TaxTMI 
TaxTMI 
1996 (4) TMI 518
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..... Suffice it to state that the respondent, who was working in the partnership firm as a Supervisor on salary basis, was taken as a partner on July 1, 1973, resulting a new partnership and it was agreed that he would be entitled to 10% of the profit and loss without contribution of any capital in the partnership. When disputes had arisen between the appellants and the respondent, the appellants - four partners - had a notice issued on 10.5.1984 dissolving the partnership. The respondent by his reply dated 17.5.1984 had agreed for dissolution. Subsequently, he filed an application under Section 20 of the Arbitration Act, 1940 (for short, the 'Act) on 8.6.1984, in the court of the Civil Judge at Shimoga for reference to the arbitrator in t....
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....s: whether the exceptions to Sub-section (3) of Section 69 would apply to the facts of the case? Sub-section (3) of Section 69 envisages as under : 69. (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 or a dissolved firm, or any right or power to realise the property of a dissolved firm; or (b) the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909 (3 of 1909), or the Provincial Insolvency Act, 1920 (5 of 1920), to realise the property of an insolvent partner. (Emphasis supplied) ....
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....er words, a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of the main part of Section 69(3) of the Act. In Jagdish Chandra's case at page 60 this Court interpreting main part of Sub-section (3) had held that "In our judgment, the words 'other proceeding' in Sub-section (3) must receive their full meaning untrammeled by the words 'a claim of set-off. The latter words neither intend nor can be construed to cut down the generality of the words 'other proceedings'. The sub-section provides for the application of the provisions of Sub-sections (1) and (2) to claims of set-off and also to other proceedings of any kind whi....
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....settlement of the accounts of the dissolved firm or any right or power to realise the property of the dissolved firm are exceptions engrafted therein and gives right to the parties to enforce the same, independent of the right arising from the contract. Therefore, the parties are relieved from the prohibition created by operation of Section 69. 8. In Jagdish Chandra Gupta's case (supra), the facts were that right to dissolution of the partnership firm was itself in dispute and the suit was filed for that purpose. Therefore, when the application under Section 8(1) of the Act was filed, this Court had held that since the partnership firm was not registered as enjoined under Sub-section (1) of Section 69, the main part of Sub-section (3) ....