IN THE HIGH COURT OF KERALA AT ERNAKULAM
SA.No. 406 of 1995()
1. NOBLE KURIES
For Petitioner :SRI.V.M.KURIAN
For Respondent :SRI.JOSE JOSEPH
The Hon'ble MR. Justice THOMAS P.JOSEPH
O R D E R
THOMAS P. JOSEPH, J.
S.A.Nos.406, 432 and 656 of 1995,
Dated this the 22nd day of October, 2009.
The common substantial question of law raised for a decision in these appeals is whether a fresh registration of the partnership firm is required consequent to its reconstitution to maintain a suit in view of Section 69(2) of the Indian Partnership Act (for short, "the Act") and whether non- intimation of reconstitution of the partnership firm to the Registrar of Firms would affect maintainability of the suit.
2. S.A.Nos.406 of 1995 and 432 of 1995 arise from common judgment and decree of learned Principal Sub Judge, North Paravur reversing judgment and decree of learned Munsiff, North Paravur in O.S.No.294 of 1988. Appellant, a partnership firm filed O.S.No.294 of 1988 for a decree for realisation of the future instalments with interest allegedly payable on the basis of a chitty agreement. Learned Munsiff granted a decree in favour of the appellant. Respondent No.4/defendant No.4 challenged the judgment and decree in A.S.No.34 of 1992 while respondent Nos.1 to 3 challenged judgment and decree in A.S.No.40 of 1992 . Learned Principal Sub Judge allowed the appeals and dismissed the suits. S.A.No.656 of 1995 arises from judgment and decree of the same appellate court in A.S.No.37 of 1992 reversing judgment and decree of the same trial court in O.S.No.364 of 1988. That also is a suit for SA Nos.406,432 & 656/1995
realisation of the money preferred by the same appellant against the respondents on the strength of a chitty agreement. The first appellate court allowed the appeal and dismissed the suit.
3. Appellant, it is averred in the plaint is a partnership firm registered under the Act with its head office at North Paravur and branch at Bangalore. It started the kuri from its branch at Bangalore in which respondent No.1 joined. Appellant alleged that respondent No.1 prized the kuri in O.S.No.294 of 1988 on 6.9.1983, received Rs.10,000/- and issued a receipt for the same. In O.S.No.364 of 1988, respondent No.1 prized the kuri on 6.5.1983, received Rs.17,850/- and issued a receipt. It is the further case of appellant that respondent Nos.2 to 4 in both the cases are sureties of respondent No.1 in both the cases and all of them jointly executed chitty agreement undertaking to pay the future instalments without default. According to the appellant, in O.S.No.294 of 1988 respondents defaulted payment of amount from the 26th instalment onwards, respondent No.4 had pledged chitty No.183 as security, amount payable under that chitty was adjusted by the appellant and the balance sum of Rs.10,000/- with interest at the rate of 12% per annum is due. Allegation in O.S.No.364 of 1988 is that respondents defaulted payment of future instalments and that a sum of Rs.13,059/- with interest at the rate of 12% per annum on the sum of Rs.9,600/- is due from the respondents.
4. Respondent Nos.1 to 3 in O.S.No.294 of 1988 contended that the partnership is not registered, the person who has signed the plaint is not SA Nos.406,432 & 656/1995
competent to do so and that no amount is due. Bar of limitation is also pleaded in defence. Respondent No.4 contended that the suit is in violation of Section 69 (2) of the Act and that he is entitled to get Rs.9,600/- from the appellant as per chitty No.183. He has not authorised appellant to adjust that amount in the amount payable by respondent No.1. He also contended that the person who has signed the agreement was not competent to do so. Similar contentions were raised by the respondents in O.S.No.364 of 1988 also. Learned Munsiff found on evidence that the partnership firm is registered and hence the bar under Section 69(2) of the Act would not apply though, in the meantime there was a reconstitution of the partnership firm. According to the learned Munsiff, failure of partners to intimate reconstitution of the partnership firm to the Registrar may visit them with penal consequences if any but, that does not affect the maintainability of the suit. First appellate court was of the view that partnership was formed for a period of five years, it was not registered after reconstitution and that reconstitution was not intimated to the Registrar as required under Section 63 of the Act and hence the suit is not maintainable. It was also found that the plaint claim in both the cases were not proved. Judgment and decree of the trial court were set aside and the suits were dismissed. Hence these Second Appeals urging the above substantial questions of law. It is contended by learned counsel for appellant that the evidence on record would show that partnership was registered and such registration would continue to hold good even after its reconstitution. According to the learned counsel reconstitution of SA Nos.406,432 & 656/1995
the firm does not require a further registration and non-intimation of reconstitution to the Registrar will not affect maintainability of the suit.
