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2012 DIGILAW 447 (AP)

Kolli Buchi Kotaiah v. Registrar of Firms

2012-04-19

L.NARASIMHA REDDY

body2012
Judgment :- A Partnership Firm, by name, M/s. Sri Krishnaveni Poultry Needs was constituted in the year 1986, with five persons, by name, Kolli Buchi Kotaiah, Kolli Satyanarayana, Kolli Panduranga Rao, Kolli Rama Devi. In 08.09.1988, Kolli Venkata Padmanabham is said to have joined as partner. Another person, by name G. Ranga Rao joined, and Kolli Satyanarayana retired, in the year 1992. The petitioner is functioning as Managing Partner. In the year 2009, the petitioner filed four applications in form No.5, dated 31.01.2009, before the Registrar of Firms, the 1st respondent herein. In one form, it was mentioned that a partner, by name Kolli Venkata Padmanabham, retired from the partnership, and his sworn affidavit, dated 05.02.2009, was filed. In another form of the same date, it was mentioned that respondents 2 and 3, by name Kolli Panduranga Rao and Kolli Rama Devi, retired as partners. Their sworn affidavits, dated 13.02.2009, were filed. The affidavits and relevant records were assigned numbers 1, 2 and 3 of 2009. Acting on the same, the 1st respondent made entries in the concerned register. Respondents 2 and 3 submitted representation/appeal on 31.10.2009 stating that Kolli Venkata Padmanabham died, way back in the year 05.06.1994 and that they did not submit any affidavits stating that they have retired from the firm. Taking this into account, the 1st respondent issued notice to all the partners, including the petitioner herein. An explanation was submitted by the petitioner admitting the fact that Padmanabham died in the year 1994. He, however, stated that respondents 2 and 3 filed their affidavits and are now retracting from their stands. Taking this into account, the 1st respondent passed an order dated 08.11.2001, cancelling the entries made on the basis of the document numbers 1, 2 and 3 of 2009. The said proceedings are challenged in this writ petition. The petitioners contend that the entries were made under Section 60 of the Indian Partnership Act, 1932 (for short ‘the Act’) and any steps in relation thereto, could have been taken under Section 64 thereof. It is urged that the impugned order does not accord with the prescribed procedure. He contends that it is only when application is made by all the parties to the document, that steps can be taken under Section 64 of the Act. The 2nd respondent, filed counter-affidavit, opposing the writ petition. It is urged that the impugned order does not accord with the prescribed procedure. He contends that it is only when application is made by all the parties to the document, that steps can be taken under Section 64 of the Act. The 2nd respondent, filed counter-affidavit, opposing the writ petition. He submits that the petitioner committed fraud on the 1st respondent and the partners of the firm, by filing fabricated documents to advance his personal interests. He contends that the petitioner did not even deny that Sri Kolli Venkata Padmanabham died in the year 1994 and is still assailing the impugned proceedings. Sri. P. Sri. Raghu Ram, learned counsel for the petitioner, submits that once entries are made under Section 60 of the Act, the revocation or cancellation thereof can be only on the basic of an application filed by all the parties to the document that gave rise to the entries. He contends that an appeal or revision submitted by respondents 2 and 3 can not at all constitute the basis for cancellation, and that the 1st respondent ought to have insisted on joining of all the partners in the application. He further submits that the 1st respondent is not conferred with the power to decide the disputed questions of fact as to whether any document or affidavit is fabricated and the matter ought to have been left to the parties to be canvassed before the concerned civil Court. Learned Government Pleader for Revenue and Sri. M.V.S. Suresh Kumar, learned counsel for respondents 2 and 3, on the other hand, submit that the very admission by the petitioner that Kolli Venkata Padmanabham died in the year 1994 and affidavit said to have been sworn to by him in 2009, was presented by the petitioner, is sufficient to establish that fraud was played. They contend that the 1st respondent has not only followed the prescribed procedure, but also followed the principles of natural justice and that no exception can be taken to it. Learned counsel further submit that once fraud is established, that would vitiate everything and even if there exist any possibility to point out procedural lapses, they virtually become irrelevant. The Act provides for the registration of firms as well as for the other related matters. Learned counsel further submit that once fraud is established, that would vitiate everything and even if there exist any possibility to point out procedural lapses, they virtually become irrelevant. The Act provides for the registration of firms as well as for the other related matters. It is not uncommon that firms once constituted, undergo changes over the period, either with the joining of few partners or retirement or death of existing partners. The firm in the instant case was constituted in the year 1986. About 10 years thereafter, some changes took place with the joining of two partners and retirement of one. In the year 2009, two applications in Form No.5 came to be filed by the petitioner before the 1st respondent, with a request to enter the changes in the constitution of the firm. The first one was relating to Kolli Venkata Padmanabham, who