TaxTMI 
TaxTMI 
1995 (1) TMI 406
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....rship firm was constituted but the firm was not registered under Section 69 of the Indian Partnership Act. Chaman Lal, the eldest son died on 6-3-1978, by obvious reasons of which the partnership stood dissolved. By the death of one of the members, it is no longer possible to adhere to the original contract. The appellants the widow and alleged son of the deceased Chaman Lal - called upon the respondents to render the accounts of the firm. Since they did not do so, invoking clause 16 of the partnership deed, the appellants had called upon the respondents to refer the dispute to M/s Tara Chand and Hans Raj Jain, income tax practitioners, the named arbitrators in the contract, to resolve the dispute. Since the respondents had refused to refer....
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....ction 20 of the Act is maintainable. 5.Shri Satish Chandra, the learned Senior Counsel for the respondents contended that "to sue", as envisaged in sub- section (1) and main part of sub-section (3) of Section 69, includes entitlement to enforce the right created under the contract. Since the partnership firm was an unregistered one, the rights arising under the contract, namely, reference to the arbitration under clause 16 of the contract itself is a right to sue under the contract and that therefore, the suit under Section 20 of the Act is not maintainable. 6.The question, therefore, is whether the suit filed under Section 20 of the Act is maintainable to work out the rights given to the parties under clause (a) to sub-section (3) of....
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....-registration.- (1) * * * (2) * * * (3)The provisions of sub-sections (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 realise the property of a dissolved firm; or....." Undoubtedly, Section 69(1) prohibits laying the suit to enforce a right arising from a contract or conferred by the Act by or on behalf of a person suing as a partner in the firm against the firm or any person alleged to be or to have been a partner in the firm. This Court in Jagdish Chander Gupta v. Kajaria Traders (India) Ltd.1, considering the words....
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....4) of Section 69 of the Partnership Act from the prohibition imposed by sub-sections (1) and (2) and main part of sub-section (3) even though the firm was not registered under Section 69. 8. It is seen that with the demise of the partners, ipso facto, the partnership stood dissolved. What the legal representatives of the deceased partner, are seeking to enforce is for accounts of a dissolved firm or any right or power to realise the property of the dissolved firm. The right "to sue" for the dissolution of the firm must, of necessity, be interpreted to mean the right to enforce the arbitration clause for resolution of the disputes relating to dissolved firm or for rendition of accounts or any right or power to realise the property of the ....
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....considered opinion that the alternative resolution forum agreed by the parties, namely, reference to a private arbitration is a mode of enforcing the rights given under clause (a) of sub-section (3) of Section 69 of the Act and gets excluded from the main part of sub-section (3) and sub-sections (1) and (2) of Section 69. The enforcement of the right to sue for dissolution includes a right for reference to an arbitration in terms of the agreement of the partnership by and between the parties. Therefore, there is no embargo for filing a suit under Section 20 of the Act. 10.It is fairly stated by Shri Satish Chandra that the party can enforce the right by a suit for rendering accounts and for realisation of the property of the dissolved fi....