5. The relevant documents produced in O.S.No.294 of 1988 are: Ext.A1 is the partnership deed dated 5.8.1982. Ext.A2 is the acknowledgment of registration of firm issued by the Registrar of Firms. Ext.A3 is the photocopy of the Register of Firms issued in Form-A by the Registrar. Ext.A4 is the deed of reconstitution of partnership dated 1.4.1986. Ext.A5 is the photocopy of certificate of enrollment of appellant in the State of Karnataka. Ext.A6 is the receipt for payment of fee for obtaining such enrollment. Ext.A7 is the minutes of meeting of the partners of the appellant on 25.1.1986. The documents produced in O.S.No.364 of 1988 are: Ext.A4 is the partnership deed dated 5.8.1982 where in Clause (1) it is stated that duration of the partnership is not for any fixed period, nor at will but it is to be determined in accordance with the terms and conditions of the deed. Ext.A7 is the photocopy of acknowledgment of registration dated 15.11.1982 issued by the Registrar of Firms. Ext.A11 is the photocopy of Register of Firms issued in Form-A. Ext.A6 is the deed of reconstitution of partnership dated 1.4.1986. The document produced in O.S.No.364 of 1988 are also the same. Ext.A4 is the copy of partnership deed. Ext.A5 is the copy of certificate of enrollment. Ext.A6 is the photocopy of reconstituted partnership deed. Ext.A7 is the copy of acknowledgment of registration of the firm. Ext.A11 is the copy of certificate in Form A issued by the Registrar of Firms.
SA Nos.406,432 & 656/1995
6. On the question whether the person who signed the plaint (Shri P.J.George as managing partner) was competent to do so, evidence on record shows that he is one of the partners whose name finds a place in the Register of Firms. In the meeting of the partners on 25.3.1988 (see Exts.A7 and A8 in O.S.No.295\4 of 1988) it was resolved that managing partner whose term expired on 1.2.1987 was given charge of managing partner indefinitely. Thus managing partner who signed the plaints was competent to do so.
7. Then the question is whether the partnership as per Ext.A1 in O.S.No.294 of 1988 (Ext.A4 in O.S.No.364 of 1988) was only for a period of five years from 5.8.1982. First appellate court has placed reliance on Ext.A3 in O.S.No.294 of 1988 (Ext.A7 in O.S.No.364 of 1988) to hold that duration of the partnership was only for a period of five years till 5.8.1987 and hence on reconstitution of the firm registration was required.
8. In Clause (1) of Ext.A1 in O.S.No.294 of 1988 (Ext.A4 in O.S.No.364 of 1988) it is stated that duration of the partnership is neither fixed to any length of time nor shall it be one at will but shall continue until determined in accordance with the terms contained in the deed. In Ext.A4 in O.S.No.294 of 1988 (Ext.A6 in O.S.No.364 of 1988) the deed of reconstitution dated 1.4.1986 also, Clause (1) makes a similar statement as to the duration of the partnership. Going by Ext.A1 in O.S.No.294 of 1988 (Ext.A4 in O.S.No.364 of 1988) partnership was not for a period of five years. But in Ext.A3 in O.S.No.294 of 1988 (Ext.A7 in O.S.No.364 of 1988) the Registrar of Firms has stated that the SA Nos.406,432 & 656/1995
date of registration of the firm is 15.11.1982 and its duration is five years.
