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Madhya Pradesh High Court · body

2016 DIGILAW 750 (MP)

Vijay Kumar v. Shriram Industries

2016-08-30

SHEEL NAGU

body2016
ORDER : Sheel Nagu, J. 1. The present revision filed under Section 115 of the Code of Civil Procedure, assails the interlocutory order dated 20/2/2006 in C.S. No. 15-A/99 passed by the District Judge, Morena (M.P.) by which an application seeking dismissal of the suit filed by the plaintiffs partnership firm represented by two partners against a third party on the ground of same being hit by the mandatory provision of Sections 69(2) of the Indian Partnership Act, 1932, (in short the Act) has been rejected. 2. Learned counsel for the rival parties are heard. 3. Brief facts giving rise to the present dispute are that the partnership firm in the name and style of M/s Shriram Industries represented through Mahila Krishnakumari and Daudayal, instituted a suit by filing a plaint praying for recovery of amount of Rs. 10,66740/- along with interest against another firm, namely, Shyamsunder & Company represented through its partners. During pendency of the suit, at preliminary stage, an application for dismissal of the suit was filed by the defendants contending that the suit being not maintainable under Section 69(2) of the Act inasmuch as that the same was though instituted by a registered partnership firm M/s Shriram Industries but was not represented through two partners both of whose names find place in the Register of partnership maintained by the Registrar of Partnership under the Act. It was though admitted that Mahila Krishnakumari was a partner of the plaintiffs-firm, who is a registered partner but objection was raised in regard to name of Daudayal s/o Shri Kanhaiyalal who was mentioned as one of the partners representing the plaintiffs/firm. It was submitted that Daudayal was inducted as partner in place of his deceased-father Kanhaiyalal. However, name of Daudayal was not mentioned in the registration certificate of plaintiff partnership firm. In this factual background, the defendants placing reliance on the provisions of Section 69(2) of the Partnership Act read with XXX of C.P.C. sought dismissal of the suit represented by only one registered partner, as not maintainable. 4. However, name of Daudayal was not mentioned in the registration certificate of plaintiff partnership firm. In this factual background, the defendants placing reliance on the provisions of Section 69(2) of the Partnership Act read with XXX of C.P.C. sought dismissal of the suit represented by only one registered partner, as not maintainable. 4. The trial court while holding the suit to be maintainable has held that provisions of Section 69(2) of the Act come into play only when a new partner is inducted without his name being mentioned in the registration certificate and not in the situation prevailing herein where the son of the erstwhile registered partner had merely replaced his deceased father who was a registered partner. In respect of the objection pertaining to provisions of Order 30, Rule 2 of C.P.C., the trial court held that the suit can survive even if one of the registered partners arrayed in the plaint, representing the plaintiff partnership firm signs and verifies the plaint. 5. The undisputed facts in the present case are that:- (i) The suit in question was instituted by a registered partnership firm represented through two persons namely, Mahila Krishna kumari, who indisputably was a registered partner and Daudayal who was though admitted as a partner but his name did not figure in the Registration Certificate. (ii) The plaint appears to have been singed and verified by both the said partners. 6. For resolving the controversy, the relevant statutory provisions deserve to be reproduced below:- "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. (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. Order 30, Rule 1 CPC 1."Suing of partners in name of firm" (1) 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 (if any) of which such persons were partners at the time of the accruing of the cause of action, and any 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 and verified in such manner as the Court may direct. (2) Where persons sue or are sued 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 such pleading or other document is signed, verified or certified by any one of such persons. 6.1 It appears that section 69 of the Act which relates to the effect of non-registration reflects that the said provision concerns two classes of suits. The first as described in section 69(1) of the Act is a suit filed by any person suing as a partner in the firm against the same firm or any partner of the same firm, whereas the other class under section 69(2) of the Act is the one filed by or on behalf of a firm against any third party. 6.2 The suit in question is against a third party and is thus relatable to section 69(2) of the Act. 6.3 Both sub-sections of section 69 of the Act are couched in negative language which is reflected from use of prohibitive phrase, i.e. "No suit to enforce a right........" 