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D.C. Upreti Vs. B.D. Karnatak - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAllahabad High Court
Decided On
Case NumberCivil Revn. No. 401 of 1984
Judge
Reported inAIR1986All32
ActsPartnership Act, 1932 - Sections 69, 69(2) and 69(3)
AppellantD.C. Upreti
RespondentB.D. Karnatak
Appellant AdvocateRajesh Tandon, Adv.
Respondent AdvocateS.R. Misra and ;H.R. Misra, Advs.
DispositionRevision dismissed
Excerpt:
commercial - unregistered firm - section 69 (2) (3) (a) of partnership act, 1932 - suit for dissolution of partnership firm not disqualified by section 69 - protected under exception to section 69 - a partner of unregistered firm has the right to include a claim for accounts in a suit for dissolution - need not bring two separate suits. - - thus the suit was clearly hit by section 69 of the partnership act and was not maintainable. ' 18. in the instant case it is obvious that it was a suit for dissolution and accounts of an unregistered partnership firm and such a suit is well protected by sub-section (3)(a) of section 69 of the partnership act......part of the saving clause (a) of sub-section (3) and also on a proper view of the nature of such suit, a suit for dissolution and accounts of an unregistered firm is protected by sub-section (3) of section 69 of the partnership act from the bar under the earlier sub-section or subsections of that section.'18. in the instant case it is obvious that it was a suit for dissolution and accounts of an unregistered partnership firm and such a suit is well protected by sub-section (3)(a) of section 69 of the partnership act. this exception excluded such suit from the operation of the general rule as laid in section 69, sub-section (2) of the aforesaid act.19. under the circumstances the finding that such type of suit is saved by the aforesaid exception and is not barred by section 69 of the.....
Judgment:
ORDER

N.N. Sharma, J.

1. This is a defendant's revision directed against the order dt. 11-6-1984 recorded by learned Civil Judge, Nainital Sri S.C. Sharma in Original Suit No. 92 of 1983 by which he terminated issue No. 2, a preliminary issue, against the defendant and held that the suit was not barred by Section 69 of the Partnership Act.

2. Plaintiff filed the suit for dissolution of partnership and accounts in the court of learned Civil Judge, Nainital. The partnership was alleged in pursuance of an oral agreement as laid in para 5 of the plaint. Parties were to invest equal amounts in the venture and share the profit and loss equally. It was the business of running paddle boats in Nainital lake from May, 1982.

3. According to the averments laid in the plaint partnership has not been dissolved even now. So the reliefs sought were : --

1. That a decree of dissolution of the partnership business be passed.

2. A decree for accounting of the partnership business up to the date of final dissolution be passed. Other alternative and incidental reliefs were also sought which are not material to be detailed for the disposal of this revision.

4. Defendant denied the alleged partnership and inter alia pleaded that the suit was barred by Section 69 of the Partnership Act

5. Issues were drawn on 16-11-1983 and issue No. 2 was disposed of as preliminary issue on the prayer of defendant without adduction of oral evidence.

6. Aggrieved by this finding this revision was preferred.

7. I have heard learned counsel for the parties and perused the record.

8. On behalf of revisionist reliance was placed upon Loon Karan Sethia v. Ivon E. Joan reported in : [1977]1SCR853 .

9. Briefly stated the material facts of the case are that Seth Loon Karan Sethia, plaintiff as a financier advanced loan to two sets of defendants viz. Ivon E. Joan, etc. at different times. Some of the items advanced by the Financier were on behalf of the partnership Firm Sethiya and Company. It was found that the alleged partnership was unregistered. Defendants put forward the plea of Section 69 of the Partnership Act which reads as below:--

'69.(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.

(2) 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 persons suing are or have been shown in the Register of Firms as partners in the firm.

(3) The provisions of Sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect : --

(a) the enforcement of any right to sue for dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or.................'

