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1987 DIGILAW 190 (BOM)

Gandhi & Co. v. Krishna Glass Pvt. Ltd.

1987-07-07

M.L.PENDSE, P.S.SHAH

body1987
JUDGMENT - SHAH P.S., J.: - This is an appeal preferred by the original plaintiffs against the judgment and order dated March 22, 1983, passed by the learned Single Judge in Suit No. 17 of 1973 dismissing the suit on the preliminary ground that the suit is not maintainable for non-compliance of the provisions of section 69, sub-section (2) of the Indian Partnership Act, 1932. The facts in so far as they are material are not in dispute. In the plaint the appellants are described as a partnership firm registered under the Indian Partnership Act and carrying on business at 90/92, Kazi Syed Street, Bombay 3. In the plaint it is further averred that the plaintiffs are a partnership firm registered under the Indian Partnership Act and that they carry on the business of supply of silica sand, dolomite limestone and other minerals. In para 7 of the plaint it is stated that there was a talk in relation to the suit contract between Rasiklal Narottam Gandhi, a partner of the plaintiffs-firm and one Dhirubhai Boda who was connected with the respondent company. The plaint is signed by Rasiklal Gandhi on behalf of the appellants firm. He has also verified the plaint as a partner of the plaintiffs-firm stating inter alia that the contents of para. 7 of the plaint are true to the knowledge of the said Rasiklal. It is not as dispute before us that the firm started on October 29, 1962, and was registered on September 11, 1964. The suit has been filed on December 11, 1972. In the written statement the respondents did not admit that the appellants are a partnership firm registered under the Partnership Act or that they carry on the business of supply of silica sand, dolomite limestone or other minerals as alleged or at all. 2. At the time of the hearing of the suit the appellants produced a xerox copy of the extract from the Register of Firms. This extract bears out that initially the firm was started on October 21, 1962, with five partners and was got registered on September 11, 1964. There were in addition three minors admitted to the benefits of the partnership on different dates and the entries give the respective dates on which the minors would attain the majority. This extract bears out that initially the firm was started on October 21, 1962, with five partners and was got registered on September 11, 1964. There were in addition three minors admitted to the benefits of the partnership on different dates and the entries give the respective dates on which the minors would attain the majority. As regards one person by name Bharatkumar, it appears that the necessary dates have not been typed while taking out the extract and may be that he was also a minor admitted to the benefits of the partnership. What is material for our purpose is the entry dated December 11, 1973, which shows that two partners viz. Rasiklal Narottamdas Gandhi and Kiritkumar Manekchand Gandhi joined the partnership firm and became partners thereof on April 8, 1966. It is this Rasiklal Gandhi whose name is mentioned in para. 7 of the plaint as a partner of the appellant-firm and who has declared the plaint as a partner on behalf of the firm. The respondents amended their written statement making clear averment as regards the non maintainability in the suit on the ground that the name of Rasiklal who is a partner of the appellant-firm has not been shown in the Register of Firms on the date of filing of the suit as required by the provisions of Section 69(2) of the Partnership Act. It was contended that the suit is not maintainable for non-compliance of the mandatory requirements of section 69(2) of the Act. The learned Single Judge accepted this contention and dismissed the suit on this preliminary ground. 3. The short question that arises before us is whether the fact that the name of one of the partners whose name was not recorded with the Register of Firms as a partner on the date of the filing of the suit would attract the bar of the provisions of section 69(2) of the Partnership Act, notwithstanding the fact that the name of such a partner is recorded in the Register of Firms subsequent to the filing of the suit. 4. In order to appreciate the rival contentions it would be useful to note the provisions of section 69 of the Act which deals with the effect of non-registration. Section 69 contains four sub-section. 4. In order to appreciate the rival contentions it would be useful to note the provisions of section 69 of the Act which deals with the effect of non-registration. Section 69 contains four sub-section. Sub-section (1) provides that- “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 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.” 5. The present suit is not covered by sub-section (1) nor are sub-section (3) and not relevant for our purpose. The relevant clause so far as the controversy is concerned is sub-section (2) and runs thus: “Effect of non-registration. - (2) No suit to enforce a right arising from a contact 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. 