6.4 More so, both sub-sections of section 69 of the Act prohibit institution of suit unless plaintiff-firm is registered under the Act or plaintiff-partner is a registered partner of the firm. 6.3 Both sub-sections of section 69 of the Act are couched in negative language which is reflected from use of prohibitive phrase, i.e. "No suit to enforce a right........" 6.4 More so, both sub-sections of section 69 of the Act prohibit institution of suit unless plaintiff-firm is registered under the Act or plaintiff-partner is a registered partner of the firm. 6.5 A close scrutiny of section 69(2) of the Act further reveals that while making it mandatory for the plaintiff partnership firm and the partners representing the said firm to be registered, the term "persons" and not 'person' has been employed. This reveals the legislative intent that the plaintiff-partner should be more than one in number. Meaning thereby that the plaintiff firm should be represented by at least two or more partners and both the said partners should be registered partners. 6.6 The object behind using the term "persons" in plural is explicitly clear. A partnership comes into being only when two or more persons agree to share profits of business carrying on by them or any of them under the Act. Thus, the very genesis of partnership is based on plurality and not singularity. 6.7 The object behind this use of plural term of "persons" is to ensure that at least two persons, which is the bare minimum requirement for formation of partnership firm to become plaintiffs to enable institution of a suit by them or through them and thereby save the suit from being hit by the prohibitory mandatory provisions of section 69(2) of the Act. 6.8 As regards Order 30, Rule 1 of C.P.C., is concerned, the same relates to the field of procedure and provides that any two or more persons claiming or being liable as partners and carrying on business, may sue in the name of the firm and any one of them should sign and verify the plaint. 6.9 This procedural arrangement made in the CPC also contemplates two or more person, which is again based on the same concept of plurality of persons necessary for partnership to be born. 6.10 Coming to the judicial pronouncements on the issue involved herein and the legal provisions, the first and foremost decision is of the Apex Court in the case of M/s Shreeram Finance Corporation v. Yasin Khan and others ( AIR 1989 SC 1769 ). 6.10 Coming to the judicial pronouncements on the issue involved herein and the legal provisions, the first and foremost decision is of the Apex Court in the case of M/s Shreeram Finance Corporation v. Yasin Khan and others ( AIR 1989 SC 1769 ). In this case the Apex court upholding the order of the High Court and the trial court dismissing the suit filed by the partners as not maintainable held thus:- "6. In the present case 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 persons 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. Reference has been made to some decisions in the judgment of the Trial Court; however, we do not find it necessary to refer to any of them as the position in law, in our opinion, is clear on a plain reading of sub-section (2) of section 69 of the said Partnership Act. " 6.11 In the above said case before the Supreme Court the issue primarily was whether a suit by a person who is not a registered partner is maintainable. The answer to the question was in "Negative". However, whether the partnership suit representing through only one of the registered partners against a third party can pass the test laid down under Section 69(2) of the Act or not was not considered by the Apex Court. 6.12 Next case is the Division Bench decision of Bombay High Court reported in AIR 1987 Bombay 348( Gandhi & Co. However, whether the partnership suit representing through only one of the registered partners against a third party can pass the test laid down under Section 69(2) of the Act or not was not considered by the Apex Court. 6.12 Next case is the Division Bench decision of Bombay High Court reported in AIR 1987 Bombay 348( Gandhi & Co. v. Krishna Glass Pvt. Ltd.) where in the considered opinion of this court, the issue involved in regard to the singularity or plurality of the partners in filing suit in the name of partnership firm against a third party was considered. The relevant extracts of the said decision are reproduced below:- 10. The learned Judge in that case dissented from the view of the Calcutta High Court in (1962) 66 Cal WN 262 where the contention that the word 'and' in Section 69(2) be read as 'or' was rejected. As discussed earlier, the scope and ambit of the provisions of Rr. 1 and 2 of O.30 of the Civil Procedure Code is different from the provisions of Section 69(2) of the Partnership Act. The provisions contained in Rr. 1 and 2 are procedural; whereas the provisions of Section 69(2) are substantive and crate a bar at the threshold of the filing of suit by or on behalf of a firm, if the conditions 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 Register 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 the partners of the firm and the phrase 'the persons 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 'persons suing' can only mean the persons who file the suit on behalf of the firm. In our opinion, the expression 'persons 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 distinctively, 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 provision of Rr. 1 and 2 of O. 