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Gulab Chand Vs. Firm Hanuman Bux Rama Kishan, Sambhar and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtRajasthan High Court
Decided On
Case NumberCivil Revn. No. 104 of 1954
Judge
Reported inAIR1959Raj223
ActsPartnership Act, 1932 - Sections 69 and 74
AppellantGulab Chand
RespondentFirm Hanuman Bux Rama Kishan, Sambhar and anr.
Appellant Advocate K.B. Saksena, Adv.
Respondent Advocate S.N. Agrawal, Adv.
DispositionApplication dismissed
Cases ReferredSurendra Nath De v. Manohar De
Excerpt:
.....firm, unless it is registered before the suit is brought. it saves a remedy, which connotes the right to institute a suit as well. i do not think, when the language of section 74 was quite clear and unambiguous, other provisions of the act should have been taken into account in order to explain what is clearly meant by the provisions of section 74 itself. 22. no doubt, in the present case, the suit was filed on 7-2-1951, when the partnership act bad come into force in rajasthan by the rajasthan adaptation of central laws ordinance, 1950, but the suit was in respect of a right which had accrued a few years before the act had come into force, and therefore, the suit was not barred by the provisions of section 69. 23. i have no reason to interfere with the judgment and decree of the..........court is concerned it is now the authoritative view that by virtue of section 74(a) and (b), a suit by a partnership firm can be brought without getting it registered, if it is with respect to a right which had been acquired or accrued before the act came into force.thus the only courts, whose view has not yet been shaken by subsequent decisions of the same courts, are lahore, patna and calcutta high courts. so far as the allahabad and madras high courts are concerned, they later on changed the view which they took in the years 1935 and 1937 respectively, and at present their view is in line with the view taken by the bombay high court in air 1939 bom 61, by the nagpur high court in air 1940 nag 137, by the rangoon high court in air 1938 rang 273, and by the madhya bharat high court.....
Judgment:
ORDER

K.K. Sharma, J.

1. The plaintiffs, Firm Hanuman Bux Rama Kishan and Surajmal filed a suit for recovery of Rs. 254/- against Gulab Chand petitioner in the Court of the learned Civil Judge, Sambhar, on 7-2-1951, on the basis of an entry in the Rokar Ex. P. 1 of the respondent firm.

2. The defendant denied the execution of Ex. P. 1, and also pleaded that the plaintiff firm having not been registered, it was not entitled to bring a suit by virtue of Section 69 of the Indian Partnership Act (hereinafter to be referred to as the Act).

3. Certain issues were framed, and the issue regarding the non-maintainability of the suit by virtue of Section 69 of the Act was decided first. The learned Civil Judge by his order dated 8-10-1952, decided that the suit was maintainable. He further decided the remaining issues, and ultimately decreed the plaintiffs' suit in toto by the judgment dated 15-1-1953.

4. The defendant went in appeal, and the learned District Judge, Jaipur District, by his judgment dated 27-3-1954, allowed the appeal in part, and modified the decree of the first court only in this respect that Rs. 54/- on account of interest were disallowed, and the decree was given only for the recovery of Rs. 200/-. The defendant has come in revision to this Court against the above decree of the learned District Judge.

5. I have heard Shri K. B. Saksena On behalf of the applicant and Shri S. N. Agrawal on behalf of the plaintiffs opposite parties. Two points emerge for decision in this revision. They are as follows:

1. Whether the suit was barred by the provisions of Section 69 of the Partnership Act?

2. Whether the Court of first instance was not justified in closing the evidence of the defendant on the 13th of January, 1953?

6. I may take up point No. 2 first. It has been argued by learned counsel for the applicant that on 8-10-1952, the learned Civil Judge had made an order that the plaintiffs' evidence would be recorded on the 13th of January, 1953. Later on, somehow the word 'muddai' (plaintiff) was struck off, and in its place the word 'muddayalah' (defendant) was substituted.

It was argued that the defendant could have no knowledge that the learned Court had changed its mood afterwards, and ordered that in place of the plaintiffs' evidence, the evidence of the defendant would be recorded on 13-1-1953. It was argued that under the circumstances an opportunity should be given to the defendant to produce his evidence, and the suit should be remanded.

7. On behalf of the opposite parties it has been argued that the plaintiffs' evidence had in fact concluded long before the 8th of October, 1952, and that on 6-10-1951, it had been recorded in the order sheet that the plaintiffs' evidence was closed, and 27-11-1951 had been fixed for the evidence of the defendant.

