w w w . L a w y e r S e r v i c e s . i n



Jayesh H. Pandya v/s Sukanya Holdings Private Limited & Others

    APPEAL NO.555 OF 2005 IN NOTICE OF MOTION NO.373 OF 2005 ALONG WITH COURT RECEIVER'S REPORT NO.127 OF 2009 & NOTICE OF MOTION NO.1047 OF 2009

    Decided On, 25 January 2010

    At, High Court of Judicature at Bombay

    By, THE HONOURABLE ACTING CHIEF JUSTICE MR. J.N. PATEL & THE HONOURABLE MRS. JUSTICE R.P. SONDURBALDOTA

    For the Appellant: R.M. Kadam, learned Advocate General with Mr. J.P. Sen i/by. Ms.Jacinta D'silva, Advocates. For the Respondent : R1, J.A. Udaipuri i/by Ms. Swati Sawant, R2, . Rahul Naricharia, R9, R14 & R15, G.S. Godbole i/by Ms. Jyoti Chawan, R27 & R28, N.C. Parekh i/by. Mansukhlal & Hiralal, R10, Yashodhan Divekar, Advocates, K.L.Vyas, Court Receiver with Ms. V.S.Avasare-IInd Asstt. to Court Receiver.



Judgment Text

Smt. R.P. SondurBaldota, J.

All the counsel agree that the appeal be disposed off finally at the stage of admission. Hence, we have heard the submissions in final hearing.

2. This appeal is preferred against the order dated 6th May, 2005 passed by the learned Single Judge dismissing the suit filed by the appellant by upholding preliminary objections as regards its maintainability. The two preliminary issues decided by the impugned order are as follows :-

(i) Whether the suit is maintainable in view of Section 69 of the Indian Partnership Act, 1932?

(ii) Whether the suit is maintainable in as much as the plaintiff has filed the present suit No.2812 of 2001 without withdrawing his earlier Suit No.1991 of 2000 for the same cause of action?

3. The pleadings in which the above issues arise, stated in the necessary details are as under :

Vide partnership agreement dated 30th April, 1992, the suit firm i.e. Hetali Construction Company was constituted, its partners being the appellant, Deepak Pandya-Respondent No.2, Sukanya Holdings Pvt. Ltd., respondent No.1 and one Ms. Jaikirti Mehta. Respondent Nos.4, 5 & 7 i.e. Gupta Brothers own, control and manage Sukanya Holdings Pvt. Ltd. The firm applied for its registration by submitting an application form to the Registrar of Firms on 11th May, 1992. At that time, the share in the profit and loss of the partnership firm of the appellant and his brother-respondent No.2 was of 25% each, that of the company was 40% and of Jaikriti Mehta was 10%. Ms.Jaikirti Mehta, retired from the partnership firm on 11th March, 1993 and her 10% share came to be distributed between the remaining parties, increasing the share of appellant and respondent no.2 to 27.5% each and that of the company to 45%. The business of the firm was to develop a plot of land situated at Santacruz(West), Bombay by constructing thereon building consisting of ground plus seven floors. There are serious disputes between the partners as regards the project of building construction and sale of flats therein. However, in our opinion it is not necessary to dilate over these disputes considering the limited scope of the present appeal. When disputes arose between the partners as regards the business of the partnership firm, the appellant filed Suit No.1991 of 2000 (hereinafter referred to as "first suit") in this court for dissolution of the firm and accounts.

4. By the ad-interim order dated 11th May, 2000, the Court Receiver, High Court, Bombay was appointed as a Receiver of all the assets and properties of the suit firm, including the books of accounts. But after filing of the suit, it was realised by the appellant that although an application had been made in the year 1992 to the Registrar of Firms for registration of the suit firm, the same had not been registered on account of some formal requirements. He, therefore, pursued the application for registration of the firm and the firm came to be registered by the Registrar of Firms on 30th May, 2000. Thereafter, on 14th August, 2001, the appellant filed the suit herein i.e. Suit No.2812 of 2001 (hereinafter referred to as "second suit") for the same reliefs as in the first suit. On 23rd August, 2001, he applied for ad-interim order of appointing the Court Receiver, High Court, Bombay as receiver of all the assets and properties of the suit firm after giving due notice to the respondents. By the order passed on that date, the Court Receiver, High Court, Bombay was once again appointed as receiver of all the assets and properties of the suit firm. On the same date, the appellant withdrew the first suit.

