Prahlad Chandu Dutta v. Dinaram Radhakishan — 1989 DIGILAW 322 (PAT)

Judgment Satyeshwar Roy, J. Defendant no. 1 is the appellant. 2. The respondent-partnership firm filed the suit for recovery of the amount lent- to defendant nos. 1 and 2 who carryon business in the name of defendant no. 3. The trial court dismissed the suit holding that by exhibit 4 dated 20th October, 1960 the firm was - re-constituted and the old firm was disolved. As the new firm was not registered under the Indian Partnership Act, 1932 (the Act) the suit was not maintainable in the name of the firm. It also held that Kamla Prasad Sultania (Kamla for short) had not been shown as a partner in the Register of Firm. The lower appellate court held that by exhibit 4 the old firm was not dissolved and, therefore there was no necessity for getting it registered again after it was re-constituted. It further held that in 1960 after Kamla attained majority, exhibit 4 was drawn up and he became a partner of the firm. Non-entry of his name in the Register of Firm was not fatal to the suit. 3. On 13.7.1982 at the time of admission of this appeal substantial questions of law were formulated. During the course of hearing it appeared that the following substantial question of law arises in this appeal: When admittedly by exhibit 4 Kamla became a partner of the firm and when admittedly again his name did not appear in the Register of Firm as one of the partners on the date when the suit was instituted, whether the suit was maintainable. 4. Certain facts now are not in dispute. The plaintiff-firm was registered in 1956 under the Act. Kamla was not a partner then. In 1960 when he attained majority, a new agreement was executed which was marked as exhibit 4 and by this deed Kamla became a partner of the firm. No notice under section 63 (2) of the Act, was given to, the Registrar. There was serious controversy at the Bar as to whether section 69 (2) requires that not only the firm must be a registered firm on the date of the filing of the suit, but also the persons suing are or have been shown in the Register of Firm as partners in the firm. There was serious controversy at the Bar as to whether section 69 (2) requires that not only the firm must be a registered firm on the date of the filing of the suit, but also the persons suing are or have been shown in the Register of Firm as partners in the firm. According to the appellant, the respondent firm was not only required to show that it was a registered firm, but also that the names of all the partners have been shown in Register of Firm on the date the suit was instituted. In support of this proposition reliance was placed by Mrs. Roy, learned counsel for the appellant on M/s. Badrimal Ramcharan Vrs. M/s. Gana Kaul and Sons; A.I.R. 1971 J & K. 109. According to the respondent-firm only requirement of sub-section is that the firm must be registered and whether all the persons have been shown as partners in Register of Firm on the date the suit is filed is of no consequence. In support of this proposition reliance was placed by Mr. Shivnath; learned counsel for the respondents, in M/s. J. Purshuttam Das and Company Vrs. M/s R.R. Brothers and others: 1973 P.L.J.R. 156- AIR 1973 Pat 300 . 5. There are number of decisions of different High Courts, some of which have laid down that it is not incumbent on the plaintiff-firm to prove that the names of all the persons of the firm were shown in the Register of Firm on the date the suit is filed, and some High Courts have held that it is a must. 6. Section 69 (2) of the Act, with which we are concerned reads as follows: “69. Effect of non-registration – (1) (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." . From the plain reading, it will be noticed that it bars a suit by and on behalf of the firm unless the firm is registered and the persons suing are or have been shown in the Register of Firm as partners of the firm. From the plain reading, it will be noticed that it bars a suit by and on behalf of the firm unless the firm is registered and the persons suing are or have been shown in the Register of Firm as partners of the firm. Let us examine whether if the first condition is fulfilled and the second not, the suit will be maintainable. 7. There is mother decision of this Court on the point in Chaiman Lal and anr. Vrs. Firm New India Traders Mica Merchants and others: A.I.R 1962 Patna; 25. In Chaiman Lal's Case (Supra) three more persons became partners of the firm subsequent to the registration, but they did not care to get their names entered in the Register of Firms. It was held by a Bench that there was nothing in that Act, to indicate that in such a contingency the suit must fail. The reason for so holding was that if section 69 (2) of the Act, and Order 30 rule 1 of the Code of Civil Procedure are read together it will follow that when the suit is instituted in the name of a registered firm only those partners of the firm can get the benefit of a decree whose names appear in the Register of Firms and they shall be liable for a decree against the firm. Subject to this condition the suit was maintainable. In Pursuttam Das (Supra) correctness of the reasoning was doubted, but not the ratio. In Purshuttam Das (Supra) the trial Court and the first appellate court dismissed the suit on the ground that the plaintiff failed to bring on record before the trial court documentary evidence to show that the partners of the firm as constituted on the date of the institution of the suit were shown in the Register of Firms. It further held that section 63 of the Act, which provides for notice to the Registrar of any change in the constitution