Skip to content


Krishnan Neelakantan and ors. Vs. Krishnan Kochukannan - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKerala High Court
Decided On
Case NumberSecond Appeal No. 1186 of 1962
Judge
Reported inAIR1967Ker96
ActsPartnership Act, 1932 - Sections 42 and 69(3)
AppellantKrishnan Neelakantan and ors.
RespondentKrishnan Kochukannan
Appellant Advocate P. Krishnamoorthy and; P.C. Chacko, Advs.
Respondent Advocate T.M. Cherian, Adv.
DispositionAppeal allowed
Cases ReferredKuruvilla Thomas v. Kuruvilla Ittan
Excerpt:
- - the question is whether the failure to register under section 69 of the partnership act was a bar to the suit......42 of the partnership act, section 42 provides that subject to contract between the partners, a firm is dissolved if the term of the partnership is over, if the purpose of the partnership is over, on the death of a partner and by the adjudication of a partner insolvent. these four clauses are subject to contract among the partners; andthese clauses will not apply when there is a dissolution by act of the partners. the travancore-cochin decision has held that by the termination of a chilly the purpose of the partnership does not come to an end; and that the purpose can come to an end only after the non-prized subscribers are paid their dues by collecting amounts from the prized subscribers. it should be so, because the purpose of the partnership is not merely to close the chilly, if.....
Judgment:

T.C. Raghavan, J.

1. Two questions come up for consideration in this Second appeal, the first being the more important one. The question is whether the failure to register under Section 69 of the Partnership Act was a bar to the suit. The trial Court held that it was not a bar, while the lower appellate Court held that it was.

2. The appellants started a chitty as a partnership; but the partnership was not registered. The respondent was a subscriber to the chitty, who bid and received the prize money. He executed a hypothecation bond, evidenced by Ex. P-1, to secure the payment of future subscriptions. On 10th October 1957 by a special resolution evidenced by Ex. P-5 the partnership was dissolved; and thereafter, the suit giving rise to the second appeal was brought on Ex. P-1. It was then contended by the respondent that the suit was not maintainable, since the partnership was not registered.

3. The counsel of the appellants draws my attention to the Division Bench ruling of the Madras High Court in Shanmugha Mudaliar v. Rathina Mudaliar, AIR 1948 Mad 187, Genlle, C. J., who spoke for the Court, observed that the intention of the legislature in enacting Section 69 was only to inflict disability for non-registration during the subsistence of the partnership. Sub-section (3) of Section 69 is in the nature of a proviso to Sub-sections (1) and (2); and it enacts that the provisions of Sub-sections (1) and (2) shall not affect, inter alia, 'any right or power to realise the property of a dissolved firm'. It is clear from this that in the case of a dissolved firm the disability contemplated by the non-registration of the firm is not to apply.

4. The reason for this is made clear by Gentle, C. J. The registration of a partnership can be effected just before the suit is filed; and such registration will enable the partnership to maintain the action regarding any claim or transaction even prior to the registration. In other words, law does not impose any disability on unregistered partnerships acquiring property or dealing with third parties; the only disability imposed is that no suit by an unregistered partnership in certain cases is maintainable. It is evident that after the dissolution of a partnership it can no more be registered. It follows that if the partnership is dissolved, for bringing a suit to realise the properly of such dissolved firm non-registration of the firm will not be a bar.

5. The counsel of the respondent invites my attention to the Division Bench ruling of the Travancore-Cochin High Court in Kuruvilla Thomas v. Kuruvilla Ittan, ILR 1955 Trav-Co 317. The learned, Judges have interpreted in that decision Section 42 of the Partnership Act, Section 42 provides that subject to contract between the partners, a firm is dissolved if the term of the partnership is over, if the purpose of the partnership is over, on the death of a partner and by the adjudication of a partner insolvent. These four clauses are subject to contract among the partners; andthese clauses will not apply when there is a dissolution by act of the partners. The Travancore-Cochin decision has held that by the termination of a chilly the purpose of the partnership does not come to an end; and that the purpose can come to an end only after the non-prized subscribers are paid their dues by collecting amounts from the prized subscribers. It should be so, because the purpose of the partnership is not merely to close the chilly, if further work of collecting and distributing amounts remains. But, this does not mean that by agreement among the partners the partnership cannot be terminated. Partnership is the result of agreement among the partners; and it can be terminated also by agreement of the partners. To such a case of dissolution by agreement of the partners Section 42 will not apply; and the decision of the Travancore-Cochin High Court can apply only to a case falling within Section 42. To the case before me, since the dissolution was by special resolution and not by virtue of Section 42, the Travancore-Cochin decision will not apply.

6. The next question, the less important one, is whether Act XXXI of 1958 applies. The lower appellate Court has held that it applies; and I do not think there is any ground for differing from that conclusion.

7. The second appeal is ultimately allowed, the decision of the lower appellate Courtla set aside and the decision of the trial Courtis restored with the modification that the respondent will be entitled, in execution, to benefitof Act XXXI of 1958, if he is otherwise entitled to them. The appellants will gel theircosts in this Court and in the lower appellateCourt.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //