Whether the court can acquit accused in cheque dishonour case on the ground that his unregistered partnership firm is not made accused?

 Thus, it is held that the registration or non registration of the partnership firm will have no bearing insofar as Section 141 of the Act of 1881 is concerned. The provision under Section 141 of the Act of 1881 makes it mandatory to arraign the company or the firm, as the case may be, as party accused in the complaint. This provision or any other provision of the Act of 1881 does not put embargo on making unregistered partnership firm an accused. That being the position and considering the preposition of law spelt out in the aforesaid case, I do not find any reason to take a different view in the matter. {Para 11}

12. In the present case, the cheque has been issued by the partnership firm. The said firm, admittedly, has been not made party accused in the complaint. Further, only the applicant has been made accused in the complaint. The non applicant no.1 has, in his complaint, averred that the applicant is one of the partners, which means that there are at least two partners in the firm. The other partner(s) has/have been not made accused in the complaint and, therefore, the complaint itself was not maintainable.

13. The learned counsel for non applicant no.1 submits that this objection was not raised either before the trial Court or before the first appellate Court. This contention is taken on record for the purpose of rejection inasmuch as it is well settled that the question of law can be raised at any stage of the proceeding and before any Court. The contention is, therefore, not sustainable.

14. Learned counsel for the non applicant no.1 then submits that the matter may be remanded back to the trial Court for consideration afresh by giving the non applicant no.1 permission to make the firm as party accused.

15. This submission has been rightly countered by the applicant by relying upon the judgment of the Hon'ble Apex Court in the case of Himanshu Vs. B. Shivamurthy and anr.; reported in MANU/SC/0072/2019 : (2019) 3 SCC 797. The Apex Court, while considering the compliance of Section 141 of the Act of 1881, has held that the company, which was not arraigned as accused in the complaint cannot be subsequently allowed to be added, for the reason that there was no demand notice against the company and thus the preconditions under Section 138 of the Act of 1881 were not complied with as against the company. In the present case as well, the non applicant no.1 has not sent demand notice against the firm and thus, pre-conditions under Section 138 of Act of 1881 have not been complied with. In the circumstances, the request made by the counsel for the non applicant no.1, cannot be accepted.

 IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Criminal Revision Application Nos. 92 and 94/2023

Decided On: 17.10.2023

Satheesan Kuttappan and Ors. Vs. P.P. Sudhakaran and Ors.

Hon'ble Judges/Coram:

Anil L. Pansare, J.

Citation: MANU/MH/4223/2023.

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Whether prosecution for dishonour of cheque filed by unregistered partnership firm is maintainable?

 In this background, there is no point in stretching

the bar which is in the nature of temporary bar to the suit to the

complaints under section 138 of the N. I. Act, which is in the

nature of penal provision with the object to inculcate faith in

banking transactions. The term ‘suit’ under Section 69(2) of the

Act of 1932 must receive its plain and simple meaning. It

cannot be stretched for securing immunity from criminal

prosecutions. The bar under Section 69(2) of the Act of 1932 is

liable to be confined only to enforcement of contractual

obligations.

20. The larger Bench in the case of A.V. Ramanaiah

(supra) fortified its view by observing that the bar contained

under Section 69 of the Act of 1932 is intended to prevent an

unregistered partnership firm to enforce a right arising out of a

contract against a third party, and that it is not intended to

create any such bar for the purposes of enforcing rights arising

out of statutes or for invoking the protection available under

any other statute.

21. For the foregoing reasons, we are in agreement with

the view expressed by the referral Judge.

22. In such conspectus, our answer to the question

referred is as under :-

“The prosecution of an accused under Section 138 of

the Negotiable Instruments Act, 1888, is not hit by

the bar created by sub-section (2) of Section 69 of

the Indian Partnership Act, 1932.”

