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Kesrimal and anr. Vs. Dalichand and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberCivil Revision No. 233 of 1954
Judge
Reported inAIR1959Raj140
ActsPartnership Act, 1932 - Sections 42, 63 and 69
AppellantKesrimal and anr.
RespondentDalichand and ors.
Appellant Advocate Kishore Singh, Adv.
Respondent Advocate Prakash Chandra, Adv.
DispositionRevision dismissed
Cases ReferredRamkumar v. Kishori Lal.
Excerpt:
.....is important for the purposes of the case before me that if additional partners had come into the firm as partners since the date of registration, and their names had not been entered in the register in accordance with a notice to be given as to the change in the constitution of the firm to the registrar, it may well be that the firm then constituted could not sue. if that was so, with profound respect, i find it difficult to understand how it can be said that the requirements of sub-section 2 of section 69 were fulfilled in this case, because even though the first requirement, thereunder, namely that the firm was registered, stood fulfilled, it could hardly be said that the other requirement, namely that the persons suing are or have been shown in the register of firms as the partners..........now, so far as the bombay case is concerned, the position therein was briefly this. there was a firm registered in the name of three persons to start with. one of these persons died. the suit was then brought by the two surviving partners, whose names undoubtedly appeared in the register of firms, also at the time the suit was brought. it was held that in view of the fact that the firm was registered at the date of the institution of the suit and that the names of the persons suing were shown in the register of firms at the date of the institution of the suit, the requirements of section 69(2) of the partnership act were amply fulfilled, no matter that the third partner had in the meantime died and that no notice of his death had been given to the registrar of firms. this decision,.....
Judgment:
ORDER

I.N. Modi, J.

1. This is a revision by the plaintiffs. Kesrimal and another in a suit for money against' the judgment and decree of the District Judge, Balotra dated 28-5-1954 by which he upheld the dismissal of the suit by virtue of the provisions of Section 69 of the Partnership Act.

2. The material facts leading up to this revision may shortly be stated as follows:

3. The case of the plaintiffs Kesrimal and Pukhraj was that they were carrying on business in the name of Kesrimal Pukhraj and that they were partners of a firm, which was registered and that there were no other partners in the firm except these two. It was then alleged that there were money dealings between the plaintiffs' firm and Pratapmal deceased, father of the defendants opposite parties from samwat 2001 migsar vad 4th to Samwat 2006 kartik vad 14 and that the said Pratapmal on the last mentioned day, after going through the accounts, executed a khata in favour of the plaintiffs' firm for a sura of Rs. 379/1/- and agreed to repay the same with interest at the rate of 6 per cent, per annum.

The defendants opposite parties were called upon to pay oft the debts of their deceased father, but without any result. Consequently, the plaintiffs instituted the present suit for the recovery of Rs. 442/5/- including principal and inerest on the 6th October, J952 in the court of the Munsiff, Balotro. Defendant Dalichand allowed the suit to proceed ex parte against himself. The other two defendants Bapulal and Pukhraf were minors and filed a written statement through their court guar-dian in which they pleaded ignorance of the suit dealings as also of the plaintiffs' firm having been registered.

Both the courts below held that the document (Ex. 1/4) alleged to have been executed by Pratapmal in favour of the plaintiffs' firm was proved to have been executed by him, but they dismissed the suit on the ground that the plaintiffs' firm was not registered and also that they had failed to show that they were entitled to sue the defendants on behalf of the firm Kesrimal Pukhraj as its partners. The plaintiffs have consequently come up in revision to this Court.

4. The contention raised by learned counsel :for the petitioners is that the finding of the courts below that they had failed to show that their firm had been registered, is wrong and should the set aside. Reliance is placed in support of this con-tention on the following facts. It is pointed out that this firm Kesrimal Pukhraj was set up for the first time in Samvat 1995 and that Kesrimal and Puldiraj's father Premchand were its partners. It is further submitted that an application for the registration of the firm, as constituted above, was made to the Registrar of firms of the State of Jodhpur, as it then was, and that the latter granted a certificate, as per copy thereof Ex. 2.

This certificate is dated 6-12-1943. It was fur-ther submitted that Premchand had died in Sam-wat 2005 but Premchand's son Pukhraj continued in the partnership and, therefore, the firm continued to exist and no fresh registration of the firm was necessary. The contention on the side of the respondent was and is that on the death of Premchand, the firm was dissolved and its fresh regis-tration was necessary for the purposes of Section 69 of the Partnership Act.

5. Having given my careful consideration to this aspect of the case, I am disposed to hold the view that there can be no serious obstacle in the way of the acceptance of the position so far advanced by learned counsel for the petitioners. It is true that Section 42 of the Partnership Act provides that a firm is dissolved by the death of a partner. It must, however, be remembered that this would be subject to contract between the partners as the opening words of Section 42 go to show.