6. It is not in dispute that the present suit is of the nature described in sub-section (2) of section 69. On a plain reading of the said provisions it would appear that in order that the suit is validly instituted by or on behalf of the firm against any third party two conditions must be fulfilled viz. (1) the firm is registered and (2) the persons suing are or have been shown in the Register of Firms, as partners in the firm. 7. Mr. Munshi, the learned Counsel, appearing of the appellants submitted that the latter portion of section 69(2) viz.' and the persons suing are or have been shown in the Register of Firms as partners in the firm 'has no application to a suit filed by the firm and the only condition necessary to be established is that the firm is registered on the date of the suit. According to the learned Counsel the word 'and' should be read disjunctively and not conjuctively and, therefore, the word 'and' is used in the sub-section to mean 'or'. According to the learned Counsel the word 'and' should be read disjunctively and not conjuctively and, therefore, the word 'and' is used in the sub-section to mean 'or'. In support of his contention the learned Counsel relied on the provisions of Order 30 of the Code of Civil Procedure. It was submitted that the provisions of section 69(2) which would produce contrary results should be avoided. The learned Counsel placed reliance on a decision of learned Single Judge of the Andhra Pradesh High Court in (M.J. Vehu Mudaliar v. Shri Venkateswara Finance Corpn.)1, A.I.R. 1971 A.P. 63 which decision was followed by the Patna High Court in (M/s. J.Purshuttam Das Co. v. M/s. R.R. Brothers)2, A.I.R. 1973 Patna 300. On the other hand Mr. Mody, the learned Counsel, appearing for the respondents contended that the provisions of Section 69(2) have no relation with the procedural provisions of Order 30 of the Code of Civil Procedure and there is no reason to depart from the well settled Rule in construing the statutory provisions that the words used therein should be given their plain ordinary meaning. As regards the construction of Section 69(2) he relied on the view taken by the Gujarat High Court in (Bharat Sarvodaya Mills Co. Ltd. v. M/s. Mohatta Brothers)3, A.I.R. 1969 Guj. 178 and of the Delhi High Court in (M/s. Shankar Housing Corporation v. Smt. Mohan Devi)4, A.I.R. 1978 Delhi 255. 8. In the case of M/s. Shankar Housing Corporation the Delhi High Court pointed out the historical background of the provisions of Order 30 of the Code of Civil Procedure. The provisions of Order 30 were added newly in the Civil procedure Code of 1908. It was pointed out that normally, when a person wishes to obtain a decree against several persons, or when several persons wish to obtain a decree against a person, all the said persons must be made parties to the suit. Similarly, when a person makes a promise to more than one person, the right to enforce the promise rests with them all under the provisions of Section 45 of the Indian Contract Act, so that all of them are necessary parties to a suit to enforce the promise. Similarly, when a person makes a promise to more than one person, the right to enforce the promise rests with them all under the provisions of Section 45 of the Indian Contract Act, so that all of them are necessary parties to a suit to enforce the promise. It was, therefore, held in some decisions under the old Code of 1882 which did not contain any provisions corresponding to the present Order 30 that in suits by or against the firms, all the partners of the firm were necessary parties. It was to enable two or more partners alone to sue or be sued as a kind of exception to the provisions of section 45 of Contract Act that the present provisions in Order 30 were introduced in the Code of 1906. 9. As far as the provisions contained in Rules (1) and (2) of Order 30 of the Code of Civil Procedure on which reliance is placed by the learned Counsel are concerned, it is clear that the provisions contained therein are merely procedural. Order 30 deals with suits by or against firms and persons carrying on business in names other than their own sub-rule (1) of Rule 1 of Order 30 enables any two or more persons claiming or being liable as partners and carrying on business in India may sue or be sued in the name of the firm of which such persons are partners at the time of the accruing of the cause of action. It is also provided in the said sub-rule that a party to a suit may in such case apply to the Court for a statement of the names and addresses of the persons who were, at the time of the accruing of the cause of action, partners in such firm, to be furnished by the other party. Sub-rule (2) of Rule 1 provides that where persons sue or are sued as partners in the name of their firm under sub-rule (1), it shall, in the case of any pleading or other document required by or under this Code to be signed, verified or certified by the plaintiff or the defendant, suffice if such pleading or other document is signed, verified or certified by any one of such persons. Sub-rule (1) of Rule 2 also speaks of the obligation of the plaintiffs viz. Sub-rule (1) of Rule 2 also speaks of the