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). 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." 7. Learned counsel for the respondents after placing reliance on the Division Bench decision of this court in the case of Firm Gopal Company Ltd. Bhopal and another v. Firm Hazarilal Company, Bhopal [ AIR 1963 (MP) 37 ] contends that even a single registered partner (Mahila Krishna kumamari as in the present case) representing the firm can save the suit from being dismissed under Section 69(2) of the Act. 7.1 A perusal of the said Division Bench decision of this court reveals that though this court took into account provisions of Order 30, Rule 1 of C.P.C., but the provisions of section 69 of the Act were not taken into consideration. 7.1 A perusal of the said Division Bench decision of this court reveals that though this court took into account provisions of Order 30, Rule 1 of C.P.C., but the provisions of section 69 of the Act were not taken into consideration. Thus, this decision is of no avail herein. 8. The maintainability of the suit filed by partner or partnership firm against another partner or partnership firm or against a third party, can be tested only on the anvil of section 69 (2) of the Act, which is substantive law relating to partnership firm. The provision of Order 30 of C.P.C., merely lays down procedure and cannot override the substantive special enactment on the subject which is the Partnership Act. This emanates out of the maxim generalia specialibus non derogant, which has been reiterated in various decisions of the Apex court in the cases of Damji Valji Shah v. LIC of India ( AIR 1966 SC 135 ), Gobind Sugar Mills Ltd. v. State of Bihar (1999) 7 SCC 76 , Belsund Sugar Co.Ltd. v. State of Bihar (1999) 9 SCC 620 including the case of Suresh Nanda v. Central Bureau of Investigation reported in (2008) 3 SCC 674 . 9. Anything contained in the C.P.C. on the issue which is contrary to the provision of the special law i.e., Partnership Act shall stand superseded and the said enactment will prevail upon general law which is C.P.C. It is settled principle of law that special enactment prevails upon the general law and also that the law relating to procedure gives way to substantive provisions of law. 10. Testing the factual matrix attending the present case on the anvil of the law laid down in various decisions supra, it is crystal clear that Section 69 of the Act prohibits institution of a suit filed by a partnership firm or the partners against a third party (as in the case herein) unless at least two qualified partners represent the plaintiff partnership firm. Qualified partners would means partners whose names are mentioned in the registration certificate of the partnership firm. 11. Before concluding it would be appropriate to mention that provisions of Order 30 of C.P.C., in fact furthers the intent and object of section 69(2) of the Act. Qualified partners would means partners whose names are mentioned in the registration certificate of the partnership firm. 11. Before concluding it would be appropriate to mention that provisions of Order 30 of C.P.C., in fact furthers the intent and object of section 69(2) of the Act. Section 69 (2) in mandatory term requires at least two or more qualified partners to represent the partnership firm instituting the suit against a third party. While in similar tenor, the provision of Order 30, Rule 1 of C.P.C., which is enabling in nature provides that two or more partners may sue or be sued in the name of the firm provided they are partners of the firm in question at the time of accruing of the cause of action. Thus, there is no occasion of any clash or contradiction between the provisions of section 69(2) of the Act and Order 30 of C.P.C. 12. In the present case, undoubtedly the second partner Daudayal representing the plaintiff partnership firm was not a qualified partner under the Act inasmuch as his name was not mentioned in the partnership registration certificate. That renders the suit in question to be instituted through sole qualified partner, i.e., Mahila Krishnakumari. Institution of such suit by only one partner runs contrary to the mandatory provisions of section 69(2) of the Act. 13. In view of above discussions on the factual and legal aspects of the matter, this court has no hesitation to hold that C.S.No.15-A/1999 (M/s Shreram Industries v. Firm Shyamsunder & Company) filed by one of the qualified partners, namely, Mahila Krishnakumari was not maintainable. 14. Accordingly, the trial court failed to exercise the jurisdiction vested in it by rejecting the application filed by the defendants. 15. In the result, civil revision stands allowed. The impugned order dated 20/2/2006 in C.S.No. 15-A/99 passed by the District Judge, Morena (M.P.) is set aside and the suit in question is held to be not maintainable and is dismissed as such. 16. Let a copy of this order be sent to the trial court for information. Revision allowed.