Again, it is not necessary that a contract between the partners in this connection need be express, but may be implied and it may be possible to spell out such a contract from the subsequent conduct of the surviving partner and the heirs of the deceased. Whether a firm, which should have otherwise been dissolved by the death of one of its partners, still continued to exist without being dissolved, would depend on the facts and circum-statoces of each case.

We have the plaintiff's own averment in the plaint supported by the testimony of plaintiff Kesrimal in court to the effect that Kesrimal and Pukhraj have been continuing as partners of the firm in question even though it is common ground between the parties that Pukhraj's father Premchand died some time in samwat 2005 (corresponding to some time in 1948 A. D.) and the present suit was brought on 6-10-1952. In these circumstances, I am inclined to the view that the partnership business which was commenced during the life time of Premchand between him and Kesrimal continued to subsist even after Premchand's death and it was not dissolved by his death, and that Kesrimal and Premchand's son Pukhraj became the partners thereof.

6. The question, however, is whether on Premchand's death, a fresh registration of the firm became necessary as a matter of law. I think not. The relevant provision in this connection is to be found in Section 63(1) of the Partnership Act. This section provides that:

'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 his agent, may give notice to the Registrar of such change or dissolution, specifying the date thereof, and thereupon, the Registrar shall make a record of such 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.'

7. The language of Section 63 is permissive as it uses the word 'may' and not 'shall'. It has, therefore, been held and I respectfully agree with that view that a change in the constitution of a registered firm owing to the coming in or going out of a partner or by the death of a partner does not occasion the necessity of any fresh registration, but all that is required is, that the change, thus brought about, should be notified to the Registrar and it is then for the latter to make a note of it in the relevant register.

Reference may be made in this connection to Pratapchand Ramchand and Co. V. Jehangirji Bomanji, AIR 1940 Bom 257 and Maddi Sudar-sanam v. Borogu Viswanadharn Bros., (S) AIR 1955 Andh Pra 12. In this view of the matter, I have no hesitation in coming to the conclusion that the plaintiffs' firm Kesrimal Pukhraj must be accepted to be a registered firm at the time of the institution of the suit notwithstanding the death of one of its partners prior thereto and the finding of the courts below, to the contrary, cannot be accepted as correct.

8. That, however, does not conclude the matter, because it is still to be seen whether the requirements of Sub-section 2 of Section 69 of the Partnership Act which have an obvious relevance in this connection, are fulfilled. Section 69(2) is in these terms : --

'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 of the firm.'

9. This sub-section clearly requires that before a suit, in order to enforce a contractual right accruing in favour of a firm, can be filed, two conditions must be fulfilled. The first condition is that the firm must be registered, and the second is that the person or persons suing must have been shown in the Register of Firms as partner or partners of the firm.

10. I have already held above that so far as the first condition is concerned, it does stand fulfilled in the present case. The question is, whether the second condition is also fulfilled. Learned counsel for the petitioners contends that the second condition has also been fulfilled in the present case, because Pukhraj is only a legal representative of his father Premchand and the name of the latter undoubtedly appeared as a partner in the Register of Firms and, therefore, any insistence on the appearance of Pukhraj's own name in the Register of Finns should not be made and is hardly necessary. Learned counsel also cited the Bombay case, AIR 1940 Bom 257 referred to above in support of kis contention.

11. Now, so far as the Bombay case is concerned, the position therein was briefly this. There was a firm registered in the name of three persons to start with. One of these persons died. The suit was then brought by the two surviving partners, whose names undoubtedly appeared in the Register of Firms, also at the time the suit was brought. It was held that in view of the fact that the firm was registered at the date of the institution of the suit and that the names of the persons suing were shown in the Register of Firms at the date of the institution of the suit, the requirements of Section 69(2) of the Partnership Act were amply fulfilled, no matter that the third partner had in the meantime died and that no notice of his death had been given to the Registrar of firms. This decision, with all respect, is unexceptionable, because the firm was held to be a registered one and rightly and the names of the persons suing were shown in the Register of Firms as partners therein.

In fact, the learned Judge who decided this case went on further to observe and this is what is important for the purposes of the case before me that if additional partners had come into the firm as partners since the date of registration, and their names had not been entered in the register in accordance with a notice to be given as to the change in the constitution of the firm to the Registrar, it may well be that the firm then constituted could not sue. because although the firm would be a registered firm, still some of the persons then suing would not have been shown in the Register of Firms as partners of the firm at the date of the suit. The present case, to my mind, is a case of this last mentioned description and the actual decision in the Bombay case does not afford any assistance to the petitioners.

