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Buhari Trading Co. Vs. Star Metal Co. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberO.S.A. No. 7 of 1982
Judge
Reported inAIR1983Mad150; (1983)1MLJ10
ActsCode of Civil Procedure (CPC), 1908 - Order 23, Rule 1 - Sections 151; Partnership Act, 1932 - Sections 69
AppellantBuhari Trading Co.
RespondentStar Metal Co.
Appellant AdvocateC. Daniel, Adv.
Respondent AdvocateS.G. Sivaji, Adv.
Cases ReferredJalal Mohd. v. Kakka Mohd.
Excerpt:
.....1908 and section 69 of partnership act, 1932 - appeal against finding of court and treating suit filed under admiralty jurisdiction as suit filed under ordinary original jurisdiction - conversion of suit only in exercise of inherent jurisdiction to meet ends of justice - no precise definition of 'ends of justice' - treating suit as filed under original jurisdiction in no way prejudiced appellant - no arbitrary exercise of power by court - appeal dismissed. - - - the learned counsel for the plaintiff has endorsed on the plaint that he is not pressing the suit. if the court is satisfied that the suit must fail for some formal defect or that there was sufficient ground for allowing the plaintiff to institute a fresh suit for the subject-matter of a suit or part of a claim, it..........raised and dealt with as preliminary issues by the learned judge. the learned judge held that the suit filed by the unregistered firm was honest in the eye of law and therefore on 24-11-1981 when the earlier suit was instituted, the present plaintiff was not in existence and that therefore there could be no room for the contention that c. s. 548 of 1981, was instituted by the present plaintiff. the learned judge further observed that if the present plaintiff has not instituted the former suit, then it is obvious that o. xxiii, r. 1, c.p.c shall not remain an obstacle in the way of the present plaintiff maintaining the present action. the learned counsel for the appellant strenuously contended that the view of the learned judge that the unregistered firm was a nonentity and it could be.....
Judgment:

V. Ramaswami, J.

1. This is an appeal against the order of the learned Judge, Shanmukham J. trying the following two issues as preliminary issues and giving a finding thereon-

1. Is the suit not maintainable in view of the dismissal of C. S. 548 of 1981?

2. Is the suit liable to be dismissed as the cause of action does not arise under Admiralty Jurisdiction of the court? On the first issue, the learned Judge held against the defendant and found that the suit is maintainable. On the second issue, though the learned Judge agreed with the defendant that the cause of action does not arise under the Admiralty Jurisdiction of this court, treated the suit as one filed under the Ordinary Original Jurisdiction of this court and in that view the suit was held not liable to be dismissed. It is against this finding that the defendant has preferred this appeal.

2. Before dealing with the arguments in the appeal, it is necessary to set out certain facts. The plaintiff is a firm of partnership registered under the Partnership Act. It was so registered on 30-11-1981. Prior to its registration, as an unregistered firm, C. S. 548 of 1981, was filed on 24-11-1981, invoking the Admiralty Jurisdiction of this Court. Along with the suit application No. 4062 of 1981, was filed praying for an order of arrest of the vessel Sir Godfrey Armstrong in the port of Madras. Time for filing counter-affidavit was taken by the defendant on 25-11-1981 and the case was adjourned for such filing of counter to 27-11-'81. On that day, a counter was filed. However the case was not taken up, but was further adjourned at the request of the counsel for the plaintiff, who appeared to have represented that he wished to withdraw the suit. Subsequently, on 30-11-1981, the counsel for the plaintiff in C. S. 548 of 1981, made the following endorsement on the plaint-

'The suit is not pressed. The suit may be dismissed and half court-fee may kindly be ordered to be refunded.'