5. Respondents No.10 and 20, who are not concerned with the partnership business and who claim to be tenants in respect of the flats in the building constructed by the firm filed Notice of Motion No.373 of 2005 and the Notice of Motion No.853 of 2004, respectively, raising preliminary objections to the suit and for its dismissal under Order VII Rule 11 of Civil Procedure Code. They alleged that the suit is barred by Section 69(2) of the Partnership Act since registration of the suit firm was obtained by the appellant fraudulently after dissolution of the firm. According to them, the suit firm was dissolved either on 11th March, 1993, when Ms. Jaikirti Mehta retired from it or on 9th May, 2000, when the first suit was filed. Therefore, registration of the firm being registration of a dissolved firm was non-est. They further alleged that the application form for registration of the firm in Form -A submitted by the appellant to the Registrar of Firms on 6th November, 1995 contained signature of only three partners. Ms. Jaikirti Mehta did not sign that Form-A. Consequently, the Registrar of Firms had returned all the papers on 12th December, 1995 pointing out that the name of Ms. Jaikirti Mehta was missing therefrom and the address of the firm shown was different from the original Form- A on the record. On such a form the appellant could not have got the firm registered. The second preliminary objection was that the second suit was not maintainable having been filed before withdrawing the first suit, filed on the same cause of action.

6. It appears that during the course of submissions on the preliminary issues framed on the basis of the Notices of Motion, the respondents set up one more possible date of dissolution of the firm and that is the date of service of the plaint upon the respondents. The other addition to the submissions made was based on Section 58 of the Partnership Act, as applicable to the State of Maharashtra. Section 58 provides for application of registration of partnership firms. By Maharashtra Act No.29 of 1984, Sub-section 1-A has been added to Section 58. This provision requires that the statement in Form-A under sub-section 1 is sent within one year from the date of constitution of the firm. It was contended that the application form dated 6th November, 1995 being beyond the period of one year from the date of constitution of the suit firm, the firm could not have been registered. The third addition to the submissions was that since the plaint in the second suit does not mention that liberty was obtained to file the suit, it is barred by Section 12 Civil Procedure Code.

7. The reply of the appellant to save the suit was that once the firm is registered, the bar under Section 69(2) of the Partnership Act gets removed and the defendants of the suit cannot contend that the suit is not maintainable on the basis of alleged invalidity of the registration. Their only remedy is to challenge the registration by filing appropriate proceedings before appropriate forum. Besides, Section 69 does not prohibit an action to recover the property of the firm from third parties even if a firm is unregistered. The reliefs sought in the plaint against respondents No.3 to 28 are for recovery of the property of the firm in their hands. Hence, the suit would be unaffected by Section 69. As regards the other partners of the firm i.e. respondents No.1 & 2, it was pointed out that respondent No.1 is estopped from challenging the maintainability of the suit on the ground of alleged want of registration, having itself filed arbitration petition No.500 of 2001 seeking reference of the disputes in the suit to arbitration. The application was rejected and the Special Leave Petition filed therefrom was also dismissed. In any case respondent no.1 did not raise any preliminary objection as regards maintainability of the suit. Respondent No.2 supports the appellant.