12. The position in the present case is that Premchand, one of the partners of the plaintiffs' firm having died, his son Pukhraj came into the partnership and he is one of the two persons, who brought the present suit, although his name admittedly was never got registered in the Register of Firms at any time, until the present suit was brought. It is, to my mind, scarcely correct to say that Pukhraj only came in as a legal representative of his deceased father Premchand and that he had no independent rights of his own in the firm as it was continued, for the simple reason that one Pukhraj chose to enter the firm, his responsibility as a member of the firm must fasten on him in his personal capacity as a partner and not as a mere legal representative of his deceased father.

The position indeed might have been different, if the suit had been brought by Kesrimal and Premchand, and the latter should have died during the course of the suit and thereupon Pukhraj' as his legal representative were to be brought on the record; the simple reason being that in such a case, the suit would have been properly brought by Kesrimal and Premchand as their names were shown in the Register of Firms as partners therein and what is of importance is the appearance of the names of the partners suing in the Register of Firms at the time of the institution of the suit and not subsequently thereto. Learned counsel for the petitioners also placed his reliance on Ramkumar v. Kishori Lal. AIR 1946 All 259, for the contention that it would have been open to Kesrimal alone to have brought the present suit in his personal capacity and so the addition of the name of Pukhraj in the array of plaintiffs did not matter.

What happened in this Allahabad case was that the plaintiff Ramkumnr bought a suit in the first instance on behalf of his firm with the allegation that on the death of one of its partners, half of the assets belonged to him and the other half to the widow and the adopted son of the deceased partner inasmuch as they were admitted into the partnership and the firm continued. An objection was raised that Section 69 operated as a bar to the suit. In these circumstances, the plaintiff sought permission to withdraw his suit with liberty to bring another one. Thereafter, the plaintiff brought a suit in his personal capacity on the allegation that on the death. of the deceased partner, a dissolution of the firm had been brought about. The bar of Section 69 was again raised in defence.

The trial court dismissed the suit on the preliminary ground. On appeal, the learned Judges in-the High Court held that the death of one of the partners did not cause the dissolution of the firm and that was undoubtedly so. They further held however, that the suit could have been brought alone by Ramkumar and this view appears to have been taken on the hypothesis that the old partnership was dissolved, and there was nothing to prevent the plaintiff either himself or along with the surviving members of the family of deceased partner to realise the property by bringing a suit on the bond under Clause (a) of Sub-section 3 of Section 69.

Now, if that was a case, which was decreed on the ground that it had been brought by the plaintiff upon the dissolution of the firm of which he was a partner to recover the dues of a dissolved firm, there need and can be no quarrel with the actual decision given in the case. The learned Judges in the earlier part of their judgment had, however, found that the partnership did continue notwithstanding the death of one of the partners.

If that was so, with profound respect, I find it difficult to understand how it can be said that the requirements of Sub-section 2 of Section 69 were fulfilled in this case, because even though the first requirement, thereunder, namely that the firm was registered, stood fulfilled, it could hardly be said that the other requirement, namely that the persons suing are or have been shown in the Register of Firms as the partners of the firm, was satisfied.

If it were to be held, as the learned Judges seem to have done, that the plaintiff alone had sued, and not the heirs of the deceased partner and the latter, be it remembered, notwithstanding that they had continued as partners in the firm's business had been impleaded merely as defendants to the suit, and that the suit could be and was properly brought as the name of the plaintiff appeared in the Register of firms, then such a view, to my mind, would render the provisions of Sub-section 2 of Section 69 completely nugatory; and with all due respect, I am unable to concur in such a view which virtually leaves it to the surviving partner alone to bring such a suit in his personal capacity so as to get round the bar of Section 69 of the Partnership Act.

13. On the aforesaid analysis of the legal position arising from the language of Sub-section 2 of Section 69, my conclusion is that befcre a partner of a firm can maintain a suit to enforce a right arising from a contract against any third party, two conditions must be fulfilled, viz. first, that the firm should be registered, and where a partner thereof happens to have died, a fresh or de novo registration of the firm need not be insisted upon as a matter of law, and the firm can still be considered to be a registered one; and the second requirement is that the person or persons on whose behalf the suit is or has to be brought must have been shown in the Register of firms as partners therein at the time of the institution of the suit; and that if both these conditions are not fulfilled, such a suit must be held to be bad and unmaintainable and would have to be dismissed. I say nothing here with respect to the exceptional cases falling under Sub-sections 3 and 4 of Section 69, as they have no application to the present case, and to such cases the bar raised in Sub-section 2 of Section 69 does not apply.

14. In the result, I hold that this suit wasrightly dismissed by both courts below, though myreasons for arriving at this conclusion are somewhatdifferent from those arrived at by those courts. Therevision is accordingly dismissed but there will beno order as to costs here in the circumstances ofthe case.


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