On that, the learned Judge made the following order:-

'The learned counsel for the plaintiff has endorsed on the plaint that he is not pressing the suit. Hence dismissed, Mr. U. N. Rao, the learned counsel for the defendant, presses for his cost. But I am not inclined to accede his request, because he has not filed his written statement and he entered appearance because of Application No. 4062 of 1981.' After the withdrawal of the suit on the same day, the plaintiff respondent herein presented the present suit after the firm was registered under the Partnership Act. Along with the plaint, again the plaintiff filed application No. 4126 of 1981, praying for an order of arrest of the said vessel. A counter-affidavit had been filed in which it was contended that consequent on the withdrawal of the prior suit the plaintiff is precluded from filing the second suit on the same subject-mater. In reply to this conter-affidavit, the plaintiff stated the circumstances under which he withdrew the earlier suit. It was stated that at the time when the previous suit was filed the firm was not registered and on the assumption that a registration under the Income-tax Act would be sufficient for filing a suit by the firm, the earlier suit was filed but coming to know that the registration under the Income-tax Act was not sufficient to sue in the name of the firm, the plaintiff applied for registration of the firm under the Indian Partnership Act on 28-11-1981 and it was registered on 30-11-1981, and therefore, the earlier suit C. S. 548 of 1981 was withdrawn. It was further contended that the unregistered firm is in law a nonentity and that therefore, the filing of the earlier suit or the withdrawal of the same did not bar the filing of the second suit. We are mentioning these facts in order to show what the parties understood by the words `not pressed' and why the earlier suit was withdrawn. A written statement was filed by the defendant in which again a plea that the plaintiff had abandoned the earlier suit and since no permission was given to the plaintiff to file a fresh suit the second suit was barred under O. XXIII, R. 1, C. P. C. On this pleading two issues, as stated above, were raised and dealt with as preliminary issues by the learned Judge. The learned Judge held that the suit filed by the unregistered firm was honest in the eye of law and therefore on 24-11-1981 when the earlier suit was instituted, the present plaintiff was not in existence and that therefore there could be no room for the contention that C. S. 548 of 1981, was instituted by the present plaintiff. The learned Judge further observed that if the present plaintiff has not instituted the former suit, then it is obvious that O. XXIII, R. 1, C.P.C shall not remain an obstacle in the way of the present plaintiff maintaining the present action. The learned counsel for the appellant strenuously contended that the view of the learned Judge that the unregistered firm was a nonentity and it could be considered as born only on registration under the Partnership Act, is legally no correct. According to the learned counsel the firm was as much alive prior to the registration as it was after, but there was only a disability against filing a suit by an unregistered firm and that therefore it is not correct to state that the present plaintiff had not instituted the former suit. The learned counsel for the appellant also relied on a Division Bench judgment of this court reported in Jalal Mohd, v. Kakka Mohd., : AIR1972Mad86 , to which one of us was a party, wherein it was held that if a decree has been made in a suit filed by an unregistered firm without a plea of bar under S. 69 of the Partnership Act, the decree is valid and binding and not a nullity and if that is so, in this case also when the suit was not pressed and dismissed when there was no plea at the time when the suit was withdrawn that the suit is barred under S. 69, the dismissal in effect amounts to a decree by this Court dismissing the suit and that decree should be deemed to be valid and binding. On the other hand, the learned counsel for the respondent-plaintiff contended that the earlier suit was withdrawn because the firm was not registered and in a number of decisions it has been held that an unregistered firm cannot file a suit for enforcing a contract under Section 69 and realising that position the suit was withdrawn and a new suit was filed after it was registered. In the circumstances, according to the learned counsel, filing of the earlier suit is not a bar for the presentation of the second suit.

3. Before we deal with the rival contentions of law, we will clear one doubt as to whether the earlier suit was withdrawn on the ground that it was one filed by an unregistered firm and may not be maintainable. We have already noticed that the earlier suit was filed on 24-11-1981, by the plaintiff as an unregistered firm. Later, only after the counter-affidavit was filed in the application for interim orders the plaintiff appears to have applied for registration on 28-11-1981, and the firm was registered on 30-11-1981. After he got the registration, he withdrew the earlier suit and filed a fresh suit on the same day. That the suit was filed on the same day is a very relevant consideration. Again, when the present suit was filed, the office returned the papers asking as to how the present suit is maintainable in view of the filing of the earlier suit. While representing, the learned counsel raised the plea that the earlier suit was one filed by an unregistered firm and that therefore no maintainable and in those circumstances, he withdrew the earlier suit and filed the present suit and that therefore the suit is maintainable. It may be mentioned that this was even before the written statement was filed. As already stated, in the counter-affidavit filed in the interim application in Appln. No. 4126 of 1981, the defendant raised the plea of bar of suit by reason of the withdrawal of the earlier suit. In reply to the same, the plaintiff contended that he withdrew the earlier suit because it was considered that a suit by an unregistered firm was not maintainable and in fact, according to the plaintiff, the old firm had no legal entity and it shall be deemed to have been born only when it was registered under the Partnership Act. In those circumstances, there could be no doubt that the plaintiff in this case withdrew the earlier suit because of the possible objection the suit was not maintainable by an unregistered firm. That is how the learned Judge also proceeded in considering the first issue and accordingly we have to proceed also on that basis and not ass if the earlier suit was not pressed and therefore was dismissed. Under O. XXIII, R. 1, C.P.C., the plaintiff is entitled, at any stage of the suit, to abandon his suit or abandon a part of his claim for which purpose an application may be filed. If the court is satisfied that the suit must fail for some formal defect or that there was sufficient ground for allowing the plaintiff to institute a fresh suit for the subject-matter of a suit or part of a claim, it may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or abandon such part of a claim with liberty to institute a fresh suit in respect of the subject-matter of such suit or such part of a claim. If the plaintiff withdraws without such permission of the court to file a fresh suit, he shall be precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim. In this case, no leave has been prayed for by the plaintiff for instituting a fresh suit and therefore, the question for consideration is, whether the plaintiff shall be deemed to have preferred an earlier suit and withdrawn which will preclude him from instituting a fresh suit in respect of the subject-matter or such part of the claim. A similar question has come up for consideration before courts in different form. In the Arunagiri Mudaliar : AIR1936Mad697 while considering a revision petition against the permission granted by the court below to an unregistered firm to file a fresh suit subsequently after registration, the learned Judge observed, the withdrawal of a suit by partners who have not been registered ass a firm is no bar to a suit filed on the same cause of action by the same persons when and if they get themselves registered ass a firm under the Partnership Act. For the latter suit would be technically by a different plaintiff. The learned Judge further observed :-

