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O. Balanarayanan and ors. Vs. the Registrar of Firms, Trivandrum and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKerala High Court
Decided On
Case NumberO.P. 1955 of 1980-N
Judge
Reported inAIR1984Ker20
ActsKerala Partnership (Registration of Firms) Rules, 1959 - Rule 4(2); Partnership Act, 1932 - Sections 60, 61, 62, 63, 63(1), 71(1) and 71(2)
AppellantO. Balanarayanan and ors.
RespondentThe Registrar of Firms, Trivandrum and anr.
Advocates: N.N. Venkitachalam, Adv.
DispositionPetition allowed
Cases ReferredRaiasthan Trading Co. v. Registrar of Firms
Excerpt:
.....does not provide any limitation with reference to particular matter - state government cannot make rule prescribing rigid time limit with reference to that matter - held, rule 4 (2) is ultra vires of powers of state government under section 71 (2) of act. - - a careful reading of section 71 (1) and (2) will clearly show that no power has been conferred on the state government under this action to make any rule prescribing timelimit for filing statements, intimations and notices under sections 60, 61, 62 and 63 of the act. 233) :registration is indubitably in the interest of the trading public as well as the partners. the division bench also noticed that section 63 itself does not prescribe any limitation as to the period within which notice should be filed, and that the section..........show that no power has been conferred on the state government under this action to make any rule prescribing timelimit for filing statements, intimations and notices under sections 60, 61, 62 and 63 of the act. there is also nothing in section 63 either expressly or impliedly showing or indicating that the notice contemplated thereunder regarding changes in the constitution of partnership of the registered firm or the dissolution of a firm should be given within a prescribed time. there can be no doubt therefore that sub-rule (2) of rule 4 is ultra vires of the act and beyond the powers conferred on the state government,6. the above view finds support in a division bench ruling of the andhra pradesh high court in raiasthan trading co. v. registrar of firms (air 1975 andh pra 232)......
Judgment:
ORDER

S.K. Kader, J.

1. The three petitioners herein along with one R. Prabhakaran constituted a partnership under the name and style 'Polylaminates' and the same was duly registered with the Registrar of Firms. Trivandum, under the provisions of the Partnership Act --hereinafter called the Act, While so, by mutual consent the firm was dissolved with effect from 1-4-1975 and a deed of dissolution also was executed on 8-3-1976 by all the partners. Public notice of dissolution of the partnership was published in leading vernacular dailies and also in the Kerala Gazette dt. 23-3-1976. Notice of dissolution in the prescribed form was sent by R. Prabhakaran, one of the partners to the Registrar of Firms, the first respondent herein. But thereafter, Sri R. Prabhakaran left India and his whereabouts were not known. Recently when the first petitioner happened to go to the office of the Ist respondent, he came to know that as there was some defect the notice of dissolution sent by R. Prabhakaran was sent back to him long back on 20-3-1976. Thereafter, the first petitioner sent a copy of the original notice of intimation of the dissolution which had been signed by all the partners without any defect. The Ist petitioner also had sent along with that notice an application praying for condoning the delay, if any caused in sending Intimation of dissolution. While so, on 19-1-1980, the Ist petitioner received a memo from the Ist respondent stating that the application sent by him was returned and the same may be retransmitted after rectifying the defects noted. Ext. P-3 is that memo and the only defect noticed is that the notice was not filed within 15 days from the date of occurrence of the event as contemplated under Rule 4 (2) of the Kerala Partnership (Registration of Firms) Rules, 1959, hereinafter called the Rules.

2. In this O. P., the petitioners invoke the exercise of extraordinary powers of this Court under Article 226 of the Constitution of India to declare Rule 4 (2) of the Rules as void and illegal and also to issue a writ of mandamus directing the Ist respondent to accept Ext. P-1 instruction sent by the first petitioner or a copy of the same when presented by the Ist petitioner or other petitioners forthwith under Sec, 68 of the Partnership Act.

3. Strongly assailing Ext. P-3 order, the learned advocate appearing for the petitioner contended that the time limit prescribed in Sub-rule (2) of Rule 4 of the Rules is ultra vires as the Act does not give any power to the rule making authority to prescribe time as has been done in Sub-rule (2) of Rule 4.