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

NAGPUR BENCH

CRIMINAL APPLICATION (APPA) NO. 748 OF 2018

Narendra Amarnathji Kalda, Vs Balbirsingh s/o Motisingh Chawhan,

CORAM : P. N. DESHMUKH &

PUSHPA V. GANEDIWALA, JJ.

DATED : 07/02/2020.

JUDGMENT : (PER PUSHPA V. GANEDIWALA, J.)

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Whether eviction suit filed by unregistered partnership firm is maintainable?

Contention was raised that the suit was not maintainable since the same was filed by an unregistered firm. Repelling the contention court took the view that a suit for eviction is maintainable by an unregistered firm as such a suit is not a suit to enforce an agreement but a right therefor accrues to a landlord by reason of the provisions of the statute namely Rent Act. We are in agreement with the Patna High Court that the right of a landlord to determine a tenancy. arises under a statute, namely, Transfer of Property Act and later by Rent. Act. The Bombay High Court in Kajaria Traders (India) Ltd. v. Foreign Imports and Exports Association. MANU/MH/0013/1961 : AIR 1961 Bom 65 held that the right to make an application under section 8 of the Arbitration Act for appointment of an arbitrator or arbitrators is a statutory right and not arising from a contract, though it is not conferred in connection with a contract. Landlord is not enforcing his right arising from a contract, but seeking eviction on the basis of the provisions of the Rent Act which is a statutory right, therefore section 69(2) would not be a bar if a petition is filed by the unregistered firm as a landlord. The petition filed by an unregistered firm for eviction is therefore maintainable.

IN THE HIGH COURT OF KERALA

CRP. No. 606 of 1997 (D)

Decided On: 18.03.2004

 Dungarsi Ranchhodas  Vs.  Moolji Visanji

Hon'ble Judges/Coram:

K.S. Panicker Radhakrishnan and Pius C. Kuriakose, JJ.

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Whether unregistered partnership firm can file criminal complaint for dishonour of cheque?

 Perusal of Section 138 of the Act shows that it has to be a transaction which relates to legally enforceable debt or other liability. It is quite clear that under Section 69(2) of the Partnership Act, the complainant, unregistered partnership could not have legally enforced the debt. If being unregistered partnership it cannot legally enforce the debt, it is not legally enforceable debt and would go out of the purview of Section 138 of the N.I. Act. When complaint was filed complainant was not a registered partnership and thus could not have, at that time, filed the complaint. In this view of the matter, the reasonings recorded by the Hon'ble High Court in the matter of Mr. Amit Desai, supra, appear to be apt for consideration of the present matter. Adopting the said view in the matter of Mr. Amit Desai, supra, I find that the trial Court did not err while rejecting the complaint and acquitting the accused.

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

Criminal Appeal No. 426 of 2003

Decided On: 22.04.2016

Sai Accumulator Industries Sangamner Vs. Sethi Brothers Aurangabad

Hon'ble Judges/Coram:

A.I.S. Cheema, J.

Citation: 2017(2) DCR 359

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Whether Cheque bounce case is maintainable if unregistered partnership firm is not made accused?

 An interesting issue has come up for consideration before this
Court. The question involved in this case is whether an unregistered
Partnership Firm can also be brought within the purview of Section 141 of
the Negotiable Instruments Act, and in such cases whether the Partnership
Firm must be made as an accused along with the other partners, in order to
maintain a complaint for an offence under Section 138 of the Negotiable
Instruments Act ?
 Section 141 of the Negotiable Instruments Act deals with the
concept of vicarious liability, wherein for the offence committed by the
Company or a partnership firm, the directors or the partners, as the case
may, are deemed to be guilty of the offence when it is shown that they are
in charge of and responsible for the conduct of the day-to-day affairs of the
business or the firm, as the case may be. While interpreting the provision,
the Hon'ble Supreme Court has categorically held that the complaint cannot
be maintained against the directors of the Company, without making the
company as an accused person. This concept has been extended even for
Partnership Firms. The registration or non-registration of the Partnership
Firm will have no bearing insofar as 141 of the Negotiable Instruments Act is
concerned.
20. In view of the above discussion, this Court is not in agreement
with the submissions made by the learned counsel for the respondent. In
this case admittedly, the cheque was given in the name of the Partnership
Firm and after the cheque was dishonored, no statutory notice was issued to
the Partnership Firm, and the Partnership Firm was not made as an accused
in the complaint. Only the partners have been shown as accused persons in
this complaint. Such a complaint is unsustainable and not in accordance

