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Andhra High Court · body

2009 DIGILAW 24 (AP)

Ganji Subbarayudu v. K. Sudharshana Rao

2009-01-28

G.YETHIRAJULU

body2009
ORDER This Revision Petition has been filed by the third defendant in OS.No. 90 of 2005 on the file of the Additional Senior Civil Judge, Kurnool. 2. The suit was filed for specific performance of an agreement of sale executed by the third defendant. During the pendency of the Suit, the third defendant filed IANo.18 of 2007 under Order 8 Rule 9 and Section 151 of C.P.C. praying the Court to permit him to file additional written statement in the suit. 3. In the said Application, the revision petitioner-third defendant contended that respondents 1 and 2 filed the suit for specific performance of an agreement of sale said to have been executed by him. The first respondent was examined as P.W, 1. During the cross examination, it came to light that R-1 to R-2 are partners of partnership firm and their claim in the suit is as partners of a firm. The petitioner learnt that the firm or R-1 and R-2 is not registered and he was not aware about it previously, therefore, he could not plead in the written statement that the suit is not maintainable as it was filed by the partners of an unregistered firm, The respondents 1 and 2 have to prove that their firm is registered for maintaining the suit, therefore, he requested permission to file additional written statement taking a plea about the maintainability of the suit for w8nt of registration of the firm. 4, The respondents 1 and 2 filed a counter contending that the suit is not filed on behalf of the firm or partners of the firm, The suit is filed on behalf of the individual purchasers under an agreement of sale, The agreement of sale is not in the name of any firm. In fact, there is no firm in this case and no name of the firm is disclosed or spoken to. The plaintiffs are the brothers doing business jointly in a particular adventure. Mere sharing of profits does not make it a firm. It requires a contract and name. The definition of Section 4 of the Indian Partnership Act, 1932 (for short 'the Act') is wrongly interpreted by the petitioner and trYing to make out a case to attract Section 69 (2) of the Act. P.w.1 never said that there IS a partnership firm of the business is on behalf of the firm. It requires a contract and name. The definition of Section 4 of the Indian Partnership Act, 1932 (for short 'the Act') is wrongly interpreted by the petitioner and trYing to make out a case to attract Section 69 (2) of the Act. P.w.1 never said that there IS a partnership firm of the business is on behalf of the firm. He only spoke that both of them are doing the business jointly and sharing the profits equally. The work "partners" used loosely does not mean that there is existence of firm. The third defendant is not a party to the agreement of sale. He has no locus standi to make out such pleas and he is only a subsequent purchaser, therefore, there is no necessity to file any additional written statement. 5. No oral and documentary evidence adduced by both parties. On basis of the pleadings, the lower court dismissed the Application by observing that either the allegations In the plaint or the evidence given by P.W.1 does not disclose the ingredients of partnership firm, therefore, the question of registration of the firm does not arise. If there is any plea of existence of firm, then only the requirement of registration is essential. Being aggrieved by the same, the third defendant preferred the present Revision Petition. 6. The learned counsel for the Revision Petitioner contended that since P.W.1 stated that respondents 1 and 2 are doing business jointly and sharing profits, therefore, joint business has to be treated as partnership firm, which requires registration, and in the absence of registration. the suit cannot be maintained. 7. The learned counsel for the respondents submitted that the respondents nowhere mentioned that theirs is a partnership or that they are doing business on behalf of the firm or that there is a name of the firm. In the absence of such pleadings or admissions, simply because P.W.1 stating that R-1 and R-1 are doing business as partners and sharing profits does not mean that they are doing business on behalf of the firm, therefore, the question of raising a plea that the firm is not registered does not arise. 8. In the absence of such pleadings or admissions, simply because P.W.1 stating that R-1 and R-1 are doing business as partners and sharing profits does not mean that they are doing business on behalf of the firm, therefore, the question of raising a plea that the firm is not registered does not arise. 8. In the light of the contentions raised by both parties, the point for consideration is: Whether there is sufficient ground for permitting the third defendant to file additional written statement for taking the plea that the suit is not maintainable for want of registration of a firm? 9. In the suit, it was pleaded that the defendants executed the suit agreement of sale covered by EX.A-2 by receiving consideration of RS.1.5 lakhs as advance. The agreement was obtained in their individual capacity. In the deposition of P.W.1, it was mentioned that the first defendant agreed to sell the plaint schedule land to the plaintiff at Rs.3,50,000/- per acre under an agreement of sale, dated 23-05-2004 and received consideration of RS.1 ,50,000/- as advance. They wanted to pay the balance sale consideration and get registered sale deed for the entire plaint schedule land. They were ready with the money and willing to perform their part of contract. They floated the scheme for the sale of the plaint schedule land by allotting it into plots and published the scheme. The brochure and style of Srilakshmi Mega Township, Kurnool and the proforma application were issued to the intending members. They sold away all the plots under the said scheme and they were requesting the first defendant to receive the balance amount and execute registered sale deeds for the plaint schedule land. In the deposition, P.W.1 further stated that they allotted house plots in the total extent. The scheme was started in the year 2004. His brother and himself are "partners" in the scheme. His brother and himself are Jointly dealing with the transactions under the scheme. He further stated that his brother and himself alone are the partners for doing this business. This is the first business they started Jointly for doing real estate business as partners. 