4. Therefore, the only question that arises for determination in this O. P. is whether that portion of Sub-rule (2) of Rule 4 prescribing time limit namely 15 days from the date of the occurrence of the event, for every statement, or notice relating to a firm under Sections 60, 61, 62, 63 (1) and 63 (2) of the Act is ultra vires the Act.

5. Rule 4 (2) reads:--

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

Under Section 63 of the Partnership Act 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 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. On a reading of this section, it is very clear that the provisions therein are intended to benefit and protect, the interest of the individual partners. Rule making power has been given under Section 71. It reads:--

'71. Power to make Rules.-- (1) (The State Government) may make rules pre-scribing the fees which shall accompany documents sent to the Registrar of Firms or which shall be payable for the inspection of documents in the custody of the Registrar of Firms, or for copies from the Registrar of Firms:--

Provided that such fees shall not exceed the maximum fees specified in Schedule 1.

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

(a) prescribing the form of statement submitted under Section 58, and of the verification thereof.

(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:

(d) regulating the procedure of the Registrar when disputes arise;

(el regulating the filing of documents received by the Registrar;

(f) prescribing conditions for inspection of original documents:

(g) regulating the grant of comes;

(h) regulating the elimination of registers and documents.

(i) providing for the maintenance and form of an Index to the Register of Firms; and

(i) generally, to carry out the purpose of this Chapter.'

Admittedly, we are concerned here only with Clause (b). Under Clause (b) of Sub-section (2) of Section 71, the State Government has been authorised to frame rules requiring statements, intimations and notices under Sections 60, 61, 62 and 63 to be in the prescribed form, and prescribing the form thereof. It is significant to note that the rule making authority under this clause is confined only to prescribing the form and the manner in which the statements, intimations and notices have to be sent. Clause (e) only confers powers on the rule making authority to regulate the filing of the documents received by the Registrar. A careful reading of Section 71 (1) and (2) will clearly show that no power has been conferred on the State Government under this action to make any rule prescribing timelimit for filing statements, intimations and notices Under Sections 60, 61, 62 and 63 of the Act. There is also nothing in Section 63 either expressly or impliedly showing or indicating that the notice contemplated thereunder regarding changes in the constitution of partnership of the registered firm or the dissolution of a firm should be given within a prescribed time. There can be no doubt therefore that Sub-rule (2) of Rule 4 is ultra vires of the Act and beyond the powers conferred on the State Government,

6. The above view finds support in a Division Bench ruling of the Andhra Pradesh High Court in Raiasthan Trading Co. v. Registrar of Firms (AIR 1975 Andh Pra 232). A similar question arose for consideration before the Division Bench. The Division Bench was considering the validity and ultra vires of Rule 4 (2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957, The only difference is that these rules were framed by the State of Andhra Pradesh. Rule 4 (2) of the Kerala Partnership (Registration of Firms) Rules, 1959 and Rule 4 (2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957 are identical and as a matter of fact Rule 4 (2) of the Rules is a verbatim reproduction of Rule 4 (2) of the Andhra Pradesh partnership (Registration of Firms) Rules, 1957. In Rajasthan Trading Company's case, it was observed (at p. 233) :--

'Registration is indubitably in the interest of the trading public as well as the partners. A partner who is newly introduced into the firm will be unable to claim his dues from the partners if 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.'

It was further observed that it will be in the interest of the partner to give immediate notice to the Registrar. The Division Bench also noticed that Section 63 itself does not prescribe any limitation as to the period within which notice should be filed, and that the section which is designed to give relief to the partners of the firm as well as the public should be construed more benevolently. It was held by the DivisionBench 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 (21 of the Act empowers the Government to make rules prescribing any time-limit for the submission of notice or intimation under Section 63(1). It was held that in the circumstances, Rule 4 (21 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 was therefore struck down. From the above discussion and findings, it follows that Rule 4 (2) of the Rules is ultra vires of the Act and beyond the powers conferred on the State Government.

7. In the result, the O. P. is allowed. Rule 4 (2) of the Rules is hereby struck down; and Ext. P-3 the proceedings of the Registrar passed in pursuance of the said Rule is also quashed. In the circumstances, the petitioners are entitled to represent Ext. P-1 to the Ist respondent in accordance with the provisions of the Act.


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