obligation of the plaintiffs viz. where the partners file a suit in the name of the firm to declare in writing the names and other information of all the persons constituting the firm on whose behalf the suit is instituted. Reading the two Rules together it is quite clear that both the Rules speak of a suit by or against a firm. Normally, but for the provisions of Order 30 the suit would have been required to be filed by each and every one of the partners of the firm or each one of the partners could have been sued,. In order to avoid this compendious procedure these provisions enable suits being filed by or against the firm and it is not necessary that the partners should be added as plaintiffs or defendants separately. The provision also enables the third party to obtain the information relating to the partners of the firm when the partners sue in the name of the firm. This provision obviously intended to safe-guard the interests of the third party who may or may not know the names of the persons who were partners of the firm at the time of the accruing of the cause of action, so that the third party may take appropriate defence in the suit. Whereas the provisions of Rules 1 and 2 of the Order 30 of the Code of Civil Procedure are procedural in nature; section 69(2) is substantive provision. It is a disabling provision whcih bars a suit unless the provisions thereof are complied with section 69(2) refers to a suit 'by or on behalf of a firm'. A firm is not a legal entity unlike a company or a Corporate Body constituted under a statute. Section 4 of the Partnership Act defines 'partnership' as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Section 4 further provides that persons who have entered into parntership with one another are called individually 'partners' and collectively 'a firm' and the name under which their business is carried on is called the 'firm name'. Thus the words 'partners' or 'firm' are clearly inter-changeable and mean the same thing. Section 4 further provides that persons who have entered into parntership with one another are called individually 'partners' and collectively 'a firm' and the name under which their business is carried on is called the 'firm name'. Thus the words 'partners' or 'firm' are clearly inter-changeable and mean the same thing. When the expression 'suit by or on behalf of the firm' is used, it is nothing but a suit by the partners of a firm. It is, therefore, obvious that when a suit is filed by a firm as permitted by the provisions of Order 30, Rule (1)/(2) of the Code of Civil Procedure it is the partners of the firm who have filed such a suit. In other words, a suit by a firm is nothing but a suit by the partners of a firm. The provisions of Section 69(2) cannot be construed with the aid of the wording of the Rules (1) and (2) of Order 30 of the Code of Civil Procedure. The said procedural provisions only provide a convenient method whereby the partners can file a suit in the name of the firm, but nonetheless the suit is in fact a suir by the partners of the firm. It is also to be noted that the requirements of Section 69(2) must be satisfied first in order that a suit of the nature mentioned in it can be instituted and it is only then that the provisions of Rules 1 and 2 of Order 30 are attracted as regards the mode or the form in which the suit may be instituted as well as the procedure that may be applicable to such a suit. Reliance was placed by Mr. Munshi on the observations in para 17 of the Andhra Pradesh High Court Judgment in M.J. Velus's case in support of his contention, which run thus: “17. In construing the provisions of section 69(2) one should bear in mind the procedure contemplated by Order 30 for the institution of suits by or against firms. Rule 1 of the Order 30 enables a suit to be filed in the name of the firm and any party to a suit may in such a case apply to a Court for a statement of the names and addresses of the persons who were at the time of the accruing of the cause of action partners in such firm. If an application in that behalf is made the partners have to be furnished and verified in such manner as the Court may direct. Sub-rule (2) says that where persons sue as partners in the name of the firm, any pleading or other document required by the Court to be signed, verified or certified by the plaintiff or the defendant may be signed, verified or certified by any one of the partners suing in the name of the firm. The expression 'suing as partners' occurring in Section 69(2) of the Partnership Act, must be read and understood in the light of the provisions of Order 30. It is not unreasonable to infer that the requirement contemplated by the later part of sub-section (2) of section 69 was intended to come into play only in cases where a disclosure of the names and particulars is called for in accordance with the provisions of Order 30. I am inclined to think that the conjunction 'and' in Section 69(2) has to be construed in the disjunctive sense. The context in which the conjunction is used seems to imply that the legislature used it in a disjunctive sense. If sub-section (2) is to be read as prescribing the two pre-conditions