'I do not see any reason why the unqualified dismissal of a suit filed by a number of persons because they are a firm and are not registered under the Partnership Act, should be any bar to the institution of a suit on the same cause of action by the same persons when they have got themselves registered.'

With these observations, the learned Judge dismissed the revision petition on the ground that even without such permission to file a fresh suit, the plaintiff would be entitled to file afresh suit and that, therefore, by the court below giving such permission, it could not be said that the court had acted without jurisdiction or in excess of jurisdiction. In Firm Sonlal Hansraj v. Sadashiv Dasaras , the prior suit was dismissed under S. 69(2) of the Partnership Act on the ground that the firm was unregistered. The firm was then registered and the second suit was brought on the same cause of action. After noting the position in England and also the other provisions, it was held that the former suit could not be said to have been heard and determined in order to say that the subject-matter of the subsequent suit must not be heard or determined. S. 69 of the Partnership Act prevented the institution of a suit, and that therefore there was no determination of the subject-matter of the previous suit and hence the second suit was maintainable, and not barred by any principles of res judicata or estoppel. In this judgment, two earlier decisions in Firm Krishna Lalram v. Abdul Gafur Khan, AIR 1935 Lah 893, and Maung Tha Nye and Co. v. Na Un Ma Pru, AIR 1929 Rang 260 were also considered in which it was held that the second suit would lie, though the decision on that point was not necessary in those cases. Though in that view they are biter, since the opinion was correct, it was accepted by the learned Judge in the Nagpur case.

4. In the decision reported in Mohan Singh v. Jankidas, AIR 1937 Lah 241, the suit by an unregistered firm was dismissed on the ground that S. 69 is a bar. The unregistered firm thereafter assigned its claim to a registered firm. A suit was filed by the registered firm and it was held that it was maintainable. This was held that it was maintainable. This was in the view that the unregistered firm, which assigned the claim, could have itself maintained another suit for recovery of the suit claim after its registration and if it could maintain another suit, the assignee from the unregistered firm also could maintain a suit and the dismissal of the previous suit would not operate as a bar.

5. The decision in Malhotra and Co, v. Ramesh Mistri, AIR 1971 PH 212, is an interesting case. In that case, the suit filed by an unregistered firm was sought to be withdrawn and permission for filing a fresh suit was also prayed for, under O. XXIII, R. 1, C.P.C. But the permission to file a fresh suit was not granted and the suit was dismissed as withdrawn. In the revision petition filed against that order, the learned Judge held that since the plaintiff wanted to withdraw the suit, the proper order to pass was to dismiss the suit and not to pass the order impugned. While so holding, the learned Judge further observed (at P. 212):-

'In fact, no suit by an unregistered firm is competent and the only course open to the court was to dismiss the suit. It could not withhold the permission so far as the plaintiff is concerned debarring him from filing a fresh suit.' The earlier decisions, which we have noted above, were also noted by the learned Judge. It may be seen that in all these cases, the latter suit was held not barred though for different reasons. In some cases, the suit was held not barred on the ground that the plaintiff itself was incompetent to file the suit and therefore there is no question of the court granting permission to the plaintiff to file a fresh suit and in such circumstances, the court can only dismiss the suit and could not consider even the claim for filing a fresh suit. The other reason found in some of these cases is that the unregistered firm and the registered firm are technically different persons and therefore even an unqualified dismissal of the suit filed by the unregistered firm could not be considered as a bar for the instituting of a fresh suit on the same cause of action. The third line of reasoning was that when the earlier suit was dismissed on the ground that the suit is barred under S. 69(2) of the Partnership Act, there was no determination of the cause of action or the subject-matter of the suit and there was no adjudication finally or otherwise and, therefore the earlier order could not be considered either as estoppel or res judicata and the subsequent suit is maintainable. Of course, this argument is to be restricted to a plea of estoppel or res judicata and may not be applicable when we consider the specific rule in O. XXIII, R. 4. C.P.C. But suffice it to say that the dismissal of a suit when it was sought to be withdrawn on the ground that the plaintiff therein was an unregistered firm, does not bar the filing of a fresh suit on the same cause of action after the firm gets itself registered and for doing so no permission is needed.