10. His brother and himself are "partners" in the scheme. His brother and himself are Jointly dealing with the transactions under the scheme. He further stated that his brother and himself alone are the partners for doing this business. This is the first business they started Jointly for doing real estate business as partners. 10. The leamed counsel for the Revision Petitioner-third defendant submits that the element of Section 6 of the Act is coming in the evidence of P.W.1, therefore, the Act applies and the Revision Petitioner be permitted to file additional written statement regarding the plea of non-maintainability of the suit and no prejudice would be caused to the plaintiffs and this point can be decided in the Suit after framing appropriate issue. 11. The learned counsel for the respondents, while drawing the attention to Sections 4 to 6 of the Act, represented that the plaintiffs are only brothers and they took a venture faintly. The mere sharing of profits does not make their business a firm. They never started any partnership firm and by mere using the work 'partners' does not mean that there is existence of firm, therefore, framing of an issue regarding the maintainability, without there being any prima facie material, will lead to unnecessary complication, therefore, requested to dismiss the Revision Petition by confirming the order of the lower Court. 12. Under Section 4 of the Act, the words "partner" and "firm" are defined, which reads as follows: 4. Definition of "partnership", "partner", "firm" and "firm name":" Partnership" is the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually "partners" and collectively "a film" and the name under which their business is carried on is called the "firm name", Section 5 of the Act refers as to when partnership not created by status, which reads as follows: 5. Partnership not created by status: The relation of partnership arises from contract and not from status: and, in particular, the members of a Hindu undivided family carrying on a family business as such, or Burmese Buddhist husband and wife carrying on business as such, are not partners In such business." Section 6 of the Act deals with the mode of determining the existence of partnership, which reads as follows: 6. Mode of determining existence of partnership:- In determining whether a group of persons IS or is not a firm, or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together. Explanation 1:- The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does not of itself make such persons partners. Explanation 2:- The receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business, does not of itself make him a partner with the persons carrying on the business: And, In particular, the receipt of such share or payment- (a) by a lender of money to persons engaged or about to engage in any business, (b) by a servant or agent as remuneration, (c) by the widow or child of a deceased partner as annuity, or (d) by a previous owner or part owner of the business, as consideration for the sale of the goodwill or share thereof, Does not itself make the receiver a partner with the persons carrying on the business.' Explanation 1 of Section 6 clarifies that sharing of profits or of gross returns arising from property by reasons holding a joint or common interest in that property does not of itself make such persons partners. In Helper Girdharbhai v. Saiyed Mohd. Mirasaheb Kadn", the Supreme Court while examining as to what are the Important elements to establish a partnership, held as follows: 'Whether there was a partnership or not may In certain cases be a mixed question of law and fact, in the sense that whether the ingredients of partnership as embodied In the law of partnership were there or not in a particular case must be judged in the light of the principles applicable to partnership. The following important elements must be there in order to establish partnership: (1) there must be an agreement entered into by all parties concerned: (2) the agreement must be to share profits of business: and (3) the business must be carried on by all or any of the persons concerned acting for all. The following important elements must be there in order to establish partnership: (1) there must be an agreement entered into by all parties concerned: (2) the agreement must be to share profits of business: and (3) the business must be carried on by all or any of the persons concerned acting for all. Sharing of profits and contributing to losses were not the only elements in a partnership, existence of agency was essential.' Under the provision of the Act there must b8 an agreement entered between the parties to carryon the business by or any persons acting for all and here must be an agreement to share the profits of business. Then only It is called partnership firm and In such a case, it requires registration. 13. It is an undisputed fact that respondents 1 and 2 are brothers. They started a joint venture and agreed to share profits equally. They never intend to constitute any firm, there was no agreement between them to that effect, the Suit was not filed on behalf of the firm, they filed the suit in their individual capacity and the business was not started with any firm name. 14. After going through the pleadings and the evidence of the P.W.1, I am of the view that the lower Court rightly came to a conclusion that the ingredients required under Section 58 of the Act for registering the firm are not satisfied and the joint venture by the brothers cannot be treated as firm. Any direction to the lower Court to frame an issue and record the evidence on this aspect will create unnecessary complication of the suit when there is no prima facie material to show that the suit was filed on behalf of the firm, therefore, I do not find any grounds to interfere with the order passed by the lower Court. 15. The civil Revision Petition is accordingly, dismissed. No order as to costs.