It was argued that thereafter the case was adjourned on several dates, because it was submitted that the Court should give its decision on the point of the maintainability of the suit first. After the decision was given on the said issue on the 8th of October, 1952, the Court made an order for the production of the evidence of the defendant on 13-1-1953, and it was only by mistake of pen that in the first instance the word 'plaintiff' had been written in place of the word 'defendant', but immediately the mistake was corrected.

It was argued that when the case was taken up on the 13th of January, 1953, counsel for the defendant was present, but no submission was made that the defendant had been under a misapprehension that the plaintiffs' evidence would be recorded on that date, and, therefore, time should be given for production of the defendant's evidence. It was argued that it was only by way of an afterthought that in the first appellate Court this point was raised.

8. I have considered the arguments of both learned counsel on this point. It is quite clear from a perusal of the order sheet of the first Court that the plaintiffs' evidence had been concluded on 6-10-1951, and that the defendant had been called upon to produce his evidence on 27-11-1951.

On 27-11-1951, it has been recorded that the case came up for the recording of the evidence of the defendant, but the witnesses were absent, and the summonses had not been returned. Hence on the application of the defendant that the issue regarding the non-maintainability of the suit in the absence of registration under the Act be decided first, arguments were heard on the said application, and then after adjournments on several dates, the decision on the said issue was given on 8-10-1952.

Now, looking to the previous history of the case, it would appear that all that was left on 10-1951, was that the defendant had to produce his evidence. The plaintiffs' evidence had been completed on the said date. There was, therefore, no occasion calling upon the plaintiff to produce his evidence on 13-1-1953.

The Court must certainly have intended that the defendant, who could not produce his evidence on 27-11-1951, should produce his evidence. Although the word 'plaintiff' was originally written, but the correction seems to have been made, & the word 'defendant' was substituted in place of the word 'plaintiff'. When the case came up on 13-1-1953, the defendant and his witnesses were found absent, but his counsel was present. If in fact a misunderstanding had been created in the mind of the defendant and his counsel by the order dated 8-10-1952, that it was the plaintiff who was called upon to produce his evidence on 13-1-1953, it was expected of the counsel of the defendant that he should have made a statement before the first Court that such a misunderstanding had been created, and, therefore, the defendant could not summon his evidence, and an opportunity should be given to him to produce his evidence. No such thing was done.

Even on the 15th qf January, 1953, when the case came up for arguments, learned counsel for the defendant did not submit that opportunity should be given to him to produce his evidence. I am quite clear in my mind that no misapprehension was created in the mind of the defendant or his counsel. They knew what the Court intended them to do, and that is why neither on the 13th nor on the 15th of January, 1953, any request was made on behalf of the defendant that opportunity should be given to him to produce his evidence. I have, therefore, no reason to differ from the learned lower appellate Court that this objection of the defendant has no force.

9. Coming to the first point, it has been argued on behalf of the defendant that the suit was filed on 7-2-1951, and the Partnership Act had come into force in Rajasthan on 24-1-1950. The plaintiff firm was not registered, and consequently it had no right to bring the suit. It has been argued that Section 69 of the Act clearly intends that any suit which is brought after the coming into force of the Partnership Act would not be maintainable on behalf of the firm, unless it is registered before the suit is brought. Support was drawn from the following rulings: Gopinath Moti-lal v. Ramdas, AIR 1936 Cal 133; Firm Ram Prasad Thakur Prasad v. Firm Kamta Prasad Sita Ram, AIR 1935 All 898; Shazad Khan v. Darbac Babu Kuchhi, AIR 1937 Pat 16; Firm Krishen Lal Ram Lal v. Abdul Ghafur Khan, AIR 1935 Lah 893; Perakam Catholic Sangham v. Ravi Varma, AIR 1937 Mad 419. Reliance was also placed upon the view of one of the two Judges of the Division Bench in S. Girdhari Lal Son and Co. v. B. Kappini Gowder, AIR 1938 Mad 688; Firm Danmal Parshotam Das v. Firm Babu Ram-Chhote Lal, AIR 1936 All 3.

