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Durga Prosad Sarawagi and ors. Vs. Registrar of Firms and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 212 of 1963
Judge
Reported inAIR1966Cal573,69CWN929
ActsPartnership Act, 1932 - Sections 59, 63(1), 64(1), 65 and 71(2); ;Constitution of India - Article 226; ;Partnership Rules - Rules 5 and 8
AppellantDurga Prosad Sarawagi and ors.
RespondentRegistrar of Firms and anr.
DispositionAppeal allowed
Cases ReferredPratapchand Ramchand & Co. v. Jahangirji Bomanji
Excerpt:
- .....against the registrar of firms and one manickchand sarawagi.2. the dispute relates to a firm of partnership by the name ramballabh rameswar. on receiving a notice from respondent manickchand sarawagi dated 30th august, 1961 under section 63(1) of the indian partnership act, the registrar of firms ex parte without giving any notice to the appellants and who are she other contending partners, dissolved the firm by entering the word dissolved' in the register. the alleged notice of dissolution signed by the respondent manickchand on which this extraordinary step was taken by the registrar of firms is in these following terms;'to the registrar of firms. west bengal. calcutta. notice is hereby given pursuant to sub-section (1) of section 63 of the indian partnership act 1932, that.....
Judgment:

P.B. Mukharji, J.

1. This is an appeal from the order of Banerjee, J. dismissing the appellant's application under Article 226 of the Constitution against the Registrar of Firms and one Manickchand Sarawagi.

2. The dispute relates to a firm of partnership by the name Ramballabh Rameswar. On receiving a notice from respondent Manickchand Sarawagi dated 30th August, 1961 under Section 63(1) of the Indian Partnership Act, the Registrar of Firms ex parte without giving any notice to the appellants and who are She other contending partners, dissolved the firm by entering the word dissolved' in the Register. The alleged notice of dissolution signed by the respondent Manickchand on which this extraordinary step was taken by the Registrar of Firms is in these following terms;

'To The Registrar of Firms. West Bengal. Calcutta.

Notice is hereby given pursuant to Sub-section (1) of Section 63 of the Indian Partnership Act 1932, that the firm Ramballabh Rameswar, 19, Nurmal Lohia Lane, Calcutta was dissolved on April 11, 1954.

(Number of the firm on the Register --19655.)

Manickchand Sarawagi Signature of any partner or his agent. Date August 30, 1981.'

3. Banerjee, J. in dismissing this application referred to a suit in this Court being Suit No. 645 of 1958 between the appellants here and the representatives and heirs of another deceased partner by the name Ram Kumar Khatuwalla and the Judgment delivered by A.N. Ray. J. in that suit. That judgment is under appeal before us. Banerjee, J. also referred to the petitioners' own statement that the firm had been dissolved and which statement was made in that suit. On that point also there is an application for amendment of the plaint by the petitioners which is also before us. The reason for which Banerjee, J. dismissed the appellants' petition under Article 226 of the Constitution may be stated in his Lordship's own words:

'The question, whether the firm was dissolved on April 11, 1954 appears to be a disputed question of fact and it is impossible for me in this Rule to come to a conclusion, without more, which is the true version, namely, whether the firm was dissolved on April 11, 1954 or was still continuing. That being the position I am disinclined to interfere with the entry made by the Registrar in this Rule.'

4. In the appeal before us Mr. Sankar Ghose for the appellants has attacked this judgment on the ground mainly that the whole procedure adopted by the Registrar of the Firms was utterly illegal and in violation of the Partnership Act and Rules made thereunder and on that ground alone apart from any question of disputed facts, he contends that the order dissolving the firm, must be deleted. He has also advanced the argument that this was not really a question of disputed fact but a question about the interpretation of the document or documents of the partnership. Admission of one partner as to the effect of such a document is not a question of fact but a question of law, because the controversy touched on the question of construction and legal effect of that document. We are inclined to accept that submission and hold that the learned Judge was not right in just dismissing the application on the ground of disputed facts.

