (Registration of Firms) Rules, 1957, framed under Section 71 of the Act reads:--

'Every statement, intimation or notice relating to a firm, under Sections 60, 61, 62, 63(1) or 63(2) of the Act, shall be sent or given to the Registrar together with the prescribed fee within 15 days from the date of occurrence of the event referred to in such statement, intimation or notice,'

Section 63 appears in Chapter VII of the Act and headed 'Registration of Firms'. Registration itself of a Firm is not made compulsory under the Act nor does it impose any penalties for non-registration. Only a right to registration of the firm by furnishing the required particulars is given under the Statute. The Act (Section 69) however imposes certain disabilities for non-registration on the partners of the firm and the firm itself to sue in a Civil Court.

8. Registration is indubitably in the Interest of the trading public as well as the partners. It would render easy to prove the existence of the partnership in case of disputes between the partners themselves or between the trading public and the firm. A partner who is newly introduced into the firm will be unable toclaim his dues from the partners it his name is not registered in the Register of Firms. The third party who deals however with a firm without knowing the addition of a new partner or knows that a new partner has been introduced can either content himself with the security of the other partners or insist upon the registration of a new partner as a condition for further dealings. However, in the case of expelled or retired partner, it is necessary to have the changes noticed in the Register since he continues to be liable for the acts of the firm until notices were given of the retirement or expulsion. Therefore, it will be in his own interest to give immediate notice to the Registrar. Therefore, Section 63(1) does not make it imperative but merely permissive to the partner incoming, continuing or outgoing when a change occurs in the constitution of a registered firm, to give notice to the Registrar of such change specifying the date thereof. But when once the change is notified, the Registrar shall make a record of the notice in the entry relating to the firm in the Register of Firms, and shall file the notice along with the statement relating to the firm filed under Section 59. The section itself does not prescribe any limitation as to the period within which notice should be filed. Notice should, however, be given within a reasonable time. The section which is designed to give relief to the partners of the firm as well as the public should be construed more benevolently.

9. Clause (b) of Sub-section (2) of Section 71 only empowers the State Government to make rules prescribing the form in which the various statements, intimations and notices required under Sections 60, 61, 62 and 63 should be sent. Under Sub-clause (c) rules prescribing the form of the Register of Firms and the mode in which entries relating to the firms are to be made therein, can be framed by the State Government. The 'Form' in which such notices or intimations should be sent, or the 'mode' in which entries are to be made in the register, cannot take in, the time-factor for doing the thing. According to Stroud's Judicial Dictionary the words 'manner and form' refer only 'to the mode in which the thing is to be done, and do not introduce anything from the Act referred to, as to the thing which is to be done or the time for doing it.' In our opinion, Section 71(2) of the Act does not empower the State Government to prescribe the minimum period of limitation for the submission of the intimations or notices under the Act But Rule 4 (2) framed in exercise of the power under Section 71(2) specifically states that every statement, intimation or notice relating to a firm under Sections 60, 61, 62, 63(1) or 63(2) of the Act shall be sent or Riven to the Registrar together with the prescribed fee within 15 days from the date of such occurrence referred to in such statement, intimation or notice. As already noticed. Section 63(1) of the Act prescribes no such period of limitation nor does it authorise the rule-making authority to prescribe. That apart, in Section 63(1) itself permissive words are employed by the Legislature that a person may send intimation to the Registrar about the change in the constitution of the firm. The consequence of non-compliance with the provisions of the section are not found in the section itself or in the rules. Further, if the notice sent after the prescribed period of 15 days about the change is rejected, that would result in defeating the manifest purpose of the legislation, namely, to have the names of the persons entered in the Register of Firms. We are, therefore, of the opinion, that Rule 4 (2) of the Andhra Pradesh Partnership Rules is beyond the rule-making power of the State Government.