in all cases of suits brought in the name of the partnership firm the provisions of Order 30 may be rendered nugatory, or ineffective. But if the conjunction 'and' is construed in a disjunctive sense, and is read as 'or' the later part of sub-section (2) of section 69 would come into play only in those cases where a disclosure of the names and particulars is made under Order 30, Civil Procedure Code.” 10. The learned Judge in that case dissented from the view of the Calcutta High Court in (1962(66) Cal.W.N. 262)5, where the contention that the word 'and' in section 69(2) as read as 'or' was rejected. As discussed earlier, the scope and ambit of the provisions of Rules 1 and 2 of Order 30 of the Code of Civil Procedure is different from the provisions of section 69(2) of the Partnership Act. The provisions contained in Rules 1 and 2 are procedural; whereas the provisions of section 69(2) are substantive and create a bar at the threshold of the filing of a suit by or on behalf of firm, if the condition mentioned therein are not fulfilled. The provisions contained in Rules 1 and 2 are procedural; whereas the provisions of section 69(2) are substantive and create a bar at the threshold of the filing of a suit by or on behalf of firm, if the condition mentioned therein are not fulfilled. Section 69(2) says that “no suit shall be instituted...by or on behalf of a firm...unless the firm is registered and the persons suing are or have been shown in the Registrar of Firms as partners in the firm. “On a plain reading of the section both the conditions laid down in the section must be fulfilled and that is clear from the fact that the word 'and' is used and appears in the section. We have already indicated that even if a suit is filed in the name of a firm it is in substance a suit by partners of the firm and the phrase 'the person suing' therefore, will have to be construed as the names of all the partners constituting the firm, at the time of the institution of the suit. In our opinion, the expression 'person suing' can only mean the persons who file the suit on behalf of the firm. If this is the construction which requires to be adopted on the said phrase used in the provision it would logically follow that the word 'and' cannot be construed disjunctively as suggested by the learned Counsel. It is well settled rule of construction of a statutory provision that unless there is ambiguity or that two constructions are possible, the normal rule of giving a plain meaning to the words used has to be followed. We find that the provisions of section 69(2) are clear and unambiguous and there is no scope for giving a different meaning to the word 'and'. We, therefore, reject the argument that if the suit is filed in the name of the firm all that is required to be shown is that the firm is registered on the date of the suit and the second condition relating to the names of the persons being shown as partners in the Register of Firms does not apply to such a suit. The question of the applicability of the provisions of Rules 1 and 2 of Order 30 of the Code arises only if the suit itself is validly instituted in compliance with the provisions of section 69(2) and not otherwise. These provisions of the Code, therefore, cannot be of any assistance in interpreting the provisions of section 69(2). 11. The reasoning in the Andhra Pradesh High Court Judgment proceeds on that basis of the provisions of Rules 1 and 2 of Order 30. With respect, it is not possible to agree with the view taken by the Andhra Pradesh High Court and also by the Patna High Court in the case of J. Purshuttam Das and Co. v. M/s. R.R. Brothers, A.I.R. 1973 Patna 300, which follows the view taken by the Andhra Pradesh High Court. 12. In (Firm Buta Mal Dev Faj v. Chanan Mal)6, A.I.R. 1964 Punjab 270, a Division Bench of the Punjab High Court held that the proper interpretation of section 69(2) is that in order to institute a suit a partnership firm must not only be a registered firm but also all the persons who are partners in the firm at the time of the institution of the suit must be, or have been, shown as such in the register. The court observed 'the person suing' in section 69(2) must mean the partners in the firm. The use of the plural 'persons' is obviously deliberate, since while a singular may also mean the plural, the plural can never mean the singular. When a suit is instituted in the name of a firm the suit is on behalf of all the partners and not only such of them as are shown in the Register as such and all the partner must be 'persons suing' contemplated in section 69(2). The Court further held that where a certain person who had been a partner from the beginning of the constitution of the plaintiff partnership and as still a partner at the time of the institution of the suit but had never been shown as such along with two other partners in the Register, the suit by suit by such a firm is incompetent. 