9. The Kerala Partnership (Registration of Firms) Rules, 1959 (Rule V of the Kerala) (for short, "the Rules") deals with registration of firms. Rule 5 states that Register of Firms shall be in Form-A annexed to the Rules. In Form- A, Col.No.4 refers to the duration of the firm which in Ext.A3 in O.S.No.294 of 1988 (Ext.A7 in O.S.No.364 of 1988) is stated as five years. It is not clear how in the light of the term regarding duration of partnership which I have stated from Clause (1) of Ext.A1 in O.S.No.294 of 1988 (Ext.A4 in O.S.No.364 of 1988) Registrar of Firms stated in Ext.A3 in O.S.No.294 of 1988 (Ext.A7 in O.S.No.364 of 1988) duration of the firm as five years. There is nothing on record to hold that the firm was constituted only for five years and on the other hand Ext.A1 in O.S.No.294 of 1988 (Ext.A4 in O.S.No.364 of 1988) shows that duration of the firm was not fixed for any period, the firm was not one at will and was to be determined in accordance with the terms and conditions stated therein. Hence the finding of the first appellate court that duration of the firm was five years cannot be accepted. The partnership firm constituted by Ext.A1 in O.S.No.294 of 1988 (Ext.A4 in O.S.No.364 of 1988) was for an indefinite period and got registration as per Ext.A2 in O.S.No.294 of 1988.
10. Ext.A4 in O.S.No.294 of 1988 (Ext.A6 in O.S.No.364 of 1988) shows that on account of some of the partners retiring and another person coming in, the partnership firm was reconstituted on 1.4.1986. Section 59 of the Act deals with registration of the partnership. There is no provision in the SA Nos.406,432 & 656/1995
Act which states that when there is reconstitution of a firm which is already registered, a further registration is required after such reconstitution. What is required is only intimation to the Registrar of Firms about the reconstitution/change as provided under Sections 60 to 63 of the Act. A Division Bench of the Gujarat High Court in Bharat Sarvodaya Mills v. Mohatta Bros (AIR 1969 Gujarat 178) held that no separate registration is necessary where there is reconstitution of a continuing firm. In this case the firm had obtained registration from the Registrar of Firms. Hence after reconstitution of that firm it was not necessary to have a fresh registration of the reconstituted firm. Finding of first appellate court to the contrary is not correct and cannot be sustained.
11. Then the question is what is the consequences of not intimating the Registrar of Firms about reconstitution even if it is assumed so, on the maintainability of the suits. Sections 60 to 63 of the Act require any change in the constitution of a registered partnership firm to be intimated to the Registrar of Firms. But neither the Act nor the Rules provide any time limit for that. Rule 4 of the Rules referred above as originally framed read, "Form of intimations and notices under sections 61, 62 and 63.
(1) Intimations and notices under sections 61, 62, 63(1) and 63(2) of the Act, shall be respectively be in Forms III, IV, V, VI annexed to these Rules together with the fees specified in those forms with such
variations as circumstances may require.
SA Nos.406,432 & 656/1995
(2) Every statement, intimation or notice relating to a firm, under section 60, 61, 62, 63(1) or 63(2) of the Act shall be sent or given to the Registrar
together with the maximum fees prescribed in the
schedule to the Act within 15 days from the date of occurrence of the event referred to in such
statement, intimation or notice." (emphasis supplied) As per Sub-rule (2) of Rule 4 of the Rules, intimation to the Registrar of Firms regarding changes in the firm had to be given within fifteen (15) days of occurrence of the event referred to in the intimation. This Court in Balanarayanan v. Registrar of Firms (1983 KLT 441) considered the virus of the time limit fixed for such intimation in Sub-rule (2) of Rule 4 of the Rules and held,
".......................... A careful reading of S.71(1) and (2) will clearly show that no power has been conferred on the State Government under this section to make any rule prescribing time limit for filing statements, intimations and notices under Ss.60, 61, 62 and 63 of the Act. There is also nothing in S.63 either expressly or impliedly showing or indicating that the notice contemplated thereunder regarding changes in the
Constitution of partnership of the registered firm or the dissolution of a firm should be given within a prescribed time. There can be no doubt therefore that sub-rule 2 of Rule 4 is ultra vires of the Act and beyond the powers conferred on the State Government."
SA Nos.406,432 & 656/1995
Thus, there could be no time limit for intimation of the reconstitution or other change in a registered partnership to the Registrar of Firms though, ofcourse intimation has to be given within a reasonable time.