with Section 141 of the Negotiable Instruments Act and the law laid down
by the Hon'ble Supreme Court. 
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 23.07.2019
CORAM
MR.JUSTICE N.ANAND VENKATESH
CRL.O.P No.13147 of 2015
and Crl.M.P.Nos.1 and 2 of 2015

Rangabashyam Vs. Ramesh 

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Whether arbitrator can be appointed for dissolution of unregistered partnership firm?

The question, therefore, is: whether the respondent is entitled to a reference under Section 20 of Arbitration Act 1940? Admittedly, the partnership firm was not registered as required under Section 69(1) of the Partnership Act. The partnership deed does contain a clause for reference to arbitrate the disputes that should arise under the contract. The question, therefore, is: 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)

6. The contention of Shri Javali is that since the words "other proceedings to enforce a right arising from a contract" clearly envisage that when a party to the contract seeks to enforce the right arising from the contract, the main part of Sub-section (3) stands attracted, the exceptions provided in the exclusionary clauses have no application. Therefore, the ratio in Jagdish Chandra Gupta's Case, though related to reference under Section 8 would apply to the facts of the case and that the reference is not maintainable. We find no force in the contention. The words "but shall not affect" require to be given meaning and effect thereof in the operation of the main part of Sub-section (3). But as seen, the exceptions engrafted in Sub-section (3) intend to exclude the embargo created by Sub-section (3) and intended to effectuate the exceptions enumerated therein. It is seen that the proviso given an exception stating that the main part of Sub-section (3) shall not affect (a) the enforcement of any right arising from dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm; it conferred interest to the partners, i.e. parties to the contract. Undoubtedly, Section 69 is mandatory in character and its effect is to render a suit by plaintiff in respect of a right vested in him or acquired under a contract which he entered into as a partner of a firm, whether existing or dissolved void. In other 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 which can properly be said to be for enforcement of any right arising from contract except those expressly mentioned as exceptions in Sub-section (3) and Sub-section (4)."

7. If the right to dissolve the firm itself is in dispute and is subject matter of the suit, necessarily in the suit for dissolution of the partnership firm, if a party to the contract of partnership seeks a reference for arbitration to resolve that dispute, it would be a right from a contract arisen in the proceedings for enforcement of the right to dissolve the firm. In that event, necessarily, the main part of Sub-section (3) stands attracted and no such reference is valid in law. But in a case where the parties have already agreed for dissolution of the partnership by mutual consent, the partnership stood dissolved. There is no dispute as regards the right arising from the contract of a firm. The dispute is only with regard to working out the rights flown from dissolution for settlement of accounts of the dissolved firm or any right or power to realise the property of the dissolved firm etc. That right would form part of the exception engrafted in Sub-section (3) of Section 69. The object intended by the legislature appears to be that in spite of the defect of non-registration and the prohibition created in the main part of non-enforceability of the right arising from a contract, the parties having worked under that contract, to the limited extent of the enforcement of a right to realise the assets, 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.

IN THE SUPREME COURT OF INDIA

Civil Appeals Nos. 7784-85 of 1996.

Decided On: 19.04.1996

Krishna Motor Service  Vs.  H.B. Vittala Kamath

Hon'ble Judges/Coram:

K. Ramaswamy and G.B. Pattanaik, JJ.

Citation:  1996 (10) SCC 88, AIR 1996 SC 2209

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How to interprete legally enforceable debt and liability in context of unregistered partnership firm?

