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2022 DIGILAW 794 (AP)

Ganesh Sai Granites and Minerals v. Commissioner and Inspector General

2022-08-25

R.RAGHUNANDAN RAO

body2022
ORDER : Initially, a quarry lease, over 11 hectares of land, in Sy.No.6 of Veeluparthy Village, Vepada Mandal, Vizianagaram District, was granted in favour of Sri Ch. Srinivasa Rao, (hereinafter referred to as ‘the 4th respondent’), for the period 21.05.2009 to 20.05.2019. During the pendency of this lease, a Firm known as M/s. Sri Ganesh Sai Granites and Minerals, was constituted by way of a Deed of Partnership dated 05.02.2015. This Firm was registered with the Registrar of Firms, Visakhapatnam, as Firm No.164/2015 on 07.02.2015. The said quarry lease was brought into the Firm and a fresh lease was also granted on 18.04.2015, in favour of the Partnership Firm to the extent of the unexpired portion of the lease. 2. While the matter stood thus, certain disputes arose between the partners of the Firm. This Firm had initially been constituted with 9 partners, including the 4th respondent. Thereafter, Sri K. Ramana Rao, the 2nd petitioner in W.P.No.4565 of 2019 and W.P.No.15614 of 2022,(hereinafter referred to as 2nd petitioner) had filed a complaint before the IV Town Police Station, Visakhapatnam in Crime No.265 of 2017, on 18.06.2017, complaining that the 4th respondent had created a deed of reconstitution of Firm dated 01.01.2016 by forging the signatures of the remaining eight partners and sought action to be taken against the 4th respondent. An arbitration application was also filed before the XII Additional District Judge, Visakhapatnam, under Section 9 of the Arbitration and Conciliation Act, 1996, which was numbered as AOP No.540 of 2017, and is still pending before the trial Court. 3. The 2nd petitioner, said to be acting on behalf of the other partners, had also filed a complaint dated 22.12.2017 before the Registrar of Firms, Visakhapatnam, setting out these details and requesting the said Registrar of Firms not to deal with any reconstituted Deed of Partnership that may be presented by the 4th respondent. 4. It appears that the 4th respondent had presented a reconstituted deed of Partnership dated 01.01.2016 before the Registrar of Firms and the same was registered by the Registrar of Firms on 12.09.2018. 4. It appears that the 4th respondent had presented a reconstituted deed of Partnership dated 01.01.2016 before the Registrar of Firms and the same was registered by the Registrar of Firms on 12.09.2018. Having come to know of this registration, the 2nd petitioner, said to be acting on behalf of other partners, had approached the Registrar of Firms again on 16.03.2019 seeking an enquiry on rectification of the Register of Firms, under Section 64 of the Indian Partnership Act, 1932 read with Rules 7 and 8 of the A.P. Partnership (Registration of Firms) Rules, 1951. 5. Thereafter, W.P.No.4565 of 2019 has been filed by the remaining eight partners, before this Court, on the ground that the Registrar of Firms was not conducting an enquiry and was not rectifying the Register of Firms as required under Section 64 of the Indian Partnership Act, 1932 read with the relevant Rules. This Court by an order dated 12.06.2019 had suspended the certificate of registration given by the Registrar of Firms, initially for a period of four weeks. This order of suspension was extended from time to time until 22.02.2020. 6. While these disputes were going on between the parties, the Assistant Director of Mines and Geology, Vizianagaram, had initiated action for recovery of certain dues, which resulted in issuance of a demand notice dated 27.10.2018 for a sum of Rs.81,74,425/-. Aggrieved by this demand notice, the 1st petitioner-Firm represented by the 2nd petitioner had moved a revision before the Government. The 4th respondent, had also sought to implead himself in the said revision contending that he was the Managing Partner of the Firm and that he should be heard before any further orders are passed. This revision was disposed of by the Government on 09.01.2020 reducing the demand to Rs.25,93,025/-. The said amount is said to have been paid by the 2nd Petitioner and other partners. The Government, while disposing of the revision, had observed that the question of ownership of the Firm would abide by the result of W.P.No.4565 of 2019. The 4th respondent being aggrieved by the refusal of the Government to consider his contention, that he is the Managing Partner of the Firm, had approached this Court by way of W.P.No.4971 of 2020, which is pending before this Court. 7. The 4th respondent being aggrieved by the refusal of the Government to consider his contention, that he is the Managing Partner of the Firm, had approached this Court by way of W.P.No.4971 of 2020, which is pending before this Court. 7. While these two writ petitions were pending, the applications for renewal of the lease were made on behalf of the Firm by both the 2nd petitioner and the 4th respondent. The application made by the 4th respondent was rejected on the ground that it was beyond time and the application made by the 2nd petitioner was taken up for processing on the ground that it was within time. Subsequently, a show cause notice bearing No.878/Q/2019 dated 13.04.2022 was issued. In this show cause notice, it was stated that the Director of Mines and Geology issued instructions on renewal of application keeping in view G.O.Ms.No.13 dated 14.03.2021, and in the said circumstances, the Firm represented by the 2nd petitioner was directed to show cause why renewal of the quarry lease application should not be rejected duly withdrawing the letter of intent issued under Rule 13(1) of APMMC Rules, 1966. As an issue, relating to whether the application of the 4th respondent should be considered or not, was already raised in this show cause notice, the petitioners again approached this Court by way of W.P.No.15614 of 2022 after submitting their explanation. In view of the earlier orders in W.P.No.4565 of 2019, this Court by order dated 15.06.2022 had stayed all further proceedings. 