TaxTMI 
TaxTMI 
2022 (1) TMI 1518
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....nd order dated 15.02.2018, as passed by the High Court of Gujarat [For short, 'the High Court'], in Civil Revision Application No. 241 of 2017, whereby the High Court has allowed the revision application filed Digitally signed Rajni Mukhi Date: 2022.01.31 15:19:41 TS by the contesting defendants (respondent Nos. 1 to 3 herein) and has reversed the order dated 07.04.2017, as passed by the Court of 9th Additional Senior Civil Judge, Vadodara [For short, 'the Trial Court'] in Special Civil Suit No. 333 of 2015. 2.1. By the said order dated 07.04.2017, the Trial Court had rejected the application moved by the contesting defendants under Order VII Rule 11(d), Order XXX Rules 1 and 2 and Section 151 of the Code of Civil Procedure, 1908 [For short 'the Code'.] read with Section 69 of the Indian Partnership Act, 1932 [For short, 'the Act of 1932'] for rejection of plaint on the ground that the suit filed by and on behalf of an unregistered partnership firm was barred by law. The Trial Court essentially held that, on its subject-matter relating to the validity of the sale deed in question, the bar of Section 69(2) was not operating against this suit. However, the High Court has taken a c....
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....4, 105, 132, 106/A in City Survey Vibhag- B, situated on Kalal Pitha Road, Hujaratpaga, Sub-District Vadodara, admeasuring 232.81 square metres, through a registered sale deed. According to the appellant, its share in the suit property was 60% and the respective shares of respondent Nos. 2 and 3 were 20% each. 5.2. It has further been averred that on 22.04.2014, a new partnership by the firm name "Aksharay Developers" was formed with four partners, namely, Sunilbhai Somabhai Ajmeri (also the partner and administrator of the appellant firm) and the respondent Nos. 2, 3 and 4. According to the plaint averments, the said partnership was formed exclusively for the purpose of the project related with the suit property and the tenure of the partnership was confined to the completion of the said project. A Memorandum of Understanding [For short, 'MOU'.] was signed by the partners on the date of incorporation of the firm, i.e., 22.04.2014; and it was agreed in the MOU that from the income which may accrue from the project, a fixed sum of Rs 1,00,00,000 (Rs. One Crore) would be paid to Sunilbhai Somabhai Ajmeri along with 5-10% on the profit accruing upon the completion of project. Accor....
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....suit so filed by the appellant, the respondent Nos. 1 to 3 appeared in response to the summonses and moved an application for rejection of plaint with reference to the provisions of the Act of 1932. 6.1. The contesting respondents submitted in the said application that the plaintiff-appellant had neither produced any documentary evidence to show that the suitor firm was a registered partnership firm nor any averment was taken in that regard in the plaint. It was further submitted that the sale deed in question (marked 4/4) was a registered document and the same was executed by Sunilbhai Somabhai Ajmeri as administrator-partner of the firm Shiv Developers. The respondents thus contended that the suit for declaration against the registered sale document, when the plaintiff had not shown to be a registered firm, was barred by Section 69 of the Act of 1932. In other words, contention of the respondents had been that as per the mandate of Section 69 of the Act of 1932, the plaintiff, being an unregistered partnership firm, was barred to file a suit regarding the rights arising from any agreement/contract. It was also submitted that as per Order XXX CPC, a suit could be filed on behal....
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....Section 69 of the Act of 1932 because of non-receipt of amount of sale consideration by the partners of the firm which had sold the property by a registered document and had the legal right of receiving the amount of sale consideration. The Trial Court further observed that dismissal of the suit was not envisaged by the provisions contained in Order XXX CPC. Therefore, the application as moved by the respondents was rejected by the Trial Court. 8. The contesting defendants (respondent Nos. 1 to 3 herein) challenged the orders so passed by the Trial Court by way of a revision application before the High Court. This revision application has been allowed by the High Court by the impugned judgment and order dated 15.02.2018. 8.1. It was contended on behalf of the contesting defendants/revisionists before the High Court that the appellant firm being an unregistered partnership firm, the subject suit by this firm for enforcement of a right arising out of the contract of sale was squarely within the ambit of Section 69 of the Act of 1932 and the Trial Court had erred in disallowing the application for rejection of the plaint while proceeding contrary to the applicable provisions of ....
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....s registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. Here is the case in which the transaction which is under challenge is a sale dated 24.02.2015 is a document entered in to by the plaintiff firm against the defendants who are third party and undisputedly the plaintiff firm is an unregistered firm, and therefore, by effect of non- registration, the suit appears to be not maintainable .... " 9.3. The High Court, thereafter, referred to various decisions cited at the Bar including that in the case of Purushottam and Anr. v. Shivraj Fine Art Litho Works and Ors., as reported in (2007) 2 G.L.H. 406[= (2007) 15 SCC 58] and in that regard, observed as under [We are not dilating on various other decisions referred by the High Court but have reproduced the aforementioned paragraph 33 for its implication, as shall appear in the discussion hereafter later.] : - "33. Another decision which has been pressed into service a decision in the case of Purushottam (supra) and by referring to this a contention is raised that the bar of Section 69(2) will not apply in the background of this fact. However, again if the fact is to be see....
