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Ashish Verma Vs. Neeraj Vyas and Others - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMadhya Pradesh Indore High Court
Decided On
Case NumberCIVIL REVISION No. 96 OF 2011
Judge
ActsCode of Civil Procedure (CPC) - Order 7 Rule 11; India Partnership Act - Section 69; Arbitration Act, 1940 - Sections 8(b), 20(4)
AppellantAshish Verma
RespondentNeeraj Vyas and Others
Appellant AdvocateShri Sameer Athwale, Adv.
Respondent AdvocateShri Anand Singh, Adv.
Excerpt:
.....said partnership business. after 25.5.2003, defendant no.1 caused obstruction in the partnership business firm. in the written statement, it has been inter-alia stated that the said firm is an unregistered partnership firm and the suit in absence of registration of firm is not maintainable. 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 in the firm. from perusal of the plaint averments and reliefs claimed therein, it is clear that the suit for share in the business of partnership firm has arisen from a contract of partnership. plaintiff has claimed money from the defendant/revisionist as..........against the order dated 17.2.2011 passed by the court of civil judge, class-i, shajapur, in civil suit no. 3a/2004, dismissing thereby application under order 7 rule 11 cpc. 2. briefly stated relevant facts are that plaintiff no.1 has instituted a suit mainly with allegations that the plaintiff and defendant/revisionist constituted a partnership firm in the name and style m/s genius computers, shajapur with equal shares in it i.e. 50% each. an agreement to this effect was duly executed between them on 4.9.1999. plaintiff cooperated in running of the said partnership business. after 25.5.2003, defendant no.1 caused obstruction in the partnership business firm. plaintiff, thereafter made a demand for accounts and further for half of his profits in the said partnership firm......
Judgment:

1. This civil revision has been preferred against the order dated 17.2.2011 passed by the Court of Civil Judge, Class-I, Shajapur, in Civil Suit No. 3A/2004, dismissing thereby application under Order 7 Rule 11 CPC.

2. Briefly stated relevant facts are that plaintiff No.1 has instituted a suit mainly with allegations that the plaintiff and defendant/revisionist constituted a partnership firm in the name and style M/s Genius Computers, Shajapur with equal shares in it i.e. 50% each. An agreement to this effect was duly executed between them on 4.9.1999. Plaintiff cooperated in running of the said partnership business. After 25.5.2003, defendant No.1 caused obstruction in the partnership business firm. Plaintiff, thereafter made a demand for accounts and further for half of his profits in the said partnership firm. Defendant No. 1 declined to make payment, hence the suit with following reliefs:-

I) It may be declared that defendant No. 1 and plaintiff are partners in the business of the said firm to the extent of 50% each and the plaintiff, being a partner to the extent of 50%, is entitled to manage affairs of the partnership firm.

II) Defendant/respondent shall be directed to submit accounts and profits & loss statement.

III) Preliminary decree may be passed for the aforesaid and other reliefs claimed in the plaint.

3) In the written statement, it has been inter-alia stated that the said firm is an unregistered partnership firm and the suit in absence of registration of firm is not maintainable.

4) Learned trial Judge, after hearing the arguments, dismissed the application under Order 7 Rule 11 CPC, holding thereby the suit to be quite maintainable. Aggrieved by same, present civil revision has been preferred.

5) Shri Sameer Athwale, learned counsel appearing for the revisionist and Shri Anand Singh, learned counsel appearing for respondent No. 1 made their respective submissions, which have been considered in the light of material record, as well as the law governing the situation.

6) It has been contended on behalf of the revisionist that the alleged partnership firm, being unregistered, the suit of the present nature is not maintainable in law by virtue of Section 69 of The Indian Partnership Act, 1932. On the other hand, Shri Anand Singh, learned counsel for respondent No. 1 supported the impugned order.

7) On due consideration of the material available on record, this Court is of the considered view that the application under Order 7 Rule 11 of CPC deserves to be allowed in the light of plaint averments and Section 69 of The India Partnership Act, which reads as follows:-

“69. Effect of non-registration.-(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 Firms as partners in the firm.

(3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or 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 (3 of 1909) or the Provincial Insolvency Act, 1920 (5 to 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 exceeding one hundred rupees in value which, in the Presidencytowns, is not of a kind specified in section 19 of the Presidency Small Cause Courts Act, 1882 (5 of 1882), or outside the Presidency-towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887 (9 of 1887), or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.”

8) Learned counsel for respondent placed reliance on decisions reported as AIR 1983 Delhi 134 (Jagat Mittar Saigal v. Kailash Chander Saigal), 2001(1) MPLJ 148 (Prakash Rajmalji Jain and others s. Vijay Saxena and another), and (1996) 10 SCC 88 (Krishna Motor Services by Its Partners v. H.B. Vittala Kamath).

9) From perusal of the plaint averments and reliefs claimed therein, it is clear that the suit for share in the business of partnership firm has arisen from a contract of partnership. Plaintiff has claimed money from the defendant/revisionist as his share in the partnership business. Further, in view of the status of the plaintiff as partner, he has claimed right to participate in the said partnership business. Thus, obviously, the suit of the plaintiff is for enforcement of a right arising out of the contract of partnership and not independent of it. Plaintiff has nowhere pleaded that the firm is already dissolved. Thus, the suit of the plaintiff is not covered by any of the exceptions provided in Section 69 of the Act. In the case of Krishna Motor Service's (supra), the partnership between the parties was already dissolved. In the case of Prakash Rajmalji Jain's case (supra), suit was against unregistered firm for rendition of accounts of dissolved firm. In the case in hand, the partnership firm between the plaintiff and defendant is still running even as per plaint averments.

10) The question of law raised in the case of Jagat Mittar Saigal (supra) under Section 8(b) read with Section 20(4) of the Arbitration Act, 1940 was as to whether such a petition is barred at the instance of a partner of an unregistered partnership firm.

This being not a situation in the present case, the respondent does not get any assistance from the Delhi High Court's decision.

11) This Court in the case of Madanlal and others v. Smt. Badambai reported in ILR (2008) MP., 3249, has clearly held that the suit for rendition of accounts is not maintainable in the absence of registration of the firm by virtue of Section 69(supra).

12) Thus, the learned trial Judge has committed an illegality in treating the suit to have not arisen from the partnership agreement. The plaintiff thus does not get assistance from any of the rulings cited by him.

In the result, civil revision succeeds and the same is hereby allowed. Impugned order is set aside. It is held that the plaint is liable to be rejected under Order 7 Rule 11 CPC. Learned trial Judge has acted with an illegality in holding otherwise. No order as to costs.

C.C. as per rules.


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