5. It is necessary, in the first place, to refer to the notice of dissolution which is quoted above. This notice is given under Section 63(1) of the Indian Partnership Act. The language of Section 63(1) of the Indian Partnership Act reads as follows:

'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 the agent of any such 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 noticealong with the statement relating to the firm filed under Section 59.'

6. On a plain reading of this section the Registrar has no power under that section to make an entry that a firm is dissolved. All that the language of Section 63(1) permits the Registrar to do is (1) to make a record of the notice in the entry relating to the firm and (2) to file the notice along with the statement relating to the firm filed under Section 59. On the fact of it, therefore, the Registrar's impugned entry in Ext. B at pages 27-32 of the paper took 'Dissolved--5d. B.K. Som' against item 7--notice of dissolution dated 2-9-61/4-9-61 is clearly unauthorised and beyond the section.

7. That is not the end of this matter so far as this impugned entry about dissolution is concerned. As will be seen from Section 63 of the Partnership Act quoted above the notice must be given by 'a person who was a partner immediately before the dissolution. Now the notice quoted above in this case was given by Manickchand Sarawagi who calls himself a partner. The question is, was Manickchand 'a partner immediately before the dissolution' of the firm within the meaning of Section 63(1) of the Indian Partnership Act. Apart from the questions of any dispute or controversy between the partners, the record of the Registrar of Firms itself shows the position on the basis of which at least the Registrar should act prima facie. What does the Register marked Ext. B in this case show on this point. It shows five entries of date the 18th November, 1958, marked numbers 2, 3, 4, 5 and 6. Against item 4 an entry on the Register is made on the following terms:

'Manickchand Sarawagi retired on 14.3.58.' If the Registrar had at all applied his mind to his own Register, to his own entries in his own Register, he would have seen that this Manickchand who was supposed to be giving the notice of dissolution had already retired on the basis of the Registrar's own record as early as on the 14th March, 1958. Taking, therefore, the Registrar's own record to be correct the Registrar could have seen that Manick having retired on the 14th March, 1958 could not be 'a partner immediately before the dissolution' within the meaning of Section 63(1) of the Indian Partnership Act on the ground that according to that notice of dissolution the partnership was dissolved on the 11th April, 1954. If the partnership was dissolved on the 11th April, 1954 then how could Manickchand continue as partner on the Registrar's own record till the 14th March 1958. Therefore, Manickchand on his own showing and on the showing of the entries of the Registrar of Firms was not a person who was authorised to give any notice of dissolution under Section 63(1) of the Act.

8. Therefore, the Registrar acted illegally and in violation of Section 63(1) of the Indian Partnership Act. His entry, therefore, 'dissolved' cannot stand and must be set aside on the ground just mentioned. The Registrar of Firms would have seen how he was contradicting his own entry by writing 'dissolved' on the alleged notice from the respondent Manickchand quoted above. His own Register shows, as I have alreadysaid, five different entries made in 1958 even after the present alleged dissolution on the lira April, 1954. These items 2, 3, 4, 5 and 6 on the Register of Firms show (1) notice of attaining majority in respect of Parameswar Sarawagi on 29th May, 1955; (2) notice of attaining majority in respect of Champalal Sarawagi on 16th January, 1957; (3) notice of change in the constitution stating that only three partners were there, namely, (a) Durga Prasad, (b) Parameswar and (c) Champalal who are petitioners appellants in this case and (4) notice of alteration of the location of the number of place of business from 16, Brojodulal Street to 19, Noormal Lohia Lane, Calcutta. All these entries relate to this very firm of Ramballabh Rameswar with the Registration No. 19655 and of the same business of Ramballabh Rameswar which was established on October 26, 1946 as appearing on the Register.