joined the firm in the year 1988. As required under law, his sworn affidavit dated 05.02.2009 was filed. Another application in form No.5, was in relation to respondents 2 and 3. Their affidavits dated 05.02.2009 were filed. The applications were assigned numbers 1, 2 and 3 of 2009. The 1st respondent found the applications to be in order and accordingly made changes in the concerned registers. The 1st respondent treated them to be in order and necessary changes were affected in the register. Respondents 2 and 3 came forward with appeals/complaints in October, 2009, alleging that Padmanabham died in the year 1994 and that they did not file any application, much less filed sworn affidavits. This naturally evoked response from the 1st respondent and he issued show cause notice to all the partners, including the petitioner. The petitioner submitted his explanation. The fact that Padmanabham died in the year 1994 was not denied at all. However, the allegation of the petitioner that they did not sign affidavits on 05.02.2009, was denied. The 1st respondent, naturally felt that the entire proceedings are vitiated and passed the impugned order. The principal contention advanced on behalf of the petitioner is that the proceedings under Section 64 of the Act was not valid. The provision reads: “64. However, the allegation of the petitioner that they did not sign affidavits on 05.02.2009, was denied. The 1st respondent, naturally felt that the entire proceedings are vitiated and passed the impugned order. The principal contention advanced on behalf of the petitioner is that the proceedings under Section 64 of the Act was not valid. The provision reads: “64. Rectification of mistakes: (1) The Registrar shall have power at all times to rectify any mistake in order to bring the entry in the Register of Firms relating to any firm into conformity with the documents relating to that firm filed under this Chapter. (2) On application made by all the parties who have signed any document relating to a firm filed under this Chapter, the Registrar may rectify any mistake in such document or in the record or note thereof made in the Register of Firms.” The very heading of the section indicates the purpose underlying it. Even in the absence of such a specific provision, the authority, which is conferred with the power to pass orders, possesses the power to rectify any mistakes, that crept into it. It is true that in sub-section (2), the submission of application by all the parties who signed any document is required to be made. That, however, is in a case where inadvertent mistake has crept in and the parties have noticed it later on. It is difficult to construe the provision as meaning that even where fraud has been committed on an individual, action can be taken only when the application signed by not only the person, who is defrauded but also the one, who committed the fraud. That will amount to putting a premium on the person who resorted to notorious or fraudulent act. Irrespective of the text of provision of that nature, the well settled principle of law that would vitiate everything would operate. The petitioner does not dispute that Kolli Venkata Padmanabham died on 05.06.1994. It is just unimaginable as to how an application came to be made on his behalf, showing that he is retiring from the partnership firm in the year 2009. The question as to whether it was the petitioner who filed application and the affidavit or somebody else, needs to be examined in the proceedings that are or may be initiated before the criminal Courts. The question as to whether it was the petitioner who filed application and the affidavit or somebody else, needs to be examined in the proceedings that are or may be initiated before the criminal Courts. However, the entry based upon such fraudulent application cannot be permitted to remain on record even for a minute. That is what exactly the 1st respondent has done duly following the principles of natural justice and giving opportunity to the concerned. The applications made on behalf of respondents 2 and 3 also was found to be vitiated though not, to the same extent as the one made on behalf of Padmanabham. The 1st respondent took the correct and proper decision in neutralizing the entries that were made on the basis of applications 1, 2 and 3 of 2009. It is not as if he has brought into existence any new set of rights and obligations, or has determined the rights of the parties. He has only erased the effect of fraud played upon him. In case respondents 2 and 3 have retired from partnership firm, the remaining partners or the petitioner can certainly workout the remedies before the concerned Court of law. Hence, no exception can be taken to the impugned order. Soon after passing the impugned order, the 1st respondent submitted a complaint to the concerned police station, with a request to prosecute the petitioner and other concerned. Crime No.30 of 2011 was registered. It is brought to the notice of this Court that on the basis of a private complaint submitted by respondents 2 and 3 Crime No.530 of 2010 was registered and investigation into those cases is in progress. It goes without saying that the observations made, if any, in the impugned order cannot be treated as final pronouncements on the acts and omissions on the part of anyone. The Court in which the proceedings are pending has its own conclusions on the basis of the evidence adduced before it. Hence, the writ petition is dismissed, with the above observations. The miscellaneous petition filed in this writ petition also stands disposed of. There shall be no order as to costs.