10. On behalf of the opposite party reliance was placed upon the following rulings: Revappa Nandappa v. Babu Sidappa, AIR 1939 Bom 61; Ibrahim Sahib v. Gurulinga Aiyar, AIR 1939 Mad 860; Nand Kishore v. Maheshwari Mills, Morena, AIR 1953 Madh Bha 42; Hiralal Gulabchand v. Amarchand Kisanlal, AIR 1940 Nag 137; Ram-gopal Sriniwas v. Net Ram, AIR 1941 All 178; Soonoirarn Ramniranjan Das v. Junjilal, AIR 1938 Rang 273 (FB), and the view of one of the Judges in AIR 1936 All 3 and AIR 1938 Mad 688.

11-12. There is of course authority in favour of the view put forward by either party before me. So far as the Calcutta, Patna and Lahore rulings relied upon by learned counsel far the applicant are concerned, they were based upon the fact that Section 74 of the Partnership Act is intended to apply to substantive rights and not to matters of procedure, and the procedure laid down by Section 69 must be followed in a suit which is filed after the coming into force of the latter section. Before proceeding further it would be advisable to quote these two sections in full.

'Section 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 Finns as partners in the firm.

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

(a) the enforcement of any right to sue for the 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

(b) the powers of an official assignee, receiver or Court under the Presidency-Towns Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, to realise the property of an insolvent partner.

(4) This section shall not apply--

(a) to firms or to partners in firms which have no place of business in the territories to which this Act extends, or whose places of business in the said territories are situated in areas to which, by notification under Section 56, this Chapter does not apply, or

(b) to any suit or claim of set-off not exceed-ing one hundred rupees in value dency-Towns, is not of a kind specified in Section 19 of the Presidency Small Cause Courts Act, 1882, or, outside the Presidency-towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887, or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.'

5. Where in any of the Covenanting States the provisions of this section or any other similar law did not exist at the commencement of this Act, this section shall come into force after the ex-piry of one year from the commencement of the Act therein. Section 74.

Nothing in this Act or any repeal effected thereby shall affect or be deemed to affect--

(a) any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of this Act, or

(b) any legal proceeding or remedy in respect of any such right, title, interest, obligation or liability, or anything done or suffered before the commencement of this Act.

(c) anything done or suffered before the commencement of this Act, or

(d) any enactment relating to partnership not expressly repealed by this Act, or

(e) any rule of insolvency relating to partnership, or

(f) any rule of law not inconsistent with this Act.'

13. It would appear that Clause (a) of Section 74 provides that nothing contained in the Act would affect or be deemed to affect any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of the Act. Clause (h) provides that nothing in the Act would affect or be deemed to affect any legal proceeding or remedy in respect of any such right, title, interest, obligation or liability, or anything done or suffered before the commencement of the Act.

The meaning of Clause (b) is that if any legal proceeding is pending on the date the Act came into force in respect of any such right, title etc., mentioned in the said clause, nothing in the Act would affect or be deemed to affect that legal proceeding. Clause (a) means that if any right, title, interest etc. had been acquired, accrued etc., before the commencement of the Act, it would not be affected by any provision of the Act.

Now, Section 69 is as much a provision of the Partnership Act as any other provision, and according to the clear meaning of Section 74, Section 69 would not affect or be deemed to affect any right, title etc., alrealy acquired, accrued etc., before the commencement of the Act.

That would mean that if a plaintiff has acquired any right to sue in respect of a certain thing before the Act came into force, the plaintiff would have the right to bring the suit in the manner as when the Act had not been applied. Some High Courts have taken the view that Section 69 is merely procedural and is not hit by the provisions of Clause (a) of Section 74 in the following cases:

14. In AIR 1937 Mad 419, which is a Single Judge case, it was held that--

'Section 69, Clause (2), Partnership Act, which is only a rule of procedure would not affect the right to sue, and being an enactment relating to procedure and therefore retrospective in its operation, will certainly govern the enforcement of that right because a mode has been provided by the Legislature in which the right of action already existing should be asserted. The Legislature intended that all actions brought after October 1933 should be governed by the said provision.

An interpretation consistent with this intention should be placed on Section 74(b) and the only possible interpretation is that Section 74, Clause (b) was only intended to save pending legal proceedings from the bar of Section 69, Clause (2) and not future proceedings. So a suit by an unregistered firm to recover sum of money due on a promissory note executed before Partnership Act is barred if instituted after October 1933.'

15. In AIR 1936 Cal 133, which is again a Single Judge case, it was held that--

'The meaning of the provision that the Act shall come into force on 1st October 1932 except Section 69 which shall come into force on 1-10-1933' in Section 1(3), Partnership Act, in that after 1-10-1933, Section 69 will become operative and a firm which is not registered and which sues to enforce a right arising from a contract shall be non-suited.'