8. Heard Sri G. Rama Gopal, learned counsel appearing for the petitioners in W.P.No.4565 of 2019; Sri C.V.R. Rudra Prasad, learned counsel appearing for the petitioners in W.P.No.4971 of 2020; Sri N.V. Sumanth, learned counsel appearing for the petitioners in W.P.No.15614 of 2022; the learned Government Pleader for Revenue and learned Government Pleader for Mines and Geology. W.P.No.4565 of 2019 9. Sri G. Rama Gopal, learned counsel for the petitioners would submit that the petitioners had filed a complaint before the Registrar of Firms, Visakhapatnam alleging that the deed of reconstitution, put forward by the 4th respondent, is a fabricated document and the same should not be taken into account. However, the Registrar of Firms ignoring this complaint had registered the deed of reconstituted partnership. Thereafter, the petitioners had again approached the Registrar of Firms for further enquiry, which was not taken up by the Registrar of Firms. However, the Registrar of Firms ignoring this complaint had registered the deed of reconstituted partnership. Thereafter, the petitioners had again approached the Registrar of Firms for further enquiry, which was not taken up by the Registrar of Firms. The said action of the Registrar of Firms in registering the reconstituted deed of partnership and the refusal of the Registrar of Firms in dealing with the complaints filed by the petitioners is clearly violative of Section 64 of the Indian Partnership Act 1932, read with Rules 9 and 10 of the A.P. Registration of Firms Rules. 10. In reply to this contention, Sri C.V.R. Rudra Prasad, learned counsel appearing for the 4th respondent submits that the deed of reconstitution submitted by the 4th respondent is a genuine document and the petitioners, for extraneous reasons, are seeking to deny the existence of the said document. He further submits that in any event, a disputed question of this nature cannot be determined by the Registrar of Firms. He would further submit that the petitioners have already approached the appropriate Court of Civil Jurisdiction by filing AOP No.540 of 2017 before the XII Additional District Judge, Visakhapatnam, and the appropriate Court for determining this issue would be the said Court. In the circumstances, the complaint of the petitioners that the Registrar of Firms has to act on the representations of the petitioners under Section 64 of the Indian Partnership Act, 1932 is misplaced. W.P.No.4971 of 2020 11. The Firm had received a show cause notice and subsequent demand notice for payment of certain amounts of money on account of the irregularities in the working of the quarry. The Firm represented by Sri K. Ramana Rao, the 2nd petitioner in W.P.No.4565 of 2019 had defended the Firm before the original authority as well as before the revisional authority in the revision filed against the demand notice issued by the original authority. The petitioner herein, who is the 4th respondent in W.P.No.4565 of 2019, had sought to implead himself in the revision on the ground that he is the Managing Partner of the Firm and Sri K. Ramana Rao cannot represent the Firm. The revisional authority without going into this question had determined the liability of the Firm and had further observed that the ownership of the Firm would be subject to the decision of this Court in W.P.No.4565 of 2019. 12. The revisional authority without going into this question had determined the liability of the Firm and had further observed that the ownership of the Firm would be subject to the decision of this Court in W.P.No.4565 of 2019. 12. Sri C.V.R. Rudra Prasad, learned counsel appearing for the petitioner in W.P.No.4971 of 2020 assails this observation on the ground that the revisional authority ought to have recognised the deed of reconstitution of partnership which has been registered with the Registrar of Firms and an observation in the nature set out above is detrimental to the interests of the petitioner herein. 13. Sri G. Rama Gopal, learned counsel appearing for the petitioners in W.P.No.4565 of 2019 and Sri N.V. Sumanth, learned counsel appearing for the petitioner in W.P.No.15614 of 2022 would submit that the decision of the revisional authority to the extent of declining to decide the ownership of the Firm cannot be faulted as the certificate of registration based on the deed of reconstitution had been suspended by this Court in W.P.No.4565 of 2019. 14. In reply to this contention, Sri C.V.R. Rudra Prasad, would contend that the order of suspension granted by this Court in W.P.No.4565 of 2019 was not extended beyond February, 2020 and as such the refusal of the revisional authority in accepting the certificate of registration issued on the basis of the reconstituted deed of partnership is clearly not in accordance with law. W.P.No.15614 of 2022 15. This writ petition arose on account of a show cause notice issued by the Assistant Director of Mines and Geology, Vizianagaram, in which there was a reference to the claims of the 4th respondent in W.P.No.4565 of 2019 and the same were assailed on the ground that such rights could not have been recognised in view of the suspension of the certificate of registration granted by this Court in W.P.No.4565 of 2019. Consideration of the Court: 16. All the three litigations arise out of the basic dispute as to who are the partners in the Firm, which is arrayed as a petitioner in W.P.No.4565 of 2019 and W.P.No.15614 of 2022. This dispute was sought to be resolved, by the petitioners in these two writ petitions, by calling upon the Registrar of Firms, Visakhapatnam, to resolve this issue by way of an enquiry under Section 64 of the Indian Partnership Act, 1932. This dispute was sought to be resolved, by the petitioners in these two writ petitions, by calling upon the Registrar of Firms, Visakhapatnam, to resolve this issue by way of an enquiry under Section 64 of the Indian Partnership Act, 1932. The 4th respondent, in these writ petitions, opposes this request on the ground that an arbitration proceeding had already been initiated by the writ petitioners and the same could always be determined in those proceedings. 