8. In his submissions before the learned Single Judge, the appellant denied that the suit firm got dissolved on occurrence of any of the three events as alleged i.e. on retirement of Ms. Jaikirti Mehta, on filing of the second suit or on service of plaint in the second suit upon the respondents. It was submitted on his behalf that neither mere filing of the suit nor service of writ of summons or plaint upon the defendants, results into dissolution of the firm as has been held by the Hon'ble Supreme Court in its decision in Banarasi Das and another vs. Kanshi Ram and others, reported in A.I.R. 1963 Supreme Court 1165. It was also contended that there was no element of impropriety whatsoever in the registration of the firm, as the application for registration had been filed in May, 1992, i.e. within a month of execution of the Partnership Deed. This application was apparently was not acted upon at that stage by the Registrar of Firms. After the retirement of Ms. Jaikirti Mehta, an application was filed on 6th November, 1995, which was withdrawn due to some technical objections. The Registrar of Firms, however, finally acted upon the original application of the year 1992 to register the firm. As regards the second preliminary objection, it was submitted on behalf of the appellant that leave under Order XXIII of Civil Procedure Code is required only for institution of a fresh suit after withdrawal of the first suit. Where a second suit has already been instituted and the first suit is withdrawn thereafter, no leave is required. It was also contended that there is no bar in Civil Procedure Code for filing or proceeding with the second suit and in such cases, Section 12 Civil Procedure Code. has no application. The appellant also contended that the two suits cannot be said to be identical. Though there is some commonality in the subject matter, the second suit is wider in its scope and includes several reliefs that do not find place in the first suit.

9. The learned Single Judge in the impugned judgment accepted the contentions of respondents no.10 and 20 that the suit firm stood dissolved by filing of the first suit by the appellant for dissolution and on service of the plaint therein upon the respondents. He held that as soon as the service was complete the suit firm stood dissolved and admittedly, a dissolved firm cannot be registered. Further fault was found with the appellant in (i) suppressing the fact of dissolution of the firm from the Registrar of Firms ; (ii) not complying with the mandatory provision of Section 58 of the Partnership (Maharashtra Amendments) Act ; (iii) not filing the Partnership Deed ; (iv) not applying within one year ; (v) not obtaining consent of other partners, against whom the suit was filed ; and (vi) not filing fresh Partnership Deed with the Registrar of Firms. The learned Single Judge was of the opinion that the Court could not disregard such attending circumstances, conduct of the parties and the representations made by them to the registering authority. In any case, according to him, by service of the plaint in first suit upon the respondents, the firm had stood dissolved and its registration, therefore, is non-est. With these observations, it was held that the suit is not maintainable in view of Section 69 of the Partnership Act. As regards the second preliminary objection, it was held that filing of the second suit without drawing the first suit and without obtaining liberty of the Court to file the fresh suit, is barred under Order XXIII of C.P.C.

10. The appellant assails the impugned judgment and order submitting that the finding of the learned Single Judge that the suit firm stood dissolved when the first suit was filed, is contrary to the law laid down by the Hon'ble Supreme Court in its judgment in Banarasi Das's case (supra), which is a direct decision on the question. A grievance is made that though the decision was cited before the learned Single Judge, the same was not at all considered by him. The impugned judgment and order makes a most cursory reference to the decision by merely mentioning it at paras 16 and 21. It is contended that the learned Judge ought to have held that the bar under Section 69 of the Partnership Act was not attracted as the suit firm was registered and the name of the appellant was shown as a partner in the Register maintained by the Registrar of Firms. The appellant had produced on record Registration Certificate issued by the Registrar of Firms, the genuineness and authenticity of the same was not disputed. According to the appellant, the learned Single Judge could not have entertained a challenge to the validity of the Registration Certificate in the suit and then held that the registration being invalid, the suit was not maintainable in view of the bar contained in Section 69. As regards Section 58 of the Partnership Act as applicable to the State of Maharashtra, according to the appellant, the same is prospective in nature and did not apply to the partnership firm that had been constituted prior to coming to force the amended provisions. In any case, the application dated 11th May, 1992 submitted to the Registrar of Firms was well within the period of one year from the date of constitution of the firm on 30th April, 1992.

11. About the second preliminary issue, the appellant contends that there is no provision in law prohibiting filing of the second suit while the first suit is pending. Hence the learned Single Judge was not right in holding that the second suit could not have been filed prior to withdrawal of the first suit. The learned Single Judge also failed to appreciate the differences in the two suits.

