TaxTMI 
TaxTMI 
1997 (12) TMI 662
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....sion of the said Smt. Jijiben Mohanlal Chawda, another deed of partnership was made consisting of the old six partners and the newly admitted partner Smt. Jijiben Mohanlal Chawda. As a matter of fact, the induction of the new partner was not brought to the notice of the Registrar of Firms by forwarding the required particulars. It is on record that still later on 3.11.1992 another partnership deed was brought into existence consisting of the same partners. It is also on record that yet another partner Smt. Hemkuver B. Kotak (S. No. 4 above) died in September, 1994. The fact of death of this partner also was not intimated to the Registrar of Firms. While so, the 1st respondent gave a notice of dissolution of the firm to the appellants and also filed a suit for the dissolution of the partnership firm bearing suit No. 5016/94 on 15.12.94 in the High Court of Judicature at Bombay on the original side. Initially in the plaint, the constitutional validity of Section 69(2A) of the Indian Partnership Act (hereinafter called the "Act"), as amended by Maharashtra Act, was not raised. The 1st respondent moved a Chamber Summon No. 301/97 seeking permission of the Court to carry out certain ame....
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....d as follows :- "The proposed amendment consists of two parts. The first part is only a factual aspect which has been sought to be introduced in order to demonstrate that the bar Under Section 69(2A) is not attracted. There is no reason as to why such an amendment should not be granted. The second part of the amendment pertains to the constitutional challenge of the validity of Section 69(2A). As we have already taken a view that Section 69(2A) is not attracted, the question of challenge does not survive and, therefore, it is not necessary to grant the amendment containing constitutional challenge." 8. Ultimately the appellate court allowed the appeal and permitted the amendment only regarding the factual portions and not regarding the constitutional validity of Section 69(2A). 9. Aggrieved by the judgment of the Division Bench, the appellants have preferred this appeal by special leave. 10. In this appeal, the following substantial question of law arises for our consideration :- "Whether on the facts of this case the suit for dissolution and account of partnership is hit by Sec. 69(2A) of the Act as amended in the State of Maharashtra" 11. For answeri....
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....nd permanent addresses of the partners, and (f) the duration of the firm. The statement shall be signed by all the partners, or by their agents specially authorised in this behalf. [(1A) The statement under Sub-section (1) shall be sent or delivered to the Registrar within a period of one year from the date of Constitution of the firm : Provided that in the case of any firm carrying on business on or before the date of commencement of the Indian Partnership (Maharashtra Amendment) Act, 1984, such statement shall be sent or delivered to the Registrar within a period of one year from such date]. (2) Each person signing the statement shall also verify it in the manner prescribed. (3)... (4)... 59. Registration [(1)] When the Registrar is satisfied that the provisions of Section 58 have been duly complied with, he shall record an entry of the statement in a register called the Register of Firms, and shall file the statement. [On the date such entry is recorded and such statement is filed, the firm shall be deemed to be registered.] [(2) The firm, which is registered, shall use the brackets and word "(Regis....
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....irm 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 the 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.] (3)... [69A. Penalty of contravention of Sections 60, 61, 62 or 63, If any statement, intimation or notice under Sections 60, 61, 62 or 63 in respect of any registered firm is not sent or given to the Registrar, within the period specified in that section, the Registrar, may, after giving notice to the partners of the firm and after giving them a reasonable opportunity of being heard, refuse to make the suitable amendments in the records relating to the firm, until the partners of the firm pay such penalty, not exceeding ten rupees per day, as the Registrar may determine in respect of the period between the date of expiry of the period specified in Sections 60, 61, 62 o....