12. So far as maintainability of the suit under Section 69 (2) of the Act is concerned, the two requirements are that the partnership firm must have been registered and the persons suing are or have been shown in the Register of Firms as partners of the firm. The Andhra Pradesh High Court in Sudarsanam v. Viswanadham Bros. (AIR 1955 Andhra Pradesh 12) held,
"............. It may be that the fact of retirement of one of the partners and the death of another should have been notified to the Registrar under S.63(1) as the said events effected a change in the constitution of the firm. But the default made by the firm is not, in not so notifying, of any relevance in considering the question of the maintainability of the suit under S.69 (2). There is the essential distinction between the constitution of a firm and its dissolution. Non- compliance with the provisions of S.63(1) may have other consequences, but under S.69(2) only two
conditions should be complied with by a firm to
enforce a right arising from a contract and those two conditions are complied with in the present case." In this case, reconstitution of the firm was on 1.4.1986 and the suits were filed in the year 1988. Non-intimation of reconstitution or change in the firm to the SA Nos.406,432 & 656/1995
Registrar of Firms by itself cannot affect maintainability of the suit. But the second condition under Section 69(2) of the Act has to be complied. It must be shown that all the partners are, or have been shown in the Register of Firms as partners. Supreme Court in M/s.Shreeram Finance Corporation v. Yasin Khan & others (AIR 1989 SC 1769) has held that at the time the suit is instituted, names of current partners constituting the firm should find a place in the Register of Firms. In this case, PW1 who gave evidence on behalf of appellant has stated that reconstitution of the firm was intimated to the Registrar of Firms. It is true that PW1 has not produced documents to support that claim. This Court in Neldon Company v. Radhakrishnan (1990 (1) KLT SN 9) has stated, with reference to Section 69(2) of the Act that it is not the requirement of law that the plaint must expressly mention that the firm has been registered or that the partners suing are shown in the register of firms as partners. If the defendant does not raise a plea that the partners suing are not shown in the Register of Firms as partners of the firm, plaintiff can assume that the plea was not raised and then he need not adduce evidence that names of partners is recorded in the Register of Firms. In this case, in the written statement it is only pleaded that Section 69(2) of the Act is not complied with. There is no specific contention raised by the respondents that the names of the partners of the reconstituted firm have not been recorded in the Register of Firms as partners and hence the suits are not maintainable. Therefore, it must be taken that the respondents have not disputed the fact names of partners of SA Nos.406,432 & 656/1995
the reconstituted firm finding a place in the Register of Firms. In the circumstances finding of the first appellate court that the suits are not maintainable cannot be sustained.
13. Another substantial question of law raised in these appeals is whether on the facts and circumstances of the case first appellate court was correct in holding that the suits are not maintainable as the chitty agreements are not produced along with the plaint. I have gone through the judgments under challenge and find that none of the documents relating to the alleged transactions with the respondents have been exhibited in evidence except Ext.A10 in O.S.No.294 of 1988. There are various contentions raised by the respondents regarding their non-liability. True, PW1 has given evidence in favour of appellant as to the transaction and the amount due. But, as I stated except Ext.A10 in O.S.No.294 of 1988 none of the relevant documents are exhibited in evidence. PW1 claimed that he had produced the relevant documents in the suit. But when a claim is made it is the responsibility of appellant to prove the relevant documents and establish the claim. That having not been done, first appellate court is correct in its view that the plaint claim are not proved.
14. Learned counsel for appellant made a request to give an opportunity to produce and prove the relevant documents. Learned counsel submits that the relevant documents had been produced in the respective cases. Considering the nature of claim made against the respondents, the oral evidence SA Nos.406,432 & 656/1995
given by PW1 though not supported by documentary evidence and other relevant circumstances I am inclined to give the appellant an opportunity to adduce appropriate evidence for which a remand of the cases is necessitated. Accordingly, finding of the first appellate court that the plaint claim is not proved is set aside. The substantial questions of law framed are answered as above. Resultantly, these Second Appeals are allowed in the following lines setting aside the judgment and decree of the first appellate court: i. It is found that suits are maintainable.
ii. Finding of the courts below regarding proof of the plaint claim is set aside and suits are remitted to the trial court for fresh decision on that issue after giving opportunity to both sides to adduce evidence. Parties shall appear in the trial court on 30.11.2009. In case respondents or any of them do not appear in the trial court on that day summons/notice shall be issued to them for their appearance. No cost.
SA Nos.406,432 & 656/1995
Thomas P.Joseph, J.
S.A.Nos.406 of 1995
432 of 1995
656 of 1995
22nd October, 2009.