12. It is evident from the pleadings that undisputedly on the date of filing of the suit, the firm was registered and the appellant shown in the Register of Firms as a partner in the firm. On the face of these facts, no bar under Section 69 of the Partnership Act can get attracted to the suit. Once the registration has been effected, the statements recorded in the Register of Firms regarding the constitution of the firm is conclusive proof of the facts contained therein. But respondents no.10 & 20 who are third parties to the firm, propose to attack the registration so as to bring the suit under the bar of Section 69 (2) of the Partnership Act. The first question arising therefore is whether such a course of action is permissible. Does Civil Court have jurisdiction to enquire into validity of the certificate of Registration issued by the Registrar of Firms appointed specifically for the purpose under the Partnership Act and decide upon it's validity?

13. Before embarking upon the task of answering the above question it will be necessary to take note of the relevant provisions under the Partnership Act. Section 57 of the Act (as amended by Mah.29 of 1984) provides for appointment Registrar of Firms by the State Government by notification in official Gazette to exercise, perform and discharge the powers, functions and duties of the Registrar under the Act throughout the State of Maharashtra. Section 59 authorises the Registrar, on being satisfied that provisions of Section 58 for application for registration have been duly complied with, to record an entry of the statement in the Register of Firms. On such record of the entry by the Registrar the firm is deemed to be registered. Any delay in filing applications or furnishing information can be condoned by the Registrar on payment of penalty at his discretion. He has powers to add, alter or delete entries in the Register of Firms. Lastly Section 68 which provides Rules of evidence reads as follows -

"68. Rules of Evidence.

(1) Any statement, intimation or notice recorded or noted in the Register of Firms shall, as against any person by whom or on whose behalf such statement, intimation or notice was signed, be conclusive proof of any fact therein stated.

(2) A certified copy of an entry relating to a firm in the Register of Firms may be produced in proof of the fact of the registration of such firm, and of the contents of any statement, intimation or notice recorded or noted therein. It is thus seen that the complete machinery for registration of the partnership firms and everything related thereto has been provided under the Partnership Act on the backdrop of which the question raised above is required to be considered."

14. As already seen above, the attack of respondents no.10 & 20 on the registration is two fold. Firstly that, it is non-est, it is no registration in the eyes of law as suit firm was not in existence for registration, it having been dissolved prior to date of registration. Secondly that, the manner in which the application for registration was made was improper and not in accordance with the prescribed procedure. The learned Single Judge without directly addressing the above question expressed his opinion by way of a passing reference that the court cannot be expected to shut its eyes to the conduct of the parties, the representations made to the registering authority and the attending circumstances, to mechanically accept the fact of registration. We would only partly agree with the opinion of the learned Single Judge. In our opinion, if it is self evident from the facts of the case that registration of the firm could not have been done at all, which would render the registration non-est, the Civil Court while hearing the suit filed by an unregistered partnership firm or by a partner in it, can consider the aspect for deciding the bar under Section 69 of the Partnership Act. This is because consideration of the bar under Section 69 of the Partnership Act, is not a mere formality to be taken care off. It vitally affects rights of the parties. But we must hasten to add that this consideration is limited only to extreme circumstances and cannot be extended to any other challenge to the registration of the firm either on the basis of the application being improper or any information supplied to the Registrar of Firms being incorrect etc. One such extreme circumstance would be registration of a dissolved firm. Undoubtedly, there can be no registration of a partnership firm which is dissolved and, therefore, such registration will be no registration in the eyes of law and hence, non-est.

