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Jharkhand High Court · body

2025 DIGILAW 607 (JHR)

Rakesh Kumar Paswan, Son of Late Basudeo Ram Paswan v. Sanjeev Ranjan, Son of Saryu Paswan

2025-02-25

SANJAY KUMAR DWIVEDI

body2025
JUDGMENT : SANJAY KUMAR DWIVEDI, J. Heard learned counsel for the petitioner as well as the learned counsel for the Opposite party. 2. This petition has been filed under Article 227 of the Constitution of India for setting aside the order dated 15.02.2023 passed in Money Suit No.9 of 2016 by learned Civil Judge, Senior Division-I, Seraikella whereby the petition under Order VII Rule 11(d) read with Section 151 of the CPC filed by the petitioner/defendant has been rejected by the learned court. 3. Mr. Kumar Harsh, the learned counsel for the petitioner submits that the petitioner is an unemployed person and belongs to scheduled caste category. Indian Oil Group Company had floated an Advertisement Notice for appointment of retail sellers for different places in Jharkhand. In clause-11 it has been disclosed that the persons belong to scheduled castes and scheduled tribes will be given the facilities. The petitioner being eligible had applied for Kanke Ranchi area and for the same has deposited the requisite fee and thereafter, the Indian Oil Company Limited has communicated vide letter dated 29.06.2009 to the petitioner regarding proposal of retail out-let dealership at Adityapur, district Seraikella -Kharsawan and the Letter of Intent with respect to dealership granted to the petitioner in Kanke area dated 14.9.2004 was issued to the petitioner has been withdrawn with immediate effect. It has been withdrawn on the ground that the company has not been able to provide the land in that area. However, later on again the retail petrol out-let dealership was provided to the petitioner and the petitioner was running the retail petrol out-let dealership with its ease. However, the plaintiff/O.P. approached the petitioner and offered for providing the working hand to run the said retail petrol out-let as he was a local resident and his father was working as Dy. Superintendent of Police in Hazaribagh. The Plaintiff/O.P has provided some working hand to the petitioner and used to visit the retain out-let on day- to-day basis and thereafter the plaintiff/O.P has ousted the petitioner and grabbed the retail petrol out-let on which the petitioner has made application before the Superintendent of Police, Seraikella-Kharsawan. Superintendent of Police in Hazaribagh. The Plaintiff/O.P has provided some working hand to the petitioner and used to visit the retain out-let on day- to-day basis and thereafter the plaintiff/O.P has ousted the petitioner and grabbed the retail petrol out-let on which the petitioner has made application before the Superintendent of Police, Seraikella-Kharsawan. The said fact was also brought to the knowledge of the authorities of Indian Oil Corporation and the company further requested the Deputy Commissioner, Seraikella-Kharsawan for assistance of the petitioner as the petitioner was having difficulty in operating the retail petrol out-let and one F.I.R was also registered as Adityapur P.S. Case No.183 of 2013 against plaintiff/O.P. Final Form was submitted stating that the allegations are found to be incorrect. He submits that for operation of the said retail petrol out-let the petitioner and the opposite party/plaintiff have entered into partnership agreement and the terms and conditions have been decided and he submits that plaintiff/O.P has said to be invested a sum of Rs.35 lacs for operation of the said retail petrol out-let and in due course of time, the loss was occurring and in view of that the said retail petrol out-let has been closed. He submits that in this background, the plaintiff/O.P. has instituted Money Suit No.9 of 2016 for recovery of money to the tune of Rs.35 lacs from the defendant/petitioner. The said partnership firm was an unregistered firm and in light of section 69 of the Indian Partnership Act, 1932 the suit is barred. He refers to the said clause and submits that the firm was an un-registered partnership firm and the money suit against another partner is not maintainable and to buttress his such argument he relied in the case of Sunkari Tirumala Rao and Others V. Penki Aruna Kumari reported in 2025 SCC OnLine SC 125 and relied on paragraph nos.8,15,16 and 17 of the said judgment which are as under: “8. It is evident from a reading of sub-sections (1) and (2) of Section 69 that it assumes a mandatory character. Section 69(1) prohibits a suit amongst the partners of an unregistered partnership firm, for the enforcement of a right either arising from a contract or conferred by the Act, unless the suit amongst the partners is in the nature of dissolution of the partnership firm and/or rendition of accounts. Section 69(1) prohibits a suit amongst the partners of an unregistered partnership firm, for the enforcement of a right either arising from a contract or conferred by the Act, unless the suit amongst the partners is in the nature of dissolution of the partnership firm and/or rendition of accounts. Section 69(2) prohibits the institution of a suit by an unregistered firm against third persons for the enforcement of a right arising from a contract. As a consequence, a suit filed by an unregistered partnership firm and all proceedings arising thereunder, which fall within the ambit of Section 69 would be without jurisdiction. 