The words,' legally enforceable debt or other liability' used in the
explanations to Section 138 of the Negotiable Instruments Act refer to the
enforceability in law of the debt or the liability in question and have no

reference to the right of the person enforcing it. If there is no legal impediment
for enforceability of a debt or other liability in general, disability of a particular
individual or entity to enforce such right to recover such debt or liability does
not render such debt or liability not legally enforceable debt or liability. The
intention of the legislature is to make non payment of amounts of cheques
despite service of notice as per the provisions of the Act an offence only when
the cheque has been issued for payment of a legitimate debt or liability. Amount
required to be paid as price of articles or goods is a legitimate debt or liability
and therefore it is a legally enforceable debt or liability. The disability of an
unregistered firm under Section 69(2) of the Indian Partnership Act to file a suit
to enforce a right arising out of a contract does not make such debt or liability
not a legally enforceable debt or liability.”

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
Cr. Appeal No. 140 of 2018

Date of decision : 11.09.2018.

M/s Uttam Traders Ranghri Vs  Tule Ram alias Tula Ram

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Whether complaint for dishonour of cheque filed by unregistered partnership firm is maintainable?

 I n the case in hand the complainant has a statutory claim in terms of
Section 138 N.I Act. Even otherwise Section 69 of the Partnership Act is
confined to enforcement of a right arising out a contract by instituting a suit or
other proceedings by an unregistered firm. The criminal complaint that has
been filed cannot be treated as a suit or other proceedings to enforce any rights
arising under a contract. Therefore, there is no bar to the criminal complaint
that has been filed and the non-registration of the firm would not bar the
prosecution of an accused on the ground that the firm was not registered.”
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
Cr. Appeal No. 140 of 2018

Date of decision : 11.09.2018.

M/s Uttam Traders Ranghri Vs  Tule Ram alias Tula Ram

Coram:
 Mr. Justice Tarlok Singh Chauhan, Judge.

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Whether suit filed by unregistered partnership firm is tenable?

At this stage, it would be relevant to refer to the observations of the Honorable Supreme Court in paragraph 26 of its judgment in M/s. Haldiram Bhujiawala & another Vs. M/s. Anand Kumar Deepak Kumar & another [MANU/SC/0144/2000 : AIR 2000 SC 1287], which reads as follows:-

"26. Further Section 69(2) is not attracted to any and every contract referred to in the plaint as the source of title to an asset owned by the firm. If the plaint referred to such a contract it could not only be a historical fact. For example, if the plaint filed by the unregistered firm refers to the source of the firm's title to a motor car and states that the plaintiff has purchased and received a Motor Car from a foreign buyer under a contract and that the defendant has unauthorisedly removed it from the plaintiff firm's possession, - it is clear that the relief for possession against defendant in the suit does not arise from any contract with defendant entered into in the course of plaintiff firms' business with defendants but is based on the alleged unauthorised removal of the vehicle from the plaintiff firm's custody by the defendant. 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....."

From the aforesaid, it is clear that even if the source of title to the JCB machine is based on agreement dated 27th November, 2014, its reference as made in the plaint is merely to indicate a historical fact.

11. The reliefs sought by the plaintiff would indicate whether the plaintiff is seeking enforcement of a right arising from a contract. One relief sought is to hand over the said machine to the plaintiff for a period of two years for using the same. This relief cannot be said to be based on a right arising from the contract. In Mukund Balkrishna Kulkarni [supra], it was held by the Honourable Supreme Court that before a plaintiff can be non-suited under provisions of Section 69(1) of the said Act, it must be shown that the suit has been filed by a person "suing as a partner in a firm" and that the suit must be to enforce a right arising from a contract. As can be seen from the nature of reliefs sought by the plaintiff, it cannot be said that the suit seeks to enforce a right arising from a contract.

