Chamber Summons No.301 of 1997,Suit No.5016 of 1994

6th May, 1997

Petitioner Counsel: Mr. SHAILESH SHAH
Respondent Counsel: Mr. M.H. SHAH, Sr. Counsel with Mr. R.C. SHAH

Cases Cited:
1989 MLJ 849 [Para 5]
AIR 1987 Bom. 348 [Para 5]
(1994) I BCR 371 [Para 5]
AIR 1976 Cal. 471 [Para 5]
AIR 1950 Bom. 345 [Para 6]

JUDGMENT

JUDGMENT :- By means of this chamber summons taken out by Plaintiff Ramniklal Mohanlal Chawda, it is prayed that Plaintiff be allowed to carry-out amendment to the plaint and proceedings as per the Schedule of amendment annexed hereto and marked with letter 'A'.

2. Proposed amendment reads thus :

"A"

SCHEDULE OF AMENDMENT

1. Add at the end of para.23 following para. as para.23-A.

"23-A. The Plaintiff submits that the Partnership firm of M/s.Paramount Builders is duly registered with the Registrar of Firms, Bombay under No.158675 by Entry No.1 on 11th December 1980. The Plaintiff submits that subsequent changes. and/or modifications in the partnership of M/s. Paramount Builders under the Deed of Partnership dated 20th October 1986 and Deed of Partnership dated 3rd November 1992 are in the nature of changes and/or modifications which do not affect the registration of the said firm of M/s. Paramount Builders as required under Indian Partnership Act, 1932 for entitling a partner to institute suit for reliefs against the partners on dissolution of the Firm. The Plaintiff submits that recording of changes and/or modifications under subsequent Deeds of Partnership dated 20th October 1986 and 3rd November 1992 are in the nature of ministerial acts required to be done and which does not affect the original registration of the firm of M/s.Paramount Builders. The Plaintiff submits that the subsequent modifications and/or changes in the partnership firm of M/s. Paramount Builders are not carried out, however the same does not affect the validity of the registration of the partnership firm of M/s.Paramound Builders in law. Without prejudice to what is stated hereinabove and to each other, and in alternative the Plaintiff submits that amendment to Indian Partnership Act 1932 by state of Maharashtra and inserting Sub-section 2-A in Section 69 of the Indian Partnership Act, 1932 is not constitutionally valid and the said amendment is violative of Article 14 and Article 19(1)(g) of the Constitution of India and therefore, the same is invalid and not applicable to the case of the Plaintiff before this Hon'ble Court. The Plaintiff submits that the Plaintiff is entitled to declaration that the provisions of Sub-Section 2-A of Section 69 of the Indian Partnership Act, 1932 are violative of Constitution of India and therefore not valid and not applicable to the case of the Plaintiff before this Hon'ble Court."

2. Add in the prayers the following prayer(aa) after prayer (a), as follows:

"(aa) that it be declared that provisions of sub-section 2-A of Section 69 to the Indian Partnership Act, 1932 as introduced by the State of Maharashtra are constitutionally not valid and not applicable to the case of the Plaintiff.

3. Consequential changes."

3. The crux of the proposed amendment is challenge to the validity and constitutionality of sub-section 2A of Section 69 of Indian Partnership Act, 1932 inserted by State of Maharashtra by way of amendment being violative of Article-14 and 19(1)(g) of the Constitution of India.

4. Mr. Shailesh Shah, the learned counsel appearing for Plaintiff submits that the proposed amendment is necessary to decide real controversy between the parties. According to him till date written statement has not been filed and, therefore, no prejudice would be caused to the Defendants if amendment in the plaint is allowed.

5. Mr. Mahendra Shah, the learned Sr. counsel appearing for Defendants opposed the chamber summons and vehemently contended that suit filed by the Plaintiff right from its inception is incompetent and could not have been entertained because admittedly the firm Paramount Builders which came into existence pursuant to the partnership deed dated 28th October-86 is not registered. The learned Sr. counsel submits that when the suit at the threshold could not have been entertained in view of the provisions contained in Sec.69 2A of Indian Partnership Act question of allowing the plaintiff to amend such suit does not arise nor the law permits such amendment to be made. In support of his contentions Mr. Mahendra Shah relied upon the judgment of the Apex Court in Shreeram Finance Corporation, Appellant V. Yasin Khan and others 1989 MLJ 849, Division Bench judgment of this Court in Gandhi & Co., Appellant v. Krishna Glass Pvt. Ltd. AIR 1987 Bom. 348, Swiss Bank Corporation, Appellants v. Jai Hind Oil Mills Co. and another 1994 I BCR 371 and the judgment of the Calcutta High Court in Sunderlal and Sons, Applicant V. Yagedra Nath Singh and another Respondents AIR 1976 Cal 471.

6. Confronted with the objection raised by learned counsel appearing for Defendants, on the other hand the learned counsel for Plaintiff submitted that the firm Paramount Builders came into existence on 29th November -79 under the deed of partnership and the said firm was registered and thereafter there were only few changes in the partners and, therefore, it cannot be said that the said firm is not registered and the suit is affected and hit by provisions of Sec.69(2A). The learned counsel for the Plaintiff would also urge that even it be assumed that at the time of filing of the plaint, the suit suffered from some defect of jurisdiction, by way of amendment, such defect of jurisdiction can be cured. In support of his contentions he relied upon Gaganmal Ramchand-Defendants-Appellants v. The Hongkong & Shanghai Banking Corporation-Plaintiffs Respondents AIR 1950 Bom 345 Division Bench judgment of this Court. The crucial question which requires consideration is whether the plaint filed by the Plaintiff Ramniklal Mohanlal Chawda is incompetent and hit by Sec.69(2A) of the Indian Partnership Act and if so whether such incompetent plaint can be allowed to be amended?