15. It is a clear as a noon day that the present suit had not been instituted by or on behalf of the firm against any third persons so as to fall under the ambit of Section 69(2). The petitioners have also not filed the instant suit for enforcing any statutory right conferred under any other law or a common law right so as to exempt the application of Section 69. Hence, the rigours of Section 69(1) would apply on such a suit and the partnership firm being unregistered would prevent the petitioners from filing a bare suit for recovery of money from the respondent. 16. It would have instead been appropriate for the petitioner to have preferred a suit for dissolution of the partnership firm and rendition of accounts, especially considering that the factum of non-registration of the partnership firm would not have acted as bar in a suit for dissolution in light of the exception carved out under Section 69(3). The defence that the partnership business had not yet commenced and thus, such a suit for dissolution could not have been preferred, would not be of any avail to the petitioners, particularly for overcoming the jurisdictional bar under Section 69(1). The High Court is right in taking the view that a suit of such nature could not be said to be maintainable in the absence of the registration of the partnership firm. 17. In light of the aforesaid, we are of the view that no error not to speak of any error of law could be said to have been committed by the High Court in passing the impugned order.” 4. 17. In light of the aforesaid, we are of the view that no error not to speak of any error of law could be said to have been committed by the High Court in passing the impugned order.” 4. Relying on the above judgment, he submits that the learned trial court has wrongly passed the impugned order saying that in the individual capacity, the plaintiff/O.P has instituted the said money-suit. He submits in view of that the impugned order may kindly be set aside. 5. Mr. Navneet Toppo, the learned counsel appearing on behalf of the sole Opposite Party/plaintiff vehemently opposed the prayer and submits that the suit is maintainable in view of the fact that in personal capacity the suit has been instituted and in view of that there is no applicability of section 69 of the Indian Partnership Act, 1932. He submits that in light of Order VII Rule 2 CPC the money suit is maintainable. He submits that so far the filing of the F.I.R against the defendant/petitioner is concerned the protest petition was filed by the plaintiff/O.P which was dismissed and thereafter the plaintiff/ O.P. has filed the revision which was allowed and in view of that he submits that however the FIR has got no relevance with regard to the dispute herein. On this ground he submits that there is no illegality in the impugned order and the learned court has rightly passed the order. 6. In reply, Mr. Harsh the learned counsel for the petitioner/defendant submits that against the revisional order with regard to criminal case the Cr.M.P. No.2339 of 2023 was filed which was allowed and the entire criminal proceeding has been quashed. He submits that based on the partnership firm, the suit has been instituted and in view of that, the argument of the learned counsel for the plaintiff/O.P is not tenable. 7. It is an admitted position that the money suit being Money Suit No.9 of 2016 was instituted by the plaintiff/O.P for recovery of Rs.35 lacs from the plaintiff/defendant. In that suit, a petition under Order VII Rule 11(d) of CPC has been filed by the petitioner/defendant contending that in light of section 69 of the Indian Partnership Act, 1932, if the partnership firm is an unregistered firm, the suit is not maintainable by one of the partners against another partner. In that suit, a petition under Order VII Rule 11(d) of CPC has been filed by the petitioner/defendant contending that in light of section 69 of the Indian Partnership Act, 1932, if the partnership firm is an unregistered firm, the suit is not maintainable by one of the partners against another partner. The learned court has rejected the said petition saying that in individual capacity the suit was instituted. Deed of partnership dated 29.12.2011 is brought on record by way of filing of the supplementary affidavit and wherefrom it transpires that the petitioner and the O.P have entered into a partnership deed. Clause-6 of the said deed speaks to provide 50-50 % share of investment to both the partners. Clause-8 is with regard to investment of the capital by both the sides, which speaks as under: “8.That the parties hereto shall may contribute the capital as per the share as mentioned above or as per their convenient raise the capital and fund of the business and the same shall be recorded in the Books and Accounts of the firm. The capital raise or contributed by either party shall bear no interest. However, second party has agreed to invest Rs.35 lacs to run the business.” 