9. If the respondent Registrar of Firms had applied his common sense or mind then apart from the technicalities of the Partnership Act he could have been that this notice of dissolution was a curious notice alleged to be coming from a partner in 1961 stating a fact that seven years before that date the partnership had been dissolved on the 11th April, 1954. Anyone would have acted with caution on receiving such a notice trying to notify a seven-year old fact of dissolution which was ever contradicted by the entries of the Registrar himself in his own Register of Firms. Without notice to the existing partners as shown on his own Register, the Registrar of the Firms acted ex parte without intimation to (1) Durga Prasad (2) Parameswar and (3) Champalal who were recorded in his own Register as partners carrying on business. If there was any violation of principles of natural justice here it is. The Registrar of Firms not only violated the language or word of Section 63(1) of the Act but also all principles of natural justice by condemning the petitioners unheard and making an entry without any notice and without hearing them. He, therefore, have no hesitation to set aside this entry of dissolution made by the respondent Registrar of Firms.

10. But then even this is not the end of the matter. The petitioners appellants protested through their solicitor on the 2nd February, 1962 and made a request to the Registrar that under Section 64(1) of the Act he had the power to rectify mistake and correct the discrepancy and cancel the said notice of dissolution and entry made in respect thereof at the instance of Manickchand Sarawagi. No reply was at first sent by the Registrar. The Registrar had to be reminded by the Solicitor again on the 17th February, 1962. Whereupon the Registrar replied on the 23/24th February, 1962 in the following terms:

'I have to inform you that the notice of dissolution relating to the above noted firm has already been noted and the same cannot be rectified by the undersigned at this stage.'

11. Now let us examine the statement of the Registrar and his refusal to rectify his record under Section 64(1) of the Act. Section 64(1) of the Act provides as follows:

'The Registrar shall have power at all times to rectify any mistake in order to bring the entry in the Register of Firms relating to any firm into conformity with the documents relating to that firm under this Chapter.'

Obviously the Registrar should have acted under this section because it was not only a case of rectification of mistakes but it was one to bring the entry in the Register to be in conformity with the document relating to that firm filed under this Chapter. Mr. Ginwalla appearing for respondent Manickchand Sarawagi advanced an argument on the expression conformity with the document relating to that firm filed under this Chapter' used in Section 64(1) of the Act. He tried to suggest therefore that the Registrar of Firms' power of rectification was not a wide and general power but a limited power to rectify only to bring the entry in conformity with the document filed under this Chapter. No doubt we accept that submission of Mr. Ginwalla. The reason why we accept that submission is that the language of Section 64(1) says so but then the whole point is, does it or does it not in this case relate to documents filed under this Chapter. The Chapter in which Section 64 of the Act occurs is Chapter VII of the Indian Partnership Act dealing with the subject 'Registration of Firms'. The documents filed under this Chapter include amongst others (1) the documents under Section 58(1) of the Partnership Act, (2) documents regarding the alteration in the firm's name and place of business on the basis of 'statement' sent under Section 60 and (3) the document under Section 62 of the Act noting changes in the names and addresses of the partners contained in 'intimation sent to the Registrar'. These are documents filed under this Chapter. Therefore, the Registrar should have consulted the statement under Section 60 as well as under Section 62 and if he had done that he could have seen that his alleged entry of dissolution is inconsistent with documents on which entries under Sections 60 and 62 of the Partnership Act regarding the alteration of names and addresses of the partners and of the firms had already been made. If he had looked at his own entry that there are three partners in 1958 including the partner Manickchand alleged to be giving the notice to notify that a dissolution had taken place as early as in 1954 then he would have found full and ample power under Section 64(1) of the Partnership Act to rectify the mistake that he had committed and should have rectified the mistake to bring the entry into conformity with the document relating to that firm filed under this Chapter VII of the Partnership Act. The Registrars refusal, therefore, to act under Section 64(1) was unjustified and unlawful. We feel that he must rectify and he should have rectified his entries about dissolution.