15. Coming to the facts of the present case, we have seen that there are three contingencies expressed by respondents No.10 & 20 for dissolution of the firm. First is retirement of Ms.Jaikirti Mehta from the firm in the year 1993. The second is filing of the first suit on 9th May, 2000 and the third is service of plaint upon the respondents, which was prior to 30th May, 2000. Mr. R.M.Kadam, the learned Advocate General appearing for the appellant submits that in none of the above contingencies the firm could have been treated to be dissolved. He points out that after retirement of Ms.Jaikirti Mehta, the firm is continued by the three remaining partners by redistribution of the share in the profits and losses. This is not disputed by respondents No.1 and 2. Therefore, the first contingency is ruled out. As regards the other two contingencies, The learned Advocate General submits that the contentions raised therein are directly contrary to the decision of the Hon'ble Supreme Court in Banarasi Das's case (supra). In the said decision, the Supreme Court negatived both the contingencies in the light of Section 43 of the Partnership Act, which provides for dissolution by notice of partnership at will and Order XX Rule 15 of Civil Procedure Code which provides for decree in a suit for dissolution of partnership firm. It will be convenient to quote the two provisions at the outset. The same read as follows :

"43. Dissolution by notice of partnership at will

1) "Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firms."

"O.XX R.15 C.P.C. - Decree in suit for dissolution of partnership.

"Where a suit is for the dissolution of a partnership or the taking of partnership accounts, the Court, before passing a final decree may pass a preliminary decree declaring the proportionate share of the parties, fixing the day on which the partnership shall stand dissolved or be deemed to have been dissolved, as much accounts to be taken, and other acts to be done, as it thinks fit."

16. After extracting O.XX Rule 15 Civil Procedure Code the Apex Court has held as follows -

"12) ..... "This rule makes the position clear. No doubt, this rule is of general application; that is, to partnerships at will as well as those other than at will; but there are no limitations in this provision confining its operation only to partnerships other than those at will. Sub. Sec.(1) of S. 43 of the Partnership Act does not say what will be the date from which the firm will be deemed to be dissolved. For ascertaining that, we have to go to Sub-S.(2) which reads thus.

"The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice."

(13) Now, it will be clear that this provision contemplates the mentioning of a date from which the firm would stand dissolved. Mentioning of such a date would be entirely foreign to a plaint in a suit for dissolution of partnership and therefore, such a plaint can not fall within the expression "notice" used in the sub-section. It would follow therefore that the date of Service of a summons accompanied by a copy of a plaint in the suit for dissolution of partnership cannot be regarded as the date of dissolution of partnership and S. 43 is of no assistance."

17. After laying down the above law, their Lordships proceeded to test the arguments of the appellants before them against the facts of the case and held that the facts did not support the submission assuming the same to be correct. The learned Advocate General submits that this exercise by the Supreme Court cannot be considered to lay down the law that a partnership firm stands dissolved on service of plaint upon the defendants as the same becomes notice of dissolution under Section 43(1) of the Partnership Act. He points out that such an interpretation of the decision has been discounted by Madras High Court in its decision in P.Venu alisa Venugopal vs. Jeya and others, reported in 1993 Madras LJ, 434. We are inclined to accept the submission of the learned Advocate General. It is clear on plain reading of the decision cited that the proposition of law laid down therein is that a plaint in a suit for dissolution of partnership firm does not fall within the expression "notice" used in Section 43 of the Partnership Act and therefore, the date of service of summons accompanied by a copy of plaint in the suit cannot be regarded as the date of dissolution of the partnership. It is obvious that after laying the law, the Apex Court had taken the argument of appellant before it to its logical end of facts for the purpose of demonstrating that even the facts of the case did not support the argument advanced, which argument had, in fact been rejected. This was obviously by way of completing the judgment in every respect. One cannot forget that this exercise was done after laying down the law in clear and specific terms at para 13 of the judgment quoted above. There is no escape from accepting the above position. Unfortunately this appears to have skipped the attention of the learned Single Judge.