6. The decision in Jalal Mohd. v. Kakka Mohd., : AIR1972Mad86 is not applicable to the facts of the present case. In that case, a suit was filed by an unregistered firm against another firm in which there was a common partner. In the earlier suit, no plea was raised under S. 69 of the Partnership Act. After the decree was made a fresh suit was filed by the common partner for a declaration that the decree obtained in the earlier suit was void as far as he was concerned on the ground that the said decree had been obtained by fraud and suppression of the unregistered partnership agreement between the defendants. This court held that the earlier decree was not void and could not be set aside on two main grounds. Firstly, in the earlier suit, the plaintiff who was a defendant there, did not raise the plea that the suit was barred and, therefore, he was estopped from raising that plea in a separate suit. Secondly, the decree passed in a suit instituted by an unregistered firm is not a nullity and the disability created by S. 69 of the Partnership Act is with regard to the power of the courts to pass a decree. It may also he mentioned that the earlier suit was filed as a proprietary concern and not as a partnership. The ratio of that judgment is therefore not in any way against the view expressed in all these judgments which we have noted above. For the foregoing reasons, we agree with the learned Judge that the suit is not barred by the dismissal of C.S. 548 of 1981.

7. The next ground raised by the learned counsel for the appellant is that the suit could not have been filed under Admiralty Jurisdiction of this court. The learned Judge held that the suit could not have been filed under the Admiralty Jurisdiction, as the ship, which is the subject-matter, is not a foreign ship and in fact, it was a wreck in debris lying in port within the jurisdiction of this court and the claim by the plaintiff could be considered only under the ordinary original jurisdiction. Even so the learned Judge held that since this court has both civil as also the Admiralty Jurisdiction justice required that it is for the court to exercise such jurisdiction as the facts and circumstances justified, and not to be carried away by what is quoted as the provision of law under which the suit was filed. The learned Judge was of the view that when all the requirement to entertain the suit are common to both the jurisdictions and are in fact satisfied, it will be doing a great injustice to dismiss the proceedings because the party quoted, on a misunderstanding of the law, a wrong jurisdiction of the court. We are in entire agreement with this view of the learned Judge for more than one reason. Even if the suit could not have been maintained under the Admiralty Jurisdiction, the plaint could have been only returned to the plaintiff for proper presentation before the proper forum, in which case, the plaintiff need have to amend only the provision of law, namely, the statement regarding the Admiralty Jurisdiction alone has to be amended, and the plaint could have been represented under the original jurisdiction. It is also not the case of the defendant that on the date when this point was decided or when the suit was taken as one filed under the original jurisdiction the claim in the suit was barred by limitation. In such circumstance, it would be only hyper-technical to ask the court to return the plaint to the plaintiff for presenting it on the original side of this court and not under the Admiralty Jurisdiction. It is true that even after the suit is taken as one filed under the original jurisdiction, some of the reliefs asked for could not befit it. For instance, in the plaint, one of the prayers was that the court should be pleased to order arrest of the vessel `Sir Godfrey Armstrong' the dredged lying in the Madras Port. We normally use the words `ordering arrest of the vessel' only in Admiralty Jurisdiction. That will have to be considered by the court below when giving the relief to the plaintiff after the trial of the suit. But, at this stage, treating the suit as one filed under the original jurisdiction could in no way be said to have prejudiced the defendant in his defence. In the circumstances, therefore, we are of the view that the learned Judge was right in treating the suit as one filed under the Ordinary Original Jurisdiction of this Court, though the cause title mentioned Admiralty Jurisdiction.

8. The learned counsel for the appellant contended that this conversion or treating the suit as one under the ordinary original jurisdiction could be only in exercise of the inherent jurisdiction is normally exercised to meet the ends of justice or to prevent the abuse of process of court and in this case such a conversion could not be stated to be to advance the ends of justice. We are unable to agree with this contention. There could be no precise definition as to what is meant by ends of justice it is a well understood expression. It depends on the facts and circumstances of each case. The learned Judge had exercised his jurisdiction and we could not say that there was any arbitrary exercise of power in treating the suit as one filed under the ordinary original jurisdiction. For the foregoing reasons, the appeal fails and it is dismissed. But, there will be no order as to costs.

9. Under Act, 134-A of the Constitution, the learned counsel for the appellants seeks leave to appeal to the Supreme Court. We consider that no substantial question of law of general importance which needs to be decided by the Supreme Court arises out of our order Accordingly, we decline to grant the leave.

Appeal dismissed.


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