TaxTMI 
TaxTMI 
2006 (11) TMI 730
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....;Act'), the suit was not maintainable, the plaintiff being an unregistered firm. 2. The facts of the case are not in dispute and they will be briefly noticed. Plaintiff No. 1, Pursushottam, carried on business as whole- sale paper merchant in the name and style of "Dinesh Paper Mart" as the sole proprietor of the concern. During this period he supplied goods to the defendant firm namely - Shivraj Fine Arts Litho Works, a firm registered under the Partnership Act. Defendants 2 to 9 were the partners of the said firm. In the year 1974, Special Civil Suit No. 9 of 1974 was filed for dissolution of the defendant partnership firm and for rendering of accounts. During the pendency of the suit a receiver was appointed initially to take possession of the properties of the firm and to run the business of the firm. Later joint receivers were appointed, and it is not in dispute that at the relevant time defendant No. 2 and defendant No. 12 were in management of the aforesaid registered firm - respondent No. 1 herein as joint receivers. 3. The aforesaid Purushottam had business dealings with the respondent No. 1 - firm. Goods were supplied and payments made from time to time. It is n....
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....laim, the Court held that once he had transferred his rights to the partnership which took over all the rights and liabilities of the proprietary concern, he lost his exclusive right to recover the amount since that had become an asset of the partnership firm over which he as a partner had no exclusive right. He, therefore, did not have any enforceable subsisting claim after the partnership came into existence, and, therefore, no relief could be granted to him in his personal capacity as erstwhile proprietor of the concern. 6. Shri V.A. Mohta, Sr. Advocate, appearing on behalf of the appellants before us advanced three main submissions. Firstly, he submitted that once registration is granted, even though after the filing of the suit, the suit should be held to be maintainable as from the date on which registration is granted subject to the law of limitation. Secondly, he submitted that Plaintiff No. 1, Purushottam in his personal capacity could sue the respondent firm for the amount in question, if the firm of which he was a partner was for reason of non- registration unable to maintain a suit. Lastly, he submitted that Section 69(2) of the Act is not attracted to a case where t....
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....ntrary view and hold that the suit is incompetent ab initio. We have considered these decisions, but in the light of the plain language of Section 69 of the Partnership Act read with Section 20 of the Arbitration Act and in view of the decision of this Court reported in Shreeram Finance Corpn. We are clearly of the opinion that proceedings under Section 20 of the Arbitration Act were ab initio defective since the firm was not registered and the subsequent registration of the firm cannot cure that defect. The same view was also reiterated in U.P. State Sugar Corporation Ltd. v. Jain Construction Co. And Anr. - AIR 2004 SC 4335. These decisions squarely answer the first submission of Shri V.A. Mohta. The submission must therefore be rejected. 9. The second submission urged on behalf of the appellants is also squarely answered by a judgment of this Court reported in Addanki Narayanappa and Anr. v. Bhaskara Krishnappa (D) and Ors. - [1966] 3 SCR 400. This Court held: It seems to us that looking to the scheme of the Indian Act no other view can reasonably be taken. The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capit....
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....herefore becomes necessary for us to notice the relevant facts of the case, the questions that fell for consideration, and the principles laid down therein. 11. The plaintiffs in the suit were the sons of Moolchand, the first plaintiff being the partnership firm of which three of his sons were partners, and the second plaintiff being his fourth son. Their case was that the partnership of which their late father Moolchand was a partner was the duly registered proprietor of the trademark Haldiram Bhujiawala. On dissolution of the firm on 16.11.1974 in terms of the deed of dissolution, Moolchand became the sole proprietor of the trademark for the whole country except State of West Bengal. Smt. Kamla Devi, another partner, who was the wife of R.L. Aggarwal a brother of Moolchand, was given ownership of the trademark rights for West Bengal. Upon the death of Moolchand in 1985 his four sons got themselves recorded as joint proprietors of the trademark. Three of them formed a partnership in the year 1983 and were running a shop in Chandni Chowk, Delhi. 12. In the meantime on 10.10.1977 R.L. Aggarwal and his son applied in Calcutta for registration of the same trademark in their name....
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....necessary for the disposal of the appeal to consider the second question formulated by this Court. Therefore, any observation made or principle enunciated, in relation to the second question was at best obiter, and not a binding precedent. 14. We shall assume in favour of the respondents that the observations made and principles laid down are obiter and therefore not a bind precedent. Even so that does not preclude this Court from appreciating the reasons given for the principles laid down, and if the reasoning appears to this Court to be cogent, and merit acceptance, the same may be accepted by this Court as its own and applied to the case before it. 15. In Haldiram Bhujiawala and Anr. (supra) this Court noticed the recommendations made by the Special Committee in its report which was considered by the legislature while enacting the Partnership Act, 1932. The Committee recommended that registration of firms be made optional as it considered making registration compulsory too drastic for a beginning in India. It was proposed that registration should lie entirely with the discretion of the firm or partner concerned, but any firm which was not registered will be unable to enfor....
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....under the provisions of the Partnership Act and consequently or even otherwise, the persons suing are not shown in the Register of Firms as partners of the firm, on the date of the suit. (ii) Such unregistered firm or the partners mentioned in the sub-section must be suing the defendant-third party. (iii) Such a suit must be for enforcement of a right arising from a contract of the firm with such a third party. Relying upon the aforesaid analysis this Court in Haldiram Bhujiawala and Anr. (supra) held that the contract contemplated by Section 69 of the Act is the contract entered into by the firm with the third party defendant. The contract by the unregistered firm referred to in Section 69(2) must not only be one entered into by the firm with a third party defendant, but must also be one entered into by the plaintiff firm in the course of the business dealings of the plaintiff firm with such third party defendant. 17. With respect, we find ourselves in complete agreement with the principles enunciated in Haldiram Bhujiawala and Anr. (supra). Having regard to the purpose Section 69(2) seeks to achieve and the interest sought to be protected, the bar must app....