of Ii registered firm, is directory. It further held that where the suit is by the firm itself or by all the partners of the firm, it is not' necessary to establish that the names of all the partners of the firm have been shown in the Register of. It further held that where the suit is by the firm itself or by all the partners of the firm, it is not' necessary to establish that the names of all the partners of the firm have been shown in the Register of. Firms Only when some of the partners of the firm institute a suit on behalf of the firm and an objection is taken by the defendants that they do not themselves alone constitute the firm on the date of the institution of the suit, they can claim that the suit is not maintainable on account of the fact that they alone have been shown in the Register of Firms as partners of the firm. It, however, appears from the judgment of Purshuttam Das (Supra) that in the trial court oral evidence was brought on record to show that all the partners who constituted firm on the date of institution of the suit were partners in the firm. The Bench was of the opinion that what is mandatory in section 69 (2) is that the firm must be registered and it is of no consequence whether names of all persons claiming as partners on the date of the institution of the suit are shown in the Register of Firms or not. It appears from the judgment that before the first appellate Court the plaintiff filed an application under Order 41 Rule 27 of the Civil Procedure Code for taking additional evidence the certified copy of the entry in the Register of Firms showing the persons who constituted the firm on the date of the institution of the suit. The lower appellate court rejected that prayer. That was allowed by the High Court and the certified copy was taken on record. In that case it was also held that the names of all the partners who claimed to be partners on the date of institution of the suit were shown in the Register of Firms. There is yet another decision of a learned Single Judge of this Court in Basant Lal Jain Vs. Union of India and ors. A.I.R. 1965 Patna 426 which held that section 69 (2) lays down two requirements: (i) firm must be registered on the date of filing of the suit and: (ii) the persons suing should be shown in the Register of Firm as Partners of the firm. 8. Union of India and ors. A.I.R. 1965 Patna 426 which held that section 69 (2) lays down two requirements: (i) firm must be registered on the date of filing of the suit and: (ii) the persons suing should be shown in the Register of Firm as Partners of the firm. 8. Both the decisions in Chaimanlal and Purshuttam Das (Supra) are by Division Bench of this Court and ordinarily I am bound by these two decisions. In such a situation, I shall have to ignore the judgments of other High Courts including Basant Lal Jain (Supra) which are contrary to these two Bench decisions of this Court. However, the two Bench decisions of this Court are no more binding on me as both are contrary to the judgment of the Supreme Court in M/s Shreerom Finance Corporation Vrs. Yasin Khan and ors: 1989 (3) S.C.C. 426. The facts in Shreeram Finance Corporation (Supra) are that the corporation was registered under the Act, on 2.11.1960. There was change in the constitution of the firm on 1.7.1967 whereby the two of the then partners and one new partner joined and two minors were admitted to the benefits of the said partnership firm. The", suit was instituted on 22.7.1968. Notice regarding change in the constitution of the firm was given to the Registrar of Firms on 28.8.1986. On those facts the Supreme Court held that: “.........the suit filed by the appellants is clearly hit by the provisions of sub-section (2) of section 69 of the said Partnership Act, as on the date when the suit was filed, two of the partners shown as partners as per the relevant entries in the Register of Firms were not, in fact, partners, one new partner had come in and two minors had been admitted to the benefit of the partnership firm regarding which no notice was given to the Registrar of Firms. Thus the person suing, namely, the current partners as on the date of the suit were not shown as partners in the Register of Firms. The result is that the suit was not maintainable in view of the provisions of sub-section (2) of Section 69 of the said Partnership Act, and the view taken by the trial court and confirmed by the High Court in this connection is correct. Although the plaint was amended on a later date that cannot save the suit." 9. The result is that the suit was not maintainable in view of the provisions of sub-section (2) of Section 69 of the said Partnership Act, and the view taken by the trial court and confirmed by the High Court in this connection is correct. Although the plaint was amended on a later date that cannot save the suit." 9. In the present case, I have already noticed that Kamla became partner of the firm in 1960 by exhibit 4 and the suit was filed on 24-3-1975. Notice under section 63(2) of the Act, was given on 24-8-1976 to get the name of Kamla entered in the Register of Firms. On the date the suit was instituted Kamla's name did not appear as Partner in the Register of Firms. The law laid down by the Supreme Court in Shreeram's case (Supra) squarely applies to this case. The decisions which are contrary to the law laid down by the Supreme Court including the two Bench decisions of this Court noticed above cannot be held to be good law. 10. In the result, this appeal is allowed. The judgment and decree of the court below are set aside and that of the trial court is restored. Parties shall bear their own cost. Appeal allowed.