It does not appear from this ruling whether the effect of Section 74 of the Act was considered.

16. In AIR 3935 All 898, which is also a Single Judge case, it was held that--

'Where the plaintiff's right to realise money from the defendant accrues before the Act came into force, nothing in the Act could affect that right. But the Aet lays down the proper procedure, namely that the registration of the firm should be completed in the manner set out in Section 59 before the suit can be instituted. The Act regulates only the procedure which must be followed.'

This ruling came to be considered by a Division Bench of the Allahabad High Court in AIR 1936 All 3. Of the two Judges Bennet J., took the view that

'the provisions of Section 74, Partnership Act, are intended to apply to substantive rights and not to matters of procedure and the procedure laid down by Section 69 must be followed in a suit which is filed after 1st October, 1933'.

The other learned Judge, Sulaiman C. J., took the view that--

'There can be no doubt that the words 'any such right' in Sub-section (b) refer to 'any right, title, interest, obligation or liability, already acquired, accrued or incurred before the commencement of the Act' mentioned in Sub-section (a). Sub-section (b) must therefore read as:

'Any legal proceeding or remedy in respect of any right, title, interest, obligation or liability, already acquired, accrued or incurred before the commencement of this Act, or anything done or suffered before the commencement of this Act.''

The learned Judge observed that he had great reluctance in holding that Section 74, Partnership Act, should be given a restrictive meaning, and that although it specifically provided that any legal proceeding in respect of a right, title, etc., acquired, accrued or incurred before the commencement of the Act should not be affected by anything in the Act, Section 69 still governed such suits.

His Lordship, however, did not categorically differ from the view taken by Bennet J., as the case came up in revision, and the Court was not bound to interfere, However, after about five years in the ease of AIR 1941 All 178, a similar question arose. In that case the view taken by Bennet J., in AIR 1936 All 3, was not found acceptable, and it was held that--

'Section 74(b) relates to those legal proceedings or remedies which were open to a party in respect of any right, title, interest, obligation or liability which had already been acquired, accrued or incurred before the commencement of the Act. It does not limit the exemption from the operation of Section 69 only to pending proceedings.'

Therefore, so far as the Allahabad High Court is concerned, the latest view is that by virtue of Section 74(a) of the Act, if any right, title etc., had been acquired or accrued before the commencement of the Act, a suit in respect of that right could be brought even without registration of the firm.

17. Another Court, which has taken the view which supports the contention of the learned counsel for the applicant is Patna High Court. It was held by a Division Bench of that Court in AIR 1937 Pat 16, that Section 74(b) of the Act only saved pending suits, and the suit which was filed after Section 69 had come into force was barred by the provisions of the said section, if the partnership firm was not registered.

In that case reliance was- placed upon the rulings of Calcutta Allahabad and Lahore High Courts in Surendra Nath De v. Manohar De, AIR 1934 Cal 754; AIR 1935 All 898 and AIR 1935 Lah 893, respectively. In AIR 1935 Lah 893, it was held that the word 'right' in Section 74 should be taken in the sense of a right to or in some property, and that it did not include a right to institute a suit. It was observed that--

'A 'right' to sue is merely in the nature of a remedy and is valuable not in itself, but only as a means to an end. Section 74 is very general in its wording and is what is sometimes described as an 'abundant caution' clause. The object of the clause appears to be to leave unaffected rights, liabilities and transactions which had accrued, or taken place before the commencement of the Act. In the present instance the plaintiffs are entitled to the amount due on the proriote and this right is not affected by the Partnership Act. But the remedy to enforce this right by a suit in a Court of Law seems to be barred by Section 69 of the Act, until and unless the plaintiff firm gets itself registered in accordance with the provisions of the Act.'

18. Learned counsel for the applicant relied upon the ruling of the Madras High Court in AIR 1937 Mad 419. In that case the learned Single Judge held that--

'Section 69, Clause (2), Partnership Act, which is only a rule of procedure would not affect the right to sue, and being an enactment relating to procedure and therefore retrospective in its operation, will certainly govern the enforcement of that right because a mode has been provided by the Legislature in which the right of action already existing should be asserted. The Legislature intended that all actions brought after October 1933 should be governed by the said provision.