18. Applying the principles laid down by Banarasi Das's case to the facts of the present case, it must be held that the suit firm had not been dissolved as on 30th May, 2000, and hence, there was no difficulty whatsoever for its registration. There was also then, no question of the appellant suppressing the fact of dissolution of firm from the Registrar of Firms. As regards the other facts which had apparently weighed with the learned Single Judge i.e. not filing the Partnership Deed, not complying with the mandatory provisions of Section 58 of Partnership (Maharashtra Amendment) Act, obtaining consent of the other partners against whom the suit is filed, the respondents cannot be allowed to raise the same in the present proceedings to challenge the registration.

19. Mr.Godbole, the learned counsel for respondent no.20 submits that the learned Single Judge was justified in holding that there is no registration of the firm and that the registration obtained on 30th May, 2000 is void ab-initio. By referring to Section 63(1) and 63(1-A) of the Partnership Act as applicable to the State of Maharashtra he argues that there is no registration of the firm consisting of the appellant, respondent no.1 and respondent no.2, since Section 53 mandates the change in the constitution of a registered firm on retirement of a partner to be intimated to the Registrar of the Firms and entry of the change made in the Register of Firms. According to Mr.Godbole, unless this is done, the firm consisting of the appellant, respondent no.1 and respondent no.2 cannot be deemed as a validly registered firm. The submissions advanced cannot be accepted for the simple reason that the consequence provided under Section 69A of Partnership Act (as applicable to the State of Maharashtra) for contravention of Section 63 is only of imposing penalty for the period of delay. There is no consequence of the registration of the firm being affected.

20. The partnership Act as applicable till the Maharashtra Amendment Act of 1984 came into force on 1st January, 1985 was materially different. It permitted the partner of an unregistered firm to sue for dissolution of the firm or for accounts or for realising the property of the dissolved firm by providing an exception to the bar in Section 69(3)(a) of the Partnership Act. The Maharashtra Amendment Act removed the exception by introducing an altogether different Section 69(3)(a) and by inserting Sub-section 2A which specifically puts a bar on a partner in an unregistered partnership firm filing a suit for dissolution or for accounts of a dissolved firm or realise properties of a dissolved firm. The only exception provided to the bar was in respect of small firms either in terms of the capital or in terms of the duration of firm. The learned Advocate General submits that even this disability stands removed in view of the recent decision of the Hon'ble Supreme Court in V.Subramaniam vs. Rajesh Raghuvandra Rao (2009)5 SCC 608 though no such contention was raised before the learned Single Judge. The question raised under the Notices of Motion was limited to Section 69(2) of the Partnership Act the bar under which relates to the third parties. Respondent no.10 and 20 can not be concerned with the bar under Section 69(2-A).

21. The Hon'ble Supreme Court in the above cited decision held that since sub-section 2A of Section 69 as introduced by the Maharashtra Legislature violates Article 14, 19(1)(G) and 300-A of the Constitution, it is ultra vires and hence declared it as unconstitutional. The above decision arose out of a suit filed in Bombay City Civil Court by a partner in an unregistered Partnership firm for its dissolution, wherein it was contended by the defendant that the suit was not maintainable in view of sub-section 2A of Section 69 of the Partnership Act.

The Hon'ble Supreme Court noted that the preliminary object of registration of a firm is protection of third parties who were subjected to hardship and difficulties of proving as to who were the partners. Under the earlier law a third party obtaining a decree was often put to expenses and delay in proving that a particular person was a partner of that firm. The registration of a firm provides protection to the third parties against false denials of partnership and the evasion of liability. Even then the registration of a partnership firm is not made compulsory under the Act. A partnership firm can come into existence and function without being registered so long as there was no problem. It could also disappear from existence without being registered until the Maharashtra Amendment came into force. The Hon'ble Supreme Court is of the opinion that the stringent disabilities affected by the Maharashtra Amendment on the suits for dissolution of unregistered firm are crippling in nature. It observed in that regard,

"25. The effect of the 1984 Amendment is that a partnership firm is allowed to come into existence and function without registration but it cannot go out of existence (with certain exceptions). This can result into a situation where in case of disputes amongst the partners the relationship of partnership cannot be put to an end by approaching a court of law. A dishonest partner, if in control of the business; or if simple stronger, can successfully deprive the other partner of his dues from the partnership. It could result in extreme hardship and injustice. Might would be right. An aggrieved partner is left without any remedy whatsoever. He can neither file a suit to compel the mischievous partner to cooperate for registration, as such a suit is not maintainable, nor can he resort to arbitration if any, because the arbitration proceedings would be hit by Section 69(1) of the Act (Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd.)."