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....the same persons carrying on business in partnership under different Firm names. Note 2. - Against items (c) and (d), the exact location of the place should be given. Note 3. - This application must be signed by all partners or their agents specially authorized in this behalf on solemn affirmation before a Magistrate or other officer duly empowered to administer Oaths. Note 4. - Making a false, untrue, or incomplete statement is punishable under Section 70 of the Indian Partnership Act, 1932. (h) In case there are any minors admitted to the benefits of partnerships :- 12. We are sending the prescribed registration fee by cash/money order. We the above named, solemnly affirm that what is stated in paragraphs is true to our own knowledge and that what is stated in the remaining paragraphs is stated on information and belief, and I/We believe the same to be true. 13. We also declared on solemn affirmation that up to the date of submission of this application there has not been any change whatever in any of the particulars aforesaid. 14. Solemnly affirmed at 15. Certified that the persons who have signed the application have signed in my ....
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.... FORM 'G' (See rule 6) Register of firms Firm No. :... Name :........................ Business : ................... FORM 'H' (See rule 17) Certificate of Registration (National Emblem) The Indian Partnership Act, 1932 (Act No. IX of 1932) Registration No.... It is certified that a firm by name...with its head office at...has this day been duly registered under the Indian Partnership Act, 1932 (Act No. IX of 1932). Given under my hand this day of...19... Registrar/Assistant Registrar of Firms Bombay, Pune, Nagpur, Aurangabad. ---- 16. Before proceeding further, we remind ourselves that we are concerned with a suit filed by a partner for dissolution and accounts. No third party rights or liabilities are involved in the present suit filed by respondent no. 1. 17. Undoubtedly counsel on both sides addressed arguments covering larger questions. But we propose to confine ourselves strictly to the facts of the case and decide the controversy without touching upon the larger issues or connected issues arising out of the pleadings because the maintainability of the suit is the....
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.... of Firms is not sufficient to maintain the suit when admittedly one of the partner's name (second respondent's name) was not shown in the Register of Registrar of Firms. He also contended that a comparison of language employed in Sections 31 and 32 of the Act, will show that whenever a partner is inducted into an existing firm, the old firm ceases to exist and an altogether new firm comes into existence from the date of induction of the new partner and that new firm must get fresh registration. In support of this proposition, he placed reliance on Madho Prasad and Others v. Gouri Dull Ganesh Lal AIR1939Pat323 ; Meenakshi Achi and Another v. P.S.M. Subramanian Chettiar and Others AIR 1957 Mad. 8 and Gouri Sankar Sheroff and Others v. Central Hindustan Bank Ltd. and Others, AIR1959Cal262 . He also submitted that the partners entered into another deed on 3.11.1992 and they have expressly treated the firm as reconstituted one. In other words, according to the learned senior counsel, the deed dated 20.10.86 in the absence of such expression' (reconstituted firm) the understanding was the old firm, ceases to be in existence and a new firm was brought into existence. For this....
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....mpliance of the said provisions will result in deregistration of the firm. As the consequence of deregistration is a drastic one, it is impermissible to hold that non-compliance with Sections 63(1) and 63(1A) would lead to deregistration of a firm in the absence of express and clear legislative provision to that effect. He further contended that merely because another partnership deed was made on 20.1.0.1986, it cannot be said that there was a dissolution of the old firm and consequential formation of a new firm under the latter deed. According to the learned Senior Counsel, it is the substance of the matter that is relevant to be looked into and not the phraseology employed by the parties. In other words, the test is whether after the execution of the deed dated 20.10.1986, for all intents and purposes, the firm as reconstituted was a different unit or remained the same unit in spite of change in its constitution. Looked at from this angle, the unit remained the same as it originally was in spite of change in its Constitution and the contention to the contrary, according to the learned Senior Counsel, was not correct. To support this, he pointed out the similarities between the tw....
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....e, it cannot be contended by the appellants that by reason of death of one of the partners, the existing firm stands dissolved. Can it then be said that by reason of inducting the widow of the deceased partner the existing registered firm ceased and totally a new partnership firm came into existence. According to the appellants, by reason of Clauses 4 and 5 in the second Deed of Partnership, it must be deemed that the old partnership ceased and entirely a new partnership firm was found under the second Deed. We are unable to agree with the contention of the learned senior counsel for the appellants on this aspect. Clauses 4 and 5 relate to commencement of the partnership and accounting year. These are minimal changes introduced in the second Deed of Partnership by reason of the introduction of a new partner in place of Clauses 4 and 5 in the first Partnership Deed and in other respects, namely, the name of the partnership firm, the address and location of the firm, the business carried on and shares allotted among the partners and duration of the partnership, are identical. Moreover a careful reading of clauses 5 of and 6 of the second partnership deed will give an impression that ....