13. In Bharat Sarvodaya Mills Co. Ltd. v. M/s Mohatta Brothers, A.I.R 1969 Guj. 13. In Bharat Sarvodaya Mills Co. Ltd. v. M/s Mohatta Brothers, A.I.R 1969 Guj. 178 a Division Bench of the Gujarat High Court has held that section 69(2) imposes two mandatory conditions and unless both the conditions are fulfilled there would be a fatal bar to the entire suit and it would be wholly incompetent in a Court of Law. The Court further held that both these conditions are cumulative conditions and both must be satisfied in order to constitute a validly instituted suit. The Court was of the view that no separate registration was necessary where there is a reconstitution of a continuing firm, but still in its view the second condition must also be complied with by showing that not only the continuing firm is a registered firm, but that all the partners at the date of the accrual of the cause of action are or have been shown in the Register of Firms as partners. 14. As far as the facts of the case before us are concerned, Rasiklal N. Gandhi was a partner at the date of the accrual of the cause of action and even if Gujarat view that all the partners at the date of the accrual of the cause of action also must be shown in the Register of Firms as partners on the date of the suit, the suit must fail because Rasiklal was not shown as a partner in the Register of Firms on the date when the suit was instituted. In any event admittedly Rasiklal was a partner also on the date of the institution of the suit and, therefore, the bar under section 69(2) have been applied. 15. A reference may now be made to the decision of the Delhi High Court in M/s. Shankar Housing Corporation v. Smt. Mohan Devi, A.I.R. 1978 Delhi 255, where also it has been held that the provisions of section 69(2) are mandatory and both the conditions laid down therein have to be fulfilled. As far as section 69(2) and Rules 1 and 2 of Order 30 of the Code are concerned, the Court took the view that they deal with different aspects and operate separately. It may, however, be mentioned that the Delhi High Court does not seem to have agreed with the view of the Gujarat High Court in Bharat Sarvodaya Mills Co. It may, however, be mentioned that the Delhi High Court does not seem to have agreed with the view of the Gujarat High Court in Bharat Sarvodaya Mills Co. Ltd. v. M/s. Mohatta Brothers to the limited extent to which it has been held by the Gujarat High Court that the names of all the partners at the date of the accrual of the cause of action must also have been shown in the register of Firms as partners in the firm. The Delhi High Court took the view that the language in section 69(2) which is in then present tense has to be given its plain grammatical meaning and when so read, it would follow that 'persons suing' in section 69(2) mean 'all the partners of the firm at the time of the institution of the suit'. This controversy does not arise in our case since admittedly Rasiklal N. Gandhi was a partner at the date of the accrual of the cause of action as also on the date of the institution of the suit. 16. In (Govindmal Gianchand v. Kunj Biharilall)7, 56 Bom.L.R. 348, it has been held that the provisions of section 69 are mandatory and there is no power in the High Court to grant to the defaulting partnership any relief against the disability imposed by the section. The suit which has not complied with the provisions of section 69 is bad on its inception and even a consent or waiver by the defendant does not make a suit which was initially bad, good. 17. In this connection it would be useful to refer to the observations of the Supreme Court in (Commissioner of Income Tax v. M/s. Jayalakshmi Rice and Oil Mills Contractor Co.)8, A.I.R. 1971 S.C. 1015, where it has been observed that the registration of a firm takes place only when the necessary entry is made in the register of firms under section 59 of the Partnership Act by the Registrar and not earlier. It was also pointed out that under section 69 which deals with the effect of non-registration it has been consistently held that the registration of a firm subsequent to the filing of the suit did not have the defect. The Supreme Court rejected the contention that the partnership should be deemed to have been registered on the date when the application was presented. 18. The Supreme Court rejected the contention that the partnership should be deemed to have been registered on the date when the application was presented. 18. There is also a decision of the Division Bench of this Court in (Prithvisingh Devisingh v. Haji Hasanalli Vazirkhan)9, 52 Bom.L.R. 862, where it has been held that under section 69(2) unless a partnership firm is registered, the institution of a suit by it is barred, and that initial defect cannot be cured by any subsequent registration of the partnership firm. 19. In the present case it is established that the name of the partner, Rasiklal N. Gandhi had not been shown in the Register of the firms on the date of the filing of the suit. The suit filed by the partnership firm must, therefore, fail. 20. We are, therefore, in agreement with the view taken by the learned Single Judge. In the result, the appeal fails and it dismissed. However, in the circumstances of the case we direct that the parties shall bear their respective costs. 21. Mr. Munshi orally applies for leave to appeal to the Supreme Court. Leave refused. Appeal dismissed. -----