8. Clause-9 speaks of working partners and Clause-10 speaks as under: “10.That the first partner has been allotted/awarded the business of Retail Outlet at the above site at Adityapur, District Seraikella Kharsawan, on individual capacity by the Indian Oil Corporation Ltd., so, the first party to regularize the constitution of the partnership undertake to obtain necessary permission from the competent authority of the said Indian Oil Corporation Ltd. On due course as would be required. 9. Clause-19 of the said partnership deed speaks as to how the said deed will be acted upon which is as under: “19.That save herein above provided, the partnership shall be governed in all other respect under the provision of Indian Partnership Act 1932 and Rules in force.” 10. In view of above, it is crystal clear that the petitioner and the Opposite party have entered into the partnership deed and it has been decided that the said partnership shall be governed in light of the provisions of Indian Partnership Act, 1932. In view of above, it is crystal clear that the petitioner and the Opposite party have entered into the partnership deed and it has been decided that the said partnership shall be governed in light of the provisions of Indian Partnership Act, 1932. Section 69 of the Indian Partnership Act, 1932 speaks as under: “ Effect of non-registration (1) No suit to enforce a right arising from a contract of or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner ma 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 person suing are or have been shown in the Register of firm as partners in the firm. 3. The provisions of sub section (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 of Court under the Presidency, towns insolvency Act 1909, or the Provincial insolvency Act, 1920, to realise 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 shall cause Court Act, 1882 or outside the Presidency towns, is not of a kind specified in the Second Schedule to the Provisional small cause Courts Act 1887. or to any proceeding or execution in other proceeding incidental to or arising from any such suit or claim.” 11. It is evident from the reading of sub-section 1 and 2 of section 69 of Indian Partnership Act, 1932 which assumes mandatory character. Section 69(1) prohibits the suit amongst the partners of an unregistered partnership firm. For the enforcement of a right either arising from a contract or conferred by the Act, unless the suit amongst the partners is in the nature of dissolution of the partnership firm and/or rendition of accounts. Section 69(2) prohibits the institution of a suit by an unregistered firm against third persons for the enforcement of a right arising from a contract. In view of that a suit instituted by an unregistered partnership firm and all proceedings arising thereunder, which fall within the ambit of Section 69 would be without jurisdiction. In the case of Sunkari Tirumala Rao and Others V. Penki Aruna Kumari (supra) at paragraph nos.10 and 11, the Hon’ble Supreme Court has held as under: 10 . In yet another decision in Mukund Balkrishna Kulkarni v. Kulkarni Powder Metallurgical Industries, (2004) 13 SCC 750 , this Court had the opportunity to consider the applicability of Section 69(1) having regard to the facts of that case. Therein, the appellant had filed a suit for declaration that the respondent no. 1 was a partnership business in which both the appellant and the respondent no. 2 had equal shares along with the prayer for dissolution of the firm and rendition of accounts. Therein, the appellant had filed a suit for declaration that the respondent no. 1 was a partnership business in which both the appellant and the respondent no. 2 had equal shares along with the prayer for dissolution of the firm and rendition of accounts. It was opined therein that the two embargoes which must co-exist for the plaintiff to be non-suited under Section 69 (1) would be that: i. The suit should be filed by a person “suing as a partner in a firm” and; ii. The suit must be to enforce a right arising from a contract. 