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....) of the Act of 1932 does not bar all suits by an unregistered partnership firm against third parties. In the factual matrix of the present case, suit is not hit by Section 69(2) because the contract is not in the regular business dealings of the firm; and the words "enforcing a right arising under the contract" used in Section 69(2) of the Act of 1932 signify the rights arising out of contracts in respect of the firm's business transactions only. Learned counsel has relied upon the decisions in Haldiram Bhujiawala and Anr. v. Anand Kumar Deepak Kumar and Anr: (2000) 3 SCC 250 and Purushottam (supra). 11.1. Learned counsel has supplemented his arguments with reference to the concurrent findings of the Trial Court and the High Court on the fact that the contract under consideration, on which the suit is premised, was not in connection with the business of the unregistered firm. Therefore, as per the law laid down by this Court, suit of the appellant is not barred under the provisions of Section 69(2) of the Act of 1932. Learned counsel has further argued that the High Court has committed an error in bringing all suits by an unregistered firm against the third party within the....
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....we may take note of the provisions contained in Section 69 of the Act of 1932 as follows: - "69. Effect of non-registration .- (1) No suit to enforce a right arising from a contract or conferred by this Act 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 to 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. (2) No suits to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. (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 (b) the powers of an official assign....
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.... on by one Ganga Bishan alias Haldiram since the year 1941. In the year 1965, he constituted a partnership with his two sons Moolchand, Shiv Kishan and his daughter-in-law Kamla Devi (wife of another son R.L. Aggarwal) to carry on business under the same name. The said firm was granted registration of the said trade name. However, on 16.11.1974, the said partnership was dissolved and in terms of the dissolution deed, the above trademark fell exclusively to the share of Moolchand for whole of the country except the State of West Bengal whereas the said Smt. Kamla Devi was given ownership of the trademark rights for the State of West Bengal. The four sons of Moolchand got their names recorded as subsequent joint proprietors of the trademark. Three of them formed a partnership (the plaintiff No. 1 in the subject suit) in the year 1983 and were running a shop at Chandni Chowk, Delhi. In the meantime, on 10.10.1977, the said R.L. Aggarwal and his son applied in Calcutta for registration of the same trademark while claiming themselves to be the full owners thereof without disclosing the dissolution deed dated 16.11.1974. One Ashok Kumar, son of Smt. Kamla Devi, constituted a new firm and....
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....difference. Hence, the said suit was held not barred. It appears to us that in that case the reference to the lease in the plaint was obviously treated as a historical fact. That case is therefore directly in point. Following the said judgment, it must be held in the present case too that a suit is not barred by Section 69(2) if a statutory right or a common law right is being enforced. XXXX XXXX XXXX 11. Likewise, if the reliefs of permanent injunction or damages are being claimed on the basis of a registered trademark and its infringement, the suit is to be treated as one based on a statutory right under the Trade Marks Act and is, in our view, not barred by Section 69(2). 12. For the aforesaid reasons, in both these situations, the unregistered partnership in the case before us cannot be said to be enforcing any right "arising from a contract". Point 1 is therefore decided in favour of the respondent-plaintiffs." (emphasis supplied) 16.2. This Court further exposited on the scope of the words "enforcing a right arising under the contract", as used in Section 69(2) of the Act of 1932; and after a detailed survey of the reports and precedents which led t....
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....dant. In such a situation, the fact that the unregistered firm has purchased the vehicle from somebody else under a contract has absolutely no bearing on the right of the firm to sue the defendant for possession of the vehicle. Such a suit would be maintainable and Section 69(2) would not be a bar, even if the firm is unregistered on the date of suit. The position in the present case is not different." (emphasis supplied) 17. The aforesaid decision in Haldiram Bhujiawala (supra) was further considered and applied by this Court in the case of Purushottam (supra) while holding as under: - "24. With respect, we find ourselves in complete agreement with the principles enunciated in Haldiram Bhujiawala. Having regard to the purpose Section 69(2) seeks to achieve and the interest sought to be protected, the bar must apply to a suit for enforcement of right arising from a contract entered into by the unregistered firm with a third party in the course of business dealings with such third party. If the right sought to be enforced does not arise from a contract to which the unregistered firm is a party, or is not entered into in connection with the business of the unregistered....
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....e, missed out the ratio and principles therein, as reiterated with reference to the previous decisions. The decision in Haldiram Bhujiawala (supra) seems to have not gone into consideration of the High Court although this decision formed the sheet anchor of the order of the Trial Court. 19.1. As noticed, the crucial and key factor in the present case remains that the sale transaction in question is not arising out of the business of the appellant firm. Equally significant fact is that the subject suit is for enforcing a right of avoidance of a document on the ground of fraud and misrepresentation as also the statutory rights of seeking declaration and injunction. Significantly, the composition of defendant firm "Aksharay Developers" (defendant No. 1) has itself been questioned by the plaintiff- appellant while alleging that on 22.04.2014, this firm was constituted with four partners but later on, the defendant Nos. 2 and 3 (respondent Nos. 2 and 3 herein), constituted another firm in the same name with themselves as partners while leaving aside the other two. 19.2. We are not commenting on the merits of the case of either of the parties but this much is apparent from a look a....