7. Sec.69(1) and 2(A) as amended by Maharashtra Act of 1984 reads thus :

Sec.69(1)

Sec.69(2)

Sec.69(2A) No suit to enforce any right for the dissolution of a firm or for accounts of a dissolved firm or any right or power to realise the property of a dissolved firm 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 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;

Provided that the requirement of registration of firm under this sub-section shall not apply to the suits or proceedings instituted by heirs or legal representatives of the deceased partner of a firm for accounts of a dissolved firm or to realise the property of a dissolved firm.}

Section 69(3)

Section 69(4)"

8. A perusal of subsection (1) of Sec.69 would reveal that no suit to enforce a right arising from a contract as conferred by Indian Partnership Act shall be instituted in any court by or on behalf of any persons suing as a partner of the firm against the firm or any person who claims himself to be partner or has been partner in the firm unless the firm is registered and the person suing is or has been shown in the register of partners in the firm. Of course there is proviso appended to subsection (1) that relates to the suit or proceedings instituted by heirs and legal representatives of the deceased partners of the firm to which present controversy is not concerned. Sub-sec.2A of Sec.69 also provides that no suit to enforce any right for the dissolution of a firm or for accounts of a dissolved firm or any right or power to realise the property of a dissolved firm shall be instituted in any court by or on behalf of any person suing as a partner in firm against the firm or any person who claims himself as a partner of the firm or has been partner in the firm unless firm is registered and the person suing is or has been shown in the register of firm as a partner in the firm. A proviso is appended to this subsection as well regarding the institution of suit by legal heirs of a partner. Thus, it would be clear that unless the firm and its partners have been shown in the register of firms as a partner in the firm, no suit to enforce any right for the dissolution of firm or for accounts of the dissolved firm or any right or power to realise the property of the dissolved firm shall be instituted in any Court. In other words, if the firm is not registered and the person suing is not shown as partner in the firm in the register of firm no suit will lie to enforce any right in the dissolution of firm or for the accounts of the dissolved firm or any right to realise the property of the dissolved firm. Partnership is relation between persons who have agreed to share profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individual partners, and, collectively a firm and the name under which their business is carried-on is called firm name as defined under Sec.4 of the Partnership Act.

9. In Shriram Fianance Co. (Supra), the Supreme Court was dealing with Sec.69(2) of Partnership Act and held that when in the suit filed on behalf of partnership, current partners on the date of suit were not shown in the register of firms, such suit was not maintainable in view of provisions of Sec.69(2).

10. In Gandhi & Co. Division Bench of this Court again while referring to sec.69(2) observed that said provisions are substantive and created a bar at the threshold of the filing of the suit by or on behalf of a firm if the conditions mentioned therein are not fulfilled. For the self same reasons provisions contained in Sec.69(1) as well as under sec. 69(2A) are also substantive in my view and create a bar at the threshold of the filing of the suits which are governed under Sec.69(1) and 69(7A). If for the reliefs covered under Sec.69(1) or 69(2A) of Partnership Act, if the firm is not registered and the partners' name are not shown in the register of firms, the filing of the suit itself is barred since the said provisions create a bar at the threshold of the filing of such suit.

11. In Swiss Bank (Supra) Division Bench of this Court with reference to Sec.69(2) held that if one partner is not shown as partner on date of institution of suit in register of firm, bar of Sec.69(2) is clearly attracted.

12. In the present case according to Plaintiff's own case as averred in the plaint and the documents placed on record in support of averments in the plaint, it would be seen that the firm M/s Paramount Builders had six partners under the deed of partnership dated 29.11.79. The said partnership was duly registered. However, it appears that one of the partners Shri Mohanlal Chawda expired on 6.5.86 and the remaining partners agreed to admit the widow of said deceased ex partner upon demise of Mohanlal Chawda. A fresh deed of partnership was executed on 7.5.86 and the said partnership business commenced from 7th May-86. However, admittedly the said partnership is not registered nor the name of newly added partner has been shown in the register of firms. By the subsequent deed of partnership dt.3rd Nov. 92 certain terms and conditions of the partnership firm were amended and altered.

13. In the suit filed by the plaintiff, the principal relief claimed is dissolution of the firm with effect from date of notice dated 15th December-94 and certain alternative reliefs. Firstly, the new partnership came in existence on 7th May-86 and the deed of partnership was executed on 20th October-86 and the said firm is not registered admittedly. Even if it be assumed that the old partnership of 1979 continued and by the deed of partnership dated 29th October-86 there were only changes in the partners still some of the partners are not entered in the register of firms and, therefore, the reliefs claimed in the suit are directly hit by provisions of Sec.69(2A) of Indian Partnership Act. As already observed Sec.69(2A) of Partnership Act creates a bar at the threshold of the filing of the suit for the relief covered therein and in the present case, therefore, the very suit filed by the Plaintiff is incompetent. When the plaint itself could not have been entertained because of the bar of Sec.69(2A), obviously amendment in such plaint can not be permitted. It would not be out of place to mention here that plaintiff is conscious of the fact that suit is hit by sec.69(2A) and the bar of Sec.69(2A) of Partnership Act. Gagan Mal Ramchand's case (supra) in the facts herein has no application.

14. In my view, therefore, when the present suit is hit and affected by Sec.69(2A) and is incompetent, such incompetent suit cannot be allowed to be amended. When the suit is barred in view of Sec.69(2A) and it could not have been entertained, no amendment of such suit even by way of challenge to Section 69(2A) can be permitted.

15. Amendment sought for by the plaintiff, therefore, is liable to be rejected.

16. Consequently, chamber summons has no merit and is dismissed accordingly.

Chamber summons dismissed.