10. It was observed at page-347 : --

'A bare glance at the section is enough to show that it is mandatory in character and its effect is to render a suit by a plaintiff in respect of a right vested in him or acquired by him under a contract which he entered into as a partner of an unregistered firm, whether existing or dissolved, void. In other words, a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Section 69 of the Partnership Act. In the instant case, Seth Suganchand had to admit in unmistakable terms that the firm 'Sethiya & Co.' was not registered under the Partnership Act. It cannot also be denied that the suit out of which the appeals have arisen was for enforcement of the agreement entered into by the plaintiff as partner of Sethiya & Co. which was an unregistered firm. That being so, the suit was undoubtedly a suit for the benefit and in the interest of the firm and consequently a suit on behalf of the firm. It is also to be borne in mind that it was never pleaded by the plaintiff, not even in the replication, that he was suing to recover the outstandings of a dissolved firm. Thus the suit was clearly hit by Section 69 of the Partnership Act and was not maintainable.'

Thus it was not a suit for dissolution of firm or for rendition of accounts brought by one partner of an unregistered firm against another so as to fall within the exception of the General Rule laid by Section 69(2) of the Partnership Act.

11. The next authority relied upon by learned Advocate for the revisionist has been reported in Ram Adhar v. Rama Kirat Tiwari : AIR1981All405 . In that case a suit was filed for recovery of amount by partners of an unregistered firm and the plea that the suit could not have laid on account of the bar of Section 69(2) of the Partnership Act was upheld.

12. Learned counsel for the revisionist next relied upon a Division Bench Case reported in Basant Lal Jalan v. Chiranji Lal Sarawai, AIR 1968 Pat 96.

13. It was a suit for recovering assets of partnership by one partner of an unregistered Firm. It was found that such a suit was an exception to the aforesaid Rule and was not barred.

14. The next authority relied upon has been reported in Smt. Umarani Sen v. Sudhir Kumar Datta, : AIR1984Cal230 . In that case partners of an unregistered firm sued the common carrier for loss of such goods entrusted for transport. It was held that the suit did not lie since under Section 69(2) of the Partnership Act they were not entitled to enforce any right arising from a contract between the unregistered Firm on the one hand and the defendant on the other.

15. Learned counsel for the revisionist also relied upon a Division Bench Case of this Court reported in Sheo Dutt v. Pushi Ram AIR 1947 All 229. It was a suit by one partner against another partner of an unregistered firm for recovery of the amount overdrawn by the latter from the partnership assets. Such suit was held as competent.

16. Learned counsel for the opposite party relied upon a Division Bench case reported in Shibba Mal v. GulabRai : AIR1939All735 . It was posited : --

'If a partner of an unregistered firm sues for the dissolution of partnership he is entitled to the ordinary decree which the Court passes in such a suit. Provision is made for this decree in Order 20, Rule 15, C.P.C. The right of a partner therefore of an unregistered firm to a decree for accounts in a suit for dissolution remains unaffected by the provisions of Section 69, Partnership Act, in view of the proviso contained in Sub-section (3) thereof. A partner of unregistered firm has the right to include a claim for accounts in a suit for dissolution. He need not bring two separate suits for them.'

17. The next authority relied upon has been reported in another Division Bench case Abdul Razaak v. Mashiruddin Ahmed : AIR1959Cal660 . It was observed at page-661 : --

'On a proper and reasonable construction of the first part of the saving Clause (a) of Sub-section (3) and also on a proper view of the nature of such suit, a suit for dissolution and accounts of an unregistered firm is protected by Sub-section (3) of Section 69 of the Partnership Act from the bar under the earlier sub-section or subsections of that Section.'

18. In the instant case it is obvious that it was a suit for dissolution and accounts of an unregistered partnership Firm and such a suit is well protected by Sub-section (3)(a) of Section 69 of the Partnership Act. This exception excluded such suit from the operation of the General Rule as laid in Section 69, Sub-section (2) of the aforesaid Act.

19. Under the circumstances the finding that such type of suit is saved by the aforesaid exception and is not barred by Section 69 of the partnership Act is correct. So I do not find any merit in this Revision which is dismissed with costs. Interim stay order dt. 13th July, 1984 is vacated herewith.


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