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Himachal Pradesh High Court · body

2009 DIGILAW 742 (HP)

HILL MOTORS v. EICHER MOTORS LIMITED

2009-08-26

SANJAY KAROL

body2009
JUDGMENT Sanjay Karol, J. (Oral):-The present appeal has been filed by the plaintiffs against the current findings of facts recorded by the Courts below. The plaintiffs filed a suit for recovery of Rs.1,37,122.40 paise against the defendants- respondents. Plaintiff No.1 is the partnership firm of plaintiffs No.2 to 4. 2. The suit was resisted by the defendants inter alia on the ground that the suit as framed was not maintainable keeping in view the provisions of Section 69 of the Indian Partnership Act, 1932 (hereinafter referred to as the Act). 3. Based on the pleadings of the parties, the trial Court framed the following issues:- “1. Whether the plaintiff is entitled to recover the suit amount? OPP 2. Whether the plaintiff is entitled to recover interest on principal. If so, at what rate and from which date? OPP 3. Whether the suit as laid and framed is not competent or maintainable? OPD. 4. Whether there is no privity of contract between parties to suit? OP Parties. 5. Whether this Court has no jurisdiction to entertain and try the suit? OP Parties. 6. Whether the defendant is entitled to recover cost U/s 35(B) CPC. OPD. 7. Whether the suit is deemed to have been instituted on 3.8.90 when the plaintiff firm was registered? OPP” 4. Issues No.3 and 7 were decided against the plaintiffs for the reason that as on the date of filing of the suit i.e. 16.10.1989, plaintiff No.1 firm was unregistered and subsequent registration of the firm on 3.8.1990 could not cure the initial defect. The trial Court dismissed the suit in terms of judgment and decree dated 18.5.1993 in case No.71/1 of 91, titled as M/s Hill Motors and others vs. M/s Eicher Motors Limited. 5. Plaintiff’s Civil Appeal No. 39-S/13 of 1995, titled as M/s Hill Motors and others vs. M/s Eicher Motors Limited, assailing the aforesaid judgment and decree was also dismissed by the Additional District Judge, Shimla in terms of judgment and decree dated 26.2.1999. The view taken by the trial Court was affirmed keeping in view the position of law as it existed on that date. 6. The present appeal was admitted on the following substantial questions of law:- “1. The view taken by the trial Court was affirmed keeping in view the position of law as it existed on that date. 6. The present appeal was admitted on the following substantial questions of law:- “1. Whether all the persons with whom the defendants have privity of contract were made party to the suit for recovery of the amount, merely the fact that such persons have also constituted a partnership firm which on the day of the institution of the suit was unregistered, can be made a ground to defeat the claim of the plaintiffs which was found genuine, could the suit be held to be not maintainable on account of non-registration of the firm? When the partnership firm was got registered during the period of limitation for filing of the suit for recovery of the amount and the said plea was permitted to be incorporated by the plaintiff in the plaint on the concession given by the defendants, could the defendants be permitted at the later stage to assail the maintainability of the suit on the ground of non-registration of the partnership firm, whether the courts below have committed procedural error in this regard? Whether the amendment in the plaint which has been allowed would relate back to the date of institution of the suit, could the suit be still held to be incompetent when the registration of the firm took place before the expiry of the period of limitation for maintaining such suit?” 7. I have heard Mr. Bhupender Gupta, learned senior counsel assisted by Mr.Neeraj Gupta, Advocate, for the appellants and Mr. Harish Behl, Advocate, for appearing respondents and also perused the record. 8. Undisputed position which emerges from the record is that the suit for recovery was filed on 16.10.1989 and the firm was subsequently registered on 3.8.1990. The plaintiff also amended its pleadings incorporating the factum of registration. 9. Section 69 of the Act reads as under:- “69. Effect of non-registration. 8. Undisputed position which emerges from the record is that the suit for recovery was filed on 16.10.1989 and the firm was subsequently registered on 3.8.1990. The plaintiff also amended its pleadings incorporating the factum of registration. 9. Section 69 of the Act reads as under:- “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 realize the property of a dissolved firm, or (b) the powers of an official assignee, receiver or Court under the Presidency-tows Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, to realize 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 Presidency-towns, is not of a kind specified in section 19 of the presidency Small Cause Courts Act, 1882, or outside the Presidency-towns, is not a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887, or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.” (Emphasis supplied) 10. Admittedly, the cause of action for filing the present suit arises out of the subsisting contract between the parties. The transaction is by and on behalf of the firm and not by the partners of the firm in their individual capacity. The partners suing have also not been shown as partners in the Registrar of firms. Hence, keeping in view the relevant provisions as reproduced hereinabove, the present suit has been rightly dismissed by the Courts below. 11. A Division Bench of the Madras High Court in K.K.A. Ponnuchami Goundar vs. Muthusami Goundar and another, AIR 1942 Madras 252, held that the registration of the firm is a condition precedent to the right to institute a suit and the Court has no jurisdiction to proceed with the trial when the condition precedent has not been fulfilled. It further clarified that registration after the filing of the suit cannot cure the defect. 12. The Constitution Bench of the Apex Court in Jagdish Chandra Gupta vs. Kajaria Traders (India) Ltd., AIR 1964 SC 1882, after noticing various pronouncements of the High Courts on the point held that even a partner of an unregistered partnership firm cannot apply under Section 8 (2) of the Arbitration Act, 1940 to enforce a right arising out of a contract between the parties as such proceedings would be barred by Section 69(3) of the Act. 13. 13. The question as to whether the amendment of the plaint incorporating the factum of registration of the partnership concern, subsequent to the filing of the suit would save the suit or not stands considered by the Apex Court in M/s Shreeram Finance Corporation vs. Yasin Khan and others, (1989) 3 SCC 476. The Court repelled the contention and held that keeping in view the provisions of Section 69(2) of the Act, the non-registration of the firm as on the date of filing of the suit would render the suit to be not maintainable and subsequent amendment of the plaint could not save the suit. The Court was dealing with a case where the suit was instituted on 22.7.1968 and the notice regarding change in the constitution of partnership firm was given to the Registrar of Firms on 28.8.1968. 14. However, the Apex Court in Rapatakos Brett & Co. Ltd. Vs. Ganesh property, (1998) 7 SCC 184, while considering the case as to whether the suit filed by a firm seeking possession of the premises from the erstwhile tenant was hit by the provisions of Section 69 of the Act framed the following question:- “(ii) If the suit was so barred, whether subsequent registration of the plaintiff’s firm under the Partnership Act could revive the suit or make it competent at least from the date on which such registration pending the suit was obtained by the respondent-firm.” An endeavour was made by the appearing party to have the earlier view taken in M/s Shreeram Finance Corporation (supra) reconsidered, but, however, the question was not answered and left undecided. Hence, the view taken by the Apex Court in M/s Shreeram Finance Corporation (supra), not only still prevails but stands reiterated subsequently by the Apex Court in Delhi Development Authority vs. Kochhar Construction Work and another, (1998) 8 SCC 559. 15. Importantly in Haldiram Bhujiawala and another vs. Anand Kumar Deepak Kumar and another, (2000) 3 SCC 250, the Apex Court made the distinction between the suit based on violation of “common law” and contractual right” of the plaintiffs. It held that a suit is not barred by Section 69(2) of the Act if statutory right or common law right is sought to be enforced by the plaintiffs. The same, however, is not the position in hand. 16. It held that a suit is not barred by Section 69(2) of the Act if statutory right or common law right is sought to be enforced by the plaintiffs. The same, however, is not the position in hand. 16. In Firm Ashok Traders and another vs. Gurumukh Das Saluja and others, (2004) 3 SCC 155, a doubt was raised as to whether proceedings initiated by an unregistered firm under Section 9 of the Arbitration and Conciliation Act, 1996 would be hit by the provisions of Section 69 of the Act for want of registration, but, however, subsequently in U.P.State Sugar Corporation Ltd. Vs. Jain Construction Co. and another, (2004) 7 SCC 332, without going into the correctness of the view in Firm Ashok Traders and another (supra), the Apex Court reiterated the view taken by the constitution Bench in Jagdish Chandra Gupta (supra) and held that even arbitral proceedings would not be maintainable at the instance of an unregistered firm having regard to the mandatory provisions contained in Section 69 of the Act. 17. Importantly, in the said decision the Court held that the “the firm must be registered at the time of institution of the suit and not later on”. So the view taken in M/s Shreeram Finance Corporation (supra) and Delhi Development Authority (supra) stands reiterated. Keeping in view the position as noticed hereinabove, I find no infirmity, illegality or perversity in the impugned judgment. The position in law having already settled, in my considered view, the substantial questions of law on which the present appeal was admitted do not arise for consideration. The appeal is dismissed.