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....stwhile partners taking over the assets and liabilities of the dissolved partnership and forming themselves into a partnership is not reconstitution of the original partnership. The partnership formed after the dissolution is a new partnership and not a continuation of the old partnership, for it would be a contradiction in terms to say that what ceased to exist was continued. A reconstitution of a firm of partnership necessarily implies that the firm never became extinct. What it denotes is a structural alteration of the membership of the firm, by addition or reduction of members, and an incidental redistribution of the shares of the partners." 30. To the same effect, this Court in Commissioner of Income-tax, West Bengal-Ill v. M/s. Pigot Champan & Co., [1982]135ITR620(SC) observed as follows : "The principle is well settled that it is on examination of relevant documents and relevant facts and circumstances that the Court has to be satisfied in each case as to whether there has been a succession or a mere change in the Constitution of the partnership. It cannot be disputed that 'dissolution' and 're-constitution' are two distinct legal concepts, for, a....
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....a contract and those two conditions are complied with in the present case. 32. The above view is supported by the decisions of this Court and various other High Courts. In Firm Girdhar Mal Kapur Chand (supra), this Court held that "once there was registration under the Indian Partnership Act that registration, in our opinion, continues to operate as registration under that Act and continues to be effective - in other words, valid registration in the eye of law as administered in India so long as the registration is not cancelled in accordance with law." 33. In Pratapchand Ramchand & Co. (supra), the Bombay High Court observed as follows : "Dealing in particular with Section 63(1), that sub-section among other things provides that when a registered firm is dissolved any person who was a partner immediately before the dissolution, or the agent of any such partner or person specially authorized in this behalf, may give notice to the Registrar of such change or dissolution, specifying the date thereof, and the Registrar shall make a record of the notice in the entry relating to the firm in the Register of Firms, and shall file the notice along with the statement relating....
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....rsons suing) were shown in the register at the date of the institution of the suit appears to me to be a compliance with Section 69(2) of the Act. It would seem that the Legislature introduced the words with which that sub-section concludes, viz. "and the persons suing are or have been shown in the Register of Firm as partners in the firm advisedly. If additional partners had come into the firm as partners since the date of registration and their names had not been entered on the register in accordance with notice of a change in the Constitution of the firm given to the Registrar, it may well be that the firm as then constituted could not sue, because although it was a registered firm some of the persons then suing would not be shown in the Register of Firms as partners in the firm at the date of the suit. That is not this case. The partners who are suing were shown in the register originally and are still shown, and the firm according to my construction of the Act remained registered notwithstanding the death of one of the original partners." 34. The above view of the Bombay High Court was followed and applied by the Calcutta High Court in Jogendra Chunder Goopta (supr....
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....gations incurred before his introduction. Mis. Nandlal Sohanlal, Jullundur v. The Commissioner of Income-Tax, Patiala, also is not helpful to the appellants. 38. We are also not impressed by the arguments of the learned counsel for the appellants that if the definition of Section 4 is applied to Section 69(2A) then unless the names of all the partners find a place in the Register of Firm, the suit filed by the Plaintiff cannot be sustained. The fact that the firm was registered and Plaintiffs name finds a place in the Register of Firms are not in dispute. The name of the newly introduced partner, of course, does not find a place in the Register of Firms. That means the person whose name does not find a place in the Register of Firms may incur certain disabilities and that will not disable the Plaintiff to press the suit against the firm, which was registered against the persons whose names find a place in the Register of Firms. We are not called upon to decide what are the disabilities of the person, whose name does not find a place in the Register of Firms. For the purpose of Section 69(2A), the partnership firm will mean the firm as found in the certificate of registration and....