An interpretation consistent with this intention should be placed on Section 74(b) and the only possible interpretation is that Section 74, Clause (b) was only intended to save pending legal proceedings from the bar of Section 69, Clause (2) and not future proceedings. So a suit by an unregistered firm to recover sum of money due on a promissory note executed before Partnership Act is barred if instituted after October 1933.'

19. A similar point arose in another case before the same High Court in AIR 1938 Mad 688. The Division Bench, which heard that case, consisted of Pandrang Row and Venkataramana Rao JJ. Ven-kataramana Rao J., struck to his view, which he had taken in Perakam Catholic Sanham's case, AIR 1937 Mad 419.

However, Pandrang Row J., took a contrary view, and held that Section 69(2) could not be said to relate to mere matter of procedure, for, it required something to be done, viz., registration de hors the Court and that Section 69, Clause (2) should not be given retrospective effect particularly in view of Section 74(b).

There being a difference of opinion on a point of law between the two learned Judges, the case was referred to a third Judge, Varadachariar J., who later on adorned the Bench of the Federal Court. This learned Judge agreed with the view taken by Pandrang How J., and held that--

'Because of the fact that the Legislature gave an interval of one year before Section 69 was brought into operation, it cannot be said that that interval can be explained only on the ground that the provision must have been intended to be retrospective. There are other considerations which required such an interval, particularly the necessity for bringing into existence the necessary machinery, and for the framing of rules contemplated by Section 71.'

His Lordship observed--

'Section 74(b) saves the 'remedy' in respect of any right acquired or accrued prior to 1-10-1932 from the bar of Section 69(2).'

20. This decision is the latest decision of the Madras High Court, and, therefore, so far as that Court is concerned it is now the authoritative view that by virtue of Section 74(a) and (b), a suit by a partnership firm can be brought without getting it registered, if it is with respect to a right which had been acquired or accrued before the Act came into force.

Thus the only Courts, whose view has not yet been shaken by subsequent decisions of the same Courts, are Lahore, Patna and Calcutta High Courts. So far as the Allahabad and Madras High Courts are concerned, they later on changed the view which they took in the years 1935 and 1937 respectively, and at present their view is in line with the view taken by the Bombay High Court in AIR 1939 Bom 61, by the Nagpur High Court in AIR 1940 Nag 137, by the Rangoon High Court in AIR 1938 Rang 273, and by the Madhya Bharat High Court in AIR 1953 Madh Bha 42.

Of these rulings, the ruling of the Rangoon High Court is that of the Full Bench. In that case the promissory note in suit was dated 7-3-(932, that is, before the Partnership Act came into force. The suit was filed on 28-2-1935, i. e., about two years after Section 69 of the Act had come into force. It was held by the Full Bench that--

'The Act must be construed in its plain terms, and where its terms admit of no doubt, anything in the nature of speculation as to the intention of the Legislature should be avoided. Section 74(a) says that nothing in the Act shall affect any right acquired before the commencement of the Act; and Section 74(b) extends this saving clause to any legal proceeding or remedy in respect of any such right; that is, any such right as is mentioned in Sub-section (a) and has accrued before the commencement of this Act.

It would be wrong to say that Section 74(b) saves only suits which are pending at the time when the Act comes into force. It saves a remedy, which connotes the right to institute a suit as well. Hence when a suit has been instituted after 1-10-1933, by a firm not registered under the Partnership Act for recovery of a debt accruing before that date, the suit is not barred by Section 69 of the Act but is saved by the provisions of Section 74 (b).'

21. If I may say with respect on a proper construction of Section 74, Clauses (a) and (b), and Section 69 of the Act, the view, which has been taken in the rulings cited on behalf of the opposite party appears to be correct, and the view which has been taken in the rulings cited on behalf of the applicant appears to have been influenced not by the plain wordings of Section 74, but by some other provisions of the Act.

I do not think, when the language of Section 74 was quite clear and unambiguous, other provisions of the Act should have been taken into account in order to explain what is clearly meant by the provisions of Section 74 itself.

22. No doubt, in the present case, the suit was filed on 7-2-1951, when the Partnership Act bad come into force in Rajasthan by the Rajasthan Adaptation of Central Laws Ordinance, 1950, but the suit was in respect of a right which had accrued a few years before the Act had come into force, and therefore, the suit was not barred by the provisions of Section 69.

23. I have no reason to interfere with the judgment and decree of the lower court in revision. The application for revision is dismissed. The contesting opposite party shall get costs from the applicant.


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