17. Section 64 of the Indian Partnership Act reads as follows: SECTION 64: RECTIFICATION OF MISTAKES. (1) The Registrar shall have power at all time to rectify any mistake in order to bring the entry in the Register of Firms relating to any firm into conformity with into documents relating to that firm filed under this Chapter. (2) On application made by the all 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 of note thereof made in the Register of Firms 18. Rules 9 and 10 of the A.P. Partnership (Registration of Firms) Rules, 1951 read as follows: Rule 9:– Index to Register of Firms: An index to the Register of firms shall be prepared in English on loose sheets, lettered alphabetically, and shall contain the particulars shown in Form VIII annexed to these rules. A fresh index shall be prepared for each calendar year. The name of each firm shall be indexed as soon as the entries relating thereto are made in the Register of Firms. (b) After all the firms registered in a year have been indexed, the index shall be checked by the Registrar who shall add a certificate in token of such check and the pages shall then be numbered in ink. (c) The index for each year shall, after it has been checked, be bound into volumes of convenient size. Rule 10:– Acknowledgement of Registration and documents:- a) Upon the Registration of a firm, the Registrar shall grant to the firm an acknowledgement in Form IX annexed to these rules and on the filing of any document required to be filed under the Act, he shall grant to the person at whose instance it is filed an acknowledgement in Form C annexed to these rules. b) On every document filed under the Act, the Registrar shall endorse the following particulars namely:- i) The number borne by the firm in the register, ii) The name of the firm iii) The description of the document. iv) The serial number of the document and v) The date of filing. The Registrar shall also affix his signature and the seal of his office to such document. c) If there is no space on the documents for entering the particulars referred to in sub-rule(b) the entry shall be made on a separate paper which shall be attached to the document and note of the fact shall be made on the document itself and signed by the Registrar. 19. A reading of these provisions make it clear that the affected parties are entitled to approach the Registrar of Firms to ascertain the actual facts. In the circumstances, the refusal of the Registrar of Firms Visakhapatnam in conducting an enquiry and passing orders, is clearly untenable. It is one thing for the Registrar of Firms to say that such complicated questions of fact are beyond the purview of an enquiry under Section 64 of the Indian Partnership Act, 1932 and it is another thing not to take any action at all. 20. In the circumstances, it would be appropriate to direct the Registrar of Firms to conduct an enquiry on the basis of the complaints given by the petitioners in the above two writ petitions, viz., W.P.No.4565 of 2019 and W.P.No.15614 of 2022, after due notice and opportunity being given to all the concerned parties and to take a decision thereafter. This exercise should be completed within a period of three months from the date of receipt of this order. 21. As far as W.P.No.4971 of 2020 is concerned, the same would not require any further orders, as the decision taken by the Registrar of Firms under Section 64 of the Indian Partnership Act, 1932 would suffice. 22. The objections raised by the petitioner in W.P.No.15614 of 2022 would also be answered and a decision to be taken by the Registrar of Firms after conducting enquiry as directed above. 23. 22. The objections raised by the petitioner in W.P.No.15614 of 2022 would also be answered and a decision to be taken by the Registrar of Firms after conducting enquiry as directed above. 23. For all the aforesaid reasons, these writ petitions are disposed of with a direction to the Registrar of Firms, Visakhapatnam, which is arrayed as the 2nd respondent in W.P.No.4565 of 2019, to conduct an enquiry, under Section 64 of the Indian Partnership Act, 1932, read with Rules 9 & 10 of the A.P. Partnership (Registration of Firms) Rules, 1951, after due opportunity and hearing being given to all the affected parties, within a period of three months from the date of receipt of a copy of this order. Needless to say, it would be open to the aggrieved party, to take further recourse to law against any decision taken by the Registrar of Firms. 24. The proceedings, before the Assistant Director of Mines and Geology, Vizianagaram, bearing No.878/Q/2019 dated 13.04.2022, shall be kept in abeyance till a decision is taken by the Registrar of Firms. Thereafter, it would be open to the authorities of the Mines and Geology department to continue with the proceedings initiated under the aforesaid show cause notice, after giving due opportunity of hearing to the person, who is found to be the Managing Partner of the Firm. There shall be no order as to costs. As a sequel, pending miscellaneous petitions, if any, shall stand closed.