Another relief sought is with regard to producing the account books, appointing a Receiver and distributing the amounts in question equally between the plaintiff and the defendant. In the aforesaid decision, it was further observed that the Hon'ble Supreme Court in view of the exception carved out by Section 69(3) of the said Act, a person suing as a partner can enforce a right under the contract for dissolution of the firm and accounts. A claim for half share in the firm's assets is a necessary corollary to a prayer for dissolution and without a prayer for specified shares in the firm's assets and business, the relief that may be granted in a suit for dissolution would be ineffective. Thus, the prayer made in the plaint for appointing a Receiver and distributing the amounts in question in equal share would be maintainable and would relate to the exception under Section 69(3) of the said Act. In Valji Shamji Chheda & others [supra], the aforesaid decision was relied upon and the suit therein was held to be maintainable.

12. There is another aspect of the matter. If the acts of the defendant prima facie are shown to be based on a misconduct committed by a partner, the suit for damages in that regard would not be barred by Section 69 of the said Act. This has been held in Chandrayya [supra]. The facts in that case indicate that a Partnership-Deed was executed between seven persons. However, one of the defendants had broken the lock put on the premises of the firm and had put his own lock. In that backdrop, the plaintiff filed a suit for recovery of certain amounts. Relying upon the judgment of the Division Bench in Navinchandra Jethabhai & another Vs. Moolchand Sadaram Gindodiya [MANU/MH/0059/1966 : AIR 1966 Bom. 111], it was held that the suit of said nature was essentially a suit for damages for a misconduct and the same would not be barred by Section 69 of the said Act. On reading the plaint averments, it is clear that the plaintiff has based the suit on the cause of action relating to the alleged misconduct of the defendant. The plaintiff has sought relief on that basis in the suit. The suit, therefore, would be maintainable and not barred by Section 69 of the said Act.

13. Thus, from the aforesaid, it is found that though there existed a partnership between the plaintiff and the defendant, the suit as filed was not based on any contract between the parties and that relief was sought in view of the alleged misconduct committed by the defendant. Non-registration of the partnership was, therefore, not fatal to the tenability of the suit. Hence, for aforesaid reasons which are distinct from the reasons assigned by the trial Court, I find that the application under provisions of Order-VII, Rule 11 of the Code was rightly rejected. The trial Court did not commit any jurisdictional error in that regard. 

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Civil Revision Application No. 7 of 2017

Decided On: 08.01.2018

Rupchand Vs. Laxman

Hon'ble Judges/Coram:

A.S. Chandurkar, J.

Citation: (2018) 2 MHLJ 356

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Whether plaint can be rejected on ground that partnership firm is not registered?

 In my considered opinion, if the cross-examination of the plaintiff is perused, it can be easily seen that he has specifically denied the suggestion that his partnership firm is not registered with the Registrar Office. The only admission given by him is that he has not placed on record any document to show that it was a registered partnership firm and he was the partner of the said firm. It is a different thing to say that partnership firm is not registered and another thing to say that no document is produced to show that it is a registered partnership firm and further denying the suggestion that it was not a registered partnership firm. In view thereof, the document, which is now produced on record by the respondents showing that one partnership firm in the name of "Safal Land Developers, Promoters and Builders", is registered with the Registrar of Firm in the year 1999 itself, needs to be taken into consideration.

7. As regards the dispute raised, that the name of the said partnership firm in the registration certificate is different from the name of the partnership firm stated in the title clause of the suit filed by the respondents before the trial court, it needs to be decided on the basis of evidence to be adduced before the trial court as to whether the registration certificate is of plaintiff's partnership firm or otherwise. Ultimately it is for the trial court to come to the conclusion in one way or other as to whether this registration certificate pertains to the partnership firm of the plaintiff or not. At this stage, the said certificate cannot be discarded on that ground especially when, the address of the plaintiff mentioned in the plaint is of the partner of the said partnership firm, whereas the address mentioned in the registration certificate is of the principal place of the office of the said partnership firm, and therefore, both these addresses are bound to be different.