12. Reference has been made by Mr. Ginwalla to Partnership Rules made under Section 71(2) of the Act. If anything the Rules show that the Registrar violated both the letter and spirit of these Rules. It is not necessary for us to discuss in detail these Rules It will be enough to make a brief reference to them. Rule 5 of the Partnership Rules clearly indicates this:

'The notice of an alteration which is required to be filed with the Registrar under Sections 60, 81, 62 and 63 of the Act shall be filed within fifteen days from the date of occurrence.' Now this notice that was filed by Manick under Section 63 of the Act was dated 30th August, 1961 and was filed not within fifteen days From the date of the occurrence of the dissolution but seven years thereafter. Realising this difficulty Mr. Ginwalla tried to advance an argument that Rule 5 mentions only the notice of alteration and, therefore, although it mentions Section 63 it is confined to a notice of an alteration and not to the notice of dissolution. Now Section 63 speaks of a change in the constitution of a registered firm and also of dissolution. It mentions notice in that connection. Mr. Ginwallas argument is that because the language is 'the notice of alteration' in Rule 5, therefore, this was a notice of alteration in the firm and not a notice of dissolution of the firm. We are not inclined to accept that submission. The word 'alteration' there in Rule 5 is used generally and would include dissolution. There is no reason why in the case of alteration notice has to be given within fifteen days from the date of alteration but in the case of dissolution which is also a more radical alteration, no notice with any time limit from the date of occurrence is required to be given. It is more in conformity with the spirit of Section 63(1) which used such words 'outgoing Partner' and 'a partner immediately before the dissolution'. These expressions seem to indicate that the action of giving notice by the outgoing partner or by the partner immediately before the dissolution should be within a reasonable time. Mr. Ginwalla has argued that the words 'a partner immediately before the dissolution' under Section 63(1) of the Act qualify the status of the person giving notice and does not qualify the time within which such notice is to be given. Mr. Ginwalla's difficulty is first on the facts here and on the records of the Registrar of Firms. His client Manickchand Sarawagi was not a partner immediately before the dissolution as we have pointed out above but that even if no time to give the notice is laid down as contended by Mr. Ginwalla, a point which we do not accept, even then the law will imply reasonable time. To give a notice after seven years of dissolution is not a notice which satisfies either Section 63(1) of the Act or Partnership Rule 5.

13. Continuing with the Rules it appears that Rule 6 provides for cases that the Registrar shall examine the notice, That duty is incumbent upon him and if he had examined the notice he could have seen how it was not given by a lawful person and how it carried inherent defects of contradiction with his own record. Rule 6 says that in that event the Registrar shall return it to the person applying for filing or recording or to the firm concerned. This Rule was not observed by the Registrar. Rule 6 continues to say 'and until proper rectification or completion be made, he shall not register or file the document in question.' The Registrar failed under these tests imposed by Rule 6.

14. Then Rule 8 provides:

'The Registrar may in his discretion institute such enquiries or make such investigation in respect of any matter as may in his opinion be necessary for the proper performance of his duties and administration of the Act, especially when a dispute arises amongst the several partners of a firm. The Registrar may in his discretion call upon any of the partners or all of them to produce any original deed, document or such other evidence as he thinks fit.' This Rule appears to indicate that a discretion is given to the Registrar to make enquiries. It also makes it clear that in enquiring the Registrar acts in quasi-judicial manner in the sense that he should call for the original deeds and documents or other evidence as he thinks fit. The Registrar did nothing of the kind in this case. He did nothing at the stage before he made the impugned entry 'dissolved' nor did he make the enquiries when he was called upon by the appellant to rectify his mistakes. He has powers under Rule 8 which not only are powers to be exercised in his own discretion but are powers to make such enquiries or such investigation as he may in his discretion think necessary for the proper performance of his duty and in the administration of the Act and especially when the dispute is among the several partners. That test is more than satisfied here on the ground of proper administration of the Act, dispute among partners and not to contradict his own Register and the other entries contained therein. He should have called for an investigation. He did not.