11 . By applying the two embargoes to the facts of that case, it was held that, first, the suit for declaration as regards the existence of a partnership could neither be said to be made by a person suing as a partner nor could be said to be a suit to enforce a right arising from a contract. It was in fact a prayer to be declared a partner in the firm and was therefore, not falling within Section 69(1). Secondly, as regards the other prayer for dissolution of the firm, the Court held that the appellant was in fact suing “as a partner” and was also enforcing a right under a contract. However, the same was saved due to the operation of the exception under Section 69(3) which permits the filing of a suit for dissolution of the firm and rendition of accounts irrespective of the non registration of the partnership firm. Therefore, the suit was held to be maintainable. The relevant observations are as under: “9. The sub-section contains embargos which must coexist before a plaintiff can be non-suited under that subsection. The two embargos relevant for this case are : (1) that the suit should be filed by person “suing as a partner in a firm” and (2) that the suit must be to enforce a right arising from a contract. The submission of the respondents which was accepted by the High Court was that the prayer of the appellant, namely, for a declaration of the existence of the partnership and the share between the parties was a suit to enforce a right under a contract against the firm. A prayer for such declaration could not be said to be made by person suing as a partner. A prayer for such declaration could not be said to be made by person suing as a partner. It was a prayer to be a partner and is therefore not debarred under the provisions of Section 69(1). Furthermore, what was in fact being prayed for by the appellant was a declaration of the existence of a contract between the parties. That could not be said to be a suit to enforce a right arising from a contract. The second prayer of the appellant was not to continue as a partner of the firm but to dissolve the firm. To that extent the appellant was suing “as a partner”. This he was entitled to do under Section 69(3)(a) which insofar as it is relevant, reads as follows: “69.(3) The provisions of sub-sections (1)…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;” 10. The right of partner to ask the dissolution of a firm is a right the enforcement of which is otherwise forbidden under Section 69 (1). It is because of the exception under sub-section (3) of Section 69 that a person suing as a partner can enforce a right under the contract for dissolution of the firm and accounts. The claim for a half share in the firm’s assets would be a necessary corollary to a prayer for dissolution. Without the prayer for specified shares in the firm’s assets and business, the relief that may be granted in a suit for dissolution would be ineffective. In the circumstances of the case, we allow the appeal and set aside the decision of the High Court and affirm the decision of the first appellate court. There will be no order as to costs.” 12. From the pleadings of the plaint, it is crystal clear that it is an admitted position that from paragraph no.31 of the plaint, for working hand to run the business of retail out-let, the plaintiff has approached the defendant/petitioner to invest in the aforesaid business. In paragraph no.5 there is clear admission about the terms and partnership deed in clause-6 and share of investment of the plaintiff and defendant was 50-50 % and it was stated that investment of Rs.35 lacs has been made by the plaintiff. In paragraph no.5 there is clear admission about the terms and partnership deed in clause-6 and share of investment of the plaintiff and defendant was 50-50 % and it was stated that investment of Rs.35 lacs has been made by the plaintiff. In paragraph 9, the huge loss has been accepted in the plaint and in paragraph 11, again the business was started, has been stated. In para15 further admission of partnership firm is there. Thus, it is crystal clear that in the capacity of one of the partners of the unregistered partnership firm, the suit was instituted. The plaintiff/O.P has also not instituted the suit for enforcing any statutory right conferred under other law for common law right so as to exempt the application of section 69 of the said Act. Hence the rigors of section 69(1) of the said Act would apply on such a suit and partnership being unregistered would prevent the plaintiff/O.P. from filing the bare suit for recovery of money from the defendant/petitioner. 13. In view of the above, the remedy would have of the plaintiff/O.P to prefer a suit for dissolution of the partnership and rendition of accounts, especially considering that the factum of non-registration of the partnership firm would not have acted as bar in a suit for dissolution in light of the exception carved out under Section 69(3) of the said Act. 14. In view of the above facts, reasons and analysis, the Court finds that the impugned order is not in accordance with law. 15. As such, the impugned order dated 15.02.2023 passed in Money Suit No.9 of 2016 by learned Civil Judge, Senior Division-I, Seraikella is set-aside. 16. Consequently, the suit itself was not maintainable and the provision of Order-VII Rule 11(d) has been rightly invoked by the petitioner and, accordingly, the said plaint is rejected, as it is barred by law. 17. C.M.P. No.657 of 2023 is allowed in the above terms and disposed of. 18. However, this order will not prejudice the right of the plaintiff/O.P. to find out his remedy available under the law.