8. Hence, having regard to these facts on record, in my considered opinion, no interference is warranted in the impugned order of the trial court, rejecting the petitioners' application for rejection of the plaint under Order VII Rule 11 CPC on the count that it is barred by the provisions of Section 69 of the Act.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Civil Revision Application No. 89/2016

Decided On: 22.06.2017

Hitendra Purushottam Kadu and Ors. Vs. Safal Developers

Hon'ble Judges/Coram:

Dr. Shalini Phansalkar Joshi, J.

Citation: 2018(1) MHLJ 256

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Whether court can refer disputes of unregistered partnership firm to arbitration?

The submission by the Petitioner is that partnership being an unregistered partnership, no reference can be made to the arbitration. In the present case there is no dispute between the parties that both Retirement deed and Partnership deed contain an arbitration clause.... When the partners and those who claim through partners agreed to get the dispute settled by arbitration, it is not open for the Appellants to contend that partnership being unregistered partnership, the dispute cannot be referred.[28]

The Petitioners have not been able to show any statutory provision either in 1996 Act or in any other statute from which it can be said that dispute concerning unregistered partnership deed cannot be referred to arbitration. The Court thus, did not find any substance in the third submission of the Appellant.[29]

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 10837 of 2016 (Arising out of SLP (C) No. 31179 of 2014)

Decided On: 15.11.2016

 Ananthesh Bhakta and Ors.

Vs.

Nayana S. Bhakta and Ors.

Hon'ble Judges/Coram:

R.K. Agrawal and Ashok Bhushan, JJ.

Citation:(2017) 5 SCC 185

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Whether subsequent registration of partnership firm will cure defect in institution of suit?

The question as to whether the subsequent registration of the firm would cure the initial defect in the filing of the suit arose for consideration in D.D.A. v. Kochhar Construction Work and Anr. MANU/SC/1279/1998 : (1998)8SCC559 . This Court held that in view of the clear provision of the Act it was not possible to subscribe to the view that subsequent registration of the firm may cure the initial defect, because the proceedings were ab initio defective as they could not have been instituted since the firm in whose name the proceedings were instituted was not a registered firm on the date of the institution of the proceedings. 

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 4092 of 1998

Decided On: 07.11.2006

 Purushottam and Anr.

Vs.

Shivraj Fine Art Litho Works and Ors.

Hon'ble Judges/Coram:

B.P. Singh and Altamas Kabir, JJ.

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Whether court can grant interim relief U/S 9 of Arbitration Act if unregistered partnership firm is in existence?

 The relevant clauses of partnership agreement are
already quoted. They show that the parties cannot put
to an end themselves to the contract unless the project
is completed. The submissions made and copy of
proceeding filed in this Court under section 11 of the Act
(Application No.12 of 2012) show the nature of dispute
which Sanjay has raised. There is a dispute that
Jugalkishor is not giving accounts of partnership firm to
Sanjay and the dispute has arisen between these two
partners regarding accounts of business of firm. As per
this record, Sanjay wants to settle this dispute amicably
and he wants to continue with the project and complete
it as provided under the agreement. Thus, Sanjay does
not want the relief of dissolution of the partnership in the
adjudication. Thus, the partnership is in existence and
Sanjay has no intention to go for dissolution of
partnership. In view of this nature of dispute raised by
Sanjay, this Court has no hesitation to hold that the bar
given by section 69 (3) of Partnership Act is applicable
against Sanjay and due to that even interim relief under

section 9 of the Act cannot be given.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
BENCH AT AURANGABAD
ARBITRATION APPEAL NO.: 6 OF 2015

Tapadiya Construction Ltd.,

V
Sanjay Suganchand Kasliwal,

CORAM:- T. V. NALAWADE, J.
DATED:- 3rd DECEMBER, 2015.
Citation: 2016(6) MHLJ 768 Bom

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Whether unregistered partnership firm can initiate arbitration proceeding?