"26. In our opinion the restrictions placed by sub-section (2-A) of Section 69 introduced by the Maharashtra Amendment Act, for the reasons given above, are arbitrary and of excessive nature and go beyond what is in the public interest. Hence the restrictions cannot be regarded as reasonable."

22. Mr.Udaipuria, the learned counsel for respondent no.1 submits that the above decision cannot come to the complete rescue of the appellant because the Maharashtra Amendment was not limited to insertion of Section 2A in Section 69. It also substituted the original sub-section 3(a) which made an exception for a suit for dissolution of an unregistered partnership firm, by an altogether different subsection 3(a), creating different exceptions. He submits that unless original sub-section 3(a) is brought back by the Legislature the appellant will not be able to maintain suit for dissolution of the Partnership Firm in view of the bar under Section 69(1) of the Partnership Act.

23. There is no doubt that the Hon'ble Supreme Court in the decision, though having taken note of existence of Maharashtra Amendment to Section 69 Sub-section 3(a), has not commented upon its viability. But at the same time it has held Section 69 sub-section 2A which specifically bars suit for dissolution of an unregistered partnership firm as unconstitutional for the reasons noted above. If the decision of the Hon'ble Supreme Court is to be given effect to in its true spirit and meaning it will have to be held that even without reintroduction of Section 69 sub-section 3(a) into the Act a suit for dissolution of an unregistered partnership firm is maintainable. Otherwise the entire judgment of the Hon'ble Supreme Court in the above case will be rendered nugatory. Therefore, we are not inclined to accept the argument of Mr.Udaipuria that the bar to file a suit for dissolution of an unregistered partnership firm continues despite the above decision of the Hon'ble Supreme Court. It may be repeated here that the challenge to the maintainability of the suit raised before the learned Single Judge was limited to Section 69 sub-section 2 of the Partnership Act which relates to suits against the third parties. None of the partners to the firm had raised question of maintainability of the suit on the ground of the bar under Section 69(2A) of the Partnership Act.

24. In our view, therefore, the decision of the learned Single Judge in holding that the suit is barred under section 69 of the Indian Partnership Act is not correct. The finding on the first preliminary issue, therefore, will have to be modified and the issue answered in the affirmative.

25. This brings us to the second preliminary issue of maintainability of the suit. According to the respondents, the appellant could not have filed the second suit without withdrawing the first suit and without obtaining leave of the court for filing the second suit. Therefore, the suit as filed is not maintainable in view of order 23 Rule 1 Civil Procedure Code. The learned Single Judge has upheld this objection and answered the preliminary issue accordingly. The learned Advocate General points out that even this finding of the learned Single Judge is contrary to the established principle of law. He submits that there is no provision under Code of Civil Procedure which bars filing of the second suit on the same cause of action. Instead Sections 10 and 11 of Code of Civil Procedure clearly visualize pendency of another suit in relation to the same subject matter. He submits that it has been so held by several decisions of the several courts including the Apex Court. Order XXIII Rule 1 of Civil Procedure Code stressed upon by the respondents reads as follows-

"1. Withdrawal of suit or abandonment of part of claim -

(1) At any time after the institution of a suit, the plaintiff may as against all or any of the defendants abandon his suit or abandon a part of his claim; Provided that where the plaintiff is a minor or other person to whom the provisions contained in rules 1 to 14 of Order XXXII extend, neither the suit nor any part of the claim shall be abandoned without the leave of the Court.

(2).........

(3) Where the Court is satisfied, -

(a) that a suit must fail by reason of some formal defect, or

(b) that there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject-matter of a suit or part of a claim, it may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or such part of the claim with liberty to institute a fresh suit in respect of the subject-matter of such suit or such part of the claim.