10. It would be apposite at this stage to refer to some of the decided cases on the point, in Sales Tax Officer, Ponkunnam v. K. 1. Abraham, AIR 196') SC 1-823 the question that arose was whether the third proviso to Rule 6 (1) of the Central Sales Tax (Kerala) Rules, 1957. prescribing the tune-limit within which a declaration must be filed by a registered dealer was ultra vires of Section 8(4) read with Section 13(4)(e) of the Central Sales Tax Act. Section 13(4)(e) did not authorise the rule-making authority to make rules prescribing the time-limit within which declarations should be made by a dealer. The Supreme Court observed at page 1825:

'The decision of the question at issue therefore depends on the construction of the phrase 'in the prescribed manner' in Section 8(4) read with Section 13(4)(e) of the Act, In our opinion, the phrase 'in the prescribed manner' occurring in Section 8(4) of the Act only confers power on the rule-making authority to prescribe a rule stating what particulars are to be mentioned in the prescribed form, the nature and value of the goods sold, the parties to whom they are sold, and to which authority the form is to be furnished. But the phrase 'in the prescribed manner' in Section 8(4) does not take in the time-element. In other words, the section does not authorise the rule-making authority to prescribe a time-limit within which the declaration is to be filed by the registered dealer.'

In that case the Supreme Court held that the third proviso to Rule 6 (1) is ultra vires of the rule-making power and that the assesses was not bound to furnish the declaration in form 'C' within the prescribed time. It was observed further that in the absence of any such time-limit it was the duty of the assessee to furnish the declarations in the form 'C' within a reasonable time.

11. In Basta Colla Coliery Co. (P.) Ltd. v. State of Bihar, : AIR1969Pat42 the Bihar High Court ruled that Section 8(4) read with Section 13(4) of the Central Sales Tax Act did not authorise the State Government bo frame a rule to bring home the rigour of time-limit for the submission of the declarations and the returns.

12. In Solar Works, Madras v. Employees' State Insurance Corporation, Madras, : (1963)IILLJ597Mad the Madras High Court held that Rule 17 of the Madras Employees' Insurance Court Rules, 1961, is ultra vires the rule-making powers of the State under Section 96 of the Employees' State Insurance Act, 1948. In that case also no time-limit was prescribed under the Act to file an application to recover Employer's contribution under Section 75(2). A time-limit is prescribed under the rules, while no specific power was expressly given to prescribe any time-limit. The learned Judges observed:

'...... Section 96(b) which we have just re-produced does not refer in any sense, to a power to prescribe time or to lay down any rule of limitation. In the light of the tendency shown in recent times, not to consider the power to prescribe limitation as merely a part of procedural provisions, at least so far as legislative competence is concerned, we agree with the argument of the learned Advocate-General that Section 96(b) will not authorise the State Government to make a rule for limitation, as for instance Rule 17 which is now in controversy.'

The learned Judges in that case held that Rule 17 was ultra vires of the rule-making power and that the application of the employees was not time-barred in any sense and the statute itself prescribes no such limitation.

13. The above decisions are persuasive authorities for the proposition in the present case that when the statute itself does not provide for any limitation with reference to a particular matter and the delegation of power to make rules is conferred by a section of the Act which does not expressly or impliedly relate to the power to prescribe time, the authority to which the power is delegated, namely, the State in this case, cannot make -a rule prescribing a rigid time-limit with reference to that matter. It is manifest that in this case neither Section 63(1) nor Section 71(2) of the Act em-powers the State Government to make rules prescribing any time-limit for the submission of notice or intimation under Section 63(1). In the circumstances, Rule 4 (2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957 is ultra vires of the powers of the State Government under Section 71(2) of the Act. The said Rule is, therefore, struck down, and the proceedings of the Registrar of Firms in F 2/8052/72, dated 30-11-1972 are quashed. It cannot be said that the intimation in this case about the change in the constitution of the firm has not been sent to the Registrar of Firms within a reasonable time. Therefore, the Registrar of Firms is directed to make a record of the notice in the entry relating to the firm in the Register of Firms and file the notice along with the statement relating to the firm filed under Section 59 of the Act.

14. The Writ Petition is accordingly allowed with costs. Advocate's fee Rs. 100/-.


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