Having regard to our conclusion that Arbitral Proceedings will not come under the expression "other proceedings" of Section 69(3) of the Partnership Act, the ban imposed under the said Section 69 can have no application to Arbitral proceedings as well as the Arbitration Award. Therefore, the appeal stands allowed, 
SUPREME COURT OF INDIA

M/s. Umesh Goel Vs. Himachal Pradesh Cooperative Group Housing Society Ltd.

[Civil Appeal No.7916 of 2009]

Fakkir Mohamed Ibrahim Kalifulla, J.

Dated: 29 June 2016
Citation:AIR 2016 SC3116,(2016) 11 SCC313

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Whether arbitral proceeding is maintainable at the instance of an unregistered partnership firm?

 The words "other proceedings" in sub-section (3) whether should be construed as ejusdem generis with "a claim of set-off", was subject of conflicting decision. In case of Wahid Hussain v. Md. Hasan, MANU/UP/0105/1961 : AIR 1961 All 409, the Allahabad High Court held that the rule of ejusdem generis did not apply, and accordingly rejected an application to enforce an arbitration clause in the partnership deed of an unregistered firm. Whereas the Bombay High Court held that an application un

der Section 8 of the Arbitration Act does not come within the words 'or other proceeding'. Finally the conflict was resolved by the Supreme Court in the case of Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd. Reported in MANU/SC/0047/1964 : AIR 1964 SC 1882 wherein the Court held the rule ejusdem generis did not apply to unregistered firm and unregistered firm could not enforce an arbitration clause in the partnership deed.

12. Subsequently, the Supreme Court in case of U.P. State Sugar Corpn. Ltd. v. Jain Construction Co. & another, MANU/SC/0681/2004 : AIR 2004 SC 4335 delivered a judgment on 25.08.2004, in which the judgment delivered in case of Firm Ashok Traders and another v. Gurumukh Das Saluja and others reported in MANU/SC/0026/2004 : AIR 2004 SC 1433 decided on 09.01.2004 was also considered and the Apex Court held that the arbitral proceedings would not be maintainable at the instance of an unregistered firm having regard to the mandatory provisions contained in Section 69 of the Indian Partnership Act, 1932.

IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR

Arbitration Application No. 7 of 2006

Decided On: 17.07.2015

Appellants: C.M. Makhija 
Vs.
Respondent: The Chairman cum Managing Director, South Eastern Coalfields Limited and Ors.

Hon'ble Judges/Coram:Goutam Bhaduri, J.

Citation;AIR 2016 Chhatisgarh63

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suit instituted by unregistered partnership firm in respect of a statutory right or a common law right is maintainable

The question whether Section 69(2) is a bar to a suit filed by an unregistered firm even if a statutory right is being enforced or even If only a Common Law right is being enforced came up directly for consideration in this Court in M/s. Raptokas Brett Co. Ltd. v. Ganesh Property . In that case, Majmudar J speaking for the Bench clearly expressed the view that Section 69(2) cannot bar the enforcement by way of suit by an unregistered firm in respect of a statutory right or a common law right. On the facts of that case, it was held the right to evict a tenant upon expiry of the lease was not a right 'arising from a contract' but was a common law right or a statutory tight under the Transfer of Property Act. The fact that the plaint in that case referred to a lease and to Its expiry, made no 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.
 The next .question is as to the nature of the right that is being enforced in this suit. It is well settled that a passing off action is a common law action based on tort (vide) Bengal Waterproof Ltd. v. Bombay Waterproof Manufacturing Company . Therefore, in our opinion, a suit for perpetual injunction to restrain the defendant not to pass-off the defendant's goods as those of plaintiffs by using the plaintiffs' trade mark and for damages Is an action at common law and is not barred by Section 69(2),

Supreme Court of India

M/S. Haldiram Bhujiawala & ... vs M/S. Anand Kumar Deepak Kumar & ... on 28 February, 2000

Equivalent citations: AIR 2000 SC 1287, 84 (2000) DLT 301 SC, JT 2000 (2) SC 596

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