15. It is no wonder that the Registrar did not appear to answer the Rule issued by this Court. The Rule was directed against the Registrar of Firms as a respondent in this application to answer the Rule and show cause to explain his order or his action. Mr. Ginwalla appearing for respondent Manickchand in this state of affairs was rather embarrassed to defend the conduct of the Registrar but suggested some kind of comparison with the Registrar of Trade Marks under the Trade Marks Act who need not appear in the proceedings against the order of the Registrar of Trade Mark. The analogy is inapplicable. This is not a proceeding against the Registrar of Trade Mark under the Trade Marks Act. Here this is a proceeding under Article 226 of the Constitution where the Registrar of Firms was made a party respondent and a Rule was issued upon him to show cause. Therefore, it was incumbent upon him to appear and explain his conduct and his action. It is all the more necessary for the Registrar to appear and help the Court in this proceeding having regard to Section 65 of the Indian Partnership Act which expressly provides:

'A Court deciding any matter relating to a registered firm may direct that the Registrar shall make any amendment in the entry of the Register of Firms relating to such Firm which is consequential upon its decision; and the Registrar shall amend the entry accordingly.

For these reasons, the Rule must be made absolute in terms of prayer (a) of the petition.

16. Mr. Ginwalla has tried to attract us by his argument on the disputed questions of fact on which the learned Judge appears to have dismissed the appellants' petition. It is not necessary for us to go into the disputed questions of fact because the order is otherwise illegal both on merits as well as on the procedure adopted by the Registrar of Firms. But the merit does not help perhaps Mr. Ginwalla although his client respondent Manickchand was notifying on the 30th August, 1961 an alleged dissolution supposed to have taken place on the 11th April, 1954 The document dated 5th May, 1954 appearing as Annexure 'A' to the petition herein does not speak of any dissolution of a firm by the retirement of Ram Kumar Khatuwalla. Manikchand himself is a signatory to this document which describes continuing partners to include himself. This he was saying on the 5th May, 1954 and now in the alleged notice of dissolution to the Registrar he was trying to say that the partnership had been dissolved on the 11th April, 1954. Again this Manickchand signs a document dated 14th March, 1958 where he calls himself as the retiring partner but does not speak of any alleged dissolution at all. Finally it is again this Manickchand who signed a document of assignment dated 24th April, 1958 where he stated: 'Ramkumar Khatuwalla was also a partner of the business until 11th April, 1954 when he retired from the partnership. This is recorded in a deed of retirement dated 5th May '54.' Therefore, even on the merits, Manickchand has said in these three documents dated 5th May, 1954, 14th March, 1958 and 24th April, 1958, something which directly and flatly contradicts his present case in the notice of dissolution that the firm was dissolved on the 11th April, 1954. Mr. Ginwalla tried (pages 83, 86, 89, 11 and 16 to the paper book) to snow that with the retirement, different partnerships came into existence and the statement in Clause (iii) of the deed of partnership dated 14th March, 1958 appearing in Annexure 'A' to the petition saying that 'the partnership business shall be deemed to have commenced on the 14th March 1958' was relied upon in support of this contention of different partnerships. While we admire the novelty of the argument of Mr. Ginwalla, we reject it as unsound and untenable. The position then according to him is one registered firm but there are many other unregistered firms but all bear the same name, the same goodwill and the same business of Ramkumar Khatuawalla established in 1946. This situation the court finds it impossible to accept. Were we to decide the question of fact we could decide against Mr. Ginwalla's client but it is not necessary for us to go into the disputed questions of tact in this appeal as we are satisfied that the impugned order cannot stand on the ground already stated. It is, therefore, not necessary to refer to the decision of Pratapchand Ramchand & Co. v. Jahangirji Bomanji, ILR 1940 Bom 715: (AIR 1940 Bom 257), which held that notwithstanding the dissolution of a partnership by death of a partner, the firm so far as registration is concern-fid is to be deemed to be still registered.

17. The appeal is, therefore, allowed with costs and the Rule is made absolute.

Masud, J.

18. I agree.


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