4. Where the plaintiff -

(a) abandons any suit or part of claim under sub-rule (1), or (b) withdraws from a suit or part of a claim without the permission referred to in sub-rule (3), he shall be liable for such costs as the court may award and shall be precluded from instituting any fresh suit in respect of such subject matter or such part of the claim."

On plain reading of the above provision, it is abundantly clear that the subsequent suit is precluded from institution only in case of withdrawal of first suit before filing the second suit and the withdrawal is without obtaining leave under Rule 1 above

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. It does not apply to a situation where the second suit is filed during the pendency of the first suit and the first suit thereafter simply withdrawn. Mr.Kadam relies upon the decision of the Apex Court Vimalesh Kumari Kulashreshtra vs. Sambhaji Rao and another, reported in (2008)5 S.C.C. 58 where in similar facts of case, the Apex Court held that order XXIII Rule 1 CPC stricto sensu was not applicable as the second suit was filed before filing the application for withdrawal of the first suit. In the proceedings before the Apex court a suit for specific performance was filed on which proper court fees were not paid. On an objection raised by the defendant to the suit another suit was filed for the same reliefs. Later, on the premise that another suit was filed the first suit was sought to be withdrawn. The application for withdrawal was allowed. In these facts the Apex court held - "Admittedly, the second suit was filed before filing the application of withdrawal of the first suit. The first suit was withdrawn as an objection had been taken by the respondent in regard to payment of proper court fee. We, therefore, are of the opinion that Order 23 Rule 1 of the Code was not applicable to the facts and circumstances of the present case." While arriving at the above decision the Apex Court has quoted with approval decisions of other High Courts i.e. (i) Mangilal vs. Radhamohan reported in A.I.R.1930 Lahor page 599, (ii) P.A.Mohammad vs. Canara Bank, reported in AIR 1992 Kerala page 85 and, (iii) Girdharilal Bansal vs. Chairman Bhakra Beyas Management Board, reported in AIR 1985 Punjab and Haryana, page 219 wherein identical view was taken. The learned Advocate General has also relied upon an unreported decision of Division Bench of our High Court, Goa Bench. The decision is dated 6th September, 1991 in Company Appeal No.1-R/1991 in the case of Rajaram Bandekar (Shivajirao), Mines Private Ltd. vs. S.Kantilal and Co. Pvt. Ltd. Our High Court has taken the identical view finding support from the case of Mangilal supra, P. Surja Reddy vs. Subba Reddy, reported in (1916) I.L.R.39 Madras 987 and the case of Girdharilal supra. It has observed in the decision that applicability of Order 43 Rule 4 arises only in a situation where there is a factual situation of the plaintiff having abandoned or withdrawn from a suit without permission. When that stage has not been reached, the Rule does not get attracted. The point of time for considering the applicability of that Rule is the institution of the fresh suit. Is it at a point of time where the earlier suit had been abandoned or withdrawn without permission? If the answer is in the affirmative and only in the affirmative, the bar could operate. The impugned judgment shows that the decision of Punjab and Haryana High Court above and Lahore High Court above were cited before the learned Single Judge. The respondents had sought to distinguish the decisions on the ground that Rule 3 of Order XXIII was not before those courts and therefore the judgments were not applicable. This apparently found favour with the learned Single Judge. In our opinion, the ratio laid down in the decisions above is clear and specific and the distinction sought to be drawn was not at all correct. In any case the controversy now is settled by the decision of the Apex Court in the case of Vimalesh Kumari supra. In these circumstances, the finding of the learned Single Judge on the second preliminary issue can also not be sustained and the issue must be answered in the affirmative. 26. In all the above circumstances, the appeal is allowed with costs. The impugned order dated 6th of May, 2005 is set aside. Both the preliminary issues are answered in the affirmative. The notices of motion no.